Is it time to move out of pharma sector funds?

The pharma sector funds have been bleeding for a while now. The category has registered negative return of -6.97 per cent in the last one year and -4.08 per cent in the last one month. Many investors are worried about their returns from the pharma funds and also have doubts about the future of these investments.

The pharma sector has been facing many regulatory issues since 2016. The industry is facing adverse conditions in both the domestic and global markets. Some of the Indian pharma giants like Lupin, Sun Pharma have seen hurdles in their business due to the stricter norms of US Food and Drugs Association (USFDA). Moreover, with the tightened norms Indian companies are facing hurdles in exporting drugs. These hurdles have dragged the earnings and performance of the pharma companies, which is being reflected in the returns of various pharma-dedicated funds.

In the near term, the outlook for pharma sector doesn’t seem to be very attractive, but still the consumer-focused pharma sector looks promising in the longer run. Government’s increased focus on affordability and availability of medicines will bode well for the sector on the domestic front. So, the investors who have already invested in the pharma funds in the last two years should not panic and they should hold the schemes if pharm is having a lower exposure in their portfolio. However, investors who are willing to enter these funds should wait for a revival as in the current volatile market, betting on this sector would be a risky play.