Evaluation of Operational Efficiency in China’s Pharmaceutical Industry and Analysis of Environmental Impacts

Jiaqiang Sun, Anita Binti Rosli (), Adrian Daud and Xia Yan
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Jiaqiang Sun: Department of Social Science & Management, Faculty of Humanities, Management & Science, Universiti Putra Malaysia, Bintulu Campus, Nyabau Road, Bintulu 97008, Sarawak, Malaysia
Anita Binti Rosli: Department of Social Science & Management, Faculty of Humanities, Management & Science, Universiti Putra Malaysia, Bintulu Campus, Nyabau Road, Bintulu 97008, Sarawak, Malaysia
Adrian Daud: Department of Social Science & Management, Faculty of Humanities, Management & Science, Universiti Putra Malaysia, Bintulu Campus, Nyabau Road, Bintulu 97008, Sarawak, Malaysia
Xia Yan: Department of Social Science & Management, Faculty of Humanities, Management & Science, Universiti Putra Malaysia, Bintulu Campus, Nyabau Road, Bintulu 97008, Sarawak, Malaysia

Economies, 2025, vol. 13, issue 4, 1-35

Abstract: The pharmaceutical industry is a cornerstone of national economies and plays a critical role in public health. However, China’s pharmaceutical industry faces significant challenges, including regional disparities in development. The existing research on operational efficiency evaluation primarily focuses on financial or innovation metrics, lacking a comprehensive approach. Moreover, studies on the environmental impact on operational efficiency often rely on a limited set of indicators, failing to offer a holistic understanding of how environmental factors influence efficiency. This study aims to address these gaps by comprehensively evaluating operational efficiency and analyzing the impact of broader environmental factors on efficiency. To achieve these objectives, the study employs a Three-Stage Data Envelopment Analysis method combined with Principal Component Analysis to evaluate the operational efficiency of the pharmaceutical industry across 31 provinces in China, considering both financial and innovation dimensions.The findings reveal that overall efficiency has improved annually, with regional disparities gradually narrowing. Specifically, innovation capability and innovation environment have a positive impact on operational efficiency, while living standards and openness exhibit a negative correlation. Additionally, the current environmental conditions in the northwestern region are found to be conducive to the development of the pharmaceutical industry. This study is the first to integrate three-stage data envelopment analysis with principal component analysis, constructing a comprehensive framework for analyzing the relationship between environmental factors and operational efficiency. The results provide empirical evidence for policymakers aiming to enhance the efficiency of the pharmaceutical industry.

Keywords: efficiency research; environmental impact; efficiency distribution; regional disparities (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2025
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