Navigating the Pharma Sector through ETFs in 2025

The pharmaceutical industry continues to attract investor interest, with projections indicating the global market could reach approximately US$1.75 trillion within this decade, as noted by Evaluate Pharma. For those seeking diversified exposure to this expanding sector without picking individual stocks, exchange-traded funds focused on pharmaceuticals offer a compelling approach. These funds combine the liquidity and trading flexibility of stocks with the diversification benefits of mutual funds, typically featuring lower expense ratios and reduced volatility compared to single-stock investments.

Understanding Pharmaceutical ETF Advantages

Pharmaceutical exchange-traded funds have emerged as a practical vehicle for accessing the sector’s growth potential. Rather than analyzing dozens of pharmaceutical companies individually, investors can gain portfolio-level exposure to therapeutic areas including oncology, pain management, vaccines, and biotechnology innovation. The structural benefits—lower costs, intraday liquidity, and built-in diversification—make these funds appealing across different investor experience levels.

Five Leading Pharmaceutical ETFs by Assets Under Management

Based on data through November 20, 2025, here are the dominant players in the pharma ETF landscape:

VanEck Pharmaceutical ETF (NASDAQ:PPH)

Assets Under Management: US$1.15 billion

Launched in late 2011, this fund tracks the MVIS US Listed Pharmaceutical 25 Index and maintains 26 concentrated holdings. The portfolio’s core positions include dominant players such as Eli Lilly, Novartis, Merck & Company, Novo Nordisk, and McKesson. This structure provides focused exposure to large-cap pharmaceutical leaders, though with higher individual stock concentration than broader alternatives.

iShares US Pharmaceuticals ETF (ARCA:IHE)

Assets Under Management: US$669.2 million

Established in May 2006, this fund casts a wider net with 45 holdings primarily drawn from US-listed pharmaceutical companies. Johnson & Johnson and Eli Lilly form the portfolio’s backbone, collectively representing nearly half of all holdings. Merck, Royalty Pharma, and Viatris round out the top five positions, reflecting a large-cap orientation across established manufacturers and specialty pharma players.

Invesco Pharmaceuticals ETF (ARCA:PJP)

Assets Under Management: US$299.48 million

Operating since June 2005, this fund applies quantitative selection criteria focused on valuation metrics and risk assessment to build a 31-company portfolio. Top positions include Eli Lilly, Amgen, Johnson & Johnson, Merck, and AbbVie. The fund’s approach emphasizes fundamental analysis in constructing its US pharmaceutical exposure.

State Street SPDR S&P Pharmaceuticals ETF (ARCA:XPH)

Assets Under Management: US$189.93 million

This fund debuted in June 2006 and tracks the pharmaceutical component of the S&P Total Market Index, holding 52 securities with relatively balanced weighting across positions. Jazz Pharmaceuticals, Tarsus Pharmaceuticals, Eli Lilly, Ligand Pharmaceuticals, and Crinetics Pharmaceuticals represent its largest holdings. The equal-weighting approach distinguishes it from concentration-heavy competitors.

KraneShares MSCI All China Health Care Index ETF (ARCA:KURE)

Assets Under Management: US$95.29 million

Launched in February 2018, this fund provides geographic diversification by tracking large- and mid-cap Chinese healthcare stocks weighted by market capitalization. The 50-holding portfolio includes BeOne Medicines, Jiangsu Hengrui Medicine, Innovent Biologics, WuXi Biologics, and Sino Biopharmaceutical. For investors seeking international pharmaceutical exposure, this vehicle offers access to a distinct emerging market segment.

Selecting the Right Pharmaceutical ETF

The choice between these funds depends on several factors: desired market cap exposure (large-cap versus diversified), geographic focus (US-concentrated versus international), portfolio concentration (concentrated versus distributed holdings), and fee structures. Investors prioritizing stability might gravitate toward the iShares fund’s broad US holdings, while those seeking concentrated bets on established pharmaceutical leaders may prefer VanEck’s focused index approach. China-focused investors have a dedicated option through KURE.

The pharmaceutical sector’s growth trajectory, combined with these funds’ varying structures and holdings, provides multiple entry points for portfolio diversification within healthcare investing.