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Productivity and technical changes in the Indian pharmaceutical industry

Author

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  • H Saranga

    (Indian Institute of Management Bangalore)

  • R D Banker

    (Fox School of Business, Temple University)

Abstract

We study the productivity change and factors driving this change in the Indian pharmaceutical industry during 1994–2003, in the backdrop of economic liberalization and change in regulatory norms. We use a non parametric Data Envelopment based-methodology to estimate productivity change and decompose it into technical and relative efficiency changes. We find that, the long-term strategic measures by a section of innovative firms that foresaw the implications from competitive forces of globalization and a change in the regulatory environment have sphereheaded the technical change. Consequently, few innovative firms, characterized by greater R&D investments, transition into higher value-added products and businesses as a step towards more technically sophisticated new drug development have pushed the production frontier, increasing the technical and productivity gains. The higher technical and R&D capabilities and wider new product portfolios of multinational companies also have contributed to the positive technical and productivity changes in the Indian pharmaceutical industry.

Suggested Citation

  • H Saranga & R D Banker, 2010. "Productivity and technical changes in the Indian pharmaceutical industry," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(12), pages 1777-1788, December.
    • Handle: RePEc:pal:jorsoc:v:61:y:2010:i:12:d:10.1057_jors.2009.142
    DOI: 10.1057/jors.2009.142
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    2. Chiranjib Neogi & Atsuko Kamiike & Takahiro Sato, 2012. "Identification of Factors Behind Performance of Pharmaceutical Industries in India," Discussion Paper Series DP2012-23, Research Institute for Economics & Business Administration, Kobe University.
    3. Varun Mahajan & D. K. Nauriyal & S. P. Singh, 2020. "Domestic market competitiveness of Indian drug and pharmaceutical industry," Review of Managerial Science, Springer, vol. 14(3), pages 519-559, June.

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