By Josh Nathan-Kazis

It's a tough time to be in the business of making the high-tech tools that scientists use to plumb the mysteries of human biology.

Companies like 10x Genomics, Illumina, and PacBio make the equipment that analyzes cells, decodes DNA, and generates the data that lead to new discoveries and new medicines.

But much of that research is happening in university laboratories across the U.S., and the Trump administration has thrown academic science into chaos.

Today, shares of the biotech toolmakers that rely most heavily on academic labs for revenues have plummeted. Pacific Biosciences, Illumina, and 10x Genomics are all down around 40% this year, while Bio-Rad Laboratories, Thermo Fisher Scientific, and Becton Dickinson are down about 25%. Some companies have announced layoffs and cost savings plans.

The disruptions to academic labs have been thrashed out extensively in headlines: First there was the announcement in February that the National Institutes of Health would cap the additional costs that universities could tack onto their NIH research grants, funds used for the biotech toolmakers' expensive machines. A judge has since halted that policy, but that hasn't stopped other changes. NIH has been pulling grants, rejecting more grants than normal, and slow-walking annual renewals. There were layoffs at NIH, and the threat of more to come: The White House's 2026 budget proposal calls for an $18 billion cut to the agency's budget.

Even more than the missing money, the biggest problem now is simply the uncertainty.

"The key thing," says Serge Saxonov, CEO and co-founder of 10x Genomics, "is just, like, stability. For our customers, just knowing what is the state of play." With that, customers can start planning, he says, and 10x can makes its own plans.

Saxonov spoke to Barron's on May 9, a day after the company reported first-quarter revenue that was down 2% from the same quarter last year, and pulled its full-year guidance. The company's CFO, Adam Taich, said on an investor call that policy changes "have introduced increased uncertainty into purchasing behavior for many of our customers."

10x's revenue comes from selling expensive machines and from selling the somewhat less expensive consumables those machines use each time they run an analysis. In 2024, around 16% of 10x's revenue came from the instruments, and about 81% came from the consumables.

In the first quarter, consumable sales held up fine. The company reported $115 million in consumables revenues, up from $110 million in the first quarter in 2024. Instrument sales, however, fell 42% to $14.8 million. Analysts expect instrument sales of $15.6 million in the second quarter, down 34.8% from the same quarter in 2024, according to FactSet.

"When you have uncertainty, people just don't want to be investing in capex," Saxonov says. A spokesperson for the company said that its instruments start at $25,000, though some of the products cost far more. "Customers literally who had planned on ordering would just like all of a sudden learn themselves that they didn't have the funds or the means to pay," he says.

Saxonov describes a mood among researchers this spring that approached panic. "Researchers are all very, very worried," he says.

Academic researchers in the U.S. account for a large proportion of 10x's customers. The company says that 40% to 50% of its revenue comes from U.S. academic and government research, and Saxonov estimates that about a quarter of the revenue comes from NIH grants. "We have really high, outsized exposure to that market," he says.

The problem wasn't just the budget cuts, but the poorly understood changes happening inside the walls of NIH headquarters in Bethesda, Md. "There's always sort of a dark matter of procedural changes," Saxonov says. "It puts all the sciences, at best, in limbo."

So far, 10x's response has been to announce plans to cut 8% of its workforce, as part of an effort to reduce operating expenses by $50 million.

Other life science tools makers have made similar decisions. PacBio, which sells advanced genome sequencing equipment, announced plans to cut its operating expenses by between $45 million and $50 million, and reported an 8% drop in revenue in the Americas in its first quarter. Avantor, which sells a wide range of scientific equipment, saw net sales drop 6% in the first quarter and said it planned to expand an existing cost-cutting program.

Even the larger, more diversified companies in the sector had to cut guidance. Thermo Fisher Scientific, which has a market value of more than $155 billion, said in April that the changes in U.S. scientific research policy had led it to reduce its revenue guidance by $500 million and its adjusted earnings guidance by $0.30 per share. After other cuts due to tariff impacts, it now expects revenue of between $43.3 billion and $44.2 billion.

"In a way, nothing has changed other than sentiment," the ThermoFisher CEO, Marc Casper, said at a May 13 investor conference. "Sentiment has changed within that customer base, so we're very concerned. But funding mechanisms are generally continuing at a moderate pace."

For Saxonov at 10x, the question is how long until there's some clarity on NIH funding. "Our mental model is, it's going to be turbulent for the next few quarters," he says. "Our goal is to make sure we're managing really carefully through these times, invest in the most critical things, so that we come out really strong on the other side of it."

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 22, 2025 02:00 ET (06:00 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.