Institute for Social and Economic Change

Established in 1972 by Professor V K R V Rao, ISEC is an All-India Institute for Interdisciplinary Research and Training in the Social Sciences

Output and Input Efficiency of Manufacturing Firms in India: A Case of the Indian Pharmaceutical Sector – isec

Output and Input Efficiency of Manufacturing Firms in India: A Case of the Indian Pharmaceutical Sector

Abstract

This paper examines the competitiveness of Indian pharmaceutical firms by computing their technical efficiency for the period 1991 to 2005 using the non–parametric approach of data envelopment analysis (DEA). The analysis establishes that even though the output efficiency levels of firms reveal a declining trend, firms have been able to make efficient use of labour and raw material inputs. An analysis carried out to identify the determinants of technical efficiency reveals that in contrast to popular belief, neither R&D and export expenditure nor the use of imported technology improve the technical efficiency of firms.

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