With some of its lead compounds facing crushing generic competition, King Pharmaceuticals (NYSE:KG) has launched a risky plan to acquire rival drug developer Alpharma (NYSE:ALO).

King's $1.2 billion bid for Alpharma, announced last Friday, is a leveraged bet on pain drugs, particularly new abuse-resistant opioid therapies. In December, King and partner Pain Therapeutics (NASDAQ:PTIE) should hopefully receive an FDA decision on their abuse-deterrent pain drug, Remoxy, while Alpharma should also get the FDA's decision on its similar rival compound, Embeda.

If King can woo Alpharma into its grips, it would have control of:

  • Remoxy.
  • Alpharma's Embeda.
  • Potentially several more abuse-deterrent pain drugs in the pipeline with Pain Therapeutics.
  • At least two abuse-deterrent pain drugs from Acura Pharmaceuticals (NASDAQ:ACUR).

Aside from a compound from Purdue Pharmaceuticals awaiting FDA review, buying Alpharma would give King control over a majority of abuse-deterrent drugs in development. However, that advantage might only be temporary, since other drugmakers like Cephalon (NASDAQ:CEPH) and Flamel Technologies (NASDAQ:FLML) have very early-stage "tamper-resistant" and abuse-deterrent methodologies in development, too.

Embeda isn't the only asset in Alpharma's arsenal. The company already markets a moderately successful once-a-day morphine pain drug named Kadian, whose primary competitor is King and Ligand Pharmaceuticals' very similar compound, Avinza. It doesn't make much sense for King to control both Kadian and Avinza; perhaps King thinks the introduction of abuse-deterrent compounds like Embeda will obviate the current use of these drugs' non-abuse-deterrent forms, or intends to outlicense Kadian.

Alpharma also markets a pain patch, Flector, that it acquired less than a year ago. Flector sales have gotten off to a great start in 2008, and Alpharma has predicted potential peak sales of $500 million annually, competing primarily against Endo Pharmaceuticals' (NASDAQ:ENDP) Lidoderm. If Flector can reach anywhere near this sales forecast, King would be getting a good deal just based on Flector alone.

King's $33-per-share offer for Alpharma represents a 37% premium to the $24.04-a-share price at which Alpharma's stock closed on Thursday. Alpharma's board of directors immediately rejected King's bid as "not in the best interest" of its shareholders, and Alpharma's shares currently trade above the buyout offer. Your move, King.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has an A+ disclosure policy.