A Study of the Impact of Value-Added Efficiency on Profitability and Market Value in the Indian Pharma Industry

The aim of this paper is to highlight the growing influence of Intellectual Capital (IC) on the profitability and market valuation, especially in knowledge-based industries. The scope of this paper is restricted to the Indian Pharmaceutical Industry, which is highly dependent on IC. This study employs the measure of Value-Added Intellectual Coefficient (VAIC) to assess impact of IC on the profitability and market valuation and to assess the growth of VAIC and its components among the companies over the years selected for the study. The study uses 22 Pharmaceutical companies listed in the Bombay Stock Exchange for a period of 12 years from the financial year 2008-09 to 2019-20. By using Path Analysis, the study demonstrates that the components of VAIC have an impact on the ROCE and market value, which has only grown as compared to earlier studies & years. The study also demonstrates that high sales and profits need not necessarily result in high VAIC. Received: 7 October 2021 / Accepted: 24 November 2021 / Published: 3 January 2022

An Examination of India's Pharmaceutical Industry Through the Lens of Dependency Theory

Dependency theory portrays certain countries as core countries and others as periphery countries. It portrays the relationship between the core and the periphery as a parasitic, and controlling, one. This paper examines global pharmaceuticals through the lens of dependency theory, which would predict that core countries try to exert control over the pharmaceutical industry in periphery countries through patents, licensing, capital controls or other means. They also extend their activities to conducting pharmaceutical testing of dangerous drugs in Third World (or periphery) countries. Evidence suggest that there is a history of major multinational pharmaceutical companies, which are headquartered in developed countries, monopolizing life-saving drugs and marketing unnecessary medical consumer products in periphery third world countries. The case of India, however, took a different discourse that cannot be fully explained within the framework of dependency theory; the Indian pharmaceutical industry has witnessed an impressive growth over the past several decades.

Investing in performance drivers

Purpose: This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design: This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings: Heavy and unrestrained investment in R&D in the Indian pharmaceutical industry can negatively impact the performance and revenues of such firms. Originality: The briefing saves busy executives, strategists and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Research and development efforts in Indian pharmaceutical industry: How much does it matter?

Purpose The economic value generated by a firm is determined by the efficient management of its resources within a given business environment. The Indian pharmaceutical industry is highly competitive and has attracted huge investments in research and development (R&D), including financing of biotechnological ventures, clinical trials, contract research activities in addition to traditional product development and filing of regulatory requirements. This study aims to identify the specific resources that are significant drivers of performance. Design/methodology/approach Data analysis uses panel regression based on an extended version of the Cobb-Douglas production function, where the dependent variable firm performance is measured using annual sales whilst the independent variables include labour, capital, R&D investments and marketing efforts. This study uses data spanning a period of 7 years (2012–2018) collected from 151 Indian pharmaceutical firms. Findings Contrary to the general understanding that R&D investments tend to create profitable opportunities, it is observed that R&D expenditures have a negative impact on sales in the short to medium time period. This study also highlights the finding that in addition to the positive impact of labour and capital, marketing efforts are more likely to have a greater positive influence on firm performance than R&D. Originality/value The uniqueness of the paper lies not only in the counterintuitive findings but also in the methodology used to capture the impact of the lagged effect of R&D investments on firm performance. Specifically, a regression model-based both on panel data and time-series averages is used to examine the said impact.

Has the Product Patent Regime Impacted Mergers and Acquisitions? Unveiling with a Systematic Literature Review

Mergers and acquisitions (M&As) are one of the most practised inorganic strategies to multiply economic profits, acquire new product capabilities, expand markets, diversify risk and bring synergistic gains. The purpose of the study is to review the literature related to companies’ financial analysis, pre and post-M&A after the Patents (Amendment) Act, 2005. The study follows a systematic literature review (SLR) process where 128 research publications from 2005–2020 are examined after applying the required review protocols. SLR found a deficient practical contribution of the limited literature on the three perspectives, namely, from accounting, productivity and managerial perspectives at the international level. Furthermore, there is also a dearth of studies from the three perspectives for the Indian Pharmaceutical Industry (IPI) post the Patents (Amendment) Act, 2005. This review finds that there is a need for a unified approach for evaluating the success of M&A in IPI. Future studies can encourage research that ties these three perspectives to a common thread and furnishes a holistic approach for analysis. It will further bolster the research to provide practical insights to companies’ rooting for a robust financial analysis.

Modelling the Enablers of Green and Sustainable Practices in Indian Pharmaceutical Industry- An ISM Approach

Rising environmental issues and production of hazardous waste by the pharmaceutical industry has created a harmful impact on society, the environment, and pharmaceutical companies' reputation. It has given rise to the need to adopt and integrate green and sustainable pharmaceutical company’s practices to mitigate environmental degradation's negative effects. The aim is to identify hierarchical interrelationships between these variables and determine their significance through MICMAC analysis and Interpretive Structural Modelling (ISM). The study identified ten significant enablers by exploring literature review and consultation with the industry experts from the Indian Pharmaceutical sector, which led to an understanding of their interrelationships. A four-level model was derived through the ISM technique. Pressure from the customer was found to be the most important enabler, followed by top management commitment and regulation. These enablers carry high driving power. The model developed through this study will help the pharmaceutical companies and their managers to implement green processes systematically.