New York/Mumbai, May 21 (IANS): Illinois-based pharmaceuticals major Abbott Friday said it is acquiring Piramal Healthcare's formulations business for $3.72 billion, to make the combined entity one of the largest players in the country's generic drugs market.

Abbott, which is celebrating its 100th year in India and owns such brands as Creamffin, Brufen and Digene, will make an upfront payment of $2.12 billion to the Ajay G. Piramal-led firm, apart from $400 million annually for four years, the two companies said.

"With this deal, the combined healthcare solutions of Abbott businesses will become the clear market leader in India, with a market share of around 7 percent," said Piramal, chairman of the group, whose company owns brands like Phensedyl, Paraxin and Pentids.

Abbott estimates the growth of its pharmaceutical business in India after the Piramal acquisition to touch 20 percent annually and log $2.5 billion by 2020. The Piramal group's turnover across several business had exceeded $1 billion in 2009-10.

Of this, Piramal's portfolio of branded generics is expected to log sales of over $500 million, with brands spanning multiple therapeutic drugs and formulations, including antibiotics, respiratory, cardiovascular, pain and neuroscience.

"This strategic action will advance Abbott into the leading market position in India -- one of the world's most attractive and rapidly growing markets," said Miles D. White, chairman and chief executive officer of Abbott.

The two companies estimate sales of branded pharmaceuticals in India to touch $8 billion this year, making it one of the fastest-growing market in the world. The pharmaceuticals industry in India is the third largest in the world in terms of volume.

Piramal group said it will retain its business of custom drug manufacturing for third parties, critical care, over-the-counter products, pharmaceutical ingredients, vitamin, diagnostic medical devices and clinical research.

As part of the deal, Piramal and its associates will also not engage in the business of generic pharmaceutical products in the finished form in India, nor will they market or manufacture products which are the part of the portfolio in emerging markets.

The combined Abbott and Piramal sales forces will be the industry's largest in India, the two companies said. While Piramal's healthcare business employs more than 5,000 people, Abbott has more than 2,500 employees in the country.

The Piramal Healthcare scrip was down 2.87 percent from its previous close at Rs.569.65 at the Bombay Stock Exchange Friday. It had climbed to an intra-day high of Rs.599.90. The other group company, Piramal Lifesciences, was up 4.98 percent at Rs.124.30.