Biotech in Flux: Patent Cliff and IPO Revival Shape the IBB
13.02.2026 - 18:21:02
The iShares Biotechnology ETF is navigating a period of upheaval as looming patent expirations push established drugmakers to adjust, even as the IPO market for younger biotech firms appears to be reviving after a lull. The IBB mirrors this evolving dynamic with roughly $8.2 billion in assets and a broad portfolio. Here are the core details and what may drive the year ahead for investors in this space.
- Assets: Roughly $8.2 billion (as of the day before yesterday)
- Holdings: 257 companies
- Top holdings: Gilead Sciences, Vertex Pharmaceuticals, Amgen, Regeneron
- Expenses: Total Expense Ratio (TER) of 0.44%
The sector stands at a pivotal juncture. From 2024 through 2030, a number of key patents are due to expire, creating potential revenue headwinds for large pharmaceutical players. Market observers expect big pharma to increasingly acquire biotech specialists to shore up their drug pipelines.
Areas drawing particular interest include radiopharmacy, RNA-based therapies, and drugs addressing obesity and cardiovascular diseases. These segments could become notable drivers of M&A activity and, by extension, influence the valuation dynamics of the IBB in the coming months.
IPO Market Shows Signs of Life
Following a cautious stretch, 2026 is seen as a year with rising momentum for biotech initial public offerings. A steady stream of biopharma companies is preparing to list, offering investors fresh opportunities and signaling greater confidence in the sector.
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The focus is especially strong on oncology and treatments for rare diseases (orphan diseases). Because the IBB is market-cap weighted, investors tend to benefit primarily from the resilience of industry leaders, while newer entrants only gain meaningful weight after achieving scale.
What to Watch for the Rest of the Year
Investors should keep an eye on the fund’s scheduled rebalancing dates. The ETF reweights on a quarterly basis, while the underlying index undergoes its annual reshuffling in December.
Beyond the broader trajectory of the portfolio companies, two critical factors stand out for 2026: FDA approval decisions and breakthroughs in AI-assisted drug discovery. The balance of regulatory hurdles and the pressure to innovate driven by patent expirations shape the sector’s current risk–reward profile.
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