Pharmaceutical giant Pfizer
Pfizer is rebuilding its portfolio of drugs as many of its blockbuster drugs lose patent protectionReuters

Pfizer has received approval from European regulators to acquire rival Hospira for $16bn (£10.9bn, €15.5bn), after the US drugmaker agreed to sell certain assets to sustain competition in the market.

As a condition for the approval, Pfizer agreed to fully divest the development, manufacturing and marketing rights of its Infliximab biosimilar drug currently in development. Infliximab is used to treat autoimmune conditions such as rheumatoid arthritis and Crohn's disease. However, the company will retain the drug's marketing rights outside Europe.

Pfizer also agreed to divest certain sterile injectable drugs administered with a hollow hypodermic needle. The European Union regulators were concerned that the combined company would have a high market share for certain sterile injectable drugs.

"We are pleased to have achieved a significant milestone for Pfizer's pending acquisition of Hospira with the EC's approval of the transaction," Ian Read, chairman and CEO of Pfizer, said in a statement.

"We continue to work cooperatively with the regulatory agencies to obtain the requisite approvals, and continue to expect the transaction to close in the second half of 2015."

Completion of the merger is still subject to approval from other governments and other customary closing conditions, among others.

Pfizer, which makes the erectile dysfunction drug Viagra and seizure drug Lyrica, is facing a major loss in revenues, as many of its blockbuster drugs have lost patent protection.

Amid a rising number of cheaper generics for its drugs such as cholesterol medication Lipitor and painkiller Celebrex, the company is seeking to own new products to maintain its revenue base.

The Pfizer-Hospira merger will combine the companies' portfolios of sterile injectable pharmaceuticals and copies of biotech medicines. The global marketplace value for generic sterile injectables is estimated to be $70bn in 2020, while the amount is $20bn for biosimilars.

Hospira's products are primarily distributed in the US, and their reach will be expanded to European and key emerging markets with the help of Pfizer.

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