Biotech ETFs soar as AI drug discovery and M&A boost sector growth in 2026

Biotechnology ETFs have surged in 2026, driven by advances in AI drug discovery and a wave of mergers and acquisitions. AI models are accelerating early-stage research, reducing costs, while large pharma companies are acquiring smaller firms to offset a looming $280 billion patent cliff by 2028. Leading biotech ETFs like XBI and SBIO have posted strong returns, reflecting growing investor interest amid a stabilizing regulatory environment and expected interest rate cuts. This trend highlights a structural shift in biotech investing, with AI innovation and corporate consolidation reshaping the sector's outlook.