Bakshi121092
Compared to the other drugs launched by
it, a lifesaving drug launched by Bio Pharmaceuticals has shown remarkable results as evident in its profits that rose by 20 percent during the second quarter of the current year.
Is the use of
its correct in the above sentence? Could it point to the drug?
ABakshi121092 , to answer your second question, no,
its could not refer to the drug.
The logical referent (the noun to which
its refers) is "Bio Pharmaceuticals."
Its is a possessive adjective* (a possessive pronoun followed by a noun, which modifies but does not replace an antecedent noun).
Logically, though preceded by both "drug" and "Bio Pharmaceuticals,"
its profits could not refer to the drug.
I highlight
profits because that word tells you the noun to which
its points: Bio Pharmaceuticals.
Drugs do not possess, have, or own profits. Companies do.
To answer your first question a bit indirectly, that which I highlighted is grammatically incorrect, confusing, and ambiguous.
Its contributes to the murkiness. Other elements contribute more.
Stated differently, I could fix this sentence by changing elements other than "its profits."
The phrase is a casualty of poor construction.
Hope that helps.
*If you would like more information, please see
GMAT Club Grammar Book: Pronouns - Possessive Adjectives , and, from the Veritas blog linked permanently here,
Pronoun Ambiguity on the GMAT