Summary
Pharma mutual funds provide diversified exposure to healthcare companies but carry very high sector-specific risk.
Compare long-term performance, expense ratio, benchmark returns and portfolio quality before selecting a pharma mutual fund.
Pharma funds are best suited for long-term investors with diversified portfolios and a high risk appetite.
The pharmaceutical sector remains one of the most resilient parts of the economy, supported by steady demand for medicines and healthcare services. Pharma mutual funds invest in a portfolio of pharmaceutical companies, hospitals, diagnostics firms and other healthcare businesses, offering investors diversified exposure to the sector without the need to select individual stocks. If the pharma sector is a part of your investment strategy, these pharma mutual funds are worth a closer look.
Best 10 Pharma Mutual Funds: Quick Comparison
The best pharma mutual funds combine strong long-term returns, reasonable costs, a healthy AUM and consistent performance across different market cycles.
The table below compares the top funds using the latest data as of 4 August 2026:
| Fund Name | Category | AUM (in ₹ cr) | 3Y CAGR (%) | 5Y CAGR (%) | Benchmark 5Y Return | Expense Ratio (%) | Minimum SIP (₹) | Risk |
| Nippon India Pharma Fund | Equity/Sectoral-Pharma | 9,044 | 19.49 | 13.66 | 14.56 | 0.79 | 100 | Very High |
| ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund | Equity/Sectoral-Pharma | 6,625 | 24.03 | 16.63 | 14.56 | 0.86 | 100 | Very High |
| SBI Healthcare Opportunities Fund | Equity/Sectoral-Pharma | 4,998 | 24.60 | 17.98 | 14.56 | 0.75 | 500 | Very High |
| DSP Healthcare Fund | Equity/Sectoral-Pharma | 3,514 | 21.18 | 15.83 | 14.56 | 0.52 | 100 | Very High |
| Mirae Asset Healthcare Fund | Equity/Sectoral-Pharma | 3,253 | 23.87 | 15.83 | 14.56 | 0.45 | 99 | Very High |
| HDFC Pharma And Healthcare Fund | Equity/Sectoral-Pharma | 2,611 | 24.24 (1-year return) | 21.30 (2-year return) | 15.24 (1-year return) | 0.74 | 100 | Very High |
| Tata India Pharma & Healthcare Fund | Equity/Sectoral-Pharma | 1,455 | 21.06 | 15.26 | 14.56 | 0.63 | 100 | Very High |
| UTI Healthcare Fund | Equity/Sectoral-Pharma | 1,308 | 24.65 | 15.77 | 14.56 | 1.00 | 500 | Very High |
| Aditya Birla Sun Life Pharma & Healthcare Fund | Equity/Sectoral-Pharma | 1,011 | 22.49 | 14.73 | 14.56 | 0.80 | 100 | Very High |
| WhiteOak Capital Pharma and Healthcare Fund | Equity/Sectoral-Pharma | 793 | 21.45 (1-year return) | 21.23 (1-year return) | 15.24 (1-year return | 0.56 | 100 | Very High |
(The 5Y return benchmark for these funds is the BSE Healthcare TRI)
Note: The funds listed are for informational purposes only. They should not be treated as investment advice.
Top 10 Pharma Mutual Funds in India
Each fund has distinct strengths in terms of performance, portfolio strategy and cost efficiency. Here is a closer look at how they compare:
- Nippon India Pharma Fund
Nippon India Pharma Fund is one of the oldest healthcare funds with an AUM of ₹9,044 crore. It delivered a 19.49% 3-year CAGR but lagged the BSE Healthcare TRI over five years. The portfolio is diversified across leading pharmaceutical companies. It has a ₹100 minimum SIP and a 0.79% expense ratio.
- ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund
ICICI Prudential P.H.D Fund has outperformed the benchmark with a 24.03% 3-year CAGR and 16.63% 5-year CAGR. It invests across pharmaceuticals, hospitals and diagnostics, providing broader healthcare exposure. The fund charges 0.86% and allows investment from ₹100 SIP.
- SBI Healthcare Opportunities Fund
SBI Healthcare Opportunities Fund has been one of the category’s best performers, delivering returns of 24.60% over three years and 17.98% over five years. It has a diversified healthcare portfolio, a competitive 0.75% expense ratio and a ₹500 minimum SIP. While the minimum investment is higher than most peers, its consistent long-term performance makes it a strong option for investors comfortable with very high sector risk.
- DSP Healthcare Fund
DSP Healthcare Fund combines solid returns with one of the lowest expense ratios in the category at 0.52%. It has outperformed the benchmark over both three and five years while investing across pharmaceuticals and healthcare services. A ₹100 SIP keeps it accessible, although its returns have been slightly behind the category leaders.
- Mirae Asset Healthcare Fund
Mirae Asset Healthcare Fund has delivered competitive returns while charging the lowest expense ratio in the category at 0.45%. It invests across pharmaceuticals and other healthcare businesses and allows investors to start with just a ₹99 SIP. Its low cost is a key strength, although it remains exposed to the high volatility of the healthcare sector.
- HDFC Pharma and Healthcare Fund
This fund is relatively new, so only the data for its one and two-year performance is available. It has managed to beat its benchmark during this period. The fund charges a 0.74% expense ratio and SIPs start at ₹100. The strong early performance is encouraging, but investors should also weigh its limited track record.
- Tata India Pharma & Healthcare Fund
Tata India Pharma & Healthcare Fund has consistently stayed ahead of the benchmark with a CAGR of 21.06% and 15.26% over three and five years, respectively. It offers diversified healthcare exposure at a reasonable 0.63% expense ratio with a ₹100 SIP. Its balanced approach is a strength, though returns have been moderate compared with top performers.
- UTI Healthcare Fund
UTI Healthcare Fund has delivered strong returns over both three and five years. It follows a diversified healthcare strategy but carries the highest expense ratio in this comparison at 1.00%. The ₹500 minimum SIP may also deter some investors. Consistency is a key positive, while higher costs are its main drawback.
- Aditya Birla Sun Life Pharma & Healthcare Fund
Aditya Birla Sun Life Pharma & Healthcare Fund has generated respectable long-term returns with a diversified portfolio of healthcare stocks. It charges 0.80% and allows investments from ₹100 SIP. The fund has broadly kept pace with the benchmark, but its long-term outperformance has been limited.
- WhiteOak Capital Pharma and Healthcare Fund
WhiteOak Capital Pharma and Healthcare Fund is a new scheme with an impressive one-year return that exceeds its benchmark. It offers diversified healthcare exposure, a low 0.56% expense ratio and a ₹100 minimum SIP. While its early performance is promising, the absence of a longer track record remains its biggest limitation.
How We Selected These Pharma Funds
We followed a transparent, data-first process when selecting the funds.
- Return consistency: We compared three-year and five-year CAGR figures against the BSE Healthcare TRI benchmark.
- Cost efficiency: Expense ratios were checked against the category average. A lower ratio means investors get to keep more of their returns.
- Fund size and liquidity: Funds with a reasonable AUM were preferred. A very small fund can face concentration and liquidity issues.
- Data sources: The data has been cross-checked across publicly available disclosures to ensure the figures are accurate and up to date.
Pharma Funds vs Other Fund Categories
Pharma funds differ from other fund categories in terms of risk, return potential and diversification.
| Fund Type | Risk Level | Return Potential | Diversification | Ideal Horizon |
| Pharma Sectoral Fund | Very High | High | Low, single sector | 5+ years |
| Diversified Equity Fund | High | Moderate to high | High | 5+ years |
| Corporate Debt Fund | Low to moderate | Low to moderate | Moderate | 1 to 3 years |
| Index Fund | Moderate to high | Market linked | High | 5+ years |
The table gives a quick overview, but here is what those differences mean in practice:
- Risk level: Pharma funds are concentrated in one sector, so they can fluctuate more than diversified equity or index funds. Corporate debt funds are usually less risky.
- Return potential: Pharma funds can outperform during strong healthcare cycles but may lag when the sector weakens. Diversified equity and index funds offer steadier long-term returns, while debt funds focus on stability.
- Diversification: Diversified equity and index funds spread investments across sectors. Debt funds invest in fixed-income securities and pharma funds invest only in healthcare-related companies.
- Ideal horizon: Pharma, diversified equity and index funds are best suited for long-term investing, whereas corporate debt funds are generally better for short to medium-term goals.
Benefits and Risks of Pharma Mutual Funds
Pharma funds offer genuine advantages, but they come paired with risks that are just as real.
Benefits
- Sector expertise: Fund managers specialising in pharma track drug approvals, patent expiries and export data closely, applying domain knowledge that a general fund manager may not have.
- Defensive characteristics: Healthcare demand tends to hold up even when broader consumption slows, which can cushion the sector during economic downturns.
- Currency tailwind: Pharma companies earn a meaningful share of revenue from exports, so a weaker rupee can work in the sector’s favour.
Risks
- Concentration risk: Pharma funds make at least 80% of their investments in one sector, so any slowdown or negative developments in the healthcare industry can affect the entire portfolio.
- Regulatory risk: Pharma companies are subject to strict regulations in India and overseas. Unfavourable regulatory decisions can hurt company earnings and share prices.
- Cyclical volatility: The sector can swing between periods of strong outperformance and sustained underperformance, testing investor patience along the way.
Who Should Consider and Avoid Pharma Funds?
Pharma funds provide sectoral exposure, which may not suit every investor.
They can be considered by:
- Investors with a diversified portfolio who want exposure to the healthcare sector
- Those with a high risk appetite and a long investment horizon
- Investors comfortable with sector-specific ups and downs
These funds should be avoided by:
- Investors with a short investment horizon or a low risk appetite
- New investors without a diversified portfolio
- Those who want stable and predictable returns
How to Choose a Pharma Mutual Fund
Picking the right pharma fund takes more than just glancing at last year’s returns.
- Compare returns across periods
Look at the returns over longer periods rather than a single-year figure, since sectoral funds can have volatile short-term performance.
- Check the risk profile
Review the fund’s risk-o-meter rating and how concentrated its top holdings are within the sector.
- Evaluate the cost
An expense ratio is the annual fee a mutual fund or ETF charges you to manage your investment. A lower ratio compounds meaningfully over a long holding period.
- Assess the manager’s track record
A fund manager who has been in charge of the fund through at least one full market cycle gives a sense of confidence and reliability.
- Study the portfolio composition
Check the split between pharmaceuticals, diagnostics and hospital stocks, since some funds diversify within healthcare more than others.
- Match with benchmark returns
Check whether the fund has consistently outperformed its benchmark, such as the BSE Healthcare TRI, over the long term.
SIP vs Lump Sum for Pharma Funds
Choosing between a Systematic Investment Plan (SIP) and a lump sum investment changes how you experience these funds.
A Systematic Investment Plan, known as SIP, lets an investor put in a fixed amount at regular intervals. This spreads the investment across market cycles and reduces the risk of entering the market right before a correction. It is a natural fit for someone building exposure to the pharma sector gradually.
A lump sum works differently. It puts the entire amount to work in one go, and can pay off handsomely when valuations look attractive, though the sector’s volatility means the risk is higher too. This route suits investors who follow pharma closely enough to judge when the timing is right.
Direct vs Regular Pharma Funds
The choice between a direct and a regular plan depends on the cost and the level of guidance you need.
A direct plan is bought straight from the fund house without a distributor, which means no commission is deducted from your returns, resulting in a lower expense ratio and a higher Net Asset Value (NAV) over time compared to the regular plan of the same fund. This route suits investors who research and manage funds themselves.
A regular plan is purchased through a distributor or financial advisor, whose commission is built into the expense ratio. While this can slightly reduce long-term returns, it provides guidance on fund selection, portfolio rebalancing and financial planning, making it a suitable option for investors who are new to sectoral investing.
Taxation of Pharma Mutual Funds
Pharma mutual funds are classified as equity-oriented schemes for tax purposes, since they invest predominantly in equity shares of listed companies.
- Long-term capital gains (LTCG): Gains on units held for more than 12 months are taxed at 12.5% on gains exceeding ₹1.25 lakh in a financial year, without indexation.
- Short-term capital gains (STCG): Gains on units held for 12 months or less are taxed at 20%.
Any dividend payout is added to the investor’s total income and taxed at the applicable slab rate. Tax rules may change, so check the latest provisions before filing your return.
Final Thoughts
Pharma mutual funds allow investors to gain exposure to the healthcare sector, but they are generally best used alongside a diversified portfolio. Choosing the right fund comes down to its long-term performance, costs and whether it aligns with your financial goals.
Before investing, compare the expense ratio, check how the fund has performed against its benchmark, and make sure it matches your risk appetite and investment horizon.
FAQs
Based on recent three- and five-year performance, SBI Healthcare Opportunities Fund, UTI Healthcare Fund, ICICI Prudential Pharma Healthcare and Diagnostics (P.H.D) Fund, Mirae Asset Healthcare Fund, and DSP Healthcare Fund are among the top performers.
Pharma funds can be considered if you have a long investment horizon, want sector-specific exposure and already have a well-diversified portfolio.
This varies by time frame, since some funds lead on three-year returns and others on five-year returns. Comparing performance across both periods gives a fairer picture than looking at just one.
Compare returns across multiple time frames, check the expense ratio, review portfolio composition, and match the fund’s benchmark and risk level to your goals.
They are suitable for investors with a high risk appetite, a long investment horizon and an existing diversified portfolio.
One-year rankings change quickly with sector news, so it is best checked on a live screener closer to your date of investment.
No mutual fund is completely safe. Pharma funds invest in equities and are subject to market, sector and regulatory risks. Their returns are not guaranteed.
Rather than trying to time the market, consider investing through a SIP if pharma aligns with your investment strategy. This helps manage market volatility over time.
One is not inherently better than the other. Pharma funds offer higher return potential but come with market risk, while FDs provide stable, predictable returns.
