Two more generic drug companies are planning to join forces. Watson Pharmaceuticals Inc (Corona, Calif) has agreed to buy smaller rival company Andrx Corp (Davie, Fla) for $1.9 billion in cash. The deal is expected to close within the next 6 months.

Allen Chao, PhD, chairman and chief executive officer at Watson, hailed the merger as an opportunity to increase the number of medicines Watson has under development, add on a drug-distribution business, and boost profits starting at the beginning of 2007. "This deal will make Watson a much stronger company and position us for growth," with a total of 60 drugs in the pipeline, Dr. Chao said.

When the deal closes, Watson will become the third-largest supplier of generic drugs in the United States, following Teva Pharmaceutical Industries Ltd (Israel) and Mylan Laboratories Inc (Canonsburg, Pa).Watson also will benefit from Andrx's expertise in developing controlled-release drugs. In addition, the merger will increase Watson's presence in a year when many blockbuster brand name drugs will lose their patent protection and become available to the generic market.