December 24, 2025

What is the NBI? How Important is it to Biotechs? And How Often is it Reconstituted?

What Is the NBI?

The Nasdaq Biotechnology Index (NBI) is the preeminent benchmark for U.S.-listed biotechs. Although its constituent companies have to be listed on Nasdaq to be included, since almost all biotechs exclusively choose to list on Nasdaq versus the NYSE, the NBI is the de facto gauge for public biotechs.

Moreover, it is the most widely followed index for biotech mutual funds, ETFs (Exchange-Traded Funds, including the iShares Nasdaq Biotechnology ETF, NASDAQ: IBB), hedge funds, and institutional asset allocators. Equity analysts will frequently refer to their covered companies outperforming or underperforming the NBI.

The NBI is run by Nasdaq Global Indexes, a division of Nasdaq, Inc. The Index began on November 1, 1993 at a base value of 200.00. At the time of writing, the index stands at about 5,600.00.

NBI Inclusion criteria

A biotech must meet all of the following criteria to be included in the NBI:

• A minimum market capitalization ≥ $200M.
• Minimum average daily trading volume of ≥ 100,000 shares.
• A company must be exclusively listed on either the Nasdaq Global Market or the Nasdaq Global Select Market.
• A company must have been Nasdaq-listed for at least three full calendar months (excluding the month of initial listing).
• A company cannot be in bankruptcy proceedings or have entered into an agreement that would cause it not to meet other requirements.
• A company must be Industry Classification Benchmark- (ICB-) classified as either Biotechnology or Pharmaceuticals.

Once a company is an NBI constituent, the requirements for continued inclusion are as follows:

• Maintaining a market capitalization of ≥ $200M.
• Maintaining an average daily trading volume of ≥ 100,000 shares.

At the time of writing, the NBI includes 247 biotechs. Because the NBI is market-cap weighted – meaning larger biotechs like AMGN, GILD, VRTX and REGN can disproportionately affect index performance – the NBI has a capping rule that each of the top 5 largest companies cannot exceed 8% of the index. The remaining companies are then capped at 4% each.

How Often Is the NBI Reconstituted and Rebalanced?

The NBI has the following corporate action schedule:

Annual Reconstitution:

This is when annual membership of the index is determined. Reconstitution occurs once a year and is determined in early to mid-December, with inclusion effective (or otherwise) after the close of trading on the third Friday in December.

Note that while in previous years Nasdaq issued a press release detailing the changes to the NBI (much like it still does for the Nasdaq-100 Index), these days companies are typically notified by Nasdaq Market Intelligence approximately one week before the annual reconstitution. Most biotechs will then usually issue a press release announcing their inclusion.

For most biotechs, their first inclusion will occur after their IPO – assuming they have been public for the requisite c. 3 months at the time of reconstitution.

Quarterly Rebalancing:

In addition, the NBI is also rebalanced quarterly in March, June, September and December, with changes announced early in each respective month and effective after the close of trading on each month’s respective third Friday.

Since membership is determined annually, rebalancing only affects the weight of a biotech in the index.

Companies can be removed at any time if they become ineligible:

At any time, if Nasdaq determines that a biotech is ineligible for ongoing NBI inclusion, the company can be removed as soon as practicable and is not replaced.

Biotechs can be removed because:

• They switched their listing to an ineligible exchange.
• A constituent was reclassified under ICB guidelines and is no longer classified as being a biotechnology or pharmaceuticals company.
• The biotech was subject to a merger, acquisition, or other major corporate event.

How important for a biotech is inclusion in the NBI?

In simple terms, when a biotech is included in the NBI, ETFs and funds with passive (index-tracking) strategies are forced to buy its stock in the secondary market. Typically, this incremental demand positively affects both a biotech’s valuation and liquidity.

The key question is – by how much?

How big are the ETFs that track the NBI?

Ticker	ETF Name	Market Capitalization	Methodology
IBB	iShares Biotechnology ETF	$10.5B	Index: Nasdaq Biotechnology Index (NBI)

Source: Google Finance.

Currently, the iShares Biotechnology ETF is the only major ETF that tracks the NBI.

At the time of writing, the IBB ETF had a market capitalization of some $10.5B and 247 constituent members. Thus, the mean holding by the ETF in a constituent company would be around $42.5M. However, the median holding is materially lower, owing to the disproportionate effect of large caps included in the NBI index.

What other biotech specialist ETFs are important?

After NASDAQ: IBB, NYSE: XBI is the next most important biotech-specialist ETF. XBI tracks the S&P Biotechnology Select Industry Index, a modified equal-weighted index, which had around 130 constituents as of 9/30/25 and is arguably more reflective of small-to-medium biotech companies.

Ticker	ETF Name	Market Capitalization	Methodology
XBI	State Street SPDR S&P Biotech ETF	$5.5B	Index: S&P Biotechnology Select Industry Index

Source: Google Finance.