But what if you could turn these rising healthcare expenses into an investment opportunity?
As the saying goes, “Peter’s loss is Atul’s gain.” While illness may be a personal financial setback, investing in the health and wellness sector — through sector-specific mutual funds — can allow you to benefit from the very dynamics that are otherwise draining your savings.
Beyond acting as a natural hedge against medical inflation (which in India has historically been twice the rate of overall inflation), here are three compelling reasons why the healthcare sector deserves a dedicated allocation in your investment portfolio:
1. Demographics Are Destiny
Life expectancy in India has more than tripled over the last century and continues to rise. By 2050, 21% of India’s population is projected to be aged 60 and above. This aging demographic will drive demand for healthcare services, creating sustainable long-term business opportunities across pharmaceuticals, diagnostics, home care, and insurance.
2. Healthcare Is a Lifelong Necessity
From infancy to old age, healthcare expenditure is constant — only its nature and size change over life stages. According to BCG, the current decade will see a 34% rise in cardiac and diabetes cases, and a 41% increase in cancer incidence. This realization probably explains why a 2024 McKinsey study found that Indian consumers lead wellness and fitness spending across emerging markets — indicating a societal shift towards preventive care and lifestyle management.
3. A Deep, Diversified, and Growing Investable Universe
The health and wellness sector has expanded beyond traditional pharmaceuticals and hospitals. It now includes Clinical Research Organisations (CROs), Contract Development & Manufacturing Organisations (CDMOs), Medtech, Diagnostics, Insurance, Nutraceuticals, and Fitness brands. Over 100 companies, with a combined market capitalisation of $200 billion, offer a deep and diverse pool of investment — across large-cap, mid-cap, and small-cap segments.
India’s pharmaceutical sector, in particular, highlights the country’s global dominance:
Proven Performance
The BSE Healthcare Total Return Index has outperformed the BSE 500 Total Return Index over 1, 3, 7, and 15 years, as the earnings of the healthcare index constituents have outpaced those of the BSE 500 constituents over the past 14 years. This shows that investors with a medium- to long-term investment horizon may find it beneficial to have a satellite allocation to a sector fund betting on this theme.
Conclusion
As medical costs rise, smart investors are turning to the health and wellness sector not just as a hedge, but as a high-growth investment theme. By aligning your portfolio with this essential and ever-expanding sector, you not only safeguard your wealth — you also grow it.
Sanjay Chawla is CIO – Equity, Baroda BNP Paribas Mutual Fund
