Pharmaceutical giant Novartis (NYSE:NVS) has bucketloads of cash, and apparently, it isn't afraid to use them. Earlier this week, the Swiss health-care company announced that it would acquire privately held antibiotics developer Protez Pharmaceuticals.

While the Protez deal is small potatoes for Novartis compared to some of its other buyouts, it does add another drug candidate to Novartis' pipeline. In exchange for as much as $400 million in cash, the Protez purchase gives Novartis access to a phase 2 antibiotic drug candidate that it predicts could be on the market in 2012.

What's nice about this deal from Novartis' perspective is that it only has to pay $100 million up front. The remaining $300 million represents milestone payments if the Protez drug succeeds in testing. By making the largest portion of the acquisition price contingent on the Protez drug's success, the deal is akin to a call option on Protez, limiting Novartis' losses in case the antibiotic fails in testing. That's a good move, since four out of five drugs that enter the clinic don't make it to market.

Even by its own standards, 2008 has been a particularly acquisitive year for Novartis. Just two months ago, it paid an initial $11 billion for a 25% stake in eye-care specialist Alcon (NYSE:ACL). That foothold might eventually let Novartis acquire the rest of Nestle's stake in Alcon for another $28 billion in a couple of years.

Novartis has long been addicted to acquisitions. In 2006, it finished a $5.7 billion buyout of vaccine maker Chiron, and in 2005, it paid $8 billion to beef up its generics drug business via a pair of acquisitions.

Novartis, like all other drugmakers, has to replenish its pipeline somehow. It's too soon to say whether doing so via acquisition is paying off, although a five-year chart of Novartis shares compared to the major stock market indices paints a dour picture. Relative to other big-pharma peers like Pfizer (NYSE:PFE) and GlaxoSmithKline (NYSE:GSK), however, Novartis has performed much better.