Productivity Changes of Pharmaceutical Industry in Bangladesh: Does Process Patent Matter?

Azad, Md. Abul Kalam and Munisamy, Susila and Kwek, Kian Teng and Mutalib, Muzalwana Abdul and Saona, Paolo (2018) Productivity Changes of Pharmaceutical Industry in Bangladesh: Does Process Patent Matter? Global Business Review, 19 (4). pp. 1013-1025. ISSN 0972-1509

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Official URL: https://doi.org/10.1177/0972150918772966

Abstract

The large pharmaceutical companies in Bangladesh have currently expertise in process patent activities rather than in product patent. Such industry condition can easily generate a high profile in production and sales. However, achieving sustainability in the long run using automation and purchase of the patent only seems unsuitable. In the last two decades, it is found that both the medium and big size companies have leaned on introducing automation in their existing product plants, improving them in nothing but production. The article measures technical efficiency using data envelopment analysis (DEA) over the period of 2009–2013. We use one output—annual sales—and three inputs, namely, (a) fixed asset, (b) raw material cost and (c) cost of salary to run Malmquist total factor productivity (TFP) index. The major contributor of TFP growth is found due to the technological positive growth with a value of 10.8 per cent annually. Moreover, all changes of technical efficiency, pure efficiency and scale efficiency have regressed with values of 5.5 per cent, 2.1 per cent and 3.5 per cent, respectively. Thus, the gains in productivity are entirely due to technological advancements and not for technical improvements. The main source of inefficiency in pharmaceutical industry is scale inefficiency rather than pure technical inefficiency. Limitations and policy implications are addressed.

Item Type: Article
Uncontrolled Keywords: Efficiency; data envelopment analysis; Malmquist productivity index; pharmaceutical
Subjects: H Social Sciences > HD Industries. Land use. Labor
R Medicine
Divisions: Faculty of Economics & Administration
Depositing User: Ms. Juhaida Abd Rahim
Date Deposited: 18 Sep 2019 07:28
Last Modified: 18 Sep 2019 07:28
URI: http://eprints.um.edu.my/id/eprint/22422

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