Today's strategic buyer is highly focused on growth by buying complimentary or competing products, filling existing distribution channels with additional products or buying similar operations to exploit synergies.

Such has been the case with Valeant Pharmaceuticals International Inc. (TSE: VRX) in 2013.

The largest deal the company unveiled was its $8.7 billion purchase of Bausch & Lomb Holdings Inc., the eye-care company owned by Warburg Pincus LLC. The move positions Canada's largest drug maker to compete globally in the growing, specialized ophthalmology market-a sector Valeant had been exploring but remained hesitant to pen an agreement unless the right opportunity came along.

With Bausch & Lomb, chief executive officer J. Michael Pearson saw ophthalmology as a growing market with many synergies. He also compared it to dermatology, another sector that Valeant had made strides in when it comes to dealmaking, calling both high-growth markets.

Since he stepped into the CEO position in 2008, Pearson has made M&A a priority.

Earlier in the year, the company was in a bidding war with Merz Pharma Group over Obagi Medical Products Inc. Valeant ended up winning the coveted skincare company for $437.5 million, notched up from $360 million. The transaction was largely seen as a sign that competition is likely to intensify among strategic buyers in the cosmetics space.

"There are a number of reasons we find dermatology attractive," Laurie Little, vice president of investor relations, tells Mergers & Acquisitions. The sector tends to be a "high cash-paying market," and skincare companies usually require smaller sales forces. Large pharmaceutical companies, such as Johnson & Johnson (NYSE: JNJ), also tend to overlook targets in dermatology, preferring bigger medication deals. This makes it easier for Valeant to compete with other strategic buyers, especially when most targets fall in the middle market .

Among the notable skin care companies in Valeant's portfolio are Acanya and Atralin, used to treat acne, as well as Zovirax and Xerese, for herpes. After the $2.6 billion acquisition of Medicis Pharmaceutical in September 2012, Valeant now owns anti-aging drugs Dysport and Restylane.

With Bausch & Lomb and Medicis being an exception, many of the targets that Valeant looks at are in the $100 million or less ballpark. For example, Valeant purchased Natur Produkt International, a maker of cough and cold remedies as well as anti-aging products, in February for $185 million. That was followed up with a takeover of Austrian pharmaceutical company Croma-Pharma for an undisclosed price in April.

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