Regional Drivers of Pharmaceutical Start-ups in India: The Role of Agglomeration, Innovation and Infrastructure

Abstract

This study examines the impact of various critical regional factors on start-ups in Indian pharmaceutical industry across Indian states. Based on various interlocked theoretical frameworks like industrial district, new economic geography, cluster, regional innovation system etc.; agglomeration, innovation and infrastructure have been identified as few of the decisive factors affecting the establishment of new firms at regional level. Using unit-level data of annual survey of industry, this study reveals that Indian pharmaceutical industry has undergone some regional transformation in terms of establishment of new pharmaceutical firms, since 1981 and especially in the last period of 2011-18. The negative binomial regression analysis highlights the significance of regional innovation, infrastructure and agglomeration-based factors like local demand, skilled labour and vertically-related firms. The findings suggest that agglomeration and innovation play positive and significant role in the start-ups of new pharmaceutical firms in Indian states. Whereas, among the infrastructural factors, energy has been found positively and significantly related to the start-ups of new pharmaceutical firms.