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Efficiency and Ranking of Indian Pharmaceutical Industry: Does Type of Ownership Matter?
Authors: Varun MAHAJAN , D.K. NAURIYAL, S.P. SINGH
Number of views: 427
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.