M&A deal flow has generally declined given the current economic conditions, but not so for the drug industry. Analysts have been predicting for a while that the drug industry would consolidate; big pharma companies are cash-rich, have shrinking pipelines, and face an oncoming “generic” cliff. Merck recently announced a merger with Schering-Plough — the deal may be complicated by J&J. Earlier this year, Pfizer announced its plans to acquire Wyeth. And the Roche acquisition of Genentech looks like it may finally come to a close. With all of these mega-deals occurring, some VC’s have raised concerns about whether any smaller, venture-baked deals will take place. Integration of large companies is painful, but I doubt that good business development people will let valuable assets fall into the hands of competitors just because their company is busy with a merger.