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IBB’s American Depository Receipts Underperformed

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IBB ADRs underperform

The iShares Nasdaq Biotechnology ETF (IBB) has 14 ADRs (American Depository Receipts) in its portfolio with a weight of 9.36%. Although the SPDR S&P Biotechnology ETF (XBI) provides exposure to ADRs, it’s very limited. It only has two ADRs in its portfolio. For the week ending August 7, 2015, the average return from IBB’s ADR portfolio stood at -4.99%. It underperformed the benchmark index—IBB. IBB had a return of -3.62% for the same period. For the previous week ending July 31, 2015, the returns were 3.13% and 2.89%, respectively.

The above graph reflects the performance of IBB and its ADRs. IBB has outperformed the ADRs for two consecutive weeks.

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Why were IBB’s ADRs pulled down?

Horizon Pharma (HZNP) has a weight of 0.69% in IBB. It fell by 10.32% for the week ending August 7, 2015. Its bid to acquire Depomed (DEPO) failed. Depomed rejected the offer because it didn’t think the price was attractive.

Shire (SHPG) fell by 6.36% for the week ending August 7, 2015, According to the company’s press release, Shire’s bid to take over Baxalta (BXLT) failed. Baxalta rejected Shire’s offer. It thought that the offered price wasn’t attractive. Shire has a weight of 1.79% in IBB’s portfolio.

Endo International (ENDP) fell by 4.33%. It announced a net loss of $91 million for 2Q15—compared to $41 million for 2Q14. The revenue for the quarter stood at $734 million—compared to $593 million in 2Q14. Endo International has a weight of 2.11% in IBB.

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