VanEck Pharmaceutical ETF vs VanEck Biotech ETF: Which Fund Is Better for Drug Innovation Profits?

The primary distinction between VanEck Pharmaceutical ETF (NASDAQ:PPH) and VanEck Biotech ETF (NASDAQ:BBH) lies in their industry concentration and risk profiles, as one targets stable pharmaceutical leaders while the other focuses on biotechnology firms.

Both funds provide targeted exposure to the healthcare sector using specialized indexes. While they are issued by the same provider and share nearly identical costs, they offer distinct risk-reward trade-offs. One may appeal to conservative investors seeking income and lower volatility, while the other targets growth-oriented portfolios that can withstand sharper price swings.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield as of the end of the trading day on Sept. 10, 2026.

With expense ratios of 0.35% and 0.36%, these funds are nearly identical in cost. However, the pharmaceutical-focused fund offers a much more robust payout, providing a significant yield advantage over its biotech-oriented sibling.

Performance & risk comparison

What's inside

VanEck Pharmaceutical ETF tracks 25 holdings in the healthcare sector, which accounts for 100% of its portfolio. Its largest positions include Eli Lilly & Co (NYSE:LLY) at 19.1%, Merck & Co (NYSE:MRK) at 11%, and Novartis (NYSE:NVS) at 10.1%. It was launched in 2011. The fund has paid $2.17 per share over the trailing 12 months, which on its recent ~$109.60 share price works out to a 2% yield.

VanEck Biotech ETF holds 25 stocks entirely within the healthcare sector. Top holdings include Amgen Inc (NASDAQ:AMGN) at 15.7%, Gilead Sciences Inc (NASDAQ:GILD) at 12.7%, and Vertex Pharmaceuticals Inc (NASDAQ:VRTX) at 8.5%. It was launched in 2011. The fund has paid $0.96 per share over the trailing 12 months, which on its recent ~$228.64 share price works out to a 0.4% yield.

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Which looks like the better buy?

These are two similar funds from the same fund company, VanEck. They have nearly identical expense ratios, both are laser-focused on healthcare and typically carry around two dozen stocks in their portfolios.

Yet there are crucial differences to take into account when deciding which fund to put into your portfolio.

Even though both BBH and PPH have about 72% of their assets in their top 10 holdings, they are quite different portfolios.

PPH, the pharma fund, is about two thirds in U.S. stocks and one third in non-U.S. developed markets, which means it has sizable positions in European stalwarts like Novartis and Novo Nordisk (NYSE:NVO).

The geographic diversification comes with a lack of diversification in stock size: 90% of the portfolio is in large cap stocks, meaning it is owning the biggest stocks in the regions it invests in. About 8% of the portfolio is in mid caps and just 1% in small caps (numbers don't add to 100% because of rounding).

BBH, the VanEck biotech fund, is all in U.S. stocks, by contrast. Yet the style of stocks provides better variety than its sibling, with 38% of holdings in large caps, 56% in mid caps, and 8% in small caps (numbers exceed 100% due to rounding).

Performance should be the differentiator for two funds that share so many similarities. In 2026, BBH shines, returning 25.8% year to date compared to 8.5% for its brethren PPH. In addition to its superior 1-year return, noted above, it edges out PPH with the 3-year return, giving investors and annualized 13.7% compared to 13.6% for its sister, BBH.

Longer term, PPH bests its kinsman. The pharma fund returned an annualized 10.4% over the past five years compared to BBH's 2.3%. Over the past 10 years, PPH returned 8.8% compared to 8.1%. Clearly those numbers shows BBH can be more volatile, as witnessed by its deeper drawdown, also noted above.

Given the biotech fund is showing more volatility without having a dramatically different structure than its cousin, we give the nod here to PPH, with its superior 10-year returns and its history of lower volatility.

Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amgen, Eli Lilly, Gilead Sciences, Merck, Novo Nordisk, and Vertex Pharmaceuticals. The Motley Fool has a disclosure policy.