Performance Analysis of the Indian Pharmaceutical Industry: A Global Outlook

Cover of Performance Analysis of the Indian Pharmaceutical Industry: A Global Outlook
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(15 chapters)
Abstract

This chapter introduces the development of the Indian pharmaceutical industry (IPI) in different phases such as till the 1970s, with the modification of the Indian Patent Act 1970, i.e. after the 1970s, with the trade liberalisation and the signing of Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement and in the product patent regime, i.e. since 2005. This chapter also discusses the position of IPI in the global economy along with the top medicine-producing countries in the world. The objectives of the present study are presented separately with the firm-level data, state-level data as well as All India and global-level data. All the research questions are also presented in this chapter related to the firm-level data, state-level data as well as All India and global-level data. Then the relevance of the present study in the existing literature is discussed considering each of the book chapters separately while outlining the structure of the present study.

Abstract

This chapter discusses a survey of literature on efficiency, productivity and other issues related to pharmaceutical industry in India and across the globe. Econometric theoretical literature on technical efficiency (TE) as well as econometric theoretical literature on total factor productivity growth (TFPG) are discussed in separate sections. Individual sections discuss studies on the performance of the pharmaceutical industries in the Indian context, studies on the performance of the pharmaceutical industries in the international context, studies on the efficiency of Indian pharmaceutical industry (IPI), studies on the TFPG of the IPI, other studies on IPI and also studies on the performance of the pharmaceutical industries in the international context (other than India). This chapter discusses the existing study highlighting the gaps and presents the connection of the present study with the existing literature in the conclusion section.

Abstract

This chapter estimates the efficiency of the IPI using non-parametric method of data envelopment analysis (DEA) approach. For doing that it measures output-oriented technical efficiency (TE) of IPI considering each firm as a decision-making unit. Also, the factors behind the variation in TE are identified using panel regression. It also estimates total factor productivity growth (TFPG) of the IPI. For doing that it measures TFPG considering each firm as a decision-making unit using non-parametric method of DEA approach. Also, the major factors responsible for variation in TFPG of IPI are found using panel regression. This chapter then compares the efficiency and productivity of IPI. For performing that it compares TE and TFPG of IPI. This chapter also tries to identify the common factors responsible for changes in these two performance indicators, i.e. TE and TFPG. Another important contribution of this chapter is that it verifies the presence of structural breaks (which may appear due to changes in economic regime over time) in the TFPG series at the firm level by using panel structural break methodology.

Abstract

This chapter investigates the performance of the Indian Pharmaceutical Industry (IPI) using state-level data. It looks at the performance of pharmaceutical industries in major Indian states. For doing that it estimates technical efficiency and total factor productivity growth (TFPG) of Indian states. This chapter helps to compare the Indian states as well as to identify the position of the states in the IPI. This chapter attempts to find out the factors affecting TE and TFPG of IPI employing data on 17 major selected states of India. Another important contribution of this chapter is that it verifies the presence of structural breaks (which may appear due to changes in economic regime over time) in the TFPG series at the state level by using panel structural break methodology.

Abstract

The present chapter tries to understand whether the total factor productivity (TFP) of the pharmaceutical industry across the 17 major states of India converges or not in terms of sigma and beta convergence over the period 1983–1984 to 2019–2020 by employing the conventional sigma convergence as well as the modern panel data approach of beta convergence. The novelty of the present chapter is that TFP is found by estimating production function by a semi-parametric approach which addresses the endogeneity problem. Then it is checked whether the series of TFP of Pharmaceutical Industries across the major selected states of India converges or not employing the sigma convergence and beta convergence hypothesis having a balanced panel with 476 observations. The empirical result suggests sigma divergence but beta convergence based on all the available panel unit root tests. Beta convergence is also confirmed by the tests based on dynamic panel models of the first differenced generalised method of moments (GMM) and system GMM.

Abstract

Indian pharmaceutical industry (IPI) is one of the few industries which has been affected in a major way due to TRIPS agreement as from 2005 the existing process patent regime gave way to the product patent regime although the process started since 1995. In such an environment, it will be interesting to examine whether there has been any improvement in the performance of IPI after 1995, i.e. after the period of first version of the product patent regime. For this, an econometric analysis has been carried out for some selected variables like output, employment, productivity of labour, productivity of capital, capital labour ratio, export intensity, export price, import intensity and price by applying a recent development using unit root test to estimate the break point of these major variables using All India level data from the period 1983–1984 to 2007–2008. The distinguishing feature of this method is that the break point is not dependent on prior belief of the researchers; rather it is endogenously determined depending on time series properties of variables. The results of estimation suggest that seven out of nine variables considered converges towards a deterministic trend. Among these seven variables, for four the break point turned out to be years after 1995. Variation in the growth performance among the variables is strongly evident. There is an improvement in the performance of output, employment and price after 1995. The study clearly identifies the variables whose performance is satisfactory and other showing relatively poor performance and hence needs special attention.

Abstract

This chapter examines the performance of the Indian pharmaceutical industry and pharmaceutical industries of leading countries namely the United States, China, Germany, Japan, Ireland, Switzerland, France, Italy, Belgium, United Kingdom, Spain, Brazil, Canada, South Korea and the Netherlands. This chapter looks at the trends of three lead variables namely output, export and import of the IPI and pharmaceutical industries of leading countries and tries to compare the IPI with the other countries in terms of the above three variables and thus helps to identify the position of IPI in the global context. Also, this chapter verifies the presence of structural breaks (which may appear due to changes in economic regime over time) in the different series of production, export and import using panel structural break methodology.

Abstract

This chapter summarises the whole study and makes the concluding observations on each of the seven chapters and recommends some policies for the betterment of the pharmaceutical industries in different Indian states and for the Indian pharmaceutical industry as a whole.

Cover of Performance Analysis of the Indian Pharmaceutical Industry: A Global Outlook
DOI
10.1108/9781837977437
Publication date
2025-02-03
Authors
ISBN
978-1-83797-744-4
eISBN
978-1-83797-743-7