5 Ways Defense Spending Creates Opportunities in Life Sciences and Healthcare Markets Globally 

When Europe announced its €800 billion Readiness 2030 initiative, most life sciences and healthcare executives probably didn’t see themselves as potential beneficiaries.  

However, the parallel in the United States proves the opposite. Johnson & Johnson was recently awarded a $260 million U.S. Army contract and has been one of the top medical supplier to U.S. armed forces since 1967. Those defense relationships have expanded rather than constrained the company’s commercial business. 

What J&J discovered decades ago is now becoming a global phenomenon. World military spending reached $2.7 trillion in 2024, the highest level ever recorded. This isn’t just an American trend—European defense budgets jumped by 17% to $693 billion, Japan approved a record $55.1 billion defense budget for 2025, and India’s defense spending reached nearly $58 billion in 2024. 

As governments increase defense spending and focus on resilience, healthcare companies have new avenues to expand into different markets, secure long-term partnerships, and develop technologies that serve both civilian and defense applications. 

1. The Government Can Become Your Most Reliable Customer

The reliability advantage starts with understanding how government procurement works. During the 1950s Cold War expansion, U.S. National Institutes of Health funding rose to nearly $100 million by 1956, spurring pharmaceutical innovation that benefited both military and civilian populations. 

Today’s version appears on multiple continents, but with far larger budgets. The U.S. Biomedical Advanced Research and Development Authority (BARDA) has an annual budget of approximately $1.7 billion that flows to pharmaceutical and biotech companies for medical countermeasures development. Meanwhile, Europe’s healthcare sector stands to benefit from the continent’s historic defense spending increases, with EU nations targeting substantial investment levels through the coming decade. 

Even before this latest surge, the trend was already paying off for healthcare companies. Companies like BioFactura received $67 million for smallpox biodefense therapeutics in 2019, Emergent BioSolutions secured $628 million for vaccine manufacturing capacity in 2020, and Cook Medical was awarded a contract with the U.S. Department of Defense for implantable medical devices to serve military personnel. 

What makes these contracts particularly attractive isn’t just their size—it’s their structure. Defense spending typically involves longer contract terms and more predictable revenue streams than commercial markets. Companies that develop services for both markets can achieve greater stability and growth than those focused on either sector alone. The government pays reliably, on time, and often provides multi-year commitments that help with business planning. 

2. Dual-Use Innovation Gets Premium Funding

Knowing governments pay reliably is one thing—knowing what they’ll pay premium prices for is another. The recent U.S. Commerce Department controls on biotechnology equipment reveal which technologies governments consider strategically valuable—and worth funding heavily. While export restrictions create compliance requirements, they also signal where substantial funding awaits. 

Equipment that can “generate high-quality, high-content biological data” for medical research also interests defense agencies for applications in “human performance enhancement, brain-machine interfaces, and biologically-inspired synthetic materials.” 

This creates clear funding pathways; for example, Europe’s €150 billion Security Action for Europe (SAFE) loan instrument represents a significant funding mechanism for defense-related investments, creating potential openings for companies that can serve both military and civilian markets. 

Companies developing technologies with dual-use potential can access government funding streams unavailable to purely commercial ventures. The trick lies in positioning research and development programs to serve both markets from the outset. A medical device designed for battlefield trauma care can often be adapted for emergency rooms. Diagnostic equipment developed for detecting biological threats can have applications in hospital infection control. 

3. Supply Chain Localization Creates Protected Markets

But even the most innovative technology faces an important question: where will it be manufactured? Governments’ push for domestic manufacturing creates openings for companies willing to invest in local production. BARDA’s $354 million contract with Phlow Corporation to build domestic pharmaceutical manufacturing shows the U.S. policy direction, despite implementation and delivery challenges. 

European governments are making similar commitments under Readiness 2030’s “strategic autonomy” framework. Between February 2022 and mid-2023, 75% of publicly announced new EU defense orders went to suppliers outside Europe, prompting calls for greater domestic sourcing. In response, the European Commission proposes acting as a central purchasing body for member states, with billions in EU-backed loans available for joint procurement from the European defense industry. 

Consider how this plays out practically: A European pharmaceutical company that establishes manufacturing in France or Germany may find itself favored for both government contracts and commercial business as buyers increasingly value supply chain security. 

Building domestic manufacturing, even at higher costs, provides competitive advantages in government markets and protection from supply chain disruptions. Government subsidies and tax incentives often offset initial investment costs. More importantly, companies with local production gain preferential access to government contracts and protected market positions that competitors without domestic facilities cannot match. 

4. Technology Transfer Partnerships Accelerate Development

Manufacturing location matters but so does speed to market. Government partnerships can dramatically shorten development timelines. For example, BARDA’s collaborative development model provides companies with funding, regulatory support, and market access to help advance medical countermeasures for public health emergencies. 

Other international government agencies often provide expertise in regulatory pathways, manufacturing scaling, and quality systems that companies would otherwise need to develop internally.  

The international scope of these partnerships continues expanding too. Canada’s Commercial Corporation facilitated $1.08 billion in defense contracts with the U.S. DoD in fiscal year 2024, a 22.4% increase over the previous year. Companies like AirBoss Defense Group received more than $20 million for nuclear, biological, and chemical equipment, including specialized medical protective equipment and decontamination systems—technologies with clear applications in both military and civilian healthcare settings. 

Companies that build relationships with agencies like BARDA, the EU’s European Defense Agency, or Japan’s defense procurement systems gain access to funding and expertise that benefit their commercial prospects as well as their government work. 

5. Cybersecurity Investments Become Competitive Advantages

Life sciences and healthcare companies pursuing defense contracts soon learn that cybersecurity requirements are non-negotiable. This has pushed major investment across the healthcare and life sciences sector, contributing to global cybersecurity spending across all industries reaching $377 billion in 2024. The healthcare sector’s focus is particularly intense—seventy-eight percent of healthcare executives now prioritize cybersecurity, but meeting government standards creates benefits for commercial operations as well. 

Beyond compliance, government cybersecurity requirements spur innovation in areas like secure data sharing, remote monitoring, and resilient communications systems— all valuable in commercial healthcare markets. The urgency became clear when the Change Healthcare cyberattack in 2024 showed the vulnerability of healthcare systems 

Investing in cybersecurity that exceeds commercial requirements can differentiate companies in both government and commercial markets. Better security becomes a selling point for commercial customers increasingly concerned about data protection. More importantly, these investments position companies for the dual-use innovation landscape that defines modern defense-healthcare intersections. 

Building on Historical Precedents in Life Sciences and Healthcare

If this all sounds too good to be true, history suggests otherwise. Medical breakthroughs have long emerged from defense research. Trauma care advances developed for battlefield medicine now save lives in civilian emergency departments. Portable diagnostic devices designed for military field hospitals serve rural healthcare. Telemedicine systems developed for remote military operations benefit underserved patients worldwide. 

Johnson & Johnson’s decades-long success in defense markets proves the model works. Rather than constraining commercial growth, their government contracts have strengthened their overall business. The same pattern now appears globally as life sciences and healthcare companies discover that serving both markets creates stability and opens new revenue streams. 

In response to current security challenges, governments are making historic investments in defense. With NATO expected to approve a new 5% of GDP defense spending target by 2035 and Asian powers like Japan planning to reach 2% of GDP by 2027, life sciences and healthcare executives who recognize these trends can position their companies to serve both national security needs and commercial markets. Companies that view government partnerships as business development rather than compliance burdens will be best positioned to contribute to both defense readiness and civilian healthcare advancement. 

About the Author

Dietrich Hauffe, Ph.D. is a Partner at Stanton Chase Düsseldorf and Global Sector Leader for Life Sciences and Healthcare. With a doctorate in biochemistry and years of experience in biotech leadership, Dietrich specializes in executive searches for the analytical industry, biotechnology, biopharmaceuticals, diagnostics, and medical devices. His expertise extends to functional areas including marketing and sales, R&D, operations, and medical affairs. Having spent over a decade in the U.S.A. and Canada, Dietrich brings a truly international perspective to his work in the biotech industry.