Sandoz rides the M&A wave in generics

And if the wave of consolidation affecting the industry continues, it could have an impact on companies supplying machinery and materials to the drug sector, as the generics industry has emerged over the last few years as a major new customer base for vendor firms.

Along with Israeli rival Teva, Sandoz has been progressively buying up generics companies to increase their market share, with both now grasping more than 10 per cent of the generics market, which is expected to more than double in size to reach $80 billion (€66bn) in 2008. No other player has captured more than 5 per cent of the market.

Sandoz' latest acquisition of Durascan ties in with its strategy of expanding its geographic reach, making it the second-largest generics house in the Nordic region. The company has not disclosed how much it is paying for the Danish company, which had sales of around €25 million a year.

Last month, Sandoz also unveiled a $565 million (€463m) bid to purchase Canadian generics company Sabex, having already paid $860 million in 2002 to get hold of Croatia's Lek. It now holds around 10 per cent of the global generics market.

Meanwhile, rival Teva recently paid $3.4 billion for Sicor of the US, making it the biggest generic company in the world with a market share of around 11.3 per cent.

Further down the scale, IVAX of the US looks set to acquire Polish generics form Polfa Kutno from under the nose of fellow suitor Recordati of Italy, which succumbed to pressure and sold the US firm its shares in the firm last month.

Meanwhile, there has been speculation that Germany's fourth-largest generics firm, Stada, could be set for a takeover after cutting its earnings forecasts for the year, citing draconian cost-cutting measures imposed by the German government.