A Study of the Impact of Value-Added Efficiency on Profitability and Market Value in the Indian Pharma Industry

Shireen  Rosario; Chandra  Sen Mazumdar

doi:10.36941/ajis-2022-0019

Authors

Shireen Rosario Lecturer, College of Commerce & Business Administration, Dhofar University, PB 2509, Salalah 211, Oman
Chandra Sen Mazumdar Assistant Professor, Department of Management Studies, MS Ramaiah University of Applied Sciences, New BEL Road, Bangalore, India

DOI:

https://doi.org/10.36941/ajis-2022-0019

Keywords:

Human capital, Indian, Intellectual Capital, Market Value, Value Added

Abstract

The aim of this paper is to highlight the growing influence of Intellectual Capital (IC) on the profitability and market valuation, especially in knowledge-based industries. The scope of this paper is restricted to the Indian Pharmaceutical Industry, which is highly dependent on IC. This study employs the measure of Value-Added Intellectual Coefficient (VAIC) to assess impact of IC on the profitability and market valuation and to assess the growth of VAIC and its components among the companies over the years selected for the study. The study uses 22 Pharmaceutical companies listed in the Bombay Stock Exchange for a period of 12 years from the financial year 2008-09 to 2019-20. By using Path Analysis, the study demonstrates that the components of VAIC have an impact on the ROCE and market value, which has only grown as compared to earlier studies & years. The study also demonstrates that high sales and profits need not necessarily result in high VAIC.

Received: 7 October 2021 / Accepted: 24 November 2021 / Published: 3 January 2022