Analysis the Efficiency and Productivity of Indonesian Pharmaceutical Public Companies Using Data Envelopment Analysis

Research output: Contribution to journalArticlepeer-review

Abstract

As one of the biggest medicines market in the South East Asia, the pharmaceutical industry inIndonesia has a huge potential market. However, the majority supply of raw materials has been imported.Besides, regulations of the Health Ministry and the Trade Ministry have still hampered mostplayers in Indonesia pharmaceutical industry. Therefore, this study used Data Envelopment Analysis(DEA) models to analyze efficiency and productivity change in the Indonesian pharmaceutical industrybetween 2006 and 2011, listed in the Indonesia Stock Exchange and also supported by applyingefficiency financial ratio. This study finds that the decision for the most relatively efficient companyis different using DEA compared to efficiency financial ratios, yet DEA has better measurement ofefficiency. It is proven by one of State-owned Enterprises has been evaluated underperformed by thefinancial ratio analysis, unexpectedly is efficient using the DEA approach. This study has also proposedand tested a hypothesis on the average efficiency to check if the domestic and foreign pharmaceuticalcompanies differ in their efficiency but the result implies that there is no significant statisticaldifference among them. This study indicates that firms having dominant contribution in selling overthe-counter medicines are more efficient than selling ethical medicines. Lastly, technological changecontribution has more influence to productivity change instead of pure technical efficiency change inIndonesia pharmaceutical companies.
Original languageEnglish
JournalIndonesian Capital Market Review
Volume6
Issue number2
DOIs
Publication statusPublished - 2014

Fingerprint Dive into the research topics of 'Analysis the Efficiency and Productivity of Indonesian Pharmaceutical Public Companies Using Data Envelopment Analysis'. Together they form a unique fingerprint.

Cite this