By Catherine Dunn
One of the largest healthcare ETFs in the U.S. is down 7% this year. Competition in the GLP-1 market for weight loss drugs could help explain why.
While the State Street Health Care Select Sector SPDR ETF does have some winners, Eli Lilly is a drag. The stock makes up 14% of the fund's holdings, and it's down more than 10% year to date as the company tries to catch up with Novo Nordisk in the weight management space.
Novo was first to win FDA approval for the injectable Wegovy in June 2021, 17 months ahead of Lilly's injectable, Zepbound, in November 2023. This year, Novo again had a timing edge when it began selling Wegovy in oral pill form in January, months before Lilly gained FDA approval in April for its pill Foundayo.
"Feedback on the oral GLP-1 market remains frequent with still many more LLY enthusiasts despite NVO eating its proverbial lunch," Mizuho healthcare sector specialist Jared Holz said in a Monday morning note.
More broadly, Holz said, it's tough going for healthcare as a sector. "While every 401k/IRA makes new all-time highs by the day, Healthcare failing to keep pace or even stay in the same game -- almost -16% vs. the SPX," Holz wrote. "This follows three consecutive years of notable underperformance."
In addition to Lilly, AbbVie shares -- another top-five holding for the State Street healthcare ETF -- are also down this year, about 12%. Guggenheim analysts recently said strong results across AbbVie's portfolio, reported during earnings in late April, "should ease recent investor concerns."
AbbVie's "quarter was highlighted by robust performance from Skyrizi and Rinvoq as well as most of the company's key drivers, including Botox Cosmetic, Botox Therapeutic, Ubrelvy, Vraylar, and Venclexta," Guggenheim wrote.
Other top holdings in the healthcare ETF are up this year, though slightly lagging behind the S&P 500's 8% gain. Those include pharmaceutical companies Johnson & Johnson, which has increased over 6%, and Merck, up more than 4%.
UnitedHealth Group, the only insurer in the fund's top five, is outperforming the S&P 500 so far, with shares up 13% year to date. After a disappointing 2025 and a fall in January, the stock has rebounded on an announced payment increase to Medicare Advantage insurers next year, as well as first quarter results that beat Wall Street expectations.
Not all of healthcare is struggling. For instance, the biotechnology-focused fund Direxion Daily S&P Biotech Bull 3X ETF has gained 19% year to date, and the AdvisorShares Psychedelics ETF is up more than 17%.
Write to Catherine Dunn at catherine.dunn@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 11, 2026 15:33 ET (19:33 GMT)
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