The European Commission has approved the proposed acquisition of Hospira by Pfizer for $17bn (£10.9bn) under EU merger regulations.
Phizer, the US drug maker, pledged it would protect the research of some drugs and guard against price rises to calm competition concerns in order to acquire its US rival Hospira.
The deal will see Pfizer become a leader in the growing market for cheaper versions of expensive biotech drugs.
The European regulators said they were worried that the merged company might discontinue production of Pfizer's infliximab biosimilar drug, a popular medication to treat autoimmune disease such as Crohn’s disease.
However, commitments offered by the companies have addressed these concerns, and the acquisition is allowed to take place.
This is the biggest ever deal for Pfizer, which aims at boosting its portfolio of generic injectable drugs and copies of biotech medicines.
Chairman and chief executive of Pfizer, Ian Read, said:
We are pleased to have achieved a significant milestone for Pfizer’s pending acquisition of Hospira with the EC’s approval of the transaction.
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.
Commissioner Margrethe Vestager, in charge of competition policy commented:
This is not just about keeping prices low for patients and healthcare services. We have also made sure that the merger of Pfizer/Hospira does not stand in the way of the research and development of medication that could have huge benefits for society.