icici prudential pms wellness portfolio - img1.imgjuv.net prudential asset ... great scope for...
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All data/information used in the preparation of this material is dated and may or may not be relevant any time after the issuance of this material. ICICI Prudential Asset Management Company Limited (the Portfolio Manager/ the AMC) takes no responsibility of updating
any data/information in this material from time to time. The recipient of this material is solely responsible for any action taken basedon this material. The information contained herein are strictly confidential and are meant solely for the benefit of the addressee and
shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of the AMC. Further, the information contained herein should not be construed
as forecast or promise. Past performance of the Portfolio Manager may not be indicative of the performance in the future. Please refer to page 30-33 for risk factors and disclaimers
ICICI Prudential
PMS Wellness Portfolio (A series under “Focused Portfolio”)
Where are we in an investment cycle?
Lower return, lower economic growth world scenario
Long term strategy would be choosing an area where growth is not a challenge
World demographics, lifestyles, outlook towards life are changing which will give us different investment opportunities
Wellness Portfolio – Investment Strategy(A series under “Focused Portfolio”)
ICICI Prudential PMS Wellness Portfolio aims to provide long term capital appreciation and generate returns by investing in all important segments of Wellness which primarily comprises of remedial Wellness and preventive wellness. For defensive consideration, the Portfolio may invest in debt and money market instruments.
The portfolio endeavours to invest in high conviction ideas across stocks engaged in the wellness industry which comprises of remedial and preventive segments with high profit potential through bottom up stock picking approach.
A focused portfolio of 15-20 ideas, agnostic to market capitalizations.
The portfolio aims to invest in both Remedial Wellness as well as Preventive Wellness.
Optimal diversification across stocks, with the opportunity to be overweight vis-à-vis its benchmark which is S&P BSE Healthcare on certain high conviction picks, aiming to potentially generate higher alpha.
The Portfolio will not be limited by any particular investment styles and has the flexibility to choose between stocks across investment styles.
May aim to use cash as hedge against sharp declines in equity in an endeavour to protect the Portfolio
The Portfolio Manager does not assure any returns under the Portfolio. There is no guarantee or assurance that the investment objective of the Portfolio will be achieved. Please refer to the Disclosure Document and the risk factors on page 30-32 The investment strategy and the composition of the portfolio as stated herein is only indicative in nature and is subject to change within the provisions of the disclosure document and client agreement.
WELLNESS
FitnessHealth Food& Beverages
VaccinationsLife Insurance
Remedial: Core Preventive: Non-Core
WELLNESS
Hospitals, Diagnostics
Pharmaceuticals
Hospitals & Diagnostics
Healthcare Sector: A Promising Future
Heart Surgery Bone Marrow Transplant Liver Transplant Knee Replacement
Source: CRISIL
US UK Thailand Singapore India0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Country-wise Cost of Treatment in USD
100,000
250,000
300,000
48,00040,000
290,000
200,000
50,000
14,000
62,00075,000
8,00015,000
150,000140,000
25,000
5,000
30,00045,000
6,000
Coupled with the cost advantage India has almost same and in many cases better success rates in many of the surgeries performed
Low Cost of labour and medicines makes it possible for India to be cost competitive relative to the developed countries
Ease of travel to India also makes it attractive destination
Healthcare Sector: A Promising Future
Source: www.payscale.com
USA India UK Netherlands Phillipines0
20,000
40,000
60,000
80,000
Nurse Salary (In $ Per Year)
Potential for Growth
Healthcare Expenditure As Percentage of GDP
Great scope for improvement with improving government expenses and increasing participation of private sector in future
Source: Bank of America Merrill Lynch Global Research, McKinsey & Company Data as on Dec’ 2015
0
2
4
6
8
10
12
14
16
18
20
% ofGDP
US France Canada UK Japan China Thailand India Malaysia Indonesia
Demographic situations in developed markets now offer less potential for growth
Changes in lifestyle in the country is ushering more lifestyle diseases
Currently Indian markets are having much better potential to grow in terms demographic profile (rising income, rising education, younger age etc)
India’s Demographic Advantage
India’s Demographic Advantage
Age-Wise Population Breakup
Source: Census 2011
62%
10%
9%
11%
8%
5-9 years 10-14 years 15-59 years 60+ years0-4 years
Significant advantage in cost of treatment
Major hospitals are reporting 10-15% of their revenues from Medical tourism
India has 19 Joint international commission(JCI) accredited hospitals( scope to increase the same)
Many hospitals are hiring translators and also arranging for occupancy for patient to recuperate post getting discharged
Government has announced it’s intent to build a medical circuit to connect hubs
Separate category of on arrival visas with up to 1 year validity announced to encourage medical tourism (150 countries eligible)
Medical tourism is worth 3 bn$ and could potentially treble in next 5 years
Medical Tourism Opportunities Galore
Source: Internal Research & Broker research reports
Health Insurance on the rise
Source: Broker Research Reports
Health insurance penetration is on the rise and this will surely allow better access to hospitals for many people (private
insurance expected to grow faster and overall should double by Fy20)
As per Insurance Regulatory & Development Authority, approximately
20% of population has health insurance
(About 25 crore people)
Speciality therapies to provide major opportunity
Healthcare Sector: A Promising Future
Source: CRISIL
Cardiac Disease Oncological Disease Diabetes0
200
400
600
800
1000
1200
201
118
29
509
274
79
1030
519
163
Rising Lifestyle Diseases (In Patient Market Size)
2008 2013 2018
(Rs. Bn)
Source: JM Financials Research
Low Real Estate Costs
CountryRent USD /
Sq.ft / YRCity Yields
2014 2015
Beijing ,CBD
Hong Kong Central
Bengaluru, CBD
Chennai, CBD
Hydrabad, Suburban (Madhapur, Gachibowli)
Pune, CBD
Kolkata, CBD
Tokyo, CBD
Singapore, CBD
Paris, CBD
London, West End
New York, Midtown (Madison / 5th Avenue)
10.2
13.3
2.0
1.6
0.8
1.7
3.2
10.7
8.6
8.5
15.2
10.6
6.0%
2.9%
10.5%
10.5%
10.5%
10.5%
10.5%
3.9%
3.3%
4.0%
3.8%
4.2%
6.3%
2.9%
10.0%
10.0%
10.0%
10.0%
10.0%
3.7%
3.7%
3.5%
4.0%
4.0%
China
Hongkong
India
India
India
India
India
Japan
Singapore
France
United Kingdom
United States
Source: Bloomberg
Market Cap Comparison
Hospitals in India: 5.2bn$
Diagnostic segment in India: 1.8 bn $
Hospital+ diagnostic segment in USA: 104 bn$
Source: Internal Research & Broker research reports
Performance so far and roadmap ahead
Most major hospitals are in expansion phase trying to spread their wings from a particular region to go nationwide
Ample scope for all to grow further and survive using different models/tie ups
Capex and Return Ratios remain a major concern with investors
In long term this is a theme that could be worth playing; volume growth doesn’t seem to be a challenge and over a period of time operating leverage is expected to come into play
Also growingly hospital pharmacies will also be able to help hospitals have better profitability
Many hospitals expect to get listed in next few years
Pharmaceuticals
Domestic Pharma Story
Complex Generic Story
Other Themes
Source: Bloomberg
Pharma Global Market Size
India ( bn $)*
India in (Rs bn)*
US( bn $)
Eu5** ( bn $)
Japan ( bn $)
China ( bn $)
Brazil ( bn $)
Russia ( bn $)
14
630
322
159
111
67
30
16
14
705
328
147
111
82
29
17
14
751
340
156
94
98
31
18
14
849
375
165
90
107
28
16
15
948
420
169
83
115
23
17
4.02%
11.75%
6.22%
2.77%
-2.97%
22.85%
-0.28%
3.94%
* The difference in the 5 year CAGR is attributed to currency depreciation** Top 5 European Countries in the EU
12
544
311
147
97
41
23
14
2010 2011 2012 2013 2014 2015 5 year GAGR
Pharma market size
Domestic Pharma Story
India is one of the few countries which is seeing double digit growth in the world.
A good chronic profile is very important to grow faster than the market and thus sales mix is important.
India gives a good mix of volume and pricing growth
In spite of some of the issues like NLEM (National list of Essential Medicines) the industry has managed to grow well post taking the one time impacts
Inorganic growth opportunities by global pharma companies could be a possibility.
Source: Internal Research & Broker research reports
Complex generic story theme in USA
Indian pharmaceutical companies are spending 12-14 percent on R&D compared to 8-10 percent 3 years ago .
Some of the complex areas include injectables, biosimilars, dermatology, opthalmics, oncology and respiratory.
Volume share in USA for India is high in oral solids and with research spends and capability additions in complex areas to play out in next 3 years, one can expect value share to increase further
The big Indian Pharma companies are very well placed to tap into the new set of generic opportunities in the above mentioned therapeutic areas.
Source: IMS
US generics: Indian companies have consistently gained market share over the years
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
30.4%28.5%25.3% 27.5%22.6%18.8%17.2%16.5%13.5%10.7%
Sales Share
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
16.4%17.8%16.4% 17.2%13.0%11.9%10.4%11.8%10.3%8.7%
Top Indian generic pharma companies have doubled
their sales share in the past 10 years
Trx ShareTop Indian generic pharma
companies have tripled their TRx share in the
past 10 years
Source: IMS, Nomura research
0
50
100
150
200
250
300
35
0
10
20
30
40
50
60
70
2011 2012 2013 2014 2015 2016 2017 2018 2019
37
55
14 1622
15 11 1019
6
4
1520
37
22
9
26
22
OSD
US generics: Growth drivers- Patent expiries, complex generics, pick up in approval rate
Non OSD
6876105
159161170
233050
6587
113115
180
230
271
Pending ANDA
Myl
an
Act
avis
Sandoz
Par
Teva
Ako
m
Hosp
ira
EndoUCB
Perrig
o
Auro
bindo
Zydus
Cadila
Sun Pah
rma
Lupin
Gle
nmar
k
Dr R
eddy’s
Ale
mbic
Indian companies account for ~1000 of the ~4000 pending ANDAs (Abbreviated New Drug Application)
US patent expiries- Increasing proportion on non OSDs (Oral Solid Dosage)
CRAMS: India is in a very good space in the CRAMS (Contract Research and Manufacturing Services) space with lot of global companies preferring to outsource to good Indian companies . Many Indian companies have established very good relationships with Global pharma giants which has enabled them to maintain client base and they have transitioned from doing low value drugs earlier to complex ones now. The space is also a very good play on USD/INR currency movements.
Recovery Story: There are a few companies which have seen their business affected because of USFDA issues. Most of the resolution committed to the FDA is complete and the companies will be calling FDA soon for inspections. Once the facilities are cleared approvals will start coming in faster and operating leverage will be seen.
Other Themes like Enzymes: Enzymes are important catalysts for chemical reactions. The companies operating in this space have sticky relationship with clients and less competition because of the structure of the industry itself that enable them to have good margins and return ratios and will not have growth concerns for next few years.
Transition from Mid Cap to Large Cap: In the mid cap space there are some good companies which have very good research capabilities, good management and good product filings who have the ability to grow at a good pace and transition from being a mid cap to a large cap in the few years.
Other Themes
Source: Bloomberg
Life Insurance theme
Growth trajectory is expected to improve with higher savings, higher GDP growth
Increasing penetration of life insurance schemes in the country
Cost efficiencies to improve due to higher variable cost structure, regulator’s focus on lower costs and online channel
Other Non Core Themes
Fitness
Presently, the industry is at a nascent stage with very few listed companies. Growing disposable income of the people coupled with rising awareness of a healthy body augur well for the industry.
Vaccinations
Global MNC companies operating in India and some domestic companies provide important vaccines which is expected to continue to further penetrate. In this space there is also a very good optional value of Dengue and malaria vaccine which have been launched in many geographies across the world and expected to be launched in India in next 1-2 years which could be a game changer.
With an increasing focus on health and lifestyle there are many companies that have come out with good products like sugar free which have shown very good acceptance and is expected to continue to further penetrate with more and more awareness. We can expect such new products in this space from listed companies.
Health Food and Beverages
Past Performance may or may not be sustained in future. The returns depicted above are for a single client investing in the portfolio on a particular day. These returns may vary significantly from the data on performance of the portfolios which may be depicted. This may be due to factors such as timing of entry and exit, timing of additional flows and redemptions, individual client mandates, specific portfolio construction characteristics or structural parameters, which may have a bearing on individual portfolio performance. No claims may be made or entertained for any variances between the performance depictions and individual portfolio performance. Neither the Portfolio Manager nor ICICI Prudential Asset Management Company Ltd. (the AMC) its Directors, Employees or Sponsors shall be in any way liable for any variations noticed in the returns of individual portfolios.
ICICI Prudential PMS Wellness Portfolio Track record (A series under “Focused Portfolio”)
Name of the Portfolio Returns (Absolute %) Returns (CAGR %)
ICICI Prudential PMS Wellness Portfolio
Nifty 50 Index
S&P BSE Healthcare Index
100.31
35.50
71.02
54.14
20.83
39.69
Period: 6-Mar-13 to 13-Oct-14
ICICI Prudential PMS Advantage
Execution expertise across market cap
Active Coverage of over 300 companies with Interface between dealers/analysts/industry experts
Experienced team of investment experts
Strong corporate interactions in equity and fixed income space
Strict adherence toprocesses and compliance
ICICI Prudential
PMS Advantage
Pioneer in PMS business and product innovation
Investment Idea
Generation
Company and Analyst Meet
Propriety & Third Party Research
Internal ValuationScreen
Analysis
Investment and
Engagement Approach
Exit Investment
Idea
Periodic Update& Revaluation
Investment Process
Investment Idea Generation: Identification of pool of investment ideas along with preliminary analysis
Company & Analyst Meet: Management contacts, a combination of meetings & plant visits and/ or conference calls to decide whether to pursue investment idea
Proprietary & Third Party Research: Basic proprietary research based on internal revenue & profitability forecast supplemented by third party research reports
Internal valuation Screen: Earnings estimates inputted into internal valuation screen. The valuation screen is extensively used for studying absolute valuations, valuations relative to sector & peer group.
Investment and Engagement Approach: The Manager will not interfere and involve in the day to day management of the investee companies, but will selectively intervene in defined periodicity to add value in few areas depending upon the requirement of the investee company.
Periodic updates & Re-evaluation: Close monitoring of quarterly results & fundamental news flows. Periodic follow up meetings with managements are undertaken to re-evaluate earlier assumptions
Exit Investment: Exit decisions formulated based on takeaway/ outputs from valuation screen
Investment Process
Investment Team
Experienced Investment Team
• Fund Management expertise across various asset classes• Experienced pool of research analyst covering various sectors and themes
• First AMC to obtain a PMS license & commence business in 2000.• Established a track record of over 14 years• Investment expertise across a wide suite of asset classes/ products to cater to investors with different risk- return profiles
- Equity Portfolios – Extensively used various investment strategies (Large cap, Mid cap, Small cap, Diversified/Concentrated, Value, Growth Strategies) in listed /unlisted equities & derivatives portfolios - Principal Protected Portfolios – First PMS to launch products on CPPI model with Gap Risk Guarantee and Enhanced Participation - Structured Products Portfolios – First PMS to launch Gold Linked Debentures along with Index & Equity Linked Debentures to give investors opportunity to hedge their equity exposure
Investment Expertise across Asset Classes
In general, investment in the portfolio may be affected by risks associated with equities and fixed income securities.
Investing in securities including equities and derivatives involves certain risks and considerations associated generally with making investments in securities. The value of the portfolio investments may be affected generally by factors affecting financial markets, such as price and volume, volatility in interest rates, currency exchange rates, changes in regulatory and administrative policies of the Government or any other appropriate authority (including tax laws) or other political and economic developments. Consequently, there can be no assurance that the objective of the Portfolio would achieve. The value of the portfolios may fluctuate and can go up or down. Prospective investors are advised to carefully review the Disclosure Document, Client Agreement, and other related documents carefully and in its entirety and consult their legal, tax and financial advisors to determine possible legal, tax and financial or any other consequences of investing under this Portfolio, before making an investment decision. The Stock(s)/Sector(s) mentioned in this material do not constitute any recommendation of the same and the portfolios may or may not have any future positions in these Stock(s)/Sector(s). The composition of the portfolio is subject to changes within the provisions of the disclosure document. The benchmark of the portfolios can be changed from time to time in the future. Trading volumes, settlement periods and transfer procedures may restrict the liquidity of investments in portfolios. Different segments of the Indian financial markets have different settlement periods and such periods may be extended significantly by unforeseen circumstances. The inability of the Portfolio Manager to make intended securities purchases due to settlement problems could cause the portfolio to miss certain investment opportunities. By the same rationale, the inability to sell securities held in the portfolio due to the absence of a well developed and liquid secondary market for debt securities would result, at times, in potential losses to the portfolio. The stocks./sectors mentioned in the document may or may not form part of the Portfolio.
Individual returns of Clients for a particular portfolio type may vary significantly from the data on performance of the portfolios which may be depicted. This may be due to factors such as timing of entry and exit, timing of additional flows and redemptions, individual client mandates, specific portfolio construction characteristics or structural parameters, which may have a bearing on individual portfolio performance. No claims may be made or entertained for any variances between the performance depictions and individual portfolio performance. Neither the Portfolio Manager nor ICICI Prudential Asset Management Company Ltd. (the AMC) its Directors, Employees or Sponsors shall be in any way liable for any variations noticed in the returns of individual portfolios.
Risk Factors and Disclaimers
Risk Factors and Disclaimers
The Client shall not make any claim against the Portfolio Manager against any losses (notional or real) or against any loss of opportunity for gain under various PMS Products, on account of or arising out of such circumstance/ change in market condition or for any other reason which may specifically
affect a particular sector or security, including but not limited to disruption/prohibition/ discontinuation/ suspension of trading in a particular Security including any index or scrip specific futures/ options or due to any act of Company, Market Intermediary by SEBI or any other regulatory authority which may result in trading in such security(ies) being completely or partially affected, to which the Portfolio Manager has taken exposure/ proposed to take exposure and is unable to take additional exposure/ restrain him from taking any position in a particular equity or related derivative instruments etc. due to any reason beyond the control of the Portfolio Manager resulting in unhedged positions or losses due to unwinding of certain positions or losses due to any reason or related to any of the aforesaid circumstances.
By their nature, certain market risk disclosures are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses could materially differ from those that have been estimated. The recipient(s) alone shall be fully responsible/are liable for any decision taken on the basis of this material. All recipients of this material should before dealing and/or transacting in any of the products referred to in this material make their own investigation, seek appropriate professional advice. The investments discussed in this may not be suitable for all investors. Financial products and instruments are subject to market risks and yields may fluctuate depending on various factors affecting capital/debt markets. There is no assurance or guarantee that the objectives of the portfolio will be achieved. Please note that past performance of the financial products, instruments and the portfolio does not necessarily indicate the future prospects and performance thereof. Such past performance may or may not be sustained in future. Portfolio Manager’s investment decisions may not be always profitable, as actual market movements may be at variance with anticipated trends. The investors are not being offered any guaranteed or assured returns. The AMC may be engaged in buying/selling of such securities. Please refer to the Disclosure Document and Client Agreement for portfolio specific risk factors
Risk Factors and Disclaimers
Risks attached with the use of derivatives: Derivative products are leveraged instruments and can provide disproportionate gains as well as disproportionate losses to the investor. Execution of such strategies depends upon the ability of the fund manager to identify such opportunities. Identification and execution of the strategies to be pursued by the fund manager involve uncertainty and decision of fund manager may not always be profitable. No assurance can be given that the fund manager will be able to identify or execute such strategies.
Derivative products are specialized instruments that require investment techniques and risk analyses different from those associated with stocks and bonds. The use of a derivative requires an understanding not only of the underlying instrument but of the derivative itself. Derivatives require the maintenance of adequate controls to monitor the transactions entered into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price or interest rate movements correctly. There is the possibility that a loss may be sustained by the portfolio as a result of the failure of another party (usually referred to as the “counter party”) to comply with the terms of the derivatives contract. Other risks in using derivatives include the risk of mis pricing or improper valuation of derivatives and the inability of derivatives to correlate perfectly with underlying assets, rates and indices.
Thus, derivatives are highly leveraged instruments. Even a small price movement in the underlying security could have a large impact on their value. Also, the market for derivative instruments is nascent in India. The risks associated with the use of derivatives are different from or possibly greater than the risks associated with investing directly in securities and other traditional investments.
In the preparation of this material the AMC has used information that is publicly available, including information developed in-house. Some of the material used herein may have been obtained from members/persons other than the AMC and/or its affiliates and which may have been made available to the AMC and/or to its affiliates. Information gathered and material used herein is believed to be from reliable sources. The AMC however does not warrant the accuracy, reasonableness and/or completeness of any information. For data reference to any third party in this material no such party will assume any liability for the same. We have included statements/opinions/recommendations in this material, which contain words, or phrases such as “will”, “expect”, “should”, “believe” and also PE ratios, EPS and Earnings Growth for forthcoming years and similar expressions or variations of such expressions, that are “forward looking statements”. Actual results may differ materially
from those suggested by the forward looking statements due to risk or uncertainties associated with our expectations with respect to, but not limited to, exposure to market risks, general economic and political conditions in India and other countries globally, the monitory and interest policies of India, inflation, unanticipated turbulence in interest rates, foreign exchange rates, equity prices, the performance of the financial markets in India and globally, changes in domestic and foreign laws, regulations and taxes and changes in competition in the industry.
All data/information used in the preparation of this material is dated and may or may not be relevant any time after the issuance of this material. The Portfolio Manager/ the AMC takes no responsibility of updating any data/information in this material from time to time. The Portfolio Manager and the AMC (including its affiliates), and any of its officers directors, personnel and employees, shall not liable for any loss, damage of any nature, including but not limited to direct, indirect, punitive, exemplary, consequential, as also any loss of profit in any way arising from the use of this material in any manner.
Risk Factors and Disclaimers
