Abstract
The Indian Pharmaceutical Industry is ranked third largest by volume and fourteenth by value. It thus accounts for 10% of world’s production by volume and 1.5% by value according to Department of Pharmaceuticals, Government of India. Recognizing the immense potential for growth of Indian pharmaceutical industry and its direct impact on Indian economy the present paper tries to analyze the market structure of the Indian pharmaceutical firms and assess how the sustainable profitability of firms is affected using structure conduct performance model. The study founds out the sustainable profitability is statistically related to firm size, export and import, raw material expenses, power use and wage intensity but there seems to be insignificant effect of market share and mergers and acquisition on firm’s performance in terms of sustainable profitability.
Highlights
The Indian pharmaceutical sector has immense potential for growth and its direct impact on Indian economy warrants to lookup the market structure of the Indian pharmaceutical firms
The critical role of understanding the market structure is evident in determining effective economic policy related to anti-trust laws, intellectual property rights, industry competition acts and regulations and which has an overall lasting effects on international trade andties
How do the Indian pharmaceutical firms make barriers to entry whether by making strategic investments in advertisement or by increasing Research and development? The proposed research tries to throw some light on these unanswered questions in context of Indian pharmaceutical sector
Summary
The Indian pharmaceutical sector has immense potential for growth and its direct impact on Indian economy warrants to lookup the market structure of the Indian pharmaceutical firms. It is quite important to determine the market structure and its relationship with performance in terms of sustainable profitability across markets for both goods and services. It is not so surprising that economist have studied the relationship between market structure, its impact on firm behavior and performance in the field of industrial organization (IO).
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