Measurement of total factor productivity in Indian pharmaceutical industry: An application of Data Envelopment Analysis

Abstract

The present paper evaluates total factor productivity growth and its components using Malmquist Data Envelopment Analysis for the period of 2009-10 to 2019-20. The data were collected from CMIE- PROWESS for the firms that are having sales more than Rs. 100 Crores based on the year 2009-10. The total of 96 firms were used for the analysis and are in terms of rupees in Crores. Total sales, cost of raw materials, salaries and wages, cost of power and fuel, and cost of Advertising and marketing are used in the analysis. The result reveals that the year 2017-18 recorded highest TFP growth mainly due to technical efficiency. The year 2012-13 recorded the lowest TFP changes due to technological changes. It is evident from the result that negative TFP growth is reported most of the firms during the study period. The main reason for lowest TFP growth is due to technological change in Indian Pharmaceutical firms.