2 Ways to Play the Big Pharma Patent Cliff

Summary

Major pharmaceuticals firms like Pfizer Inc. NYSE: PFE and Novo Nordisk A/S NYSE: NVO have been fighting to spend large sums on smaller companies in the space in recent months (the former of these companies completed an acquisition of weight loss drug maker Metsera in November 2025). But while M&A activity is sometimes a sign of aggressive expansion, in this case, it may signal a response to a threat: a patent cliff that could see the loss of exclusivity of many of the top-selling drugs globally in the years to come. Major drugs with collective annual sales of close to $175 billion will suffer this fate in the coming six years, and the figure gets much higher when considering smaller names too. Though this is a dangerous obstacle for many of the biggest pharma companies, it is also an opportunity for investors. The coming years are likely to bring an increasingly desperate flurry of M&A activity, which could lead to some new winners in the space. While it may be difficult for investors to predict which specific firms may come out on top, a pair of exchange-traded funds (ETFs) can position investors well to capitalize on volatility in the industry.Get SPDR S&P Biotech ETF alerts:Sign Up Broad Access to the U.S. Biotech Space, With a Focus on Smaller FirmsThe SPDR S&P Biotech ETF NYSEARCA: XBI tracks the S&P Biotechnology Select Industry Index, a collection of biotech names from the S&P Total Market Index. The index takes a modified equal weighted approach and provides exposure to biotech names across the market capitalization spectrum. This is key for investors in the space, as smaller names can sometimes have major breakthroughs and stellar performance if a drug candidate receives approval or a blockbuster new medicine emerges. Investors may want to note that mid-cap names make up about half of the portfolio, with small-caps representing another nearly 30%. SPDR S&P Biotech ETF TodayXBISPDR S&P Biotech ETF$134.85 -1.00 (-0.74%) As of 05/14/2026 04:10 PM Eastern52-We...