Biotech ETF XBI soars 25% this year as Big Pharma races to buy pipelines before patent cliffs hit

What happened

The SPDR S&P Biotech ETF (XBI) has gained 25% this year and nearly 80% over the past 12 months, hitting its highest level since February 2021. Big Pharma companies have acquired 37 biotech businesses valued at $1 billion（約1600億円） or more this year—exceeding the previous annual record of 35—with total deal value reaching $216 billion（約35兆円）, nearly doubling from $118 billion（約19兆円） last year. Recent blockbuster deals include Vertex's $10 billion（約1.6兆円） acquisition of Crinetics Pharmaceuticals, AbbVie's $10.9 billion（約1.7兆円） deal for Apogee Therapeutics, and GSK's $10.6 billion（約1.7兆円） purchase of Nuvalent.

Why it matters

Patent expirations are forcing large drugmakers to act: Morningstar estimates that patent expirations could create a $139 billion（約22兆円） revenue headwind for the largest biopharma companies through 2030, with major products like Merck's Keytruda and Bristol Myers Squibb's Opdivo facing patent pressure around 2028–2029. Rather than accept years of clinical risk developing replacements internally, cash-rich pharma giants are buying companies with drugs already nearing approval or on the market. This creates a window for biotech assets that might otherwise have remained independent or struggled to fund development.

What to watch

Investors are hunting for the next wave of biotech deals; candidates include Viking Therapeutics (with obesity drug VK2735), Structure Therapeutics, Revolution Medicines, Legend Biotech, Incyte, BioMarin, Ionis Pharmaceuticals, and Moderna. Notably, retail sentiment toward XBI has reached a record-low score of 21 out of 100 on Stocktwits, marking an 'extremely bearish' shift, despite the ETF's strong outperformance—suggesting a potential mismatch between technical momentum and market sentiment heading into the July 31 options expiration.