The Billion-Dollar Ripple Effect

James M. Dewar is worried about his frog guy.

Dewar, an assistant professor of biochemistry at Vanderbilt University, researches the genetic causes of cancer and aging with the goal of developing better cancer treatments. And that requires frog eggs. Lots of them.

Frogs, it turns out, have a lot in common genetically with humans, which allows Dewar and his team to use cell extracts from frog eggs to study DNA replication and repair. There’s just one supplier that can provide him with the volume of eggs he needs: a Michigan frog farm called Xenopus 1.

Dewar is concerned that deep cuts to federal support for research could be a blow not just to university scientists, but to Xenopus 1 and other companies that work with colleges.

The Trump administration’s assault on research — grants terminated on ideological grounds, support for overhead costs slashed, funding frozen across big-name universities to try to bring them in line with the president’s priorities — has disrupted research agendas and hurt Ph.D. enrollments.

But less attention has been paid to another potential casualty: the web of businesses that undergird academic science. Dewar estimates that he spends between one-third and one-half of each grant he’s awarded by the National Institutes of Health and other federal agencies on materials and services from outside vendors.

Xenopus 1, which is named for the genus of frogs typically used in labs, is one tiny but critical piece in the broader research ecosystem. In and around Ann Arbor, where the company is based, dozens of other businesses support work at the nearby University of Michigan and colleges across the country. They provide proteins and antibodies, sell and repair sensitive lab equipment, and stock hazardous gases for chemical synthesis, dry ice for preserving specimens, and many, many pipettes.

Rather than isolated, white-coated places, academic labs are hubs with spokes fanning outward, said Jason Owen-Smith, a professor at Michigan and founding executive director of the Institute for Research on Innovation & Science, a consortium of universities working to study the public value of research. That long reach is “a meaningful impact that we don’t often talk about,” he said.

A 15-percent cap on indirect costs by the NIH alone could be a $29-million hit to Ann Arbor’s research-and-development supply chain — in addition to lost jobs and reduced household spending — according to an estimate produced for The Chronicle by IMPLAN, a company that provides economic-impact data and analysis. Nationally, the impact could be in the billions of dollars.

“If that valve gets shut off,” said Bill Mayer, senior vice president for entrepreneurial services at Ann Arbor SPARK, a regional economic-development organization, “it’s massively disruptive.”

Already, research-related businesses are bracing for the blow: revising revenue estimates downward, limiting expenditures, and seeking new markets for their products outside academe and outside the United States. Some have laid off workers. As the effect of shrinking federal support ripples out into the American economy, a wave of business closures could very well follow.

Damage to that infrastructure could boomerang back on higher education. Dewar’s own projects have, so far, been untouched by the government, but he needs companies like Xenopus 1. “Without those frogs,” he said, “my research doesn’t exist.”

Xenopus 1 is located down a dirt road off a side road in Dexter, Mich., a 20-minute drive from the University of Michigan’s Ann Arbor campus. “Are you sure you want me to leave you here?” my Lyft driver asked when he dropped me off in front of an aging red-sided barn.

Inside, instead of hay bales and horse stalls, were rows and rows of deep industrial tanks. Walking the aisles I could see the life cycle of a frog — starting with a petri dish of bicolored, marble-like eggs. They become minute tadpoles barely visible to the eye, and then morph into froglets with hind legs and a swishy tail. A full-grown frog, research-grade, is about the size of a man’s palm, said Robert Weymouth, Xenopus 1’s owner.

Weymouth’s father was a zoologist who ran an education-supply company and started the colony 45 years ago as a retirement project. Weymouth was an English major who, before he took over the family business, ran an art gallery in Mexico City. Nonetheless, he has thrown himself into amphibian husbandry, helping draft standards for frog welfare and tinkering to create a low-fat, high-protein, vitamin-supplemented, sustainable food. “It’s like what you get in Whole Foods,” Weymouth said. “But for frogs.”

Frogs have a long history in research. Xenopus laevis, or African clawed frogs, were used in the development of early pregnancy tests because hormones in a pregnant woman’s urine would stimulate them to lay eggs. Scientists rely on frogs to explore genetic mutations, cloning, and the impact of climate change. They produce a lot of eggs, which are easy to collect and study and take up limited space. Doing similar research on human cells would require bowling lane after bowling lane of petri dishes, Dewar said.

Frogs, which Weymouth sells for $53 apiece, are also comparatively inexpensive — a fraction of the cost of mice.

In fact, those relatively low returns led the only other major xenopus vendor to get out of the frog-supply game a few years ago. Weymouth bought out the company’s colony, making six 14-hour trips to Wisconsin in a rental truck to cart home 22,000 frogs.

Even though he has cornered the bulk market for frogs — other producers sell smaller numbers for high-school biology classes and as pets — Weymouth’s margins are tight. He recently spent months working to land a new client, a researcher at the University of Kansas. While her initial order was small, he told me the effort was worthwhile because she might become a regular.

But if the vise on federal funding tightens, Weymouth will feel the pain. His customers are highly concentrated in academe. Likewise, Danish Myo Technology, or DMT, which manufacturers cardiovascular equipment, does between 80 and 90 percent of its business with universities. William Wisniewski, who leads American sales for the Denmark-based company, said that suppliers hope academic researchers could diversify their funding by turning to alternative sources, like the private sector and philanthropies, to offset the losses and sustain their work.

But DMT is also counting on demand from researchers in other countries to help make up for an American slowdown, Wisniewski said.

In Xenopus 1’s office, a dry-erase board tracks October orders from universities in Canada, China, Cyprus, Germany, and South Korea, in addition to an assortment of American colleges. Expanding its client base overseas comes with additional boxes to check, such as complying with rules for transporting wildlife across borders and other countries’ regulations.

Many of the 8,500 frogs Weymouth ships in an average year go to major American research universities. So far, he hasn’t lost customers, but his wife, Lissett L. Martinez, who handles company finances, said the number of frogs per order has been shrinking as researchers, worried about future grants, conserve their current funds.

Raising frogs requires investment — in food, water that must be changed twice a week, and regular testing for disease. It requires moss and insulated boxes to ship the amphibians without harm. And because they need a constant 68-degree environment to thrive, space heaters run between tanks even in October, with fans whirring to keep the warm air from escaping.

Weymouth is trying to look on the bright side. If researchers have less grant money to spend, he muses, maybe some will switch from mice to the economical frogs.

But funding disruptions could be ruinous for Xenopus 1. Frog husbandry isn’t the sort of business that can wait out a bad market. It takes two years to rear frogs to full size, and then only about half meet research specifications, Weymouth said. Producing fewer embryos today means he won’t have the frogs to sell later on.

If the cuts to research dollars are going to be significant and longlasting, he said, “then I should just sell the business tomorrow.”

When Arbor Assays had to revise its revenue forecasts, Braden Robison, the chief executive, sat all 25 employees down in a conference room. He wasn’t just a boss breaking difficult news to his staff — the Ann Arbor biosciences company is employee-owned.

As owners, they deserve a high level of transparency, Robison told me. What are the potential financial scenarios? In a leaner environment, what kind of trade-offs might they need to make between investment and profit, stability and speculation?

“You’re looking at it as an owner, and you’re understanding more intrinsically how those decisions get made,” Robinson said. Positions aren’t at risk, he added, although new hiring is on hold.

Just a year ago, the outlook was brighter. The company — which produces testing kits used to detect proteins, hormones, antibodies, and antigens — moved to accommodate its expansion. The new building has walls of industrial refrigerators for stable storage and a sterile room for quality checks. With two and a half times the floor space of its old home, there’s room for Arbor Assays’ entire operation, from research to manufacturing to shipping.

The expectation was growth. “The question was, How good is good?” Robison said.

Arbor Assays got its start in wildlife endocrinology, with kits that can test blood, feces, feathers, and even the sloughed skin of snakes and the blow holes of whales. The results can, for instance, help researchers determine how changes in reproductive hormones have affected breeding or whether pollutants have caused animals’ stress levels to spike.

Over time, Arbor Assay has refined its tests to work across different species. In humans, they can measure viruses in the blood stream and the efficacy of certain drugs. While the technology is no longer cutting-edge, the company has honed its product for more specialized uses and to improve quality.

That means listening to researchers. Staff members pitch in to ensure that every call is answered within three rings. Scientists in the middle of an experiment can’t wait for an answer, Robison said.

Though Arbor Assays sells to researchers around the country, it has a special connection to its hometown institution. Professors at the University of Michigan stop by to pick up orders. And as a college town, Ann Arbor is its own feedback loop — Robison began hearing about the impact of cuts to medical research from fellow parents at his daughters’ volleyball games.

Research universities like Michigan generate both supply and demand. Their work creates a need for state-of the-art goods and services. The students they train go on to work on college campuses and in the private sector: Many of Arbor Assays’ employees have University of Michigan connections. Some of their discoveries are spun out into companies, creating both new markets and more consumers. For the past 75 years, federal funding has fueled it all.

The University of Michigan attracted $1.9 billion in federal research and development in 2023, more than all but three other institutions nationwide.

Communities like Ann Arbor have a lot to lose if the federal-funding pipeline dries up. Average salaries in biosciences in Michigan are about $110,000, nearly double that of any other industry in the state. Said Jenny Apriesnig, an associate professor at Michigan Technological University, who has studied the role of colleges as economic drivers across the state: “Those local economies have skin in the game.”

Arbor Assays is also committed to being a good corporate citizen, contributing a portion of its sales to charity — this year, STEM education in local schools. Although philanthropy is “core” to the company, that’s one part of the business that might need to be reconsidered, Robison said.

The CEO is unflappable and understated. He allows that he has been “surprised” that the federal cuts are so far-reaching. Still, he said he is focused on planning for “realistic outcomes,” not doomsday scenarios. “We haven’t wasted a lot of emotional energy or cultural energy on disaster fantasies.”

Some research-based companies are already feeling the fallout.

Cayman Chemical’s offices are a short drive from the Arbor Assays building, in the same research park. Like its neighbor, Cayman also manufactures research assay kits as well as biochemicals, pharmaceutical drugs, and tests to identify fetanyl and other opioids. (The company got its name, and its start, from early research using Caribbean coral.)

The company had its best-ever year in 2024, and 2025 started off well enough, said Kirk M. Maxey, Cayman’s chief executive and founder. Projections were for modest growth. Then the Trump administration began its changes and sales “pancaked.”

Suddenly, the company was staring down the first losses in more than four decades.

The sharp decline in revenues frightened Cayman’s bank, which demanded an immediate repayment of a $10-million loan for a mortgage the company had taken out to build a new, state-of-the-art biochemistry wing on its campus. Although the company was current with all of its payments, Maxey said, “a panic in the financial community can lead to real job losses here in the small-business community.”

The reduction in earnings meant Maxey had to trim his work force by 10 percent, or 32 people, through a combination of layoffs and attrition. The company decreased its 401K match for remaining employees by 75 percent. It is now actively working to refinance its loans.

University researchers make up a third of Cayman’s orders and about 10 percent of its revenues. Still, Maxey calls colleges a “core constituency.”

Business from universities hasn’t dried up; the number of orders has stayed about the same. But almost every order has shrunk. Many researchers are purchasing the smallest possible amounts of chemicals and compounds, just enough to keep their work going.

Maxey has considered selling only to scientists who meet order minimums, but hasn’t. He doesn’t want to further harm those struggling in the current research environment.

Instead, Cayman is offering markdowns: “Academic institution discount, 10 percent off,” the company website says. “Keep science moving forward.”

“We’re having a fire sale,” Maxey said.

The cuts to university research aren’t Cayman’s only challenge — the company also works directly with federal agencies, which have been hit with their own spending and work-force reductions. And other actions have intensified pressures on its bottom line, like the steep tariffs imposed by the Trump administration. Cayman manufactures some compounds overseas in its own facilities in the Czech Republic, which means it is essentially stuck paying a tax on its own products.

A medical doctor by training, Maxey has attacked the problem with the logic of a scientist and the pragmatism of a businessman. Cayman is retrofitting a lab in Ann Arbor to move more of its production to the United States, although the renovations take time and money.

The company is leaning more on existing customers outside academe, like pharmaceutical companies. It’s also seeking new lines of business, such as marketing its in-house capabilities to conduct bespoke research projects for startups and universities that can’t afford expensive equipment or lack specific expertise.

When I visited Cayman’s offices, the conference room where Maxey and I met contained remnants of an earlier gathering to mark the signing of a hard-won contract. As we spoke, employees slipped in and out to snag doughnuts from a local bakery. Maxey grabbed one for himself as we set out to tour the company’s modern facilities.

“Finally,” he said, “something to celebrate.”

In the face of a difficult and volatile federal-funding environment, Cayman and the other companies I spoke with all landed on the same conclusion: Their immediate strategy is to continue doing the high-quality work that has supported American scientific success for decades. “You can only deal with what you know,” said Robison’s colleague, Cassie Schumacher, sales and marketing manager at Arbor Assays.

Weymouth is emphasizing the health of his frog stock, which has a spontaneous mortality rate of 0.0003 percent. In fact, when the male frogs in Dewar’s lab stopped producing sperm, he turned to Weymouth to troubleshoot the problem. Together, they were able to identify changes to the frogs’ housing that returned them to reproductive health.

Dewar said his relationship with Weymouth isn’t out of the ordinary. An equipment supplier provided the know-how to help him initially set up his lab. When the seal on one of his refrigerators began to leak during the pandemic, threatening the viability of stored experiments, the manufacturer’s sales rep responded to Dewar’s panicked Sunday-afternoon email, figured out the cause — peroxide from Covid cleaning protocols — and saved his specimens.

Some wholesalers are faceless names on invoices, Dewar concedes. Many, though, aren’t just suppliers but partners. After Weymouth pitched in to help with the health of the researcher’s frog colony, Dewar realized he could outsource some of his lab’s work, dissecting frog testes, to Xenopus 1.

The companies I spoke with see their role in a similar way, as collaborators. Wisniewski fields calls from longtime customers for advice on calibrating DMT’s cardiovascular machines for new uses. Because he’s in frequent contact with multiple researchers, he sometimes serves as an informal link between scientists who’ve embarked on similar lines of research. DMT touts that its machines have been used in more than 20,000 peer-reviewed publications.

At Vanderbilt, Dewar worries about the impact of funding uncertainty on colleagues applying for or renewing awards. Nearly a year ago, before the start of the new administration, he sat on a National Science Foundation panel that recommended grantees; so far, he doesn’t know of any that have received funding.

Yet, in the current climate, Dewar told me he is even more concerned about companies like Cayman, Arbor Assays, and Xenopus 1 — companies that form the architecture that supports American research. Many faculty members, he said, have the cushion of salaried jobs and tenure to help insulate them from immediate effects. Suppliers, who get none of the press or scientific prizes, are far more vulnerable.

“There’s a whole class of people who are not recognized but who are integral to scientific system,” Dewar said. As the impact reverberates outward, “that’s who’s going to get hit harder.”