Reliance Pharma Fund Invest
The increasing interest of global pharma majors in the Indian generics space, strong growth in the domestic market besides the pro-generic healthcare reforms likely in key markets of the US, Europe and Japan make a strong case for investing in the pharmaceuticals sector now.
Investors with a long-term perspective can consider buying the units of Reliance Pharma Fund, given its diversified pharmaceutical exposure. Taking the mutual fund route would also save investors the trouble of unravelling the complex workings of the industry, where prospects are subject to regulatory intervention, M&A and litigation as well.
Investors, however, can consider investing in the dividend option of the fund, given the high-risk profile of sector funds.
Benchmarked against the BSE Healthcare Index, Reliance Pharma Fund has consistently delivered superior returns relative to the index as well as its peer funds. It has also in the five years of its existence outpaced market indices such as BSE Sensex and S&P CNX Nifty. The fund’s portfolio offers a one-stop exposure to all the promising segments of the sector – companies with a strong footing in domestic formulations, complex generics, CRAMS, bio-generics as well as the healthcare space.
Shrinking product pipeline, increasing R&D expenditure and generic incursion have forced the global pharma companies to look at emerging markets such as India for growth.
Not only has this led to increased buyouts of Indian pharma assets — be it Ranbaxy-Daiichi, Dabur Pharma-Fresenius Kabi, Shantha Biotech- Sanofi Aventis or the more recent Orchid Chemicals-Hospira deal — but has also made global pharma companies forge alliances with Indian generics or increase stakes in their Indian subsidiaries. Given the latter, the fund’s significant exposure to the subsidiaries of MNC pharma holds potential.
Indian pharmaceutical companies also stand to gain considerably from their US market presence if the US Healthcare Bill that is approaching its climactic vote next week gets cleared. The Bill, which seeks to expand healthcare coverage to a larger majority of its citizens, would further open up the lucrative US market for Indian generics, which enjoy a competitive edge over global peers in terms of product pricing and operational costs. While the final contours of the Bill are not yet known, a generic push appears inevitable. Further, the number of authorised generics is expected to grow even in the key markets of Europe and Japan, led again by the healthcare reforms of their respective governments. The fund’s portfolio has a fair representation from companies that would benefit from the shift to generics in these markets as well.
Fund details: The fund’s portfolio has a reasonable sprinkling of stocks from all market capitalisation categories. Its top holdings include Ranbaxy Laboratories, Zydus Wellness, Indoco Remedies, Aventis Pharma and Divis Laboratories and the NAV per unit under the dividend option is Rs 32. Source – HBL
