In a significant development for Alzheimer's diagnostics, the U.S. Food and Drug Administration (FDA) has recently granted clearance to the Elecsys pTau217 blood test, developed jointly by healthcare giants Eli Lilly LLY and Roche RHHBY. The test is designed to identify amyloid-beta pathology in individuals aged 55 and older exhibiting signs of cognitive decline, supporting both rule-in and rule-out assessments in primary and specialty care settings.
Notably, it is the first and only FDA-cleared single-biomarker blood test to offer this dual capability using one validated clinical cutoff.
This regulatory milestone comes against a backdrop of a mounting health crisis, with an estimated 7.4 million Americans aged 65 and older currently living with clinical Alzheimer's dementia, a figure projected to nearly double to 13.8 million by 2060 (as per NIH data).
With the long-term national care costs for people living with dementia projected to reach $409 billion by the end of this year, the FDA's green light for a more accessible, blood-based diagnostic tool thrusts both Eli Lilly and Roche, and by extension the healthcare exchange-traded funds (ETFs) that hold significant positions in these pharmaceutical giants, into the global investment spotlight.
But before identifying those particular ETFs, it is important to understand the commercial value of Alzheimer’s diagnostics and therapies and, ultimately, why sector-focused ETFs offer compelling portfolio exposure to this expanding market.
Booming Market for Alzheimer's Treatments
The economic landscape surrounding early detection and treatment of Alzheimer's represents one of the largest growth opportunities in modern biopharmaceuticals. To this end, it is imperative to mention that health and long-term care costs for American people living with dementia are projected to reach nearly $1 trillion in 2050.
With Alzheimer's disease being the leading cause of dementia, diagnostic tools like the Elecsys pTau217 getting regulatory approval should exponentially expand the eligible pool of patients for disease-modifying therapies (DMTs). Consequently, this should boost LLY and RHHBY’s revenue growth opportunities, with the global Alzheimer's DMT market projected to surge to $13.1 billion by the end of 2030 (as per BCC Research data).
Recognizing the growth potential of the Alzheimer’s DMT market, Eli Lilly and Roche, along with other pharmaceutical giants, are also funneling significant capital into this space. For instance, AbbVie ABBV completed its acquisition of Aliada Therapeutics in late 2024 for $1.4 billion, gaining access to ALIA-1758, an investigational anti-pyroglutamate amyloid beta antibody currently in Phase 1 trials.
Biogen BIIB is conducting advanced research to support earlier diagnosis through blood-based biomarkers and investigating therapies directed at key drivers of Alzheimer’s disease biology, including amyloid and tau. Its Lecanemab anti-amyloid antibody, co-developed with Eisai, has recently expanded to include at-home administration options via subcutaneous autoinjector formulations for early-stage Alzheimer's patients.
Pharma giant Novartis NVS is evaluating VHB937, a TREM2-targeting candidate currently in Phase 2 clinical trials for early Alzheimer's disease. The company has also entered into a massive licensing and collaboration agreement worth up to $1.7 billion with SciNeuro Pharmaceuticals to develop a next-generation, amyloid-beta-targeting antibody program.
Eli Lilly is independently conducting Phase 3 clinical trials for the efficacy of its donanemab in participants with preclinical Alzheimer's Disease. Notably, donanemab is an FDA-approved monoclonal antibody, designed to clear brain amyloid plaques in early symptomatic Alzheimer's patients.
Why Healthcare ETFs Offer a Strategic Investment Approach
For investors looking to gain exposure to the potential upside from the Alzheimer’s treatment market, healthcare ETFs present a compelling option.
Investing directly in individual biotech or pharmaceutical equities carries inherent concentration risk, as clinical trials can produce mixed efficacy results, regulatory delays, or patent disputes.
Instead, by investing in a healthcare ETF that counts the aforementioned stocks among its top holdings, investors can position themselves to benefit from the collective progress these companies are making in Alzheimer's diagnostics and therapeutics.
Healthcare ETFs to Track
Considering the aforementioned discussion, investors interested in capitalizing on the growth potential of Alzheimer’s treatment can add the following ETFs to their watchlist and invest once they seem fit:
State Street Health Care Select Sector SPDR ETF XLV
This fund, with assets under management (AUM) worth $44.57 billion, offers exposure to 60 companies in the pharmaceuticals; health care equipment and supplies; health care providers and services; biotechnology; life sciences tools and services; and health care technology industries. Of these, LLY holds the first spot with 15.43% weightage, while ABBV holds the third spot with 7.42% weightage.
XLV has rallied 26.7% over the past year and charges 8 basis points (bps) in fees.
iShares Global Healthcare ETF IXJ
This fund, with net assets worth $4.38 billion, offers exposure to 110 pharmaceutical, biotech, and medical device companies worldwide. Of these, LLY holds the first spot with 10.33% weightage, while ABBV holds the third spot with 4.97% weightage. RHHBY holds the fifth position in this fund with 3.90% weightage, while NVS holds the seventh spot with 3.49% weightage. BIIB holds 0.39% of this fund’s assets.
IXJ has gained 21.4% over the past year and charges 38 bps in fees.
VanEck Pharmaceutical ETF PPH
This fund, with net assets worth $1.06 billion, offers exposure to 26 companies involved in pharmaceuticals, including research and development, as well as the production, marketing and sale of pharmaceuticals. Of these, LLY holds the first spot with 19.32% weightage, while NVS holds the third spot with 10.07% weightage. ABBV holds the eighth position in this fund with 4.49% weightage.
PPH has soared 30.4% over the past year and charges 36 bps in fees.
iShares Neuroscience and Healthcare ETF IBRN
This fund, with net assets worth $8 million, offers exposure to 68 global companies advancing research and treatment of neurological disorders. Of these, Praxis Precision Medicines holds the first spot with 5.31% weightage, while BIIB holds the ninth position with 4.14% weightage.
IBRN has surged 60.6% over the past year and charges 47 bps in fees.
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Novartis AG (NVS): Free Stock Analysis Report
Biogen Inc. (BIIB): Free Stock Analysis Report
Roche Holding AG (RHHBY): Free Stock Analysis Report
Eli Lilly and Company (LLY): Free Stock Analysis Report
AbbVie Inc. (ABBV): Free Stock Analysis Report
State Street Health Care Select Sector SPDR ETF ETF (XLV): ETF Research Reports
VanEck Pharmaceutical ETF (PPH): ETF Research Reports
iShares Global Healthcare ETF (IXJ): ETF Research Reports
iShares Neuroscience and Healthcare ETF (IBRN): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).