Teva says it isn't worried about the more aggressive pricing strategies used by brand companies to blunt blockbuster generic launches. What if the world's largest generic company is wrong? Part II of this two-part series looks at the future of the generic drug industry.

In Vivo presents another installment of our quarterly review of dealmaking--in this case February 2001-May 2001. Our data comes from Windhover's Strategic Transactions Database. We include medical device financings by industry segment and by deal type; medical device M&A; diagnostic financings and alliances by product category; pharma and biotech alliances by technology segment; pharma and biotech alliances by deal type, and pharma and biotech financings by market segment and therapeutic category.

DIRECT, the first placebo-controlled trial of a laser myocardial revascularization technology, did not prove any benefit from the therapy, an announcement that has stirred a hornet's nest of controversy in the TMR/PMR industry. Laser companies and physicians who perform the procedures have been in damage control mode since the announcement. The event has exacerbated the challenges that laser companies were already facing in the early adoption phase of a new treatment paradigm. PLC Systems and Eclipse Surgical feel confident that their technologies are sufficiently different from that used in the DIRECT trial and are striving to reassure physicians, patients and investors. In its efforts to convince skeptical physicians or those put off by the DIRECT results, PLC is banking on its perfusion data and its positive 5-year results for its surgical TMR approach. Eclipse hopes positive results from its clinical trial will help it get approval for the first interventional approach.

When Fisher Scientific International agreed to buy PSS World Medical Inc. in an all-stock deal valued at roughly $840 million at the time of the announcement, PSS shareholders should have been content. After all, their company's stock was hovering at near-record lows in the wake of a disastrous year for PSS. But shareholders were cool, partly because they were unhappy with PSS' quarterly earnings report, announced the same day, partly because they didn't know Fisher, and partly because they were caught up in a web of arbitrage, which drove down the stocks of both companies 25%.Fisher, an international distributor of scientific supplies, sees PSS as a way to expand its customer and vendor bases and to take advantage of cross-channel opportunities. The companies don't have much product overlap, with PSS strong in alternate site markets and Fisher a force in research labs and acute care hospitals. Fisher is relatively unknown on Wall Street, because only 7% of its shares are publicly traded. And PSS, while reeling from a series of problems, has a healthy underlying business as the market leader in alternate site markets for hospital and lab supplies. Now, Fisher and PSS have to convince Wall Street that they mean business.