Investors wondering if Big Pharma companies are still in an acquisitive mood (especially after Pfizer (NYSE:PFE) and Merck (NYSE:MRK) announced their big deals) need only read between the lines and look behind the scenes of sanofi-aventis’ (NYSE:SNY) first-quarter report.

Last week, the French drug giant reported earnings per share of 1.67 euros, excluding one-time items, representing a 16.8% rise on a reported basis and a 9.8% rise on a constant exchange-rate basis versus the year-ago quarter. Aside from gains by some blockbusters, several items stood out to illustrate the company’s desire to broaden its scientific and geographic base by acquisition.

sanofi-aventis has made several recent acquisitions of generic drug companies, giving it access to fast-growth markets in Mexico, Brazil, Russia, Turkey, and central and eastern Europe. These purchases are expected to raise sanofi-aventis’ generics sales to 1.2 billion euros from 349 million.

Now, 1.2 billion euros per year pales in comparison to the company’s high-margin prescription drugs, like the insulin Lantus or the anticoagulant Lovenox, whose first-quarter revenues were 747 million euros and 762 million euros, respectively. But the company appears willing to follow Novartis’ (NYSE:NVS) lead as a Big Pharma purveyor of generics.

Other products, other markets
CEO Chris Viehbacher has said that generics would be a source of growth, especially in emerging markets. Over-the-counter drugs are on his shopping list, too. First-quarter revenue grew 9.9% to 378 million euros, but the only way to produce a rapid expansion in OTC sales is to buy something.

Since coming over from GlaxoSmithKline (NYSE:GSK), Viehbacher has discussed mergers & acquisitions as a way to reinforce research & development, filling gaps and augmenting existing strengths.

Part of the M&A strategy relates to his view that sanofi-aventis needs a “transformation” in R&D by being more forceful in dropping experimental products that don’t show scientific or commercial promise. So far, many tough calls have come from the more expensive and time-consuming phase 2 and phase 3 trials. In the first quarter, sanofi-aventis dropped six phase 1 products, four phase 2 drugs, and three in phase 3. The rights to another one in late-stage testing were returned to its research partner. In a few months, the company will rule on four others.

Timing is important
The speed and depth of Viehbacher’s strategy may depend on events. He knows he has lost European patent protection for the colorectal cancer drug Eloxatin and will lose protection on the anticoagulant Plavix in 2012. And Lovenox, the company's biggest seller, is under generic threat, though the FDA has not approved any generic yet.

He’s also not sure how much of a revenue cushion he’ll get from Multaq, an experimental drug for treating the irregular heartbeat condition called atrial fibrillation. The drug is now under FDA review. Some analysts have questioned its revenue potential, even though an FDA advisory panel supported the drug by a 10-3 vote in March.

Viehbacher has been moving fast to make changes at sanofi-aventis since he became CEO in December. While these changes haven't been to the same scale as Pfizer and Merck's megaacquisitions, the question investors need to be aware of is whether he’ll have to accelerate the pace or alter heading if the company suffers any setbacks.

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