Sources of Heterogeneity in the Efficiency of Indian Pharmaceutical Firms
AbstractUsing the non parametric approach of Data Envelopment Analysis (DEA) this paper examines firm’s heterogeneity in the Indian pharmaceutical industry by measuring their input and output efficiencies for the period 1991 to 2005. The analysis establishes that even though firms have been able to make efficient use of inputs like labor and raw material the output efficiency of the firms reveals a declining trend. The phenomenon can be attributed to the 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 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 firms to gain higher efficiency but only for the large sized firms.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Connecticut, Department of Economics in its series Working papers with number 2011-22.
Length: 41 pages
Date of creation: Nov 2011
Date of revision:
Contact details of provider:
Postal: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063
Phone: (860) 486-4889
Fax: (860) 486-4463
Web page: http://www.econ.uconn.edu/
More information through EDIRC
Patents; Pareto-Koopmans Efficiency; Data Envelopment Analysis (DEA);
Other versions of this item:
- Subhash C Ray & Mainak Mazumdar & Meenakshi Rajeev, 2010. "Sources of Heterogeneity in the Efficiency of Indian Pharmaceutical Firms," Working Papers id:3334, eSocialSciences.
- L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-21 (All new papers)
- NEP-CSE-2011-11-21 (Economics of Strategic Management)
- NEP-EFF-2011-11-21 (Efficiency & Productivity)
- NEP-IND-2011-11-21 (Industrial Organization)
- NEP-IPR-2011-11-21 (Intellectual Property Rights)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Subhash C. Ray & Yongil Jeon, 2003.
"Reputation and Efficiency: A Nonparametric Assessment of America's Top-Rated MBA Programs,"
2003-13, University of Connecticut, Department of Economics.
- Ray, Subhash C. & Jeon, Yongil, 2008. "Reputation and efficiency: A non-parametric assessment of America's top-rated MBA programs," European Journal of Operational Research, Elsevier, vol. 189(1), pages 245-268, August.
- Aw, B. -Y. & Hwang, A. R., 1995. "Productivity and the export market: A firm-level analysis," Journal of Development Economics, Elsevier, vol. 47(2), pages 313-332, August.
- Subhash C. Ray, 2002. "Did India's Economic Reforms improve Efficiency and Productivity? A Nonparametric Analysis of the Initial Evidence from Manufacturing," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 37(1), pages 23-57, January.
- Evangelia Desli & Subhash C. Ray, 2004.
"A Bootstrap-Regression Procedure to Capture Unit Specific Effects In Data Envelopment Analysis,"
Indian Economic Review,
Department of Economics, Delhi School of Economics, vol. 39(1), pages 89-110, January.
- Evangelia Desli & Subhash Ray, 2004. "A Bootstrap-Regression Procedure to Capture Unit Specific Effects in Data Envelopment Analysis," Working papers 2004-15, University of Connecticut, Department of Economics.
- Ray,Subhash C., 2004. "Data Envelopment Analysis," Cambridge Books, Cambridge University Press, number 9780521802567, April.
- Kankana Mukherjee & Subhash C. Ray, 2005.
"Technical Efficiency And Its Dynamics In Indian Manufacturing: An Inter State Analysis,"
Indian Economic Review,
Department of Economics, Delhi School of Economics, vol. 40(2), pages 101-125, December.
- Kankana Mukherjee & Subhash C. Ray, 2004. "Technical Efficiency and Its Dynamics in Indian Manufacturing: An Inter-State Analysis," Working papers 2004-18, University of Connecticut, Department of Economics.
- Kaliappa Kalirajan & Shashanka Bhide, 2004. "The Post-reform Performance of the Manufacturing Sector in India," Asian Economic Papers, MIT Press, vol. 3(2), pages 126-157.
- TULKENS, Henry & VANDEN EECKAUT, Philippe, 1993.
"Non-Parametric Efficiency, Progress and Regress Measures for Panel Data : Methodological Aspects,"
CORE Discussion Papers
1993016, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Tulkens, Henry & Vanden Eeckaut, Philippe, 1995. "Non-parametric efficiency, progress and regress measures for panel data: Methodological aspects," European Journal of Operational Research, Elsevier, vol. 80(3), pages 474-499, February.
- Tulkens, H. & Vanden Eeckaut, P., . "Non-parametric efficiency, progress and regress measures for panel data: Methodological aspects," CORE Discussion Papers RP -1132, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Kalirajan, K P & Obwona, M B, 1994. "Frontier Production Function: The Stochastic Coefficients Approach," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 56(1), pages 87-96, February.
- R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
- Varian, Hal R, 1984. "The Nonparametric Approach to Production Analysis," Econometrica, Econometric Society, vol. 52(3), pages 579-97, May.
- Rajiv D. Banker, 1993. "Maximum Likelihood, Consistency and Data Envelopment Analysis: A Statistical Foundation," Management Science, INFORMS, vol. 39(10), pages 1265-1273, October.
- Kneip, Alois & Park, Byeong U. & Simar, L opold, 1998. "A Note On The Convergence Of Nonparametric Dea Estimators For Production Efficiency Scores," Econometric Theory, Cambridge University Press, vol. 14(06), pages 783-793, December.
- Duncombe, William & Miner, Jerry & Ruggiero, John, 1997. " Empirical Evaluation of Bureaucratic Models of Inefficiency," Public Choice, Springer, vol. 93(1-2), pages 1-18, October.
- R. Banker & W. Cooper & E. Grifell-Tajté & Jesús Pastor & Paul Wilson & Eduardo Ley & C. Lovell, 1994. "Validation and generalization of DEA and its uses," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer, vol. 2(2), pages 249-314, December.
- Katayama, Hajime & Lu, Shihua & Tybout, James R., 2009. "Firm-level productivity studies: Illusions and a solution," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 403-413, May.
- Leopold Simar & Paul Wilson, 2000.
"A general methodology for bootstrapping in non-parametric frontier models,"
Journal of Applied Statistics,
Taylor & Francis Journals, vol. 27(6), pages 779-802.
- Simar, L. & Wilson, P.W., 1998. "A General Methodology for Bootstrapping in Nonparametric Frontier Models," Papers 9811, Catholique de Louvain - Institut de statistique.
- Majumdar, Sumit K., 1998. "Slack in the state-owned enterprise: An evaluation of the impact of soft-budget constraints," International Journal of Industrial Organization, Elsevier, vol. 16(3), pages 377-394, May.
- Subhash C. Ray, 1991. "Resource-Use Efficiency in Public Schools: A Study of Connecticut Data," Management Science, INFORMS, vol. 37(12), pages 1620-1628, December.
- Fried, Harold O. & Lovell, C. A. Knox & Schmidt, Shelton S. (ed.), 1993. "The Measurement of Productive Efficiency: Techniques and Applications," OUP Catalogue, Oxford University Press, number 9780195072181, September.
- Cook, Wade D. & Seiford, Larry M., 2009. "Data envelopment analysis (DEA) - Thirty years on," European Journal of Operational Research, Elsevier, vol. 192(1), pages 1-17, January.
- Simar, Leopold & Wilson, Paul W., 2007. "Estimation and inference in two-stage, semi-parametric models of production processes," Journal of Econometrics, Elsevier, vol. 136(1), pages 31-64, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kasey Kniffin).
If references are entirely missing, you can add them using this form.