Hospital growth will surpass pharma companies' growth

Shibani Kurian, who leads equity research at Kotak Mahindra AMC, believes that the growth of hospitals in India will surpass that of pharmaceutical and diagnostic companies. She shared her insights about the healthcare sector and the potential impact of tariffs on the pharmaceutical industry. Many hospitals are planning to double their capacity within the next three to five years. Kurian explains that this expansion comes as the demand for quality healthcare in India continues to rise. In contrast, the growth rate for diagnostic companies is expected to be moderate. Indian pharmaceutical companies supply most of the generic medicines needed in the U.S., holding about 50% of the market. However, Kurian warns that proposed tariffs could increase costs. If a 10% tariff is imposed, Indian firms may need to pass these costs onto consumers, affecting their competitiveness. Despite facing challenges, Kurian anticipates that the pharmaceutical sector will see double-digit growth in earnings. Companies that depend heavily on the drug Revlimid might experience slower growth, but overall, there is a positive outlook for domestic branded generics. Kurian has positioned her portfolio to focus more on branded formulations and hospital stocks, minimizing exposure to global generics. She believes that while current tariffs might create short-term difficulties for Indian companies, their significant cost advantage will ensure long-term competitiveness. Overall, the health sector is performing well. Hospital companies are expected to grow rapidly due to the increasing demand for organized healthcare services in India. The combination of higher insurance coverage and patient awareness is driving this trend. Investors are encouraged to pay attention to hospitals focusing on expansions, as this segment shows promising growth potential.