International Journal of Business and Economics Volume 8, No. 2 August, 2009

Comparing the Efficiency and Productivity of the Indian Pharmaceutical Firms: A Malmquist-Meta-Frontier Approach

Mainak Mazumdar

Centre for Economic Studies and Policy, Institute for Social and Economic Change, Bangalore, India

Meenakshi Rajeev

Centre for Economic Studies and Policy, Institute for Social and Economic Change, Bangalore, India

Abstract

This paper examines the technical efficiency, technological gap ratio, and productivity change of Indian pharmaceutical firms across different groups. The groups are formed based on size, strategies, and product varieties. The analysis indicates that vertically integrated firms that produce both bulk drug and formulation exhibit higher technological innovation and efficiency. However, in contrast with popular belief, the analysis reveals that increased export earnings do not necessarily lead to higher efficiency.

Keywords：data envelopment analysis, efficiency, global frontier, group frontier, pharmaceutical, technological gap ratio, Malmquist productivity index.

JEL Classifications：C14, C61, D21, L6.

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