Methodology
2.1 Method of Analysis
The paper is written on the Revealed comparative advantage: A study on the Pharmaceutical Industry of India. The paper attempts on showing the strength of the export of Indian pharmaceutical sector. This is made by showing that, India has a relative advantage when compared with one of the major trading bloc of South Asia. The relative advantage is shown by the revealed comparative advantage.
The idea of revealed comparative advantage is based on the Ricardian comparative advantage concept. It is an index, which is commonly used, in the “international economics” for calculating the relative advantage or disadvantage that a county acquires in a particular class of commodities or services, which is observed during a trade flow. In this an index is formed which is referred as ‘Balassa Index’, which was given, by “Bele Balassa” and “Mark Noland” in 1965.
The index is given as;
RCAij = xij/Xi Xaj/Xa
Where xij; exports of product j from country “I”
Xi total export of from country “I”
Xaj total export of j from reference country
Xa total export from the reference area
Indian
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The Indian pharmaceuticals market stands third in terms of volume and 14th largest in terms of value. In the Global Pharmaceutical Industry the total production of the sector is 20% in terms of vol. and 1.4% in terms of value.
India is the leading supplier of generic drugs globally with the Indian generics accounting for 20 per cent of global exports in terms of volume . One of the major characteristics of this industry is that it is highly fragmented. The country enjoys large pool of scientist and engineers who have the potential to direct the industry. Presently over 80 per cent of the antiretroviral drugs used globally to combat AIDS are supplied by Indian pharmaceutical firms