Pharmaceutical mergers-and-acquisitions activity has been jumping for the past few months, but the consolidation can't go on forever. With Roche, Merck (NYSE:MRK), and Pfizer (NYSE:PFE) out of the running, who's left?

GlaxoSmithKline (NYSE:GSK) looks like it's making a move to stock up on cash so that it can buy or license while the pickings are cheap. Last year, the company said that it would forgo any stock buybacks, and last week it sold off $256 million of stock in Quest Diagnostics to add to its nest egg.

The British drugmaker isn't the only one with cash burning a hole in its pocket, just look at how much cash these other pharmaceutical companies have on their books.


Cash and short-term investments (billions)



Bristol-Myers Squibb (NYSE:BMY)


Johnson & Johnson (NYSE:JNJ)


Eli Lilly (NYSE:LLY)


Novartis (NYSE:NVS)


Source: Capital IQ, a division of Standard & Poor's.
*Includes the $256 million added last week.

Sure, none of these match the $26 billion that Pfizer had before it announced the acquisition of Wyeth, but they don't really need such a large sum since most of them are unlikely to do a large deal. For instance, Glaxo has been using call options to acquire the rights to drugs, and Johnson & Johnson has made it a tradition to pick up small companies to bolt onto the family tree.

And there's lots of cheap pickings. According to Rodman & Renshaw, there are 81 biotechs trading at less than cash on hand. That's a lot of companies that could be bought for next to nothing or that might be willing to part with their drug candidates just to stay alive for a few more months. Myriad Genetics, for instance, recently bought the complete rights to Panacos Pharmaceuticals' HIV drug candidate, bevirimat, for a measly $7 million.

There's still plenty of cash to be deployed, just don't expect it to be put out in large acquisitions.

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