Belgian drugmaker UCB won permission today from the European Commission to buy Germany's Schwarz Pharma for around €4.4 billion in stock and cash.
"The Commission concluded that the operation would not significantly impede effective competition in the European Economic Area or any substantial part of it," the European Union executive said in a statement.
The deal brings together two mid-sized drugmakers to create a group with sales in excess of €3.3 billion, research and development (R&D) spending of €770 million a year and a novel neurology and inflammation drug pipeline.
It underlines rapid consolidation among smaller firms in Europe. Schwarz Pharma has been making the transition from a generic drugmaker to one that develops its own drugs.
The company rose to prominence in 2003 as the only seller in the US market of a generic version of AstraZeneca's Prilosec anti-ulcerant.
UCB is seeking new sources of sales ahead of the loss of US patent protection on top-selling allergy pill Zyrtec in December 2007.