List of Top Pharma Mutual Funds in India (2025)
Investing in pharma mutual funds is becoming a popular choice for investors who want to explore opportunities in India’s growing healthcare sector. The pharmaceutical industry in India continues to expand with strong R&D capabilities and a large pool of skilled professionals, making it an attractive space for investment. Many investors are now focusing on pharma sector funds to benefit from the rapid growth in healthcare demand. Before exploring these funds further, it’s important to understand what they are and how they work.
List of Best Mutual funds for Pharma Sector in India 2025
Here is a list of the top pharma funds sorted as per the AUM:
| Name | AUM (Rs. in cr.) | Expense Ratio (%) | CAGR 3Y | NAV | Exit Load | Absolute Returns - 1Y | Volatility |
|---|---|---|---|---|---|---|---|
| Nippon India Pharma Fund | 8357 | 1 | 22 | 562 | 1 | -2 | 15 |
| ICICI Pru Pharma Healthcare & Diagnostics (P.H.D) Fund | 6162 | 1 | 28 | 43 | 1 | 3 | 15 |
| SBI Healthcare Opp Fund | 3963 | 1 | 26 | 491 | 1 | 3 | 15 |
| DSP Healthcare Fund | 3107 | 1 | 24 | 43 | 1 | -3 | 14 |
| Mirae Asset Healthcare Fund | 2796 | 0 | 22 | 43 | 1 | 0 | 16 |
| HDFC Pharma and Healthcare Fund | 1896 | 1 | 0 | 17 | 1 | 6 | 17 |
| Tata India Pharma & Healthcare Fund | 1296 | 1 | 23 | 35 | 0 | -1 | 15 |
| UTI Healthcare Fund | 1097 | 1 | 25 | 326 | 1 | 1 | 16 |
| Aditya Birla SL Pharma & Healthcare Fund | 845 | 1 | 22 | 34 | 1 | -3 | 15 |
| Baroda BNP Paribas Health and Wellness Fund | 637 | 0 | 0 | 10 | 1 | 0 | 10 |
Disclaimer: Please note that the above table is for educational purposes only, and is not recommendatory. Please do your own research or consult your financial advisor before investing. The data is derived from Tickertape Stock Screener and is subject to real-time updates.
Note: The data on the top pharma funds in India in the list is from 6th February 2025. The data present in the list of the best pharma funds is taken from Tickertape Mutual Fund Screener.
10 Top Pharma Funds Overview
Nippon India Pharma Fund
This fund invests in pharmaceutical and healthcare companies to benefit from India’s expanding healthcare market. It focuses on capturing growth opportunities and aims for long-term pharma fund returns.
ICICI Pru Pharma Healthcare & Diagnostics (P.H.D) Fund
This fund invests in pharmaceutical, healthcare, and diagnostics companies to give investors exposure to these industries. It aims to generate long-term pharma mutual funds capital appreciation through focused investments.
SBI Healthcare Opp Fund
This fund invests in high-growth companies in the healthcare and pharmaceutical sectors. It aims to capitalize on India’s growing healthcare market and deliver sustainable long-term returns.
DSP Healthcare Fund
This fund invests in companies within the healthcare and pharmaceutical industries that benefit from India’s rising healthcare demand. It aims to generate consistent long-term capital growth.
Mirae Asset Healthcare Fund
This fund invests in pharmaceutical and healthcare companies to tap into India’s expanding healthcare market. It seeks to provide long-term capital appreciation through diversified investments.
HDFC Pharma and Healthcare Fund
This fund invests in companies across the pharmaceutical and healthcare sectors to benefit from India’s rapidly growing healthcare needs. It aims to offer steady long-term growth for investors.
Tata India Pharma & Healthcare Fund
This fund invests in key pharmaceutical and healthcare companies to leverage India’s expanding healthcare infrastructure. It focuses on providing long-term growth potential through strategic investments.
UTI Healthcare Fund
This fund invests in high-growth healthcare and pharmaceutical companies in India. It aims to deliver long-term capital appreciation through exposure to the country’s healthcare market.
Aditya Birla SL Pharma & Healthcare Fund
This fund invests in pharmaceutical and healthcare companies that form part of India’s expanding healthcare ecosystem. It aims to achieve long-term capital growth through sector-focused investments.
Baroda BNP Paribas Health and Wellness Fund
This fund invests in companies operating in healthcare, pharmaceuticals, and wellness sectors. It aims to deliver long-term growth by supporting India’s evolving health and wellness market.
What are Pharma Mutual Funds?
Pharma mutual funds are investment vehicles that focus on the pharmaceutical and healthcare sectors. They pool money from investors to invest in stocks of pharmaceutical companies, biotech firms, and healthcare providers, aiming for growth by capitalizing on the industry’s expansion.
Taxation on Pharma Funds
Understanding the taxation on pharma funds is crucial for investors, as it directly impacts returns. The tax treatment varies depending on the holding period, type of gains, and whether the investor is a resident or non-resident. Here’s an overview of the key tax implications for pharma fund investments.
| Tax Type | Tax Rate | Implications |
| Short-Term Capital Gains (STCG) | 15% | Tax on gains if held for less than 3 years. Reduces overall returns. |
| Long-Term Capital Gains (LTCG) | 10% (above ₹1 lakh) | Lower tax rate for gains held for more than 3 years. Only gains over ₹1 lakh are taxed. |
| Dividend Tax | 10% (if dividends exceed ₹5,000) | TDS on dividends, must be included in total income. |
| SIP Taxation | STCG or LTCG based on holding | Each SIP installment taxed based on its holding period. |
| Tax for NRIs (LTCG) | 10% (above ₹1 lakh) | Same as domestic investors for long-term capital gains. |
| Dividend Tax for NRIs | 20% TDS | Higher tax on dividends for NRIs. |
How to Invest in Pharma Funds?
You can easily start to invest in pharma funds by following these steps:
- To invest in the best pharma mutual funds, you can visit a mutual fund investment platform such as smallcase.
- The next step is to research and identify the pharma mutual funds that match your financial goals. Tools like the Tickertape Mutual Fund Screener can help you filter and compare funds based on parameters such as returns, expense ratio, and fund size.
- Once you shortlist the funds, visit smallcase, log in, and search for the fund by name. You can then choose the investment mode and complete the process.
How Do Nifty Pharma Mutual Fund Work?
Investors with similar goals choose mutual funds that let them allocate money to different schemes. Sectoral funds are a type of equity mutual fund that focuses on companies within one industry. For example, an IT fund invests in IT companies and a banking fund invests in banks. A pharma fund invests in pharmaceutical and healthcare companies in India.
Pharma mutual funds only invest in the pharmaceutical industry even during market downturns. This focus can cause heavy losses until market conditions improve. At the same time, the concentrated portfolios of these funds can generate high gains when the sector performs well.
Top pharma mutual funds work like other mutual fund schemes. When a fund house launches a new scheme, it collects money from investors and invests in top pharma shares and companies involved in biotechnology, hospital management, and research facilities. SEBI rules require these funds to invest at least 80% of their total assets in the pharma sector.
Features of Best Performing Pharma Mutual Funds
Let’s look at the key features of the best performing pharma mutual funds.
- Focused Industry Exposure: The best performing pharma mutual funds focus their investments mainly on pharmaceutical and healthcare companies. This targeted approach helps investors benefit from the growth potential of the sector.
- Diversified Portfolio within Pharma: Successful pharma mutual funds diversify their portfolios across different segments of the pharmaceutical industry. They invest in areas like pharmaceutical manufacturing, biotechnology, healthcare services, and research facilities. This diversification reduces risks linked to any single segment.
- Thorough Research and Analysis: Top pharma mutual funds rely on detailed research and analysis done by fund managers. They study pharmaceutical companies, market trends, and regulatory changes carefully. This research helps them make well-informed investment choices that enhance performance.
- Responsive Portfolio Management: The best performing pharma mutual funds actively manage their portfolios. Fund managers monitor their investments closely and make quick changes when needed. They replace underperforming assets to improve returns for investors.
- Compliance with SEBI Regulations: Top pharma mutual funds follow SEBI regulations strictly. They invest at least 80% of their total assets in the pharmaceutical sector. This ensures transparency and maintains alignment with industry standards.
Who Should Invest in Pharmaceutical Mutual Funds?
Investors with a high-risk tolerance can consider pharmaceutical mutual funds to earn strong returns. These funds invest in equities of leading pharma companies and often perform well when the market is favorable, but they can face major losses during downturns.
Financial advisors usually suggest long-term investment in a specific pharma fund, but risk-averse investors should look for safer options. Thematic mutual funds that focus on the pharma sector typically invest in top Indian pharma stocks, mostly large cap companies, which increases credit risk. Although the sector often shows positive performance and potential for good returns, it can also experience heavy losses when the market declines.
Factors to Consider Before Investing in Pharmaceutical Mutual Funds
Before investing in pharmaceutical mutual funds, assess several key factors.
- Deciding About Investing in Pharma Sector Mutual Funds: Pharma funds allocate at least 80% of their total assets to the sector identified as best according to SEBI regulations. Investors with high risk tolerance, especially aggressive investors, choose pharma funds.
- Investment Horizon: Choose pharma funds if you have a long-term investment horizon.
- Strategic SIP Plans: Consider using a systematic investment plan (SIP) for pharma funds. The best Pharma MF SIPs offer a phased approach to investing in the pharmaceutical sector and encourage a disciplined gradual investment strategy.
- Portfolio Alignment: Large-cap portfolios usually allocate 3% to 5% to the pharma sector. Mid-cap and multi-cap funds often provide more substantial exposure to pharmaceutical and healthcare segments.
Benefits of Investing in Top Pharma Mutual Funds
Investing in top pharma mutual funds offers several advantages for investors in the healthcare and pharmaceutical sectors.
- Potential for high pharma fund returns: You can earn high returns since these funds carry some risk but also offer big rewards when the market is doing well. The pharma sector is growing, which helps boost your gains, making these funds a good choice if you want to grow your money over about three years.
- Sectoral impact on growth: These funds focus on the pharmaceutical sector, helping both the industry and the economy grow. Keep in mind, government policies can affect how well these funds do, so you want to pick the right time to buy and sell.
- Tax implications: When it comes to taxes, pharma funds follow the same rules as other equity funds. You don’t pay tax on long-term gains if they are below ₹1 lakh. But if you make more than that, you owe a 10% tax. For gains made in the short term, you pay 15%. Also, these funds don’t get any tax benefits from indexation.
Risks Involved While Investing in Pharma Mutual Funds
Investing in pharma mutual funds can offer promising returns, but it also comes with its own set of risks. Here are some key concerns to consider:
- Clinical Trial Failures: New drugs face a high risk of failure during clinical trials, significantly impacting the performance of companies and the fund’s value.
- Regulatory Hurdles: Drug approvals can be delayed or denied by regulatory bodies. Therefore, this causes setbacks for pharmaceutical companies and potential losses for investors.
- Patent Expirations: The expiry of key patents can lead to price competition and reduced revenue for pharmaceutical companies. This may affect the fund’s value.
- Macroeconomic Factors: Economic downturns and currency fluctuations can impact the demand for pharmaceuticals funds, leading to market volatility and potential losses.
- Competition: The pharmaceutical industry is highly competitive, with new entrants and generic drugs constantly challenging established players.
How to Choose Best Pharma Mutual Funds for Investing?
Picking the best pharma mutual fund for you is like tailoring a suit – it needs to fit your goals and risk tolerance. Here’s how:
- Know Your Style: Are you a long-term growth seeker, a dividend hunter, or somewhere in between? Choose a fund that aligns with your vision. Look for large-cap funds for stability, small-cap for potential growth spurts, or sector-specific ones to target specific areas like biotech.
- Look Under the Hood: Dive into the health care mutual funds’ performance. Check how it fared over different timeframes, compared to benchmarks, and against similar funds. A good track record doesn’t guarantee the future, but it paints a picture of the fund’s competence.
- Meet the Manager: The captain steers the ship! Research the fund manager’s experience, qualifications, and investment philosophy. Do their values resonate with yours? Trusting their expertise is key.
- Cost Matters: Expense ratios (management fees) eat into your returns. Compare fees across similar funds and choose one that offers good value for the service.
- Don’t Put all your Eggs in One Basket: Diversify! Investing in a mix of pharma funds and other asset classes helps spread your risk and potentially smooth out bumpy rides.
Remember: No one size fits all. Take your time, research thoroughly, and choose a fund that complements your financial goals and personality. And if you’re still unsure, consulting a financial advisor for personalised guidance can be a wise step.
What are the Returns on Pharma Mutual Funds & How are they Calculated?
The Indian Pharmaceutical sector ranks as the world’s third-largest by volume and 14th-largest by value. It contributes to 3.5% of global medication exports and currently makes up 1.72% of the country’s GDP, projected to grow at a rate of 10% to 12% annually. Additionally, India boasts the second-highest number of FDA-approved plants globally. Thus, it is positioned as the leading supplier of generic pharmaceutical medicines worldwide. Notably, manufacturing costs in India are 33% lower than in Western markets.
However, as per the returns, the pharma mutual funds have potentially delivered 22.33% p.a. returns in the last 5 years. Therefore, their 3 and 10 year annualised returns are 15.66% and 16.28% p.a.
Returns on pharma mutual funds can be calculated using two main methods: Absolute Returns and Compounded Annual Growth Rate (CAGR).
Absolute Returns
Absolute returns measure the actual percentage change in the Net Asset Value (NAV) of the mutual fund over a specific period. The formula for absolute returns is:
Absolute Returns= [(Ending NAV−Beginning NAV) / Beginning NAV] ×100
This formula gives you the percentage increase or decrease in the NAV over the chosen time frame.
Compounded Annual Growth Rate (CAGR)
CAGR provides a smoothed annual rate of return, taking into account the compounding effect over multiple years. The formula for CAGR is:
CAGR = (Ending NAVBeginning NAV) 1/Number of Years−1
CAGR is particularly useful for assessing the annualized growth rate over an investment horizon, providing a more accurate representation of returns over time.
As always, investors must do their own research and/or consult their financial advisor before investing.
To Wrap It Up…
In conclusion, investing in pharma mutual funds involves careful consideration of the sector’s dynamics, one’s risk tolerance, and the potential for long-term growth. The pharmaceutical mutual fund industry’s resilience and its contribution to healthcare make it an intriguing option for investors seeking exposure to a specialised sector.
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Frequently Asked Questions (FAQs) on Pharma Mutual Funds
Sectoral Pharma Mutual Funds invest in stocks of companies, so stay invested for at least 5 years.
The best healthcare mutual funds in India seek growth in companies that develop or sell drugs, medical devices, and healthcare services, from large corporations to biotech startups.
Pharma sector mutual funds have delivered average annual returns of 22.33% over the past 5 years. The annual returns for the 3-year and 10-year periods are 15.66% and 16.28% respectively. Investors should understand the growth potential and challenges faced by these companies.
Investors with a large corpus can diversify their portfolio by putting 5-10% into sector schemes like Pharma. Always do your own research or consult a financial advisor before investing.
Pharma mutual funds in India generally have no lock-in period, allowing you to redeem your investment anytime.
