This study looks into one of the prominent examples of success in India—the Indian pharmaceutical sector. The study tries to draw a performance comparison between high, medium and low category firms within this sector and also tries to assess the most significant variables contributing towards the Compound Annual Growth Rate (CAGR) for firms within each category. Eighty four firms of the Indian pharmaceutical sector formed the sample and they were analyzed for a period of 10 years from 1997-2006. Advertising and R&D intensities were considered along with labor productivity as independent variables to assess their impact on the CAGR. Regression results revealed that labor productivity donned the cap of significant contribution in the high category, while advertising intensity prevailed in the low category. But the medium category indicated non-feasibility for regression. On a comprehensive note, there was no significant performance variation among the firms in the three categories considered.

The past four decades have witnessed tremendous growth in the pharmaceutical sector in India. The success of this sector can be attributed to the synergy among various factors like the government, industrial and public health policies, tailored Intellectual Property Rights (IPR) laws, national scientific and technological capability development, adoption of cost-effective manufacturing processes and proactive response to the available business opportunities domestically as well as globally. Also the fast-paced development of the cost-effective, alternative and non-infringing patent processes by the Indian scientific and technical personnel has led to the growth of this sector. The efforts of the Indian scientific and technical personnel have been largely supported by the Indian Patent Act of 1970, which forbids product patents in India.

Though this sector is growing rapidly and is getting acknowledged worldwide for its contribution, it is not devoid of certain drawbacks. It is currently marred by 15% to 25% of substandard and counterfeit drugs that now exist within this sector. The Government of India is trying to curb this unfavorable situation with the setup of an expert committee with representation from the industry and industry associations which will recommend measures to deal with the problems of substandard and counterfeit drugs.

The growth in related industries like biotechnology, chemistry, IT and other convergent technologies has contributed to the advantageous growth of the Indian pharmaceutical sector. The adoption of globally relevant policies for this sector coupled with the support from the government, institutions and industry players would assure its positive performance on the world’s stage in the years to come.

Management Research Journal, Multinational Companies, Indian Pharmaceutical Sector, Financial Management, Working Capital Management, Public Sector Enterprises, Inventory Management, Credit Management, Multinational Private Sector Companies, Multiple Regression Techniques, Pharmaceutical Companies.