India’s Pharma Sector Ready For Bigger ‘Second Coming’, Says Nippon India
India’s pharmaceutical sector is ready for a “second coming” that will be “bigger and bolder” than the growth it has seen in the last 10 years despite inadequate spends on infrastructure.
That’s according to Sailesh Raj Bhan, deputy chief investment officer of equity investments at Nippon India Mutual Funds. The firm’s pharma fund has returnd 33% gains to investors in the last one year, second only to Mirae Asset Healthcare Fund, according to Value Research data.
The Covid-19 pandemic has brought the sector to the limelight and the under-investment in the sector has become visible, making it top priority for individuals and the government, Bhan told BloombergQuint in an interview. “I think a disproportionate amount of spending will happen in healthcare, accelerating the trend of growth in this sector,” he said. “This will accelerate a lot of things that have been slow and low on priority.”
The industry was already earning double-digit profits and seeing expansions before Covid, but the pandemic will increase spending on infrastructure and research along with increasing awareness, he said.
India is among the largest pharmaceutical manufacturing spots in the world, Bhan said. In terms of dominance, the country has 20-40% share in the U.S. market and possibly the most number of plants approved by the U.S. FDA anywhere in the world. There’s enormous scope in India’s domestic market itself, he said. The country has 27 crore people above 50 years of age which makes them prime candidates for consumption of pharma products. If they were a country of their own, India would be the fourth-most populous nation, he said.
Moreover, Indian drugmakers have invested around Rs 52,000 crore on research and development in the last five years and are likely to spend another Rs 40,000 over the next decade owing to their rich cash flows, the fund manager said.
This will create “fantastic opportunities” for investors in the coming years, especially among the larger pharma companies with a more holistic portfolio, Bhan said.
“We see this as the second coming of the Indian Pharma sector as R&D spends rise rapidly.”
Watch the full conversation here: