Pfizer, the world's biggest pharmaceuticals company, needs a magic pill.

The company is facing a patent "cliff" in 2011, when it loses its exclusive right to produce cholesterol drug Lipitor. It is the world's top-selling medicine and worth $12.7bn (£9.3bn) a year in sales to the company.

Pfizer's solution to this problem came to light on Friday, with the news it's in talks to buy US rival Wyeth for as much as $70bn.But Pfizer is not alone. Fellow US pharma giants Merck and Eli Lilly are also searching for ways to recover the losses they will face in the next four years when patents on branded medicines run out.

Between the three companies, drugs worth some $121bn in annual sales are about to drop off the patent cliff. So is this the start of a new wave of mega-mergers in the pharmaceuticals industry and if so, where does it leave the biggest players in Britain, GlaxoSmithKline and AstraZeneca?

According to Glaxo's chief executive, Andrew Witty, who took the helm in May, drug companies have always behaved like lemmings when a big takeover is on the cards.

"If one big company makes a move, I can absolutely imagine that triggering off a series of moves," Mr Witty told Bloomberg News before Pfizer's interest in Wyeth came to light. "The industry has historically habitually demonstrated its inability to sit on its hands when someone moves.”

But with the pharmaceuticals industry undergoing a radical shift, when it can no longer rely on branded "blockbuster" drugs for earnings growth, is getting into bed with another company facing the same problems the best course of action?

Glaxo, for example, is facing competition from generic products on four of its best-selling medicines – Lamictal for epilepsy, the antidepressant Wellbutrin XL, Coreg for high blood pressure and Requip for restless legs syndrome. They have lost about £3bn in peak annual sales to cheaper copies, according to Mr Witty.

Following Pfizer down the monster takeover route is "a step back into the land of the dinosaurs", said Jeremy Batstone-Carr, an analyst covering Glaxo and AstraZeneca for Charles Stanley in London.

"Now the pharmaceuticals industry is all about developing relationships with generic operators, expanding exposure in emerging markets and being more creative about what the structure of a future company will look like," he said. Pfizer is "not thinking radically enough".

Mr Witty at Glaxo has also said making a large acquisition would be too much of a distraction and throw the company's own research strategy off track. "You could very quickly distract an organisation like GSK which is now settling into quite a good groove in terms of R&D productivity. I'm not into that," he said in the same interview.

But with so much uncertainty over future revenue, there is a risk UK drugs companies could plunge into takeovers out of desperation. Glaxo, for example, reported a 22pc fall in third-quarter profit on slowing sales of its Avandia diabetes medicine, after a report linked the medicine to the risk of heart attack.

AstraZeneca, Britain's second-largest pharmaceuticals company, faces US lawsuits over claims that its Seroquel anti-psychotic drug causes diabetes and other health problems.

And there are aspects of a Pfizer-Wyeth deal which could appeal; the combined company would have sales of more than $70bn a year.

It would also have a very stable source of revenue because Wyeth has been focusing its research on vaccines which, unlike drugs, do not lose patent protection, so don't have to compete with a flood of cheaper generic copies further down the line.