The Next Pharma Acquisition

The rate of mergers and acquisitions among drugmakers has reached a feverish pace lately, but I can't see it slowing down anytime soon. Some drugmakers' stock has been beaten down to respectable levels, and the falling dollar has made stateside drugmakers cheaper for foreign counterparts to consider.

Which of course leads to the question: Who's next?

Partners
One of the criteria for a successful acquisition is how informed a company is about the takeover target's business. And you can't get much more involved than when you're working hand-in-hand to develop or sell your takeover target's drug.

Here's just a small list of the companies that could be takeover targets:

The only problem with partnerships is that they dissuade potential suitors that don't want to buy the rights to half a drug, and it's a little hard to get a bidding war going when there's only one potential suitor. If a company has multiple partnerships, like Biogen Idec (NASDAQ:BIIB), the joint ventures can derail potential bidders altogether.

Going out on a limb
I think the next big takeover won't be the takeover of a partner, but the purchase of an independent drugmaker. Given many pharmaceutical companies' dry pipelines and imminent patent cliffs, it seems likely that the next takeover target will already have drugs on the market.

With that in mind, here's a look at a few mostly independent drugmakers that might make the cut:

CV Therapeutics is still waiting on the FDA's decision to expand angina treatment Ranexa into a larger patient population, and it's looking for a marketing partner to sell Ranexa in Europe. A pharmaceutical company with a European presence might just snatch up the entire company, rather than just grabbing the rights to the drug outside the U.S.

CV Therapeutics isn't completely independent; it does get royalties from its marketing partner, Astellas, for its recently approved heart-imaging diagnostic aid Lexiscan. But I doubt that partnership would hinder an acquisition. And the most likely reason that it'll get snatched up is that, as fellow Fool Brian Lawler pointed out, its stock is woefully undervalued.

Shire is in a race to get patients off its ADHD medicine Adderall XR and onto its new Vynase, before generics hit the market next year. A larger pharmaceutical company with a little more muscle could probably help it get the job done a little more efficiently.

Yeah, I snuck a generic-drug maker in there with Mylan. While some pharmaceutical companies like GlaxoSmithKline have said that they're unlikely to go that route, others will probably be more open to the idea -- if you can't beat them, join them. It's certainly worked pretty well for Novartis, and Mylan has been thoroughly beaten down while trying to integrate a few acquisitions of its own.

Not a reason, but ...
Buying a company because you believe there's an impending buyout is often a bad idea, because you can never know if the sale will materialize -- just ask all those people who bought Biogen at around $80 a share. But as my Foolish colleague pointed out when valuing Elan after its precipitous drop, simply asking whether a pharmaceutical company would purchase the takeover target for its enterprise value is a very simple way to see if a company is undervalued or overvalued.