And these numbers perhaps reveal the secret of depressed pharma stocks. The pharmaceutical sector is a growth story, but not as fast growth as the technology sector. And investors flock only at the flavour of the day.

Key positives of the sector
Dominance of well managed companies in the sector - Indian as well as foreign, with strong brands, wide distribution and strong research base; with a large and aging Indian population, health care is likely to remain a high growth industry, immune to economic recession and commodity cycles; the sector is poised for explosive growth with expected increase in spending on healthcare, the likely phasing out of the Price controls and Product Patenting for WTO norms compliance, the likely expansion of the organised healthcare with the opening of insurance business; for environmental pressures, the highly fragmented sector is likely to undergo massive consolidation and reliable companies (These companies have been around for many years now, which makes the estimation of their earnings and their true worth a lot more realistic).

If you'd like to boost your portfolio's exposure to drug and healthcare stocks, here are the good funds that will help you do so.

Kothari Pioneer Pharma Fund, launched in April '99 has returned 0.6 per cent since its launch. The fund's NAV has been able to crawl above par levels after a renewed interest in the sector in the recent past. The fund underperformed the I-Sec pharma index during the rising markets but has weathered the falling phase much better.

The fund touched a high of Rs 15.74 in October '99 and has maintained a higher allocation to MNCs between 40-50 per cent. However, the top holding of the fund is Dr Reddy's Laboratories, which accounts for 15 per cent of net assets. The fund currently has a size of Rs 50 crore which is a growth of about 70 per cent over its initial mop-up.

SBI Magnum Pharma Fund, launched in July '99 is down 3.3 per cent since launch. The initial investments of the fund made in the post-cyclical rally of April-June '99 enabled the fund to pick up stocks at relatively lower levels. As a result, despite the late entry, the fund was able to ride the short-term tide in these stocks and touched high of Rs. 15.65. However, in the downslide, the loss was more pronounced. The fund also has a reasonably higher allocation to MNCs to the extent of 30-45 per cent.

UTI Pharma & Healthcare was launched at the same time as Magnum Pharma Fund. The only fund with positive return of 2.6 per cent. The highest NAV that the fund touched was Rs 14.51 around the same time as its counterparts.

The fund over time has reduced its allocation to MNC companies. For reasons best known to the fund manager, there is even convergence between pharma and telecom in UTI's pharma fund! The fund's portfolio has Himachal Futuristic, accounting for 5 per cent of the portfolio.

Some other funds with a relatively high allocation to the sector are Alliance Buy India fund with 41 per cent exposure and Birla MNC and Tata Life Sciences and Technology fund with 25 per cent each. Although the sector has finally been given the tax breaks for R&D work, the progressive tax on the export profits will certainly have an impact on the earnings of the companies. But the impact of the tax on exports can be offset, given the potential that it is still to be tapped within the domestic market itself. The current low valuations present an attractive opportunity to the investors for bottom fishing.