'Small and mid caps likely to grow faster than large caps'

Summary: India’s pharma sector may continue to grow strongly, but the biggest opportunities are shifting away from traditional large-cap generics toward faster-growing areas like domestic healthcare and CRDMOs. HDFC AMC’s fund manager explains why the next phase of pharma investing could reward investors willing to look beyond the sector’s familiar giants and dominant narratives.

Summary: India’s pharma sector may continue to grow strongly, but the biggest opportunities are shifting away from traditional large-cap generics toward faster-growing areas like domestic healthcare and CRDMOs. HDFC AMC’s fund manager explains why the next phase of pharma investing could reward investors willing to look beyond the sector’s familiar giants and dominant narratives. Indian pharma has compounded well over two decades, but the next leg of growth may look quite different. Structural areas like domestic healthcare and CRDMOs are emerging as the more compelling opportunities, even as generics and APIs continue to evolve. HDFC AMC’s Nikhil Mathur believes the sector rewards those who look beyond the dominant narrative. Presently, Mathur is a Fund Manager and Senior Equity Analyst at HDFC AMC, where he manages two schemes: HDFC M1NC Fund and the HDFC Pharma and Healthcare Fund. In this interview, he also shares his views on valuations across the pharma value chain, the China-plus-one theme, hospital chain re-ratings and the one structural risk that the market may be overlooking. Most pharma funds are weighted heavily toward large caps. A fund manager once told us that large companies are simply best placed to capture the opportunity. Your portfolio thinks differently, mid caps dominate and small caps have a meaningful share too. Walk us through that thinking. The pharma and healthcare ecosystem entails both cyclical (generics) and structural (CRDMO, hospitals, diagnostics) areas. Portfolio construction is quite bottom-up with a high