Abstract: The Pharmaceutical industry, a life line for human beings, contributes to the community development. Indian Pharmaceutical industry is one of the most – high tech and capital intensive industries in the world. Increased infrastructure, Insurance coverages, launch of potential products, rise in prevalence and treatment of chronic diseases have contributed to this growth of Indian Pharmaceutical sector. The study is conducted to evaluate the influence of efficiency of the selected Pharmaceutical firms and assessing the relationship between the efficiency and flow of foreign funds. Efficiency of the firms was computed using the Data Envelopment Analysis and further the efficiency results were regressed with Foreign direct investment (FDI) to find the influence of efficiency in attracting FDI. This study leaves with results where the current day as well as lag efficiency has influenced the inflow of FDI. Keywords: Efficiency Analysis, Input – Output Analysis, Foreign Direct Investment JEL Classification Number: D24, D57, F2