Foreign Institutional Investment and Accounting-Based Financial Performance of Selected Pharmaceutical Companies in India

The research has revealed that the relationship between Foreign Institutional Investment and accounting-based financial performance varies significantly amongst different drug manufacturing companies in India. While Lupin, Torrent Pharmaceuticals and Aurobindo Pharma registered generally positive outcomes from FII/FPI ownership, since it had major consequences in terms of their revenue, profit after tax, and earnings per share. At the same time, the results for Dr Reddy's Laboratories, Cipla, and Zydus Lifesciences were mainly positive since the ownership by the major institutional players affected some accounting performance metrics only partly. The statistics for Biocon were very negative, while Glenmark Pharmaceuticals was only negatively affected in terms of revenues. Sun Pharmaceutical and Divi's Laboratories, on the other hand, did not show high degree of reaction to the changes in the ownership patterns. Thus, it is possible to conclude that FII/FPI ownership should be treated as a specific factor affecting financial performance by pharmaceutical companies.

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