Dealmaking goes from mega to mini

The mega-merger was so 2009. This year was the year of the mini-merger; of many mini-mergers, in fact. As drugmakers continued their scramble to replace revenues lost or soon-to-be-lost to generic competition, they made their deals in sips and nibbles. Think cocktail party rather than sit-down, seven-course meal; a few hundred million or a couple billion dollars rather than $50 billion.

Of course, one of the reasons pharma went for smaller deals this year was because they're easier to digest. So while Pfizer ($PFE) and Merck ($MRK) and Roche worked to integrate Wyeth and Schering-Plough and Genentech ($DNA), respectively, Sanofi-Aventis ($SNY) snapped up the U.S. consumer products company Chattem for $1.9 billion and a Chinese consumer drugs company for $520 million. Biovail ($BVF) and Valeant Pharmaceuticals ($VRX) merged in a $3.2 billion deal. Japan's Astellas Pharma bought OSI Pharmaceuticals for $4 billion. GlaxoSmithKline ($GSK) nibbled on one emerging-markets company after another. And Pfizer re-entered the deal fray to offer $3.2 billion for pain-drug specialist King Pharmaceuticals.

The year's biggest deal--Novartis' ($NVS) majority-stake buyout of Alcon ($ACL)--was almost the exception that proved the rule. The company spent $28.1 billion to bring its stake in the eye care company to 77 percent, and in mid-December finally wrapped up an agreement to buy the remaining 23 percent for $12.9 billion. All told, that buyout cost more than $50 billion, and it will have taken almost two years from start to finish. Not a bite-sized endeavor at all.

Indeed, all you have to do to appreciate the virtues of the mini-merger is talk to Claudio Bergamo, CEO of Brazil's Hypermarcas, which just bought fellow Brazilian drugmaker for $1.5 billion. That's a big deal for Hypermarcas; revenue-wise, it's proportionate to combining, say, GlaxoSmithKline with Amgen ($AMGN). "It is like a boa after eating a cow," Bergamo said at the time. "It needs some time to digest." Months curled up in a tree, most likely. These days, drugmakers prefer to eat and run.