Deloitte report: Pharmaceutical companies' 'patent cliff' could bolster mergers, acquisitions

NEW YORK A wave of acquisitions indicates a trend of consolidation in the drug industry, as companies seek ways to build up their research and development pipelines while reducing overhead costs, according to a report released Tuesday by professional services firm Deloitte.

One of the factors driving mergers is that drugs representing more than $74 billion in sales will lose patent protection by 2012, which many analysts have come to call the “patent cliff.”

“With so many rapidly changing dynamics – the patent cliff, healthcare reform and still-dry capital markets – the trends in life sciences industry consolidation are almost certain to continue with a growing emphasis on those deals with companies involved with late-stage developed compounds,” Deloitte & Touche partner Phil Pfrang said in a statement. “Healthy companies have good cause to pursue deals that promise faster revenue streams and profits.”