PGIM India Healthcare Fund: For long term wealth creation from healthcare theme

The PGIM India Healthcare Fund has completed a little over eight months since its launch in November 2024. In the short time since its inception, the fund has shown promise of being a good opportunity for long term investment. In this article, we will review the PGIM India Healthcare Fund in light of the opportunities presented by the Healthcare sector in India.

Drivers of long-term growth in Indian healthcare sector

Under-penetration of health insurance in India results in significantly higher out of pocket expenses compared to developed economies. There is huge growth potential for healthcare and allied sectors in India. The drivers of long-term growth of the healthcare industry in the Indian context are:

• Life expectancy is increasing in India. Average life expectancy at birth in 2000 was 63 years, which is expected to increase to 84 years by 2048. Longer life spans fuel healthcare sectors.
  
  

  

  Source: PHD Research Bureau projections for the years 2030, 2040 and 2047



• Ageing population over time is a natural phenomenon in a young country with improving healthcare facilities. India has seen an increase of the median age since the 1950's. From 20.0151 to 28.4413 years of age, an increase of 42.1% of the median age of the population in total. The median age is further expected to increase by 1.3X (2025-2050). Aging population boosts demand for age-related healthcare services.
  
  

  

  Source: World meter



• Private healthcare expenditure outstrips Government spending on healthcare in India. Growing per capita income will drive personal healthcare investment.
  
  

  

  Source: S&P Household Income Projections; Fitch Solutions Health Expenditure



• India spends less on health than other EMs & DMs (see the chart below). There is scope for significant growth in healthcare expenditure in India compared to other major economies.
  
  

  

  Source: WHO, Data as of 2021. DM - Developed Market and EM - Emerging Market



• Healthcare infrastructure is improving in India. Hospital beds expected to increase 12X by 2048 (see the chart below). Number of Doctors increased 1.1X in 4 years. No of medical colleges in India increased by 1.8X to 758 in FY 24 (in 8 years). Healthcare infrastructure is expanding with growing investments in Tier 2-6 cities for multispecialty hospitals, diagnostics, specialty clinics etc.
  
  

  

  Source: PHD Research Bureau projections for the years 2030, 2040 and 2047

Why should you invest in the Healthcare sector?

• Potential of getting superior returns over long investment tenures: The chart below shows the 3 year rolling returns of Nifty Healthcare TRI versus the Nifty 500 Index since the inception of the healthcare index. You can see that healthcare index consistently outperformed the broad market except a 3 - 4 year period when several Indian pharma companies were subject to US FDA inspections. Over the last 20 years, the average and median 3 year rolling returns of the healthcare index (17.2% and 15.3% respectively) were higher than the average and median rolling returns of Nifty 500 TRI (17% and 13%) respectively.
  
  

  

  Source: Advisorkhoj Research, Period: 1^st April 2005 to 22^nd August 2025



• Higher consistency of superior returns: The chart below shows the returns distribution of 1, 3 year and 5-year rolling returns of the healthcare index versus the broad market index. Observe that across all three investment tenures (1, 3 and 5 years) the healthcare index has outperformed the broad market index Nifty 500 TRI in terms of consistency of generating 12%+ CAGR returns. Not only that, the percentage instance of 20%+ returns from the healthcare index is consistently more than that from the broad market across all three investment tenures (see shaded in light green).
  
  

  

  Source: Advisorkhoj Research, Period: 1^st April 2005 to 22^nd August 2025. *Nifty Healthcare TRI. All indices are Total Return Indices (TRI)



• Winners rotate across segments: Different segments experience different business cycles leading to varying performance trends. Bottom up stock selection may give alpha trends.
  
  

  

  Source - Factsheet, PGIM India Internal Analysis. For understanding purposes only



• Diverse opportunities across various sub-segments within Healthcare: Investment in the Healthcare sector gives investors the exposure to the entire gamut of the sub-segments (see graphic) in the healthcare industry; each sub-segment featuring distinct business models with unique economic characteristics.
  
  

  

  Source: PGIM India product presentation



• Since the outbreak of the COVID-19 pandemic healthcare has outperformed the broad market in most years (see the chart below).
  
  

  

  Source: Advisorkhoj Research, as of 22^nd August 2025



• The healthcare index has also outperformed the broad market index over long investment horizon. The chart below shows the growth of Rs 1 lakh investment in Nifty Healthcare TRI versus the broad market index, Nifty 500 TRI since the inception of the healthcare index.
  
  

  

  Source: Advisorkhoj Research, as of 22^nd August 2025

PGIM India Healthcare Fund

The PGIM India Healthcare Fund is an open-ended equity scheme investing in healthcare and pharmaceutical sector, with an objective to seek to generate consistent returns by pharmaceutical and healthcare companies. The fund is managed by A Anandha Padmanabhan, who also manages multiple PGIM India MF schemes and has been tracking the Healthcare domain of Indian equities for over 15 years.

Investment Strategy of PGIM India Healthcare Fund

• The fund managers use three-pronged criteria based on Quality, Growth and Management to choose about 180-200 stocks from a universe of all companies with a market cap greater than Rs.1,000 crores (including any IPOs). As of December 2024, there were 1,452 companies with market capitalization greater than Rs 1000 crores
  
  

  

  Source: PGIM India Healthcare Fund product presentation



• From the fund house universe of 180-200 stocks so chosen, an optimal portfolio is constructed (see graphic) keeping in view the mandate of diversification, and high active share while maintaining lower portfolio turnover. Factors considered include valuation, market cap, liquidity, and macro-outlook.
  
  

  

  Source: PGIM India Healthcare Fund product presentation

Current Portfolio Positioning

The current portfolio is relatively well balanced between large cap and mid / small cap. Large-cap allocation is 48%, while midcap and small cap allocations are 19% and 31% respectively.

Source: PGIM India MF, Fund Factsheet, as on 31^st July 2025. *Services include Hospitals, Diagnostic Centres etc.

Why Should you invest in PGIM India Healthcare fund?

• Focus on relative risk/return potential, management quality, and revenue growth consistency.


• Key drivers for various segments include therapy mix, field force productivity, and brand strength in hospitals and diagnostics.


• Portfolio metrics: The fund portfolio exhibits lower volatility compared to the benchmark and has low debt-to-equity ratio indicating lower leverage.

Who should invest in the PGIM India Healthcare Fund?

The fund is suitable for:

1. Investors looking for long term capital growth,


2. Investors who have a long-term investment horizon of more than 5 years


3. Investors who have a high to very high-risk appetite.


4. Investors who would want exposure to the healthcare sector

Investors should consult their financial advisers or mutual fund distributors of PGIM India Healthcare Fund is suitable for their investment needs.