Many of the pharma stocks have been multi-baggers
The BSE Healthcare index, which was on a bull run since early 2012, came to a halt in April 2015 and has been in a sideways consolidation phase lately. However, it continues to outperform the Sensex over five- and 10-year periods. This outperformance is mainly due to a strong rally during 2009 and 2010 as well as an accelerated rally between 2012 and 2014. Many pharma and healthcare stocks in this rally became multi-baggers.
This is reflected in the pharma and healthcare funds as well, which have delivered a category average return of 5.8 per cent, 27.2 per cent and 20 per cent over one, three and five-year periods, respectively. In these periods, they have comfortably outpaced the BSE Healthcare index by 2 to 5 percentage points.
SBI Pharma leads
There are four funds in the pharma sector — Reliance Pharma, SBI Pharma, UTI Pharma & Healthcare and Tata India Pharma & HealthCare launched in December 2015.
SBI Pharma leads the category over one, three and five-year periods. The scheme’s picks in the mid and small-caps space helped performance over the past year. For instance, Bengaluru-based Sequent Scientific’s stock price has more than doubled in the last one year. Likewise, other small mid-cap stocks that boosted the scheme’s performance include Natco Pharma, Aurobindo Pharma and Strides Shasun.
The fund exited Dr Reddy’s Laboratories following regulatory issues at three of its manufacturing facilities; this helped the fund contain the downside better than its benchmark – BSE Healthcare Index.
Reliance Pharma ranks second, clocking 10 per cent over a one-year time-frame. The fund loaded up on Abbott India, which provided a leg-up to its performance. Other large-cap names that aided performance include Sanofi India, Divi’s Laboratories and Biocon. The rally in mid-cap stocks, such as Aurobindo Pharma and FDC, also helped spice up returns. The fund was a buyer in the recently-listed pharma and healthcare stocks – Alkem Laboratories, Dr Lal PathLabs and Narayana Hrudayalaya.
