Pharmaceuticals: Sector update - Temporary hurdles, nothing structurally negative. We believe the long term outlook for Indian healthcare sector remains structurally positive, considering abundant growth opportunities, strong balance sheets, higher return ratios and free cashflow generation in pharma companies and reasonable valuations. Demonetization in India is unlikely to have any material impact on domestic business in our view, except possible trade disruptions in the near term. We believe outcome of US elections will not have any near term impact but may be both positive and negative over long term due to faster generic drug approvals and increased pricing pressure (which is already happening) on higher competition respectively, as new president proposed to remove barriers to entry for drug imports. We expect healthcare companies under our coverage to report revenue and earnings CAGRs of 12.2% and 17% respectively over FY16-19.
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