Efficiency and Ranking of Indian Pharmaceutical Industry: Does Type of Ownership Matter?

Authors

  • Varun MAHAJAN Indian Institute of Technology Roorkee
  • D. K. NAURIYAL Indian Institute of Technology Roorkee
  • S. P. SINGH Indian Institute of Technology Roorkee

Keywords:

Pharmaceutical industry; India; Ownership; Data Envelopment Analysis; Super-efficiency; Ranking; Slack

Abstract

This paper measures the technical efficiency, super-efficiency, slacks, and input/output targets for large Indian pharmaceutical firms according to ownership by applying Data Envelopment Analysis (DEA) approach. The paper uses raw material, salaries & wages, advertisement & marketing and capital usage cost as input variables and net sales revenue as output variable. The super-efficiency model is applied to rank firms on the basis of efficiency scores. The paper finds that mean overall technical efficiency scores of Private Indian and Private Foreign are higher than Group-owned firms, suggesting that type of ownership affects the performance of a given firm. Further, foreign firms were found to have minimum slacks in inputs, evidently owing to their superior technology, better engineering skills and managerial practices. The study suggests that the inputs, such as, advertisement & marketing expenditure, and also the usage of labour and capital are required to be utilized far more productively in order to improve efficiency.

Published

30-11-2014

How to Cite

MAHAJAN, V., NAURIYAL, D. K., & SINGH, S. P. (2014). Efficiency and Ranking of Indian Pharmaceutical Industry: Does Type of Ownership Matter?. Eurasian Journal of Business and Economics, 7(14), 29-50. Retrieved from https://www.ejbe.org/index.php/EJBE/article/view/131

Issue

Section

Articles