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Indian pharmaceutical industry, which accounts for approximately 2.4 percent of the global pharmaceutical industry in value terms and 10 percent in volume terms, is now in the bust phase due to high competition and challenging price environment. Most of the investors experienced to taste bitterness in earnings of the industry in the recent past which is now impacting the sentiments of the sector for the long-term. In the wake of above issues, it is an imperative task to figure out the financial efficiency levels in the Indian pharmaceutical industry. The present study attempts to carry out an in depth analysis into the financial efficiency levels of 91 companies based on cross-sectional data of 2015-16 using DEA approach. The DEA results highlight that the level of financial inefficiency in Indian pharmaceutical industry is a whopping 30.54 percent. Out of this scale size and managerial incapacity are almost equal contributors of inefficiency. Therefore, there is a huge scope for improvement in financial efficiency in the industry. The findings hold an important place in the wake of the overwhelming contribution of Indian pharmaceutical industry to India’s economyand the need for maximizing the shareholder’s value so as to make it attractivefor the investors globally.
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