Buying ideas, also known as licensing, has become so rampant that even medium-size pharmaceutical companies are doing it. Industry observers predict that licensing deals will generate about half of all U.S. drug sales in 2010.

Licensing deals can be a survival tool for many small drug companies, but they skim off the ideas most likely to turn into best sellers. Some in the industry worry that millions of dollars could be diverted from the Triangle, which has a host of small, innovative companies.

"It's good and bad," said Vipin Garg, chief executive of Tranzyme Pharma, a privately owned Durham company.

Small companies might have to share the fruits of their labor, but in return they get money and guidance to continue work on other ideas, said Garg, who led a panel discussion about industry trends at Biotech 2007, an annual conference that was held Monday and Tuesday in Durham.

Tranzyme will consider licensing one of its experimental gastrointestinal treatments to a larger company next year.

Large U.S. drug makers spent a record $23 billion last year to buy competitors or their experimental treatments, according to Ernst & Young's annual biotech report. Survey results, which were part of the report, showed that more than 400 companies worldwide are planning an acquisition or licensing deal in the next two years.

Novartis and GlaxoSmithKline executives and investment bankers at the conference said the shopping spree is driven by two complementary needs: Small companies don't have enough money for research, and the research arms of big companies aren't churning out enough new drugs to make up for growing competition from cheaper generic copies. Over the next 10 years, the top 10 pharma companies stand to lose more than $110 billion in sales as patent protection on some of their biggest sellers expires.

"Big pharma is to the point where they are desperate," said Jeff Barber, managing director of PricewaterhouseCoopers' Raleigh office.

GlaxoSmithKline, which has a U.S. headquarters in Research Triangle Park, is one of the most aggressive shoppers. According to Ernst & Young, the British drug maker has spent more than $11 billion in the past four years to make up for nearly $13 billion in sales it risks losing over the next decade.

Such deals are not necessarily bad for the Triangle.

One of GSK's deals is with Pozen, a Chapel Hill drug development company. GSK will bring Pozen's migraine drug, Trexima, to market.

In addition, work resulting from GSK's other deals is being conducted in the Triangle, where the company employs about 6,000, said Om Dhingra, head of GSK's preclinical drug discovery for metabolic and viral diseases in RTP.

"You'll get a lot of economic benefit, no matter where the deal was made," Dhingra said.

Large drug makers are under so much pressure that they're willing to funnel as much as half of the profits of a drug they have licensed to the company that discovered it, Garg said.

But the rampant deal-making is curtailing entrepreneurial spirit, some in the industry say.

Local drug development companies that aim to take ideas from the lab to the market are disappearing, said Rob Lindberg, technology development director at the N.C. Biotechnology Center. Most of the business plans that Lindberg sees these days go no further than halfway through clinical testing.

The horizon was broader, maybe less realistic, when Inspire Pharmaceuticals started in 1995.

For nearly 10 years, the Durham company focused on bringing its own drugs to market. It started to buy others' ideas when it encountered regulatory and drug development setbacks two years ago. The first of the drugs that Inspire licensed, a pink-eye treatment developed by a small California company, is expected to come to market in August or September. The company isn't about to stop shopping.

"I have a whole list of potential products that I'd like to look at," said Bart Dunn, Inspire's vice president of business development, who left drug giant Pfizer in the summer.

It's as much a strategy to grow as it is to survive.

"If you want to be a stand-alone company, you have to have a lot of products in your bag of tricks," said Michael Constantino, who heads Ernst & Young's Southeast area life-science practice in Raleigh.