Assessing the Financial Viability of Vertical Integration in the Pharmaceutical Industry

DOI: https://doi.org/10.63345/ijrmp.v10.i11.2

Neha Singh

Independent Researcher

Jakhan, Uttarakhand, India

Abstract

Vertical integration in the pharmaceutical industry has increasingly attracted the interest of both practitioners and researchers as companies seek to gain competitive advantages, reduce supply chain uncertainties, and improve cost efficiency. This manuscript examines the financial viability of vertical integration by exploring its impact on key performance indicators such as production costs, research and development (R&D) productivity, and overall profitability. Drawing on both qualitative insights and quantitative analyses, the study integrates a comprehensive review of the literature up to 2020, descriptive statistical assessments, and an empirical evaluation using data from selected pharmaceutical firms. The findings indicate that while vertical integration can yield significant benefits—particularly in reducing transaction costs and ensuring supply chain stability—the extent of its financial advantage is contingent upon market conditions, firm-specific capabilities, and the regulatory environment. The paper concludes with recommendations for firms considering vertical integration and suggestions for future research to address existing gaps.

Keywords

Vertical Integration, Pharmaceutical Industry, Financial Viability, Cost Efficiency, Supply Chain Management, Risk Mitigation

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