The Sources of Heterogeneity in the Efficiency of Indian Pharmaceutical Firms

Part of the Contributions to Economics book series (CE)


Using the non parametric approach of Data Envelopment Analysis (DEA) this chapter examines firm’s heterogeneity in the Indian pharmaceutical industry by measuring their input and output efficiencies. The analysis establishes that even though firms have been able to make efficient use of inputs like labor and raw material, the output efficiency reveals a declining trend. The phenomenon can be attributed to differences in the size of firms and the presence of economies of scale in production. Further analysis reveals the importance of firm specific factors like its strategies and structure for variation in output efficiency. We find that firms that are vertically integrated with down-stream raw-material industry are more efficient. We also find that R&D is a possible strategic option for only the larger sized firms to gain higher efficiency.


Data Envelopment Analysis Capital Stock Efficiency Score Output Efficiency Inefficient Firm 
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© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Centre De Sciences Humaines (CSH)New DelhiIndia

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