“The acquisition will position Teva as the leading generic pharmaceutical company in Europe,” the Jerusalem-based drugmaker said, boosting its yearly sales in Europe to $5.2 billion from $3.3 billion at present.

Ratiopharm belonged the late German tycoon Adolf Merckle, who threw himself under a train in January 2009 as the global financial crisis pushed his business empire onto the rocks.

The 74-year-old’s VEM holding company controlled Ratiopharm, building materials giant Heidelberg Cement and one of Europe’s biggest wholesale drug distributors, Phoenix.

Generic drugs are medicines whose patent protection has expired, and Germany is the world’s second largest market in this area, worth around $8.8 billion, Teva said.

Ratiopharm is Germany’s second largest generics producer and the sixth largest worldwide.

“This is an important acquisition for Teva. This transaction is perfectly aligned with our long-term strategy in which Europe is an important pillar and growth driver,” Teva chief executive Shlomo Yanai said.

“Ratiopharm will provide us with the ideal platform to strengthen our leadership position in key European markets, most notably in Germany, as well as rapidly growing generic markets such as Spain, Italy and France.”

It is the biggest takeover in the generic industry since Teva itself bought US-based Barr Pharmaceuticals for $7.5 billion in 2008.

Teva reportedly saw off competition from US giant Pfizer and from Iceland’s Actavis to acquire Ratiopharm. Pfizer baulked at the high asking price and may now turn its attention to Germany’s Stada Arzneimittel.

The combined entity will hold the leading market position in 10 European markets, including Britain, Italy, Spain and the Netherlands as well as a top three ranking in 17 countries including Germany, Poland and France, Teva said.