Icelandic drugmaker Actavis completed its acquisition of the human generic medicines business of US company Alpharma yesterday, elevating itself into the top five largest generic companies worldwide.

The $810 million dollar cash purchase is the latest in a series of acquisitions by Actavis and creates a company with 2006 revenues estimated at around 1.3 billion euros and an operating margin of 19%-20%.

Actavis has bought 20 businesses between 1999 and 2005 and boosted its revenues from 57 million euros to more than 450 million euros over the same period. Most recently, Actavis acquired New Jersey- based Amide Pharmaceuticals in May 2005, giving the company a presence in the USA, and with the Alpharma buy it now expects over a third of group revenues in 2006 to be generated in this key market.

The latest deal makes Actavis the fourth-largest generics company in the world, after Teva/Ivax (whose merger is still in front of the regulators), Novartis subsidiary Sandoz and Merck KGaA. In terms of market share, Actavis/Alpharma will have around 3.9% of the global generics market, behind Merck's 5.1% share, but still well behind the clear leaders, Teva and Sandoz, with 12.8% and 11.1%, respectively.

Teva, Sandoz and Merck have all embarked on their own acquisitive sprees over the last couple of years. Bigger is better in generics, because payers are increasingly trying to do deals with single providers of pharmaceuticals to cut costs and companies which can offer a broad range of products have a competitive advantage.