D. K. Nauriyal

Technical efficiency analysis of the Indian drug and pharmaceutical industry

Purpose – The purpose of this paper is to measure technical efficiencies, slacks and input/output targets for 50 large Indian pharmaceutical firms. Design/methodology/approach – The data are collected from Prowess of Centre for Monitoring of Indian Economy for the financial year 2010-2011. This study uses data envelopment analysis approach, taking raw material, salaries and wages, advertisement and marketing and capital usage cost as input variables and net sales revenue as output variable. Findings – The paper finds that out of 50 firms, nine firms were overall technical efficient while 19 firms pure technical efficient and thus defined the efficient frontier. The BCC model identified that the inefficiency is either due to inefficient managerial performance or scale utilization. Further, firms are classified as high, low and middle robust firms on the basis of peer count. The study also analysed the slacks which were found to be significant in regard of some inputs, especially advertisement and marketing...

Trade performance and revealed comparative advantage of Indian pharmaceutical industry in new IPR regime

Purpose – The purpose of this paper is to examine the trade performance, revealed comparative advantage and trade specialisation indices of Indian pharmaceutical in the post-modified Indian Patent Act. Design/methodology/approach – The main data sources for this paper are United Nations Conference on Trade and Development, PROWESS of Centre for Monitoring Indian Economy, Government of India reports and Reserve Bank of India databases. Revealed comparative advantage index (RCAI) and trade specialisation coefficient (TSC) have been calculated in the study. Findings – India is ranked third in regard of TCS, far behind Ireland and Israel. While Ireland has moved up the value chain faster after 1995, Israel has moved up swiftly after 2000 through global production network and supply chain. The Indian pharmaceutical industry, on the other hand, has largely capitalised on its low-cost production of generic drugs and a large domestic market. The RCAI also supports the results of TSC. India is positioned at 11th p...

Economic Growth, Globalisation and Human Capital: Empirical Evidence from India

This paper examines the contribution of human and physical forms of capital on the economic growth of India. The study was primarily undertaken not only because research on this issue has important policy implications but also because there are not many studies on India which conclusively point towards the relative importance of both forms of capital in the Indian growth trajectory. The impact of physical and human capital on real gross domestic product (GDP) of India is estimated with a log-linear model; where GDP per capita as dependent and per-labour physical capital (PC) and per-labour human capital (HC) in conjunction with the dummy variables, D and D1 for policy reform and political instability, respectively, as independent variables for the reference period 1975-76 to 2004-05. Further, switching regression is used to capture the impact of structural changes arising out of the initiation of the policy of openness and globalisation after 1990. The results, robust in nature, suggest that post-liberalisation growth in India owes more to the human capital than to physical capital.

Firm level profitability determinants in Indian drugs and pharmaceutical industry

Purpose This paper aims to analyze the firm level determinants of profitability of Indian drug and pharmaceutical industry which is known for historically weak R&D initiatives. Design/methodology/approach The change in the economic environment brought out by the Trade-Related Intellectual Property Rights (TRIPS) compliance, this industry was found to have fast adjusted to a new working environment by substantially modifying its strategies. This study aims at using inflation-adjusted panel data for a period 2000-2013 and applies the fixed effects regression model with cluster standard errors. Findings The study has found that export intensity, A&M intensity, firm’s market power and stronger patent regime dummy have exercised positive influence on profitability. The negative and statistically significant influence of R&D intensity and raw material import intensity points to the need for firms to adopt suitable investment strategies. Research limitations/implications The study suggests that firms are required to pay far more attention to optimize their operating expenditures, advertisement and marketing expenditures and improve their export orientation, as part of the long-term strategy. Originality/value This study uses a recent data-set to analyze the firm level profitability determinants in the Indian pharmaceutical industry and captures the effect of change in profitability pre and post-TRIPS.

Efficiency and Its Determinants: Panel Data Evidence from the Indian Pharmaceutical Industry:

The study determines the efficiency of Indian pharmaceutical firms and its determinants in the pre- and post-product patent regime. Overall inefficiency in the industry is higher due to the inefficient conversion of inputs into output rather than through scale inefficiency. The study finds that the Product Patent Act has a negative impact on efficiency. Ownership, capital imports intensity and size variables are positively related with efficiency scores whereas age, time dummy and size square variables are inversely related. The study supports the finding that with an increase in mergers and acquisitions, a movement towards diversifying operations, the use of advanced imported foreign technology, investment in fixed assets and judicious allocation of resources for marketing activities could improve firm performance. For future policy implications, the small firms may either merge into bigger entities or manufacture pharmaceutical products for other companies, so as to raise operational scale and improve capacity utilisation. JEL Classification: C02, C61, D2, L65

Do innovative activities matter to Indian drug and pharmaceutical firms? An application to export performance

This paper analyzes the R&D and exports profile of Indian drug and pharmaceutical industry during the period 2000–2014. The present paper examines how R&D expenditure and patent impact export performance of the Indian drug and pharmaceutical firms. The study period from 2000 to 2014 has been characterized by a rapid growth in industry’s innovative activity, as part of the strategic shift, induced by the Patents (Amendment) Act, 2005. Using the real financial data for the top 91 publicly listed Indian domestic pharmaceutical companies, the study provides new evidence on firm-level export performance of the Indian drugs and pharmaceutical industry. Generalized Method of Movements estimator developed by Blundell and Bond is applied. The empirical findings of the study reveal that increased R&D intensity, higher patent count and firm’s size are important determinants of firm-level export performance.

Software Exports from India: An Econometric Exploration

The study has applied auto regressive distributed lag approach to examine determinants of software exports from India. The results suggest that in short- and long-run openness, human capital measured by higher education enrollment, and policy measures executed by the Government of India have played decisive role in endorsing software exports from India. In the short run, foreign direct investment and gross domestic product of high-income Organization for Economic Co-operation and Development countries helped to improve software exports from India. But real effective exchange rate has little impact on software exports. There is a stable long-run relationship among variables and supports the hypothesis of learning by exporting.

R&D and Performance Analysis of Indian Pharmaceutical Firms: An Application of DEA

The purpose of the study is to examine the efficiency of R&D and non-R&D firms in Indian pharmaceutical firms from 2000 to 2010 comprising both pre and post product patent periods by applying data envelopment analysis technique. The analysis based on a panel sample data set of 141 firms, drawn from PROWESS database of CMIE, measures efficiency by using one output and four inputs. Net sales revenue is taken as output and raw material cost, salaries and wages, advertisement and marketing cost and capital cost as inputs. The study found that efficiency of R&D firms was higher than that of non-R&D intensive firms for all the years. Nevertheless, both types of firms were found to have a good scope for improvement in their resource use efficiency without affecting their level of output.