Should Your 2025 Portfolio Have Pharma Funds?

Pharmaaaa…. Rings a bell in the mind about a popular investor in Shark Tank… isn’t it? But, this blog is not about seeking investment for your business but making long-term investment in pharma funds or pharma stocks. If you’re sipping your daily cup of coffee and wondering whether your portfolio should have pharma mutual funds in 2025, read on.

Pharma Mutual Funds - Making a Big Splash in 2024

Pharma mutual funds made quite a big splash in 2024. How big, you may ask? Imagine this. The highest average return from pharma and healthcare mutual funds was a jaw-dropping 38.05% in 2024 (from Jan 1 to 2024 to Dec 3, 2024) . Yes, you read it right. Return from some funds soared beyond 40%. That's like your investments going from "meh" to "wow".

If you are wondering why this sudden love for pharma, here’s the deal. The Indian pharma industry has been riding high thanks to initiatives like the production-linked incentive scheme (PLI). 50 greenfield plans in the pharma and the medical tech sector are operational with 50 more in the pipeline , with exports growing faster than ever. Add to this the global demand for affordable generics and biosimilars and you’ve a success recipe.

Pharma Sector Poised for Growth

If you thought that 2024 was a lucky break for pharma mutual funds and pharma stocks, let’s play doctor for a second and check the vitals of the pharma sector in 2025 to understand how it’s positioned in 2025:

• Market Growth

Despite the noise surrounding market volatility, FII withdrawals, and the corporate sector's rough patch, the Nifty Pharma Index has flexed some serious muscle. It posted a solid 23.59% YoY profit growth , something that can make even the most skeptical investor sit up straight and take notice. The growth isn’t just a fluke, but backed by strong fundamentals and India’s growing prominence in the global healthcare sector? If that’s not a show of strength, what is?

• Trump Card - Literally

Love him or loathe him, Trump 2.0 might be the gift the Indian pharma sector needs. President-elect Trump's focus on diversifying supply chains could mean big bucks for Indian pharma companies. The icing on the cake could be the Biosecure Act, a US law in the making aimed at curbing reliance on China. If it comes into place, Indian pharma companies could be at the right place at the right time.

While it may not be all roses with potential US tariffs on imported goods raining on parade, India's solid footing in generics and contract manufacturing, the benefits might outweigh the hiccups.

The Final Prescription

If you’re looking to add some healthcare-flavoured growth potential to your investment mix and are thinking about investing in pharma mutual funds and pharma stocks, the signs are positive. That said, while pharma funds are having their moment under the sun, they are not immune to risk. Like any medicine whose overdose can backfire, ensure that exposure aligns with your investment goals.