Earlier this week, Israel’s Teva Pharmaceuticals (NasdaqGS: TEVA) said it will pay $40.5 billion for Allergan’s (NYSE: AGN) generic drugs unit, underscoring the notion that the healthcare sector remains white hot when it comes to mergers and acquisitions activity.

A broad swath of exchange traded funds are benefiting from theme of healthcare mergers and acquisitions activity, but when it comes to more pharmaceuticals consolidation, it makes sense to focus on dedicated pharmaceuticals ETFs, including the Market Vectors Pharmaceutical ETF (NYSEArca: PPH). [Healthcare ETFs: Specialized Drugs in Greater Demand]

The $413.4 million PPH is home to 26 stocks, a group that includes both potential buyers and sellers as pharmaceuticals M&A continues booming. Likely buyers found within PPH include Dow component Pfizer (NYSE: PFE), PPH’s third-largest holding at a weight of 5.5%.

Home to one of the largest stockpiles of cash in the U.S., Pfizer can execute a big deal as it has several times in the past. GlaxoSmithKline (NYSE: GSK) and Shire (NYSE: SHPG) have been rumored to be potential targets for Pfizer, according to Bloomberg. Those stocks combine for 9.5% of PPH’s weight.

“Pfizer has a proven track record of integrating large companies, said Chief Financial Officer Frank D’Amelio. In 2000, New York-based Pfizer paid $116 billion for Warner-Lambert Co.; in 2003 it spent $60 billion for Pharmacia Corp.; and in 2009 it paid more than $60 billion for Wyeth LLC — acquisitions that gave Pfizer blockbuster products like Lipitor and Prevnar,” reports Bloomberg.

Valeant Pharmaceuticals (NasdaqGS: VRX) and Jazz Pharmaceuticals (NasdaqGS: JAZZ) have also been mentioned as pieces in the pharmaceuticals M&A puzzle though the former has a history of being a buyer. Those stocks combine for almost 6% of PPH’s weight.

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