Graphic: Cathleen Heard

SmithKline Beecham and Glaxo Wellcome; Pfizer and Warner-Lambert; Pharmacia & Upjohn and Monsanto; PE Biosystems and Third Wave; Astra and Zeneca. In the last year, many top-tier biotech and pharmaceutical giants have reached definitive agreements to merge. The unions are touted as hostile or friendly, strategic or tactical, market driven, Machiavellian, culturally astute, even desperate. Competition has forced drug companies to up the ante for blockbuster development and broaden the pipeline for new drugs and instruments. Further, Big Pharma is gobbling up high-energy biotech start-ups with breakthrough technology, allowing the combined companies to jump into whole new therapeutic arenas--and profit centers.

"The drug industry has become a victim of its own success," says Kevin Lewis, an equities analyst for pharmaceutical and biotech with William Blair & Co., Chicago. "Just five years ago, companies like Merck and Pfizer were relying on their own internal R&D to develop...