Teva Pharmaceutical Industries has confirmed the rumours and announced that it is to acquire a controlling stake in Taiyo Pharmaceutical Industry Co, Japan's third-largest generics firm.

The Israeli company is buying 57% of the shares in privately-held Taiyo for $460 million in cash and will also extend an offer to purchase all remaining outstanding stock. This will value Taiyo at $1.3 billion, and Teva noted that the deal should be accretive to earnings within four quarters after closing.

Taiyo had sales of $530 million in 2010 and has over 550 generic drugs "in a variety of therapeutic areas and dosage forms". It is particularly prominent in hospitals "due to its wide range of injectable product offerings", Teva added.

The newly-acquired firm also enjoys "top-tier production capabilities in a wide range of technologies" (including sterile manufacturing) in two facilities, it is claimed, "as well as a strong R&D team and local regulatory expertise".

Teva chief executive Shlomo Yanai said the deal will enable his firm to "deliver on our strategic objective of becoming a leading player in the fast-growing Japanese generics market. In fact, we now expect to reach our 2015 target of $1 billion in sales in Japan ahead of schedule".

The second largest pharmaceutical market in the world, valued at $96 billion in 2010, has a relatively low rate of generic penetration at the moment, some 23%. However, the Japanese government has expressed its intention to push this up to 30% by 2012.

The transaction will be funded through a combination of cash and bank debt and should be completed by the end of the third quarter.