In November the pharma world was buzzing over news reports that Novartis (NVS) was seeking to acquire generics maker Amneal Pharmaceuticals LLC, in a deal that could fetch around $8 billion.

Acquiring Bridgewater, N.J.-based Amenal would help Novartis's generics unit, Sandoz International GmbH, maintain its spot as the third-largest U.S. generics maker as other generics leaders have been buying up smaller rivals.

That deal hasn't happened and Sandoz CEO Richard Francis recently suggested it won't because Sandoz doesn't need larger scale to remain competitive.

Nevertheless, it makes sense that pharma watchers would predict more consolidation in the generics space. Inflation, a looming "patent cliff" and consolidation in the healthcare services and goods segment as a whole are all putting pressure on the generics space causing those on Wall Street to wonder who and what may be next in terms of deals.

Oppenheimer analyst Derek Archila said the other major generic firms are also likely to limit themselves to acquisitions of small and mid-sized companies in the immediate future. "In the near term there's little capacity to a big deal-Teva, Mylan and Perrigo are over-leveraged or don't have a CEO," he said. "I don't think that will stop U.S. and Indian generic manufacturers and private equity firms from looking at small to mid-cap producers."

Possible acquirers in the space include Pfizer Inc. (PFE) , which entered the market in big way with the 2015 acquisition of Hospira, Teva Pharmaceuticals (TEVA) , Perrigo Co. plc (PRGO) and Mylan NV (MYL) , if it can escape the governance troubles that stemming from its controversial EpiPen pricing and investor unhappiness with the company's governance. Foreign acquirers of smaller U.S. generics are expected to be Germany's Fresenius SE (FMS) , Jordan's Hikma Pharmaceuticals plc (LON) and India's Glenmark.

Takeover candidates include Impax Laboratories Inc. (IPXL) , Lannett Co. (LCI) , Momenta Pharmaceuticals Inc. (MNTA) and SciClone Pharmaceuticals Inc. (SCLN) .

The sector as a whole has been plagued by price deflation in the U.S., thanks to an influx of products from low-cost manufacturers in India and to record levels of generic approvals by the FDA. There's also fierce price negotiating by the three giant consortia that buy drugs on behalf of drug store chains—Red Oak Sourcing, a venture of CVS Health Corp.  (CVS) and Cardinal Health Inc.  (CAH) ; Walgreens Boots Alliance Inc.'s (WBA) partnership with AmerisourceBergen Corp.  (ABC) , and McKesson Corp.'s (MCK) with Walmart Stores Inc.  (WMT) .

Another worry is the looming "patent cliff" in which the number new drugs coming off patent will drop off precipitously, robbing generics of their ability to maintain a healthy flow of new products. According to numbers from Oppenheimer & Co., the annual sales volume of branded drugs coming off-patent will fall from $27.5 billion in 2018 to $10.7 billion in 20219 and then to $7.9 billion in 2020.

Generics are also being forced to beef up because their customer base--pharmacies, hospitals and other healthcare providers—are also consolidating and thus gaining negotiating leverage.

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Francis said Sandoz will focus on "more precise surgical bolt-ons" to enter treatment segments it isn't in already.

What will potential acquirers look for in a merger partner?

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