From time immemorial, India has been synonymous with medicine and healthcare. The virtues of Ayurveda have been known to the world for centuries. The works of Charak (considered the Father of Ayurveda) and Sushruta (the first surgeon of India) have contributed to even modern medicine. This heritage of medicine, pharmacy and healthcare has been carried forward even today by our modern Indian healthcare services.

The pandemic came as a turnaround for the healthcare industry across the world, and especially India. The necessity brought out the best of the Indian healthcare system on a domestic as well as international level. Hospitals and diagnostic centres improved occupancy and capacity. Pharma research and development picked up and individuals became more health conscious.

India’s healthcare industry at a glance

India ranks tenth in the Global Healthcare Resources Medical Tourism Index 2020-21, and is a leading provider of generic medicine, accounting for 20% of global supply volume. Patients from all over the world are choosing India for its cost-effective treatment, a wide range of specialties, alternative medicine, skilled medical professionals, advanced technology, English-speaking population, and ease of travel.

Despite growing at a rapid speed, India’s healthcare infrastructure is relatively less developed than other countries, with a majority of population having limited access to advanced medical equipment and quality healthcare.

This supply shortage which was once seen as a roadblock is now viewed as an opportunity to expand and grow.

The changing scenario of the Indian hospitals

Behind this change of perception is the turnaround in the healthcare space driven by government reforms on healthcare infrastructure and medical tourism, and increasing focus on efficiency and quality at hospitals. The Union Budget 2023 increased the healthcare budget by 3.43% to Rs. 89,155 crores. While the government is making efforts at the macro level, hospitals and pharma companies are making efforts at a micro level.

Hospitals have switched from greenfield expansion of building healthcare facilities from the scratch to brownfield expansion of acquiring and leasing existing hospitals. The latter is fast and cost effective. India is also seeing a strong growth in the pharma space, housing the highest number of US-FDA approved pharma factories after the US.

This changing scenario in the healthcare space is attracting domestic and foreign investors towards this capital-intensive sector.

Investing in the Indian healthcare sector

To facilitate investment in sectors, Nifty creates sector specific indices that use a defined eligibility criteria and periodic review of the eligibility and rebalancing. As the entire process is formula driven, there is limited human intervention. The healthcare sector comprises pharma, hospital, laboratories, and medical equipment and device manufacturers.

The Nifty Healthcare TRI invests in up to 20 healthcare companies with the highest market capitalization. For rebalancing, the index ensures that no single stock has more than 33% weightage and the cumulative weight of the top three stocks does not exceed 62%. This rebalancing is done on a quarterly basis.

A stock’s performance at the time of the rebalancing period determines whether or not it will stay in the index. The index makes it easier for new investors to invest in sectors they are bullish on.

Investing in the nation’s health for your portfolio’s wealth

With the world recognising the merits of ayurveda and holistic healing, India has become a preferred destination for healthcare. This preference is also reflected in the performance of the healthcare sector, giving investors an opportunity to invest in its growth.

You can invest in the Nifty Healthcare TRI with the Aditya Birla Sun Life Nifty Healthcare ETF and tap the potential growth in the healthcare space. The ETF replicates and tracks the index, allocating the same weightage to the stocks that the index gives. As a passively managed ETF, it is a cost-efficient way of getting exposure to the healthcare sector.

Aditya Birla Sun Life Nifty Healthcare ETF can give your portfolio a healthy dose of diversification into a non-cyclical and defensive sector that sees demand irrespective of the economic scenario. You can invest in the ETF from your demat account and trade it on the stock exchange.

Index Methodology: https://www.niftyindices.com/Methodology/Method_NIFTY_Equity_Indices.pdf

Aditya Birla Sun Life AMC Ltd (“ABSLAMC”) /Aditya Birla Sun Life Mutual Fund is not guaranteeing/offering/communicating any indicative yield/returns on investments. This document represents the views of Aditya Birla Sun Life AMC Limited and must not be taken as the basis for an investment decision.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.