Aditya Birla Sun Life Mutual Fund launches Pharma & Healthcare Fund
The scheme can also invest in equities of listed overseas companies, in line with the RBI and SEBI guidelines.
According to a press release by the fund house, apart from the core pharma and healthcare space, the fund will also look at other large opportunities in sectors like hospitals and diagnostics, wellness businesses, or the global contract research and manufacturing services industry (CRAMS). The scheme can also invest in equities of listed overseas companies, in line with the RBI and SEBI guidelines.
The fund will be managed by Dhaval Shah. The benchmark index for the fund is S&P BSE Healthcare TRI (Total Return Index).
“The sector has been a long-term outperformer over a 10-year period, except in the past two to three years. The underperformance of the sector in the last three years was due to compliance issues coming from abroad and pricing pressures,” said A Balasubramanian, CEO, Aditya Birla Sun Life AMC. “We believe this risk is already factored in the prices, given the strong balance sheet and export potential of companies in the sector. Poised for a strong rebound, there is opportunity in the coming cycle to take position given the attractive valuations and the potential growth in the sector,” added Balasubramanian.
The fund house said that with a new business cycle coming into play and new businesses with high growth potential and sticky profit like diagnostics, wellness and specialty chemicals also available to invest, this sector is more vibrant than ever before. “To add to novelty, we also have ability to invest in innovators, patent holders & specialty instrument makers in global markets,” added A Balasubramanian.
The fund house also said that the main reason for it to come up with a pharma and healthcare fund is that the Indian pharma industry is projected to become $100 billion industry by 2030, with domestic pharma expected to grow at 10-12 per cent per year. The press release noted that the Indian pharma companies are global leaders in generic drug manufacturing; in fact one in every three medications sold in the US is supplied by an Indian pharma Company. The gradual global shift from branded to generic drugs will act as a tailwind and further fuel the export market for Indian Pharma.
The fund house also believes that the increased government spending on public healthcare through schemes like ‘Ayushman Bharat’, growing penetration of health insurance, higher life expectancy and increasing spends towards healthcare and wellness will act as a stimulus for growth.