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

Abstract

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.

Green Training and Development Revolutionizing Organizational Performance: The Moderating Role of Green Employee Involvement in the Bangladeshi Pharmaceutical Industry

“…Amid global emergencies and pandemics, pharmaceutical companies often face challenges related to supply chain disruptions, necessitating re-shoring, near-shoring, and swift operational adjustments (Shivdas & Ray, 2021). This emphasizes the significance of maintaining or increasing OC and OP within the industry.…”

“…For the Bangladeshi pharmaceutical industry, adopting a green approach to meet customer needs and supply demands (Shivdas & Ray, 2021) is insufficient; the industry must also concentrate on economic, environmental, financial, and social factors to achieve success and increase profits (Daily et al, 2009;Govindarajulu & Daily, 2004). According to Glavas et al (2010), several concrete processes should be developed and coordinated to successfully implement sustainable corporate strategies.…”

Investing in performance drivers

“…The work of Shivdas and Ray (2021) has revealed some problematic results. Contrary to expected outcomes, their work suggests that, in certain circumstances (rather than in a fixed effect model, when viewed from pooled regression and regression based on averages) investment in R&D actually restricts growth and ultimately harms performance and profitability.…”