Earticle

This study selected 38 Korean pharmaceutical firms listed on the KOSPI and KOSDAQ and attempted to evaluate their management efficiency on the last five years of data from 2007 to 2011. In order to utilize DEA(Data Envelopment Analysis) model, this study used output data such as net profit, operating profit, and gross sales and input variables such as sales management expenses, R&D cost, labor cost, and total assets. A Malmquist model, a measurement method of productivity, was used to evaluate the dynamic change of the management efficiency of five years. Because an efficiency analysis preceded drawing a Malmquist Productivity Index(MPI) for analyzing productivity, the current research is comprised of both efficiency and productivity analysis. The result analyzed by a DEA technique showed that domestic pharmaceutical firms increased their efficiency and productivity through internal management innovation, maintaining efficient size relatively. Although domestic pharmaceutical firms’ productivity is affected more by technological changes than by efficiency changes, efficiency changes in individual pharmaceutical firms are not affected by technological changes. Thus, individual pharmaceutical firms stick to short-term efficiency. Accordingly, because investment expansion of R&D and facilities for improving long-term productivity rather increases input by decreasing efficiency, it is for individual pharmaceutical firms to perform this strategy.