PHARMA SECTOR – what is in it for us???

Dear Investor,

More often than not when there are sound,  it is always followed by a big bubble that leaves behind a vacuum akin to a  silence post a tempest/gale.   Is it the same as far as Pharmaceuticals as a sector is concerned or is this sound an organized one or a rhythmic one to move our heads and start enjoying the tune? 

To make it more lucrative and compelling – yesterday  US President Mr. Trump’s decision to sign 4 of executive orders relaxing the prices of drugs and opening up the gate for other pharmaceutical companies to compete with the pricing factors of US made medicines.  This particular one  will be painted by the Democrats as a political stunt to lure the voters.  But for any of  the exporters of bulk drugs,  this particular decision may turn out to  be money spinner in the long-run.

Above all what is really making any of us to skew our attention towards this sector at this juncture is the expectation of a Vaccine for the Pandemic which has shattered the economies across the board and who is going to win the race at the end.  In all likelihood most the players in that segment irrespective of their size or wherewithal will be  all out to skew their attention in inventing the Vaccine to become rich and to gain name across the Globe.  It need not be only from the listed entities in any of the bourses or the Titans of the industry but can be from those small unlisted players too.  Time alone will address this Conundrum.

In the race, should I skew my attention to pick and chose those Titans of the industry who are bulk manufacturers of drugs or go with those who are known for their R&D or perhaps a combination of both would be a better bet.  Assuming that I do one now and finally if their efforts turn out to be a futile one,  then I will be missing the bus or must have boarded a wrong one.  At the same time ignoring it also may not turn out to be a prudent decision.   Then is it possible to invest into all the 78 listed guys spread across different market caps (list enclosed above)?  Here for obvious reasons we have not taken those micro guys and if we have to include them, then the list becomes more exhaustive and will  dilute my very intention of creating wealth. The BSE Pharmaceutical index which has fallen to 10,950 levels from its peak of 18,850 has now come back to 17,000 levels which means, we are already seeing a recovery to the tune of 55% from the nadir.

WHAT SHOULD I DO?

We have three options.  (1) Identifying those stocks who are likely to be the winner in the race or (2) going with sectoral approach within the gamut of MF or (3) going with well diversified scheme wherein the exposure to pharmaceutical is slightly on the higher side.    It is blatant that going with one of the renowned fund houses make enough sense.

WHAT ARE ITS ADVANTAGES:

  1. I get the experts views as I am otherwise busy and unable to identify the right choice for my money.  More over these experts have the advantage of dealing directly with the respective promoters of the companies and they will have advanced information concerning the invention of a Vaccine.
  2. If they find the necessity to expand the number of companies within the gamut of that sector, or to increase the percentage of their holdings, they can always do it by off loading some of the less potential sectors or companies within any of the sectors.
  3. It is better to skew our attention to those diversified schemes across market caps and amongst them whoever having decent exposure to pharmaceutical sectors would be the ideal choice to capitalize on this opportunity.
  4. Alternatively we can also take advantage of specific sector oriented schemes like pharma-fund (a comparative chart is enclosed) within MF schemes by parking about 50% of our surplus. 

Suggestions on any of these assets cannot be generic  and it has to commensurate with the risk appetite of the investors concerned.  Perhaps depending upon the requirements with due respect to the profile of our patrons,  we should be able to suggest the options and the percentage of exposures advisable.

LSN.

29.07.2020

About LSNSPEAK

LSN is the founder promoter of Ultimate, aged about 60 and bubbling with tons of energy. He started his career in TN state police department as sub-inspector and now is a veteran in the financial services industry with an experience of over 2 decades. His previous assignment was with Karvy as Country Sales Head and prior to that, he had worked for organisations like HUL, Cadburys, Garden etc and way 2 wealth. His expertise comes from a combination of experience, relationship management and hard work. He is a connoisseur of Carnatic music and one can find him glued to music during his leisure time.
This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s