Drug cocktails aren't just for alchemists anymore. In many diseases they've become big business, and investors would be smart to pay attention.

Two heads are better than one
Perhaps the most famous drug cocktail was developed to fight HIV. Doctors figured out that attacking the virus from multiple angles could slow it down enough that patients could live for an extended period of time with the virus.

Taking multiple pills a day is worth it to save your life, but I imagine it's still a pain. Never one to miss an obvious opportunity, drug companies started combining pills. Now, the top-selling HIV drugs at both Gilead Sciences (Nasdaq: GILD) and GlaxoSmithKline (NYSE: GSK) are both combination pills containing two different drugs.

Recently, the HIV companies have taken it a step further and reached out to their competitors to develop combination drugs. Gilead and Bristol-Myers Squibb (NYSE: BMY) already have a drug on the market that combines three different drugs; two from Gilead and one from Bristol-Myers. Glaxo and Pfizer (NYSE: PFE) have taken partnering to a whole new level, setting up a joint venture to sell the HIV drugs they've developed individually. The next step for the duo is clearly to start combining the drugs into single pills now that they're under the same umbrella.

Merck (NYSE: MRK) has similarly made its blockbuster diabetes drug, Januvia, more convenient, but it didn't need the help of the original developer, since metformin is available as a generic. Diabetics seem to like the convenience. Sales of the combination product, Janumet, more than doubled year over year in the first quarter compared to a 51% increase in sales of Januvia.

Not all partnerships are happening after drugs are approved, though; earlier this month, Merck and AstraZeneca (NYSE: AZN) announced that they were joining forces to test combinations of their two cancer drug candidates. AstraZeneca's AZD6244, which was originally developed by Array BioPharma , works against a pathway known as MEK, while Merck's MK-2206 targets another pathway called Akt. There's some evidence that the pathways compensate for each other -- and AstraZeneca's drug didn't work so well as a monotherapy -- so the early partnership seems like a good move to make use of drugs that might not get on the market individually.

If you can't beat 'em ...
A company needs to set up a partnership to make a combination treatment with a patented drug, but it doesn't really have to befriend the competition to take advantage of their already-approved drugs.

Rather than going head-to-head against the competition, many drugmakers are developing add-on treatments. Since the drug only needs to show an incremental effect instead of having to beat the competition, it's easier for the drug to get approved.

Pfizer is taking that approach with testing Sutent for breast cancer. The drug failed to best current treatments in two trials, but Pfizer had a backup plan and is already testing Sutent separately in combination with sanofi-aventis ' Taxotere and Roche's Xeloda.

The next-generation hepatitis C drugs from Vertex Pharmaceuticals and Schering-Plough (NYSE: SGP) are also using the tactic of adding on to the current treatments -- Schering's Pegintron and Roche's Pegasys. Since Vertex and Schering are in a heated race, Vertex is testing its drug in combination with Pegasys, while Schering obviously picked its own drug to test its next-generation drug with. Considering that the cure rates for the two pegylated interferons are under 50% for the first attempt, there's plenty of potential for improvement.

No drug stands alone
Except in the rare case where a drugmaker is developing a drug for some rare orphan indication, most drugs have some kind of competition. Investors without the stomach for death-match make-or-break clinical trials should look for drugmakers that are combining their treatments. Lowering the bar for success might allow you to enjoy a cocktail after the drug is approved.