Buying and Selling: Financing Medical Breakthroughs

Policy debates about pharmaceutical innovation often focus on the idea that the United States finances the world’s medical breakthroughs. But that perspective looks only at the final stages of the innovation process – after drugs and technologies reach the market. In reality, much of the earliest research depends on venture capital and investments that fuel startups long before a product generates revenue.

In research led by Yunan Ji, assistant professor of strategy, an analysis of global venture capital flows shows that this early-stage funding is deeply international. While the United States continues to function as a central hub for global health care investment, it relies on a much broader venture ecosystem to drive medical innovation. 

Here, Ji shares insights on why global venture capital flows are critical to medical innovation and why policies that restrict cross-border investment could have unintended consequences.

BUYING

Global Capital as the Engine of Health Innovation.

The prevailing narrative suggests that the United States finances the world’s pharmaceutical innovation. But venture capital data reveal a different reality: the United States is actually a net importer of global risk capital for health care startups.

Between 2020 and 2024, international investors directed roughly $256 billion into U.S.-based health care startups – about 60% of global venture capital investment in the sector. During the same period, U.S. investors invested about $237 billion abroad, producing a net inflow of approximately $19 billion into the United States.

This inflow reflects the country’s unique position as a hub for early-stage research and commercialization. Venture capitalists from Europe, Asia, and other regions invest in U.S. startups because the ecosystem offers strong universities, research hospitals, intellectual property protections, and access to one of the world’s largest health care markets.

The innovation process itself has also become increasingly global. Few medical technologies are developed entirely within a single country. Instead, discovery, testing, and commercialization often occur across multiple regions that specialize in different parts of the process. 

This global collaboration ultimately benefits U.S. patients. When startups develop and commercialize new drugs and technologies in the United States, Americans often gain faster access to cutting-edge treatments than if the innovation pipeline were restricted against cross-border R&D.

SELLING

Policies That Restrict Cross-Border Investment.

Because the U.S. innovation ecosystem depends heavily on global venture capital, policies that restrict international investment could inadvertently slow the development of new health technologies.

Trade tensions, tariffs, or expanded reviews of foreign investment are often designed to protect domestic industries. However, for early-stage health care startups that rely on venture funding to pursue research, limiting cross-border capital could reduce the financing available for promising ideas.

The global innovation landscape is also evolving. Countries such as China have rapidly expanded their biotechnology sectors over the past decade and are becoming major players in clinical trials and later stages of research. If international capital begins flowing more heavily toward other hubs, the United States could lose some of the advantages that have historically made it the center of health care innovation.

Maintaining the United States’ position as the leading destination for venture capital will require policies that preserve openness to global investment while protecting national interests. Otherwise, efforts meant to strengthen domestic innovation could make the U.S. ecosystem less attractive to the international capital that helps sustain it.

This story was originally featured in the Georgetown Business Spring/Summer 2026 Magazine.