Underfunding certainly can(has?) interfere with their ability to do their job. But proper funding might not help if regulatory capture is also in play.

I'm of the persuasion that governmental organisations need to be shaken up from time to time to prevent ossification, stagnation, inefficiencies, regulatory capture, ideological capture, etc... but the new agency needs to utilize the pieces from the old agency (not to start from scratch).

An industry that sells drugs would want the regulating authority to be underfunded when it comes to insuring the safety of drugs.

Really? Back when the FDA was underfunded in the 80s, there was a massive backlog in drug approvals that cost drug makers billions. They happily coughed up fees to better find the FDA.