The progress of Esteve's lead compound Surfaxin illustrates how the Spanish group is building a robust, yet risk-controlled pipeline to supplement its co-marketing activities. The compound may also become the first marketed drug in which Esteve played an active development role, and bears testament to the private group's partnering appeal.

At the top of the industry, consolidation has frozen out much additional M&A; horizontal mergers among large companies have become much more difficult to get through regulatory authorities as the industries themselves have consolidated. In medical devices, M&A is at a 10-year low, reflecting a paucity of high-value small-company opportunities. Perhaps as important, some successful big-company development programs undermine a basic assumption of medical device investing: that big companies must source innovation from small ones, usually through acquisitions. Meanwhile In biotech, the number and value of M&A is down, despite the apparent logic of consolidation and the unprecedented willingness of sellers to accept low valuations. The key problem is that there are few buyers: those without extremely strong balance sheets aren't willing to take on additional burn rates, having seen some acquirers come to grief as their new, apparently stronger companies are unable to raise money in this bear market.

It's clearly a buyer's market in the public biotech sector. On the shopping list: products, chemistry, and cash.

In one of the biggest late-stage biotech licensing deals ever, Genta has given Aventis worldwide rights to Genasense. The antisense compound targets Bcl-2, a protein now known to protect cancer cells from death messages. The firms are betting that giving patients this compound in combination with conventional therapies will kill cancer more effectively. The potential is high, but risk remains. Bcl-2 is unproven as a target, and designing clinical trials for two agents is not straightforward. Emerging from a troubled past, Genta initially decided to take the compound to market in the US all on its own. It focused on helping desperately ill patients in small disease indications. Eventually, as encouraging data accumulated, the small firm realized it would be better off partnering. The focused indications that Genta chose, and the way it pursued them, made strategic sense for it-but Aventis aspires to develop the drug against major cancer cancers. The large firm can afford to think bigger: it has more money and resources and the benefit of coming in after Genta laid the groundwork. Both companies are being guided by theories and observations, fully aware that such things mean little to regulators who demand clinical evidence. As befits their respective size and scope, the firms have different approaches to managing the risks of novelty.