Biotech ETF IBB outperformed S&P 500 by 22 points in 3 months amid pharma patent cliff deals.

The iShares Biotechnology ETF (IBB) surged 26% over three months ending September 4, 2026, outperforming the S&P 500's 4% gain by 22 points. This rally is driven by big pharmaceutical companies acquiring mid- and small-cap biotech firms to offset revenue losses from expiring drug patents, known as the patent cliff. IBB focuses on established biotech firms, with top holdings like Vertex and Amgen, making it a less volatile option than smaller clinical-stage biotech ETFs. While the sector has rebounded sharply, investors should consider the high entry price and potential risks like clinical trial failures and drug pricing policy changes before adding exposure.