Widespread news reports claim a bipartisan government spending deal has been reached to keep the government funded through the end of the fiscal year (September 30). The agreement includes a $2 billion increase for the National Institutes of Health (NIH), an increase consistent with what we anticipated in our note, “NIH under Trump.”

This $2 billion increase builds on the $2 billion increase the agency received last fiscal year, the first significant increase in funding in years. The Trump administration had requested that the NIH budget be cut by $1.2 billion for the remainder of the fiscal year, but the chairmen of the subcommittees in charge of the NIH budget rejected that cut and instead provided another sizable increase.

While this increase will likely be viewed positively for stocks impacted by NIH funding, we caution that the money may not be spent as quickly as investors would hope. NIH, unlike many other agencies, often receives funding that can be carried over into additional fiscal years. The threat of the Trump administration proposing cuts to the NIH budget in future years could result in the NIH leadership delaying spending of some of these funds or allocating resources differently.

(Source: The Loop)