Post Covid-19, the world took notice of factors affecting health. The pharmaceutical industry soared with the discovery of new vaccines while new pharma companies focused on research and collaboration to dole out more immunity-boosting pills and vaccines. The recent news of the USFDA concluding its inspection at the Granules India Jeedimetla Facility and Ajanta Pharma Dahej is enough reason for the pharma sector to rejoice and soar to new heights.
Apart, India holds a prominent position in global vaccine production and serves as the foremost manufacturer of generic medicines, contributing 20 per cent of the world’s total supply by volume. Apart from the United States, India boasts the highest number of pharmaceutical factories that adhere to USFDA regulations. The government is actively dedicated to fostering inclusive and sustainable growth within the sector, paving the way for future advancements. The Indian health-tech market is projected to witness a remarkable annual growth rate of 39 per cent from 2020 to 2023, with an estimated value of US $50 billion by 2033.
Personal finance and stock market experts are showing confidence in the pharma sector which is again gaining traction. Both foreign institutional investors and domestic investors are pumping billions of dollars into the pharma sector. Apart, the measures announced in the Union Budget 2023 augured well for both pharma and healthcare companies, thus, explaining more potential for growth in this sector.
With the sector doing well on all fronts, should investors consider investing in the healthcare sector? Basavaraj Tonagatti, a certified financial planner and SEBI-registered investment advisor shared, “It is best to either own a market with a well-diversified all-sector inclusive equal-weighted index or a typical index exposure, rather than picking the theme (particularly the health sector, which was booming throughout the Covid time). Running after trends may often backfire on investors and is dangerous.”
To benefit from the rising optimism in this sector, Quant Mutual Fund recently launched its Quant Healthcare Fund on June 27, 2023. The new fund offer closes on July 11, 2023, thus, allowing inclined investors to register their investment details with this fund. The investment objective of the scheme is to seek long-term capital appreciation by investing in equity/equity-related instruments of companies from the healthcare sector, thus, hinting at the idea of seeking long-term capital appreciation by investing in healthcare and related companies.
This is an NFO that aims to tap the growth potential in this sector. Rishabh Parakh, Chief Play Officer, NRP Capitals explained, “Never invest in a sectoral fund unless you are doing it based on your risk profile and health companies related stocks went up crazily during covid times and surely may have a good future but that is the whole point with the sector-specific fund. It remains lulled for a long time and then spikes suddenly. Sectoral funds come with a high-risk-reward proposition and timing the exit if you make a good profit when the sector outperforms is extremely important apart from having the patience to stay silent when the sector remains stagnant for years together.”
Thematic sectors do yield high returns but come at the cost of heavy risk. This is mostly due to their cyclical nature. What works today may not work tomorrow. What investors prefer today may not gain favour with the investors tomorrow. In the end, it all boils down to how much risk you are willing to take and how long you are willing to wait for a particular sector to perform or outperform the market in sync with your expectations and financial goals.
