Posted By: Admin
Pharma funds have had a phenomenal run in the past 2 years plus, while the sector was terribly underperforming in the past, thanks to the impact of Covid and increased awareness on health care and the fallout higher allocation to healthcare across the world, the pharma sector has seen a smart rerating of its potential. Having said, the vaccine against Covid 19 is yet to be in place and India is likely to play the role of a bulk drug manufacturing partner for the pharma majors across the world, for the simple reason that there is capacity to replicate at a massive scale and that we are nation that adheres to intellectual property( IP) so overseas majors have far greater confidence in their Indian partners than their competing Chinese partners. We believe based on this, the prospects for Pharma, healthcare and ancillary industries like Health insurance, diagnostics etc should also see a good uptick in the short / medium term.
Our view is that people who have already invested in Pharma funds and seen some good returns may stay on for another year or so to reap the tail end returns thanks to the Covid 19 pandemic.
For new investors , we believe that these are not great times to enter with a lump sum but more in a staggered manner with some allocations over the next few months to build your Pharma Funds portfolio.
Indian Pharma and healthcare industry has enough potential to replicate the success seen by the Information Technology industry by playing the Global back office and supplier of innovative global IT solutions. Similarly Indian Pharma has the opportunity to emerge as the Global bulk drug hub as also the leader in clinical trials for new drug discovery and related areas. Furthermore the potential of Medical tourism to bring in Forex and world class medical treatment to the world can spawn a whole new large industry that is currently nascent. India’s growing middle class population and its aspiration for high quality of medical resources is also further spawning tremendous opportunities.
Being a sectoral fund, we recommend investors to do their due diligence and then deploy a smaller portfolio into the pharma sector selectively. Investors need to be aware that investments in the sector funds tend to be high risk and play out over a longer period of time. So investors may need a large dose of patience to derive the benefit from this sector.
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