What are pharmaceutical ETFs?
Pharmaceutical ETFs own companies that develop, make and market prescription drugs. This guide covers six funds, and most of them hold the same group of large drugmakers. Eli Lilly, Johnson & Johnson, Merck, Bristol-Myers Squibb and Pfizer each appear in four of the six funds. So does Liquidia Corp, usually at a much smaller weight. AbbVie appears in three.
The five unleveraged funds all track indexes, and none is actively managed. They differ most in how concentrated they are. iShares' IHE holds 56 stocks, but its top 10 make up 76.11% of the fund, led by Johnson & Johnson (22.44%) and Eli Lilly (22.25%). VanEck's PPH tracks the MVIS US Listed Pharmaceutical 25 Index and has 72.72% in its top 10. It also owns foreign drugmakers such as Novartis through their U.S. listings. Invesco's PJP (30 stocks, tracking an Intellidex index) and First Trust's FTXH (50 stocks, tracking the Nasdaq US Smart Pharmaceuticals Index) sit in the middle, with about half their money in their top 10. State Street's XPH is the most spread out, with 65 stocks and 22.18% in its top 10. Direxion's PILL is leveraged: it seeks three times its index's return for a single day.
Most of the group costs about the same. The median expense ratio, the yearly fee taken from fund assets, is 0.37%. XPH is the cheapest at 0.35%, with PPH at 0.36% and IHE at 0.37%. PJP (0.58%) and FTXH (0.60%) charge more, and PILL is the most expensive at 0.98%.
The money is concentrated too. The six funds hold about $2.98 billion combined, and 99.3% of it sits in the five largest. IHE alone holds about $1.14 billion, while FTXH holds about $36 million and PILL about $21 million.
Pharmaceutical ETF holdings: the stocks most funds own
The stocks that show up most often among the largest positions of the 6 biggest pharmaceutical ETFs with holdings reports, from their latest N-PORT filings.
| Stock | Funds holding it | Typical weight |
|---|---|---|
| Eli Lilly and Company | 4 of 6 | 7.77% |
| Johnson & Johnson | 4 of 6 | 5.18% |
| Merck & Co., Inc. | 4 of 6 | 5.06% |
| Bristol-myers Squibb Company | 4 of 6 | 4.37% |
| Pfizer Inc. | 4 of 6 | 3.96% |
| Liquidia Corp | 4 of 6 | 1.47% |
| AbbVie Inc | 3 of 6 | 5.48% |
| Definium Therapeutics Inc | 3 of 6 | 2.13% |
| Ligand Pharmaceuticals Incorporated | 3 of 6 | 1.94% |
| Corcept Therapeutics Incorporated | 3 of 6 | 1.9% |
| Viatris Inc. | 2 of 6 | 3.62% |
| Amgen Inc. | 2 of 6 | 3.18% |
Typical weight is the median share of each fund’s assets in the stock, among the funds that hold it in their 25 largest positions.
The largest pharmaceutical ETFs, side by side
Swipe the table to see all 5 funds.
| IHE | PPH | PJP | XPH | FTXH | |
|---|---|---|---|---|---|
| Net assets | $1.14B | $879.5M | $472.1M | $428.4M | $36.2M |
| Expense ratio | 0.37% | 0.36% | 0.58% | 0.35% | 0.6% |
| Holdings | 56 | 25 | 30 | 65 | 50 |
| In the 10 largest | 76.11% | 72.72% | 49.47% | 22.18% | 53.06% |
| Biggest holding | Johnson & Johnson (22.44%) | Eli Lilly & Co (20.23%) | Abbott Laboratories (5.67%) | Definium Therapeutics Inc (3.09%) | Eli Lilly & Company (7.77%) |
| Yield | 1.38% | 1.86% | 0.89% | 0.42% | 0.67% |
| 1-year return | +39.8% | +26.4% | +34.0% | +30.8% | +46.9% |
| 3 years, a year | +25.0% | +17.9% | +24.3% | +23.1% | +23.4% |
| 5 years, a year | +12.8% | +11.5% | +11.3% | +7.6% | +12.6% |
| Worst drop, past year | -9.7% | -10.8% | -9.4% | -16.4% | -7.5% |
| Launched | 2006 | 2011 | 2005 | 2006 | 2016 |
The largest ordinary funds by net assets (leveraged and inverse funds are listed further down). Holdings from each fund’s latest N-PORT report; returns include reinvested distributions, as of Oct 27, 2026.
Head to head
IHE vs PPH
The two largest funds are both top-heavy. IHE holds 56 U.S. stocks, with 76.11% in its top 10 and Johnson & Johnson at 22.44%. PPH holds 25 stocks, with 72.72% in its top 10 and Eli Lilly at 20.23%, and adds foreign drugmakers such as Novartis. They share 43.7% of assets, and their fees are nearly identical at 0.37% and 0.36%. In the year to May 16, 2025, IHE returned -0.7% and PPH -2.8%, with largest drops of 15.9% and 18.1%. IHE may suit those wanting U.S.-only exposure; PPH, those open to foreign names.
PPH vs XPH
These two overlap the least of any pair, with just 13.3% of assets in common. PPH focuses on large drugmakers: 25 stocks, 72.72% in its top 10 and Eli Lilly at 20.23%. XPH spreads 65 stocks so widely that its top 10 make up 22.18%, and its biggest holding, Definium Therapeutics, is 3.09%. Fees are 0.36% and 0.35%. In the year to May 16, 2025, XPH returned -0.2% to PPH's -2.8%, but XPH's largest drop was deeper: 23.6% versus 18.1%. PPH may suit those focused on the biggest drugmakers; XPH, those wanting a wider spread.
PJP vs FTXH
These two overlap the most, sharing 49% of assets and 18 stocks. Both are moderately concentrated. PJP holds 30 stocks with 49.47% in its top 10, led by Abbott Laboratories at 5.67%. FTXH holds 50 with 53.06% in its top 10, led by Eli Lilly at 7.77%. They are also the costliest unleveraged funds, at 0.58% and 0.60%. In the year to May 16, 2025, PJP returned -0.2% and FTXH -5.4%, with largest drops of 16.3% and 19.5%. FTXH is far smaller, at about $36 million. Both may suit investors wanting less weight in any single giant.
How much do the largest pharmaceutical ETFs overlap?
Owning two funds that hold the same stocks adds little diversification. Overlap here is the share of assets two funds have in common: for each stock both own, the smaller of its two weights, added up.
| Funds | Assets in common | Shared holdings | |
|---|---|---|---|
| PJP and FTXH | 49% | 18 | |
| IHE and PPH | 43.7% | 13 | |
| IHE and XPH | 38.3% | 56 | |
| IHE and FTXH | 37.6% | 13 | |
| IHE and PJP | 36.3% | 20 | |
| PPH and FTXH | 35.6% | 10 | |
| PJP and XPH | 32.2% | 20 | |
| PPH and PJP | 29.2% | 10 | |
| XPH and FTXH | 15.4% | 13 | |
| PPH and XPH | 13.3% | 13 |
From each fund’s full holdings in its latest N-PORT report.
How have pharmaceutical ETFs performed?
The five largest ordinary funds: growth from the start of the range, distributions reinvested. The dashed gray line is the S&P 500 (SPY).
Best-performing pharmaceutical ETFs over the past year
| # | Fund | Net assets | Cost | 1 mo | YTD | 1 yr | 3 yr |
|---|---|---|---|---|---|---|---|
| 1 | FTXH First Trust Nasdaq Pharmaceuticals ETF | $36.2M | 0.6% | +3.5% | +31.5% | +46.9% | +23.4% |
| 2 | IHE iShares U.S. Pharmaceuticals ETF | $1.14B | 0.37% | +0.8% | +22.9% | +39.8% | +25.0% |
| 3 | PJP Invesco Pharmaceuticals ETF | $472.1M | 0.58% | -0.4% | +21.8% | +34.0% | +24.3% |
| 4 | XPH SPDR S&P Pharmaceuticals ETF | $428.4M | 0.35% | -3.2% | +14.5% | +30.8% | +23.1% |
| 5 | PPH VanEck Pharmaceutical ETF | $879.5M | 0.36% | +3.3% | +13.0% | +26.4% | +17.9% |
Funds with at least $25 million in net assets; leveraged and inverse funds left out. Past returns don’t predict future returns.
How pharmaceutical ETFs did in past market crashes
| Fund | 2008 crash | 2020 crash | 2022 drop |
|---|---|---|---|
| IHE | -34.4% | -26.8% | -13.4% |
| PPH | not yet launched | -28.5% | -10.8% |
| PJP | -33.3% | -26.3% | -10.5% |
| XPH | not yet launched | not yet launched | -12.7% |
| FTXH | not yet launched | -30.2% | -9.2% |
| S&P 500 (SPY) | -55.2% | -33.7% | -24.5% |
Total return from the stock market’s peak to its low in each fall, distributions reinvested.
What drives pharmaceutical ETFs?
Drugmakers earn most of their profits from a handful of patented medicines. When a patent expires, cheaper generic copies can take sales quickly, so the timing of patent expirations matters a great deal. Clinical trial results and regulatory approvals can lift or sink a stock in a day, especially for smaller companies that depend on one or two experimental drugs. Pressure from governments and insurers on drug prices affects the whole industry at once. People need medicine whether the economy is strong or weak, so drug sales tend to hold up better in recessions than sales in many other industries.
That steadier demand has shown up in past downturns. In the 2008 financial crisis, the S&P 500 fell 55.2%, while IHE fell 33.6%, PJP 33.2% and XPH 28.7%. PPH and FTXH did not yet exist. In the 2020 COVID crash, the S&P 500 dropped 33.7%. IHE (26.8%) and PJP (26.3%) held up better, while XPH (31.9%) came close to the market's decline. In the 2022 bear market, the S&P 500 lost 24.5%, and the funds lost between 9.2% (FTXH) and 13.3% (IHE). Smaller losses are still losses.
Pharmaceutical ETFs with the lowest expense ratios
| # | Fund | Expense ratio | On $10,000 | Net assets |
|---|---|---|---|---|
| 1 | XPH SPDR S&P Pharmaceuticals ETF | 0.35% | $35 a year | $428.4M |
| 2 | PPH VanEck Pharmaceutical ETF | 0.36% | $36 a year | $879.5M |
| 3 | IHE iShares U.S. Pharmaceuticals ETF | 0.37% | $37 a year | $1.14B |
| 4 | PJP Invesco Pharmaceuticals ETF | 0.58% | $58 a year | $472.1M |
| 5 | FTXH First Trust Nasdaq Pharmaceuticals ETF | 0.6% | $60 a year | $36.2M |
Ordinary funds with at least $10 million in net assets. The median ordinary pharmaceutical ETF charges 0.37% a year; leveraged and inverse funds usually charge more.
Do pharmaceutical ETFs pay dividends?
5 of the 5 ordinary pharmaceutical ETFs with a page here paid distributions over the last 12 months, with a median yield of 0.89%.
| Highest yields | Yield | Net assets |
|---|---|---|
| PPH VanEck Pharmaceutical ETF | 1.86% | $879.5M |
| IHE iShares U.S. Pharmaceuticals ETF | 1.38% | $1.14B |
| PJP Invesco Pharmaceuticals ETF | 0.89% | $472.1M |
| FTXH First Trust Nasdaq Pharmaceuticals ETF | 0.67% | $36.2M |
| XPH SPDR S&P Pharmaceuticals ETF | 0.42% | $428.4M |
Distributions over the last 12 months divided by the price; funds with at least $25 million in net assets.
How to choose a pharmaceutical ETF
- Fees: three low, two higher. XPH charges 0.35% a year, PPH 0.36% and IHE 0.37%. PJP (0.58%) and FTXH (0.60%) cost noticeably more, and leveraged PILL charges 0.98%. Fee gaps compound over long holding periods.
- How much rides on one stock. IHE puts 22.44% in Johnson & Johnson and 22.25% in Eli Lilly, and PPH puts 20.23% in Eli Lilly. XPH's largest position is Definium Therapeutics at 3.09%, with 22.18% in its top 10.
- Which index sets the rules. PPH tracks the MVIS US Listed Pharmaceutical 25 Index (25 stocks). FTXH follows the Nasdaq US Smart Pharmaceuticals Index (50 stocks), and PJP a 30-stock Intellidex index. XPH draws from a U.S. total market index.
- U.S.-only or some foreign drugmakers. IHE, XPH and FTXH follow U.S. indexes. PPH's index covers U.S.-listed shares, so it also owns companies based abroad, including Novartis (10.63%) and Novo Nordisk (5.37%). That adds some foreign currency and market exposure.
- Fund size and trading costs. IHE holds about $1.14 billion and PPH about $879 million, while FTXH holds about $36 million. Smaller funds can have wider bid-ask spreads, a hidden trading cost, and a greater chance of closing.
- PILL behaves very differently. PILL aims for 300% of its index's daily return and resets each day, so it behaves very differently from the other funds over longer periods. It charges 0.98% and returned -23.5% in the year to May 16, 2025.
What are the risks of pharmaceutical ETFs?
- Heavy reliance on a few giants. Eli Lilly, Johnson & Johnson, Merck, Bristol-Myers Squibb and Pfizer each appear in four of six funds. IHE's top 10 make up 76.11% and PPH's 72.72%, so a setback at one company can move these funds sharply.
- Patent expirations and drug-price pressure. Drugmakers depend on a few patented products. When patents expire, generic copies can take sales fast. Pressure from governments and insurers on prices tends to hit every company in these funds at the same time.
- Double-digit drops within a year. In the year to May 16, 2025, volatility (how widely returns swing) ran from 16.4% for PPH to 21.4% for XPH. Largest declines ranged from 15.9% for IHE to 23.6% for XPH.
- Owning two may not diversify much. Many of these funds hold the same stocks. IHE and PPH share 43.7% of their assets, and PJP and FTXH share 49%. Holding two of them adds less variety than two tickers suggest.
- Leveraged PILL can lose fast. PILL seeks three times its index's daily move, resetting each day, so longer-term results can stray far from three times the index. In the year to May 16, 2025, it lost 23.5%, with 61.4% volatility and a 60.4% drop.
Leveraged and inverse pharmaceutical ETFs (3x)
These funds aim for a multiple, or the opposite, of one day’s return, and reset every day. Held for longer than a day, their results can drift far from that multiple, especially when prices swing. They are trading tools, not long-term holdings. Why leveraged ETFs decay →
| Fund | Daily aim | Net assets | 1-year return |
|---|---|---|---|
| PILL Direxion Daily Pharmaceutical & Medical Bull 3X S… | 3× | $20.7M | +73.8% |
List of all pharmaceutical ETFs, by size
| # | Fund | Net assets | Cost | Yield | YTD | 1 yr | 5 yr |
|---|---|---|---|---|---|---|---|
| 1 | IHE iShares U.S. Pharmaceuticals ETF | $1.14B | 0.37% | 1.38% | +22.9% | +39.8% | +12.8% |
| 2 | PPH VanEck Pharmaceutical ETF | $879.5M | 0.36% | 1.86% | +13.0% | +26.4% | +11.5% |
| 3 | PJP Invesco Pharmaceuticals ETF | $472.1M | 0.58% | 0.89% | +21.8% | +34.0% | +11.3% |
| 4 | XPH SPDR S&P Pharmaceuticals ETF | $428.4M | 0.35% | 0.42% | +14.5% | +30.8% | +7.6% |
| 5 | FTXH First Trust Nasdaq Pharmaceuticals ETF | $36.2M | 0.6% | 0.67% | +31.5% | +46.9% | +12.6% |
| 6 | PILL Direxion Daily Pharmaceutical & Medical Bull 3X S… Leveraged | $20.7M | 0.98% | 0.41% | +20.0% | +73.8% | -2.2% |
Questions investors ask about pharmaceutical ETFs
What is the largest pharmaceutical ETF?
IHE, the iShares U.S. Pharmaceuticals ETF, is the largest of the six funds in this group, with about $1.14 billion in net assets. VanEck's PPH is second at about $879 million. Invesco's PJP follows at about $472 million and State Street's XPH at about $428 million. IHE is also among the most concentrated: Johnson & Johnson (22.44%) and Eli Lilly (22.25%) are its two biggest holdings.
What is the cheapest pharmaceutical ETF?
XPH, the SPDR S&P Pharmaceuticals ETF, has the lowest expense ratio at 0.35% a year. PPH (0.36%) and IHE (0.37%) are close behind, while PJP charges 0.58% and FTXH 0.60%. The cheapest fund is not a stand-in for the others, though. XPH spreads its money across 65 stocks with only 22.18% in its top 10, while IHE (76.11%) and PPH (72.72%) are far more top-heavy.
IHE vs PPH: what's the difference?
Both are concentrated in big drugmakers, but PPH reaches beyond U.S. companies. IHE tracks a U.S. pharmaceuticals index of 56 stocks, led by Johnson & Johnson (22.44%) and Eli Lilly (22.25%). PPH tracks the MVIS US Listed Pharmaceutical 25 Index, led by Eli Lilly (20.23%), and includes Novartis and Novo Nordisk. They share 43.7% of assets, and their fees are 0.37% and 0.36%. In the year to May 16, 2025, IHE returned -0.7% and PPH -2.8%.
Do pharmaceutical ETFs pay dividends?
Yes. All five unleveraged pharmaceutical ETFs pay dividends, with a median yield of 1.78% based on data as of May 16, 2025. PPH had the highest yield at 1.97%, followed by FTXH at 1.9%, IHE at 1.78% and XPH at 1.62%. PJP was lowest at 1.13%. These payouts come from the dividends paid by the drugmakers the funds own, less fund fees.
Which pharmaceutical ETFs hold Eli Lilly?
Four of the six funds in this group hold Eli Lilly, with a median weight of 7.77% in those that do. It is the largest holding in PPH (20.23%) and FTXH (7.77%). In IHE it is second at 22.25%, just behind Johnson & Johnson at 22.44%. Funds that spread money more evenly give any single company far less weight: XPH's largest holding, Definium Therapeutics, is 3.09%.
How many pharmaceutical ETFs are there?
This guide covers six pharmaceutical ETFs with about $2.98 billion in combined assets. Five are unleveraged index funds: IHE, PPH, PJP, XPH and FTXH. The sixth, PILL, is a leveraged fund that seeks three times its index's daily return. The money is concentrated: the five largest funds hold 99.3% of the group's assets, and IHE alone holds about $1.14 billion.
What is PILL, the 3x leveraged pharma ETF?
PILL, the Direxion Daily Pharmaceutical & Medical Bull 3X Shares, is the only leveraged fund in this group. It seeks 300% of its index's return for a single day, before fees. Because it resets daily, results over weeks or months can differ widely from three times the index, especially when prices swing. In the year to May 16, 2025, PILL returned -23.5%, with volatility of 61.4% and a largest drop of 60.4%. It is a short-term trading tool, not a long-term holding.
Do pharmaceutical ETFs hold up in a stock market crash?
In past crashes they fell less than the S&P 500, but they still lost money. In the 2008 financial crisis, IHE fell 33.6%, PJP 33.2% and XPH 28.7%, while the S&P 500 fell 55.2%. In the 2020 COVID crash, the funds fell between 26.3% (PJP) and 31.9% (XPH), versus 33.7% for the S&P 500. In the 2022 bear market, they lost between 9.2% and 13.3%, against 24.5% for the S&P 500. Past declines do not predict future ones.
Is there a Vanguard, Fidelity or Schwab pharmaceutical ETF?
No. None of the three offers a pharmaceutical ETF. The largest pharmaceutical ETFs come from iShares (IHE), VanEck (PPH) and Invesco (PJP), and customers of all three firms can buy other companies’ ETFs in their brokerage accounts. For a broader fund, VHT (Vanguard Health Care ETF) and FHLC (Fidelity MSCI Health Care Index ETF) are covered in our healthcare ETF guide.
