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HDFC MF has launched its Pharma and Healthcare Fund.
Increasing incidence of lifestyle related diseases(diabetes/cardiac) creates repeat demand for medication. This coupled with increasing lifespan in India augurs well for consistent growth in demand for pharmaceuticals.
Domestic healthcare services (hospitals, diagnostics and pharmacies) are seeing significant traction for higher quality branded names who are gaining market share. Growing penetration of health insurance is also directly influencing growth in high quality branded hospitals. Valuations are not cheap –cannot make an argument for re-rating here, but growth can support current valuations.
US generics exports looking up due to persisting shortages caused by lower competitive intensity due to closure of some companies and adverse FDA observations against some key players. Price deflation has abated. Companies with strong pipelines will benefit in this environment.
BSE Healthcare index is trading at a 15% premium to market –in line with its historical averages. Earnings growth across all 4 business verticals is looking sound. Diversity in businesses enables one to build a diversified portfolio within this theme, giving due weightage to bottom up opportunities in individual stocks.
NFO opportunities clearly discussed.
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