GlaxoSmithKlineAstraZeneca?

Faced with disappointments in its research labs and slowing growth of top sellers Advair and Avandia in the United States, GlaxoSmithKline may turn to deals to bolster its fortunes.

"The most obvious strategy that the group could adopt to help alleviate these pressures is to act as an industry consolidator, and we view this as reasonably probable," said brokerage Credit Suisse.

Europe's biggest drugmaker unnerved investors recently by announcing delays for cervical cancer vaccine Cervarix and platelet-booster Promacta, the scrapping of a drug for sepsis and poor data on experimental diabetes pill Redona.

That eclipsed strong third-quarter profits and an upgrade in the group's 2006 earnings forecast.

As a result, the shares have fallen more than six per cent in the last two days.

Insider's view: A merger with AZ could happen if GSK have any more bad news in the pipeline.

There would be useful "synergies". GSK would bolster their oncology and CV franchises. The job cut savings (especially in the UK and US) would be significant.

Soon to retire Chief Executive Jean-Pierre Garnier has previously argued that delivering on Glaxo's large portfolio of experimental drugs is the top priority and he will not be distracted by pursuing large, or transformational, deals.

On the other hand, he has said that consolidation in the industry is inevitable.

Further failures or substantial slippage on new product development could force his hand.