Generic drug makers can expect further consolidation in the sector following a wave of deals this year and last in the still fragmented industry, executives and bankers said on Tuesday.

With demand for cheaper unpatented drugs growing strongly and patent expirations creating new market opportunities, key players in the fast-growing generics business are keen to expand their geographical and technological reach.

Market leaders Teva Pharmaceutical Industries of Israel and Sandoz, the generics wing of Switzerland’s Novartis, have both struck deals recently that increase their lead over rivals, pressuring others to follow suit.

“Teva and Sandoz are raising the bar in terms of the market share that generic drug companies need to compete effectively,” Tommy Erdei, a banker with ABN AMRO, told the annual meeting of the International Generic Pharmaceutical Alliance.

Teva currently has a market share of 11.3 percent, just ahead of Sandoz on 10 percent - but no other company has yet reached a market share of five percent, according to ABN AMRO figures.

“The pace of consolidation will continue to increase because of the need to gain market share,” Erdei said.

Speculation about deals in the sector has reached fever pitch recently in Germany, the biggest market for generics in Europe, with takeover talk lifting shares sharply in Stada Arzneimittel earlier this month, although the stock has since retreated.

Teva and Sandoz have again been suggested as likely bidders, following aggressive expansion plans recently which saw Teva buy U.S. firm Sicor for $3.4 billion last year and Sandoz pay around $860 for Slovenia’s Lek, as well as agreeing to buy Canada’s Sabex for $565 million earlier this month.

Lower down the league table, other companies are likely to consider mergers and acquisitions as a way to increase their market reach, possibly through the marriage of mid-tier players.

Firms in central and eastern Europe are looking increasingly to the western half of the continent following European Union enlargement, while India’s large generic industry is becoming a bigger force both in Europe and the United States.

Dilip Shah, secretary-general of the Indian Pharmaceutical Alliance, said Indian firms were becoming much more international as they expanded into overseas markets.

Exports to the United States, India’s largest foreign market, increased by 23 percent last year while those to Germany, its second biggest outlet, surged 45 percent.

Some Indian companies have already made tentative steps into Europe, with Ranbaxy Laboratories recently acquiring Aventis’s small generics unit, France’s fifth largest generics maker, for an unspecified price.