Navigating Pharma ETFs: A 2025 Guide to Top Sector Funds

The pharmaceutical industry continues its expansion trajectory, with projections indicating the sector will reach approximately US$1.75 trillion in valuation before 2030. For investors seeking diversified exposure to this booming sector without picking individual stocks, pharmaceutical ETFs offer a compelling solution. These funds deliver concentrated access to leading healthcare companies while maintaining the flexibility and lower costs characteristic of exchange-traded products.

Why Pharma ETFs Make Sense for Your Portfolio

Pharmaceutical ETFs combine several investor-friendly advantages. Rather than analyzing dozens of individual pharma stocks, these funds bundle market-leading companies into single tradeable instruments. The result? Lower volatility compared to holding individual equities, reduced expense ratios, and instant sector diversification spanning oncology, vaccines, pain management, and biotechnology innovations.

The strategy appeals equally to beginners building their first healthcare allocation and seasoned traders executing sector rotations. By November 2025, five ETF pharma products stood out for their substantial asset bases and strategic positioning.

Five Leading Pharma ETF Options

VanEck Pharmaceutical ETF (NASDAQ:PPH) leads the pack with US$1.15 billion in assets under management. Launched in late 2011 and tracking the MVIS US Listed Pharmaceutical 25 Index, this fund maintains 26 positions concentrated in industry heavyweights. Eli Lilly, Novartis, Merck & Company, Novo Nordisk, and McKesson form the portfolio’s core. Investors pursuing tactical pharma exposure frequently gravitate toward PPH for its focused approach and proven track record.

The iShares US Pharmaceuticals ETF (ARCA:IHE) attracts a different investor profile. With US$669.2 million under management since its May 2006 launch, IHE casts a wider net across 45 US-listed pharmaceutical giants, predominantly large-cap names. Johnson & Johnson and Eli Lilly dominate holdings, representing nearly half the fund’s value. Secondary positions in Merck, Royalty Pharma, and Viatris round out the predominantly large-cap exposure.

Invesco Pharmaceuticals ETF (ARCA:PJP) takes a more selective stance, holding 31 carefully vetted companies based on valuation metrics and risk assessment criteria. Managing US$299.48 million since June 2005, this fund emphasizes disciplined security selection. Top holdings include Eli Lilly, Amgen, Johnson & Johnson, Merck, and AbbVie—names chosen through systematic evaluation rather than pure index weighting.

State Street SPDR S&P Pharmaceuticals ETF (ARCA:XPH) distinguishes itself through balanced position-weighting across 52 holdings, deviating from the concentrated approaches of competitors. Launched in June 2006 with US$189.93 million in assets, XPH tracks the pharmaceutical sub-sector of the S&P Total Market Index. Jazz Pharmaceuticals, Tarsus Pharmaceuticals, Eli Lilly, Ligand Pharmaceuticals, and Crinetics Pharmaceuticals represent top positions.

For investors targeting emerging markets, KraneShares MSCI All China Health Care Index ETF (ARCA:KURE) provides alternative exposure. Established in February 2018 with US$95.29 million in management, KURE holds 50 Chinese healthcare companies weighted by market capitalization. BeOne Medicines, Jiangsu Hengrui Medicine, Innovent Biologics, WuXi Biologics, and Sino Biopharmaceutical anchor the portfolio, offering a window into Asia’s pharmaceutical evolution.

Choosing Your Pharma ETF Strategy

Selection depends on your investment objectives. Concentration-seekers prefer PPH’s focused 26-stock approach, while diversification hunters may favor IHE’s broader 45-company exposure or XPH’s balanced 52-holding structure. International allocators can supplement domestic pharma holdings with KURE’s Chinese healthcare focus. Each ETF pharma vehicle serves distinct portfolio purposes within the rapidly expanding pharmaceutical sector.