Productivity Growth and Its Determinants in Indian Pharmaceutical Industry: A Firm Level Analysis

Abstract

Nowadays Indian Pharmaceutical Industry (IPI) has emerged as one of the most vibrant segments of the Indian manufacturing sector and deserves special attention. Most often the case of IPI is projected as the most successful case of a developing country like India scaling up the indigenous capabilities (Kumar 2003). Recent study makes an in-depth analysis of the productivity growth and its determinants of the Indian pharmaceutical industry using Data Envelopment Analysis (DEA). CMIE Prowess database is considered as source of data and 1991-92 to 2019-20 is considered as the period of study. Forty firms are chosen from 528 firms which contributes 80.5 percent of total share of IPI to GDP. Maximum total factor productivity growth 6.58 percent is observed for Sanofi Healthcare India Pvt. Ltd. and -4.6 percent is the minimum obtained in case of Micro Labs Ltd. Among the determinants of TFPG Profitability, R&D expenditure, market share, size of the firm play vital role in the productivity growth. So far as the environmental issues are concerned the industry is polluting the environment as per unit use of energy is increasing over the study period.