MEASUREMENT OF TOTAL FACTOR PRODUCTIVITY AND
ITS COMPONENTS IN INDIAN PHARMACEUTICAL FIRMS:
AN APPLICATION OF DE
V Vijayalalitha, Pratibha Garg, Dr Giriraj Kiradoo, KM Ashifa.
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 are collected from CMIE- PROWESS for the firms that are having sales
more than Rs. 100 Crores based on the year 2009-10. 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 analysis was carried out in four stages. In the stage- I, all the firms were included, in the stage II the firms
which are less than Rs. 500 Crores are included, in Stage III the firms which are between Rs. 500 to 1000 Crores were included
and in Stage IV the firms which are more than Rs. 1000 Crores has been included. It is evident from results that the year 2017-18
recorded highest TFP growth, which is due to technical efficiency. The year 2012-13 recorded the lowest TFP changes, which is
due to technological changes. It is also 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.
Key words: Data Envelopment Analysis, Indian Pharmaceutical Industry, Malmquist index, total factor productivity, Technical
Efficiency, Technological changes.
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