The global generic drugs sector has already had its biggest ever year of deal-making but industry leaders meeting in Malta expect the pace of consolidation to accelerate as pricing pressures force more firms to scale up.
Around the world, cheap generic medicines find themselves in a sweet spot as governments promote their use in order to cut costs and increasing numbers of branded blockbuster drugs lose patent protection.
But growing popularity has also spawned growing competition and prices of generic, or unpatented, medicines have tumbled in major markets as more manufacturers, especially from India, enter the business.
After double-digit percentage price increases earlier in the decade, prices in the United States - home to more than half of industry revenues - actually fell last year.
It is this combination of growth opportunity and margin pressure that is obliging more and more companies to seek economies of scale.
"We will see more consolidation and I strongly believe that within the next four to five years we will see only a few global players controlling the generics market," Robert Wessman, chief executive of Iceland's Actavis, told the annual meeting of the International Generic Pharmaceutical Alliance in Malta.
"I expect to see fewer and fewer local or regional players." His firm has made 20 acquisitions in the last six years, of which the largest was a $600 million deal last month to buy US group Amide Pharmaceutical Inc.
Although big by generics standards, that transaction pales by comparison with Novartis's agreement in February to acquire Germany's Hexal and Eon Labs of the US for more than $8 billion.
Both Sandoz, the generics arm of Novartis, and Israel's Teva Pharmaceutical Industries are extending their lead over rivals as the world's top two generic firms - a fact which is adding to pressure on smaller players to catch up.
Indian firms, in particular, are becoming more aggressive in their global ambitions, as highlighted by this week's planned purchase by Matrix Laboratories to buy a controlling stake in Belgium's Docpharma for up to $238 million.
It is the biggest foreign acquisition yet by an Indian generics manufacturer - but is unlikely to be the last.
"We are seeing the Indian firms beginning to step up to the plate in a big way now," said Tommy Erdei of ABN AMRO, whose bank advised Docpharma.
And the traffic may not all be one-way. David Maris, an analyst with Banc of America Securities, thinks the industry will see a wide range of deals and that Indian firms could be in the sights of Western groups.
"The negative pricing environment is going to lead to further consolidation ... and low-cost manufacturers are the real wave of innovation," he said.
"The big question is: will an Indian generic company be on the menu in 2005?"
With dramatically lower costs, a skilled workforce and more manufacturing plants meeting Food and Drug Administration standards than any country outside the United States, there is no question that India is now a major force in generics.
But China is hot on its heels, pointing to an increasingly tough competitive environment in the years ahead.
"The pricing competition is being driven by a huge over-capacity in the market because of all the investments that have been made in India and are going to be made in China," Frank Condella, European head of operations at Ivax, told this week's meeting.
The answer, he said, could be more alliances between developed market leaders and low-cost producers.
Adding to the squeeze has been the rise in the United States of so-called authorised generics - unpatented versions of branded medicines which are launched by pharmaceutical groups like Pfizer when their medicines lose patent protection.
Industry executives complain they cut by half the profits to be made during the first 180 days of sale, when the first generic firm is supposed to enjoy market exclusivity under US rules designed to reward successful patent challenges.