Efficiency Development in the German Pharmaceutical Market

Abstract

Changes in Germany legislation since 2009 significantly limited the operation of German pharmacies. Since then, there has been a steady decline in the total number of pharmacies. This article deals with the efficiency change within the German retail and wholesale pharmaceutical sectors in the years 2009 to 2016. The efficiency calculation was based on the nonparametric data envelopment analysis method and the Malmquist index was used to evaluate changes. Two components of Malmquist index were also monitored separately, capturing changes in the area of technical efficiency and changes in the area of the production possibility set. The results point to the increasing efficiency which means that decreasing number of pharmacies is caused by concentration tendencies rather than by negative effects of government decisions.