Daiichi Sankyo, the Japanese pharmaceuticals company, has acquired a majority stake in Ranbaxy, India's largest maker of generic drugs, in a transaction that will be worth up to $4.6 billion (£2.35 billion).

The combination of the two companies will give Ranbaxy access to Daiichi's expertise in research while the Japanese company will benefit from low-cost production on the sub-continent, amid a deepening profits crisis in Japan’s drugs industry.

Daiichi said that it has agreed to buy the 34.8 per cent stake in Ranbaxy held by the founding Singh family at 737 rupees a share. Under the terms of the deal, Ranbaxy will become a subsidiary of the Japanese company.

Malvinder Mohan Singh, chief executive and managing director of Ranbaxy, said: "This is a significant milestone in our mission of becoming a research-based international pharmaceutical company."

Daiichi is paying a 31 per cent premium on Ranbaxy's closing price yesterday. The combined company will be worth about $30 billion.

Takashi Shoda, president and chief executive of Daiichi Sankyo, said the deal would "complement our strong presence in innovation with a new, strong presence in the fast-growing business of non-proprietary pharmaceuticals".

Countries with ageing populations, such as Japan, are likely to encourage cheap copies of patented drugs to reduce healthcare costs.

Analysts said the deal could also be a response to growing anxiety within the Japanese government over future healthcare provision and the lack of any real generic drug industry in Japan, which accounts for just 5 per cent of the market.

In a bid to slash its costs, Japan’s health ministry is attempting to persuade both doctors and patients that generic drugs are just as good as their branded equivalents but has so far met with failure.

Even changing the prescription forms to make generic drugs the default recommendation of doctors has been unsuccessful - a government target that 30 per cent of the Japanese drug market should be occupied by generics by 2010 has looked increasingly implausible.

Part of the problem, say government officials, is that generic drug companies in Japan are small and doctors do not trust them.

By effectively re-branding Ranbaxy generics under the well-known name of Daiichi Sankyo products in Japan, that dynamic might change and a market for generics develop.

Cost-cutting and new drugs pipeline does not appear to play a role in Daiichi's decision, and although investors queried what appeared to be a deal “with no apparent synergies at all”, the move by Daiichi will give the group access to generic drugs markets in 50 different countries.

That access comes at a time when patent expiries threaten the profits from many blockbuster drugs that have helped Japanese companies amass huge cash reserves – Daiichi Sankyo is drawing on a $6 billion cash war-chest, and its rivals have similar piles of capital ear-marked for acquisitions.

The deal marks a substantial departure from the old Japanese business model and one which analysts said may now provide a template for increasingly worried Japanese drugsmakers.

Most analysts expected Daiichi and its domestic rivals to use their money beefing-up their pipelines of new drugs – the strategy employed by Takeda earlier this year when it paid nearly $9 billion for Millennium Pharmaceuticals in the US.

But Daiichi’s move on Ranbaxy, which was described by stunned Tokyo investors as “bold and entirely out of character”, could mark the start of a wholesale strategic shift towards emerging markets by Japan’s pharmaceutical industry.

For years Japanese companies have been able to depend on their high-spending domestic healthcare market for solid profits, but Japan’s shrinking population has become a severe threat to that part of the business model.

Where previously the likes of Daiichi and its rivals Takeda and Eisai were highly conservative and focused mainly on their domestic, US and European sales, said BS pharmaceuticals analyst Hirohisa Shimura, they may now have accepted that their future growth lies in the fast-growing middle classes of Asia’s emerging markets.

“Emerging markets are absolutely the sort of expansion that the Japanese pharmaceutical companies will be thinking about now that their international competitors are doing the same Daiichi’s move is every brave, but good,” said Mr Shimura.

Times Recommends

• Food prices rise 8.3% on soaring fish and meat
• Car sales crash as economy hits skids
• House prices fall but Bank leaves rates on hold