Facing no growth, price cuts, and increased competition at home, four of the nation's five biggest drugmakers executed some of the year's most ambitious deals, spending a total of more than $20 billion over the past 12 months on US-based biotechs. Last December, Eisai bought oncology biotech MGI Pharmaceutical for $3.9 billion. Three months later, Takeda upped the ante with its $8.8 billion takeover of Millennium, maker of cancer blockbuster Velcade—in cold, hard, yen-leveraged cash. "It's a deal that would have been impossible from any US player," wrote In Vivo blogger Derek Lowe. In September, Shionogi paid $1.4 billion for Sciele's cardiovascular and diabetes portfolio.

Declaring itself a global threat, Daiichi Sankyo chose instead to go its own way, furthering its diversification strategy with a 64 percent stake in Indian generics giant Ranbaxy for up to $4.6 billion, in June.

Other top 15 market-expansion deals were aimed at grabbing US and European consumers, too. In July, Fresenius, a German firm that sells products and services to hospitals and home healthcare groups, paid $3.7 billion for Los Angeles–based APP Pharmaceuticals, the developer of the first ever nanotech cancer drug, Abraxane. At press time, biotech Celgene, which resurrected thalidomide as the cancer treatment Revlimid, announced its first big acquisition: a $2.9 billion buyout of Pharmion, which sells Revlimid in Europe.

Biotechs with even a single approved drug can still demand pretty exorbitant prices if a company's need for fast revenue is sufficiently desperate. Exhibit A: Millennium.

Exhibit B: ImClone. Crafty activist-investor Carl Icahn scored again in 2008; after Bristol-Myers Squibb offered $4.5 billion for the oncology biotech, Icahn strung BMS CEO Jim Cornelius along by courting one or more secret bidders in a very public effort to trigger a bidding war. No slouch at such ploys, Cornelius refused to up his bid, and in October, the press-dubbed "mystery suitor" was revealed to be Lilly's new chief, John Lechleiter, who inked the deal for $6.5 billion.

Most analysts agreed that Lilly was overpaying (and then some) for the biotech, which markets only one product, Erbitux, with BMS, and is developing some uncertain Erbitux follow-ons. "That price indicates that Lilly is almost desperate for revenue," says Michael Russo of the Bruckner Group. "It could have bought a whole bunch of smaller biotechs with promising products rather than putting so much faith in a single pipeline."

It's still a sellers' market for the makers of late-stage compounds, few of which remain. "Pharma's cherry picking of biotechs has driven the valuations higher and higher," says Frost & Sullivan analyst Barath Shankar Subramanian. "Since drugmakers have little R&D that they can really call their own, the demand just keeps going up."

In a sign of how inflated the prices have become, in September both GlaxoSmithKline and Pfizer inked big deals for single products. GSK dished out a record-breaking $3.2 billion for Actelion's first-in-class insomnia drug, almorexant—pending good data from its Phase III trials. Meanwhile, Pfizer paid $775 million in milestones to Medivation for 60 percent of the potential US profits and for total potential foreign sales of Dimebon, which is set to enter Phase III trials this year in Alzheimer's and Huntington diseases.