Enhancing Sustainable Growth in the Indian Pharma Industry: The Governance Role of Independent Directors and Intellectual Capital – A Study on NSE NIFTY Pharma Index Companies

This research investigates how Intellectual Capital (IC) influences the Sustainable Growth Rate (SGR) of Indian pharmaceutical firms that are part of the NSE NIFTY Pharma index. This study delves deeper into the moderating influence of Independent Directors and examines the control effect of Leverage (Debt-Equity Ratio) on this relationship. A descriptive research design was utilized, employing panel data from FY 2015 to FY 2024. The dataset was obtained from the Prowess database (CMIE), and the Two-Step System GMM method was utilized with STATA 18 to guarantee a thorough econometric analysis. The findings indicate that Intellectual Capital (IC) plays a crucial role in enhancing SGR, thereby reinforcing the Resource-Based View (RBV). Independent Directors effectively moderate this relationship, strengthening Agency Theory. Nonetheless, leverage has a detrimental effect on SGR, consistent with Pecking Order Theory. Pharmaceutical companies ought to allocate resources towards Intellectual Capital, enhance corporate governance, and uphold appropriate debt levels to ensure sustained long-term growth. This study effectively combines IC, corporate governance, and financial leverage in the Indian pharmaceutical sector, providing valuable concrete insights for policymakers, academics, and industry experts.