TOTAL FACTOR PRODUCTIVITY AND EFFICIENCY OF BANGLADESH PHARMACEUTICAL INDUSTRY

Abstract

Withanannual two-digit growth rate, Bangladesh's pharmaceutical industry is currently able to satisfy about 97 percent of all domestic demand. But the question of how well the corporations produce is raised. The study employs Data Envelopment Analysis (DEA) to gauge the technological efficiency of Bangladesh's pharmaceutical sector from 2011 to 2021. With one output annual sales and four inputs 1. fixed asset cost, 2. raw material cost, 3. Electricity and gas and 4. salary cost. we employ the non-parametric DEA. The analysis's findings show that the Malmquist total factor productivity index (TFPCH), which has a value of 5.2 percent yearly, has maintained a slightly increasing trend throughout the study period. Additionally, with a value of 10.8% positive increase per year, technical progress has been found to be the main driver of TFPCH growth. Furthermore, with values of 5.1 percent, 3.1 percent, and 345 percent, respectively, all changes in technical efficiency, pure efficiency, and scale efficiency have regressed. Due to technical advancement and an overall decline in efficiency, productivity as a whole increased. Thus, rather than increased efficiency, the increases in productivity are solely the result of technological breakthroughs. Instead of pure technical inefficiency, scale inefficiency is the primary cause of inefficiency in the pharmaceutical sector. There have two type of company bulk drug manufacturers and bulk drug and formulation drug both manufacturers. Among them bulk drug manufacturers show better efficiency than other.