Sources of productivity growth in the Spanish pharmaceutical industry (1994-2000)

The Spanish pharmaceutical industry underwent an important transformation during the 1990s. To survive under the new market conditions, labs had to refocus their competitive strategies towards increasing productive efficiency or reinforcing research and development (R&D) activities. This paper analyzes the evolution of the productive patterns in a sample of 80 pharmaceutical laboratories that operated in Spain from 1994 to 2000. We estimate Malmquist productivity indexes and decompose them into four sources of productivity change. The results suggest that pure technical efficiency change and the scale change of the technology explain most of the productivity growth observed during the period. The contribution of technical change to productivity growth is negligible, indicating a poor result from R&D activities at least in the groups of Small and Medium-sized labs. (C) 2004 Elsevier B.V. All rights reserved.