With more consolidation on tap in generics, who's next to buy and be bought?

Teva's ($TEVA) $40.5 billion deal for Allergan's ($AGN) generics business, announced last week, was just the latest to hit a rapidly consolidating generics industry. And while the M&A bug is sweeping through the wider pharma industry, in generics, there's an added factor pushing copycats to join hands.

Generics players are bulking up to gain leverage with drug distributors, which buy up their knockoffs for eventual sale to patients, Bloomberg notes. And after some recent partnering and dealmaking within the distributor space, there are only four major buyers left.

First, there's McKesson ($MCK), which swallowed Celesio for about $5 billion in 2014. CVS ($CVS) and Walgreens Boots Alliance ($WBA) inked pacts in 2013 with Cardinal Health and ($CAH) AmerisourceBergen ($ABC), respectively, and Wal-Mart ($WMT) rounds out the group.

Allergan CEO Brent Saunders

As the news service notes, that flurry of consolidation is part of what convinced Allergan chief Brent Saunders to part with his company's generics division--even after touting the benefits of housing brands and generics under one roof.

But that's not the only factor pushing generics makers together. U.S. regulators are keeping a more watchful eye on the industry's manufacturing safety, which is upping costs. And with pharma's most serious patent cliff years behind it, fewer blockbusters are losing their IP shields, limiting opportunities for copymakers.

The result? "We have a giant Teva and we have a Sandoz and Mylan, those are your big three now--it's not even the big four anymore," Evercore ISI analyst Umer Raffat told Bloomberg. And because of the rising prices that come along with less generics competition, regulators might be interested "in having another large, large player emerge."

So who's next to buy--and be swallowed? "Endo's clearly looking to do deals to get bigger," Gabelli Funds portfolio manager Jeff Jonas told the news service. It could go after $5.3 billion Akorn ($AKRX), which makes eye meds and injectables, he said. BTIG analyst Tim Chiang listed Impax Labs ($IPXL), Lannett ($LCI) and Sagent Pharmaceuticals ($SGNT) as other potential targets in the industry.

And don't count out the big guns as buyers. Mylan ($MYL) is currently trying to nab OTC drugmaker Perrigo ($PRGO) for about $33 billion, and the CEO of Teva itself said it's eyeing opportunities "to execute against our priorities in the generic space," Bloomberg notes--the very same day it announced the Allergan deal.

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Special Reports: Top 10 generics makers by 2012 revenue | Pharma's top 10 M&A deals of 2014

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