Ending government funded research will kill privately funded research as sure as sitting on top an H-bomb when it goes off will be fatal. Drugs work on specific cellular components. Drug companies target specific cellular components to develop drugs. Grant-funded public research teases out what cellular components do what and interact with what, and when they don't do as they should how they might be related to what disease. Biotech/pharma are reluctant enough to spend money on applied research as it is. Strip funding for basic research out of government and add that cost onto the front end of the drug pipeline and the entire biotech and pharmaceuticals industry is completely fucked.
BTW trying to present stem cell research as an example of the wonders of private enterprise over government is laughable. They were discovered at UCSF by researchers funded by an NIH grant--our tax dollars hard at work!