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The combination creates a pharmaceuticals powerhouse with immense negotiating power with wholesalers and insurance companies. It is now more than 50 percent larger than its closest rival, Britain's GlaxoSmithKline Plc (London:GSK.L - News), in terms of market share.

With the Pharmacia acquisition, Pfizer will reap all sales of blockbuster arthritis drug Celebrex, which was previously co-promoted by the two companies.

he two companies had combined revenue of more than $46 billion in 2002 and a combined research budget of $7 billion.

The merged company will hold about 11 percent of the world's market for prescription drugs, compared with Glaxo's 7 percent share. Patients will receive more than one billion prescriptions per year for the company's medicines, Pfizer said.

"The combined company has the people, products, pipeline and financial flexibility to extend, and sustain, our leadership," said David Shedlarz, Pfizer's chief financial officer.

The new company boasted a market capitalization of about $255 billion as of Tuesday, making it the world's third-largest company by market capitalization.

New York-based Pfizer, the maker of erectile dysfunction drug Viagra and cholesterol drug Lipitor, faced some antitrust hurdles, with European and U.S. regulators requiring the companies to divest overlapping products in certain areas.

For the acquisition to win U.S. approval, both Pfizer and Pharmacia agreed to divestments of pharmaceutical products in nine separate markets, including drugs for the treatment of overactive bladder, combination hormone replacement therapies, and treatments for erectile dysfunction.

MERGER-RELATED SAVINGS

Pfizer said it anticipated merger-related cost savings of $2.5 billion in 2005.

When Pfizer announced the deal last July, its shares fell, making the stock-for-stock transaction valued at $53 billion. But Pfizer shares gradually climbed since then.

The acquisition was worth about $57 billion when the Federal Trade Commission approved it on Monday and $60 billion based on Pfizer's closing stock price Tuesday. Pharmacia shareholders will get 1.4 Pfizer shares for each Pharmacia share they own.

Pfizer's stock price has barely budged over the past five years, despite consistent annual double-digit percentage earnings growth. Analysts have expressed concern that the company's profit growth stems from merger-related cost savings rather than development of new, groundbreaking medicines.

The company obtained Lipitor and epilepsy medicine Neurontin through its $114 billion acquisition of Warner-Lambert Co. in 2000.

Pfizer also said on Wednesday it will expand its patient assistance programs as it combines those of Pharmacia with its own. In 2002 Pfizer donated more than $520 million worth of medicine to help low-income, uninsured patients.

Pfizer added in a statement that it expected to submit 20 new major medicines for regulatory approval over the five-year period through 2006.