Advanced Medical Solutions Group Share News (AMS)

Hold on tight, a wave of patent expiries and generic competition could spark another round of consolidation in the pharma and medical devices sector this year.Billions of dollars have been spent on takeovers or pumped into new issues in recent months as confidence in the recovery grows and cash-rich firms pick up businesses while they're still cheap.As well as patents and generics, Matrix analyst Navid Malik points to a tougher regulatory environment for drugs and devices, widening safety issues and pricing pressures as austerity measures."The sector has typically survived turbulent times by consolidating, and we believe we are on the verge of such a phase," he says.A colossal $42bn in US branded drug sales are set to lose patent protection over the next two years, putting up to $267bn of sales globally at risk between now and 2016 "so time is of the essence". Malik picks Smith & Nephew (S&N) in the healthcare sector. "We think it's one of the more attractive blue-chip takeover targets, with a high probability of being snapped up in 2011," he says, shifting his target price on the stock to 893p from 729p.S&N has already rallied this year following reports, quickly denied, it had received an approach from America's Johnson & Johnson, and on talk of a was £15bn merger with private equity-backed US orthopaedics group Biomet. Innovative wound and sealant player Advanced Medical Solutions is another one to watch, Matrix reckons. Over in the pharma sector it's Shire that's looking vulnerable. The drugmaker is most likely to be bought, having one of the best top-line growth profiles in the industry, with strong gearing into high-margin biologicals and low generic exposure. The target price jumps to 1,956p from 1,758p. Others likely to attract the attention of possible suitors include biotechs Futura Medical - owner of a revolutionary new condom product - and respiratory drug expert Synairgen.