Efficiency and productivity of publicly-traded bio-pharmaceutical companies in Taiwan

The biopharmaceutical industry has been rapidly growing these last few decades due to the breakthroughs in molecular biology since the 1970s. The Taiwan government initiated a program for developing the biotech industry as early as the 1980s. However, Taiwan´s biopharmaceutical companies have failed to deliver any new drugs to the market in the last 30 years. Therefore, the managerial efficiency of these biopharmaceutical companies in Taiwan needs further examination. Traditional managerial efficiency measurements are either output-oriented or input-oriented, respectively. In this study we apply the directional distance function to estimate the relative managerial efficiency of eleven publicly-traded biopharmaceutical firms during the period 2012-2014. We also measure their productivity by means of the Malmquist-Luenberger index. Our results show that, during 2013-2014, the mean productivity of these companies declined, which can be possibly explained by the significant reduction in mean gross sales due to the occurrence of a serious food safety crisis in 2014. Taiwan´s pharmaceutical firms have to pay more attention to their quality control over ingredients that are being used in food and drug production.