Resource utilization by pharmaceutical companies in India: Emphasis on R&D, labor and capital

The growing competition in the Indian Pharmaceutical Industry has emphasized that they utilize resources in an effective manner to ensure sustainable growth. Using data of 116 India pharmaceutical companies for the year financial year 2013–14, we find that R&D expenditures are statistically significant along with expenditure on physical and human capital in explaining the sales performance. We also present an alternative framework based on resource utilization for mapping and measuring the performance of a firm and its competitors. Our study shows that the average technical efficiency for the Indian Pharma firms is low and there is also wide variation among the firm. We conclude that resource optimization is a key for the long term sustainable growth of any firm.