There are lots of signs pointing to a biotech comeback after a four-year drought. But hanging over that is concern about staffing, drug approvals and upheaval at the FDA.

Why it matters: It's not just future treatments and cures that are on the line, but America's global dominance in biopharmaceuticals.

• There are warnings from all over that China is about to overtake the U.S. as the world biotech leader if the Trump administration neglects the innovation pipeline.

Driving the news: The annual JPMorgan health care conference started out with a bang this week when the FDA's former longtime top cancer regulator accused the agency of having become politicized and warned that its talent exodus will be hard to undo.

• If you recall, Rick Pazdur was one of five officials who served as the FDA's top drug regulator last year before he abruptly retired. His brief tenure atop the Center for Drug Evaluation and Research was a time of relief for industry and investors.
• He was replaced by Tracy Beth Høeg, a key player in the Trump administration's push to adopt the Danish childhood vaccine schedule in the U.S., despite the pushback from scientists and public health experts.
• "It's terrible to see 25 years of work dismantled," Pazdur said at a Stat event at the conference. "The real work that will be needed in the agency is looking at emerging science and evolving principles, and that cannot be done by new staff that doesn't have any expertise in the field."

Yes, but: Overall there was a lot of optimism about the future of biotech heading into 2026, my colleagues who attended JPM told me.

• Biotech is dominating the early 2026 deals market, Axios' Dan Primack reported this week, noting that 25 of the 59 venture deals he's included in Axios Pro Rata so far this year have been for biotech startups.
• "We are seeing investment returning to our industry and exciting new scientific and technological developments that are transforming biotechnology and medical breakthroughs," John Crowley, CEO of the Biotechnology Innovation Organization, said in a statement to Axios.
• But he added: "To continue this momentum, we need a smart, strong and predictable FDA. And we need bold changes to reform and modernize the FDA and the entire clinical trials system in the United States."

Two things can be true at once: Biotech's got a lot going for it right now, and regulatory dysfunction risks messing it all up.

The big picture: Concern about the FDA is widespread, but analysts and investors are divided over how much the agency's current problems are going to factor into the sector's future.

• Regulators could get their act together and give biotechs and their funders predictability and confidence, making the present moment a bump in the road.
• Alternatively, the brain drain and inconsistency around standards for approvals could drive investors away from the search for life-altering new drugs.

By the numbers: The FDA last year lost more than 900 scientists and health experts, along with over 500 regulators, investigators and compliance workers, as Health Secretary Robert F. Kennedy Jr. and DOGE radically reshaped the federal workforce, a ProPublica analysis found.

Where it stands: "There's a lot of enthusiasm in the sector," former FDA commissioner Scott Gottlieb said on Sunday while speaking on a panel (not at JPM) titled "Innovation at a Crossroads." Gottlieb is also a Pfizer board member and a partner at New Enterprise Associates.

• The rise in dealmaking partially reflects the fact that drug companies "were sitting on a lot of capital until they had visibility on what was going to happen around tariffs," Gottlieb said.
• But the general optimism about innovative products isn't taking into account the state of the FDA, he added, noting both the quantity and the quality of personnel who have left since President Trump was sworn in.
• "There is no way that's sustainable and there is no way that's not going to catch up and get reflected in the productivity of the organization, unfortunately. And I think 2026 is a year that that's going to become more apparent to people in this ecosystem," Gottlieb warned.

The other side: "FDA continues to operate as a stable regulator while implementing reforms to strengthen efficiency, accountability, and transparency," HHS spokesperson Andrew Nixon said.

• "FDA's current size, like HHS itself, is comparable with the pre-pandemic staffing level. This is consistent with the same staffing level during Gottlieb's tenure, so his criticisms are baseless," Nixon added.
• BIO's Crowley said there have been signs of improvement: "In 2025 we saw massive changes at the FDA. Some changes were welcome and much needed, while others sowed great confusion and doubt. As we enter 2026, we are seeing signs of stability and some encouraging steps toward positive change."

Forget the FDA for a minute. It's looking like a fantastic era for biotech is about to begin.

• It's not just the reduced threat of pharmaceutical tariffs that could open Big Pharma's pockets. The big players also are facing patent expirations, meaning the end of market exclusivity and the need to hunt for new moneymaking products.
• AI-enabled drug discovery has been a buzzword for years now, but 2026 may be the one where it starts to make a difference. "Fundamental advancements in drug discovery are nothing short of revolutionary," PitchBook wrote in its 2026 health care outlook.
• And perhaps most importantly, the underlying science is just really good.

How it works: The most promising innovation tends to now originate from small biotechs that could make ripe acquisition targets.

• They're heavily reliant on early-stage investor capital. And investors count on large returns in order to offset the sector's relatively high failure rate.
• Manufacturers often work closely with the FDA as they develop their products, to get clarity about what's needed for approval. As of late, multiple companies — including one just this week — have said that the agency has contradicted itself about what evidence it's seeking.
• "Saying one thing and doing another challenges industry ability to make informed investment decisions and likely will limit behavioral changes by companies that FDA rhetoric implies they desire," Raymond James analyst Chris Meekins wrote in an investor note.

What we're watching: Whether investors find another place to put their money.

• Everything going on at the FDA could just be short-term, some say, especially because the Trump administration has such an incentive to ensure that the agency remains functional.
• Investors think the stakes are too high for the government to "tolerate a dysfunctional gatekeeper," said Peter Kolchinsky, founder and managing partner at RA Capital Management.
• "If current [FDA] leadership can't keep new approvals moving on time, it will be replaced and new leadership will do things differently," he added, noting such changes happen over the course of months to years while biotech takes a longer-term view.

The bottom line: "While we're closer than ever to realizing biotechnology's full potential to make miracles, we're also closer than ever to throwing that potential away. We're at risk of taking a sledgehammer to our miracle machine," Noubar Afeyan, founder and CEO of Flagship Pioneering, wrote in his annual letter.