GlaxoSmithKline has bought the research institute of Croatian drug maker Pliva in a deal worth up to $50m (£28.7m).
Glaxo is Europe's biggest drug maker
Zagreb-based Pliva, eastern Europe's largest drug maker by sales, will get an upfront sum of $35m with possible further payments of up to $15m.
In addition, Pliva will receive royalties on certain assets should they reach the market.
Glaxo, Europe's biggest drug maker, is to take control of Pliva's intellectual property assets and employ its staff.
The deal is expected to be completed in April, subject to regulatory approval.
Pliva opened its newly built state-of-the-art research and development institute in 2002 and focuses on the generic drugs business. It has a target to launch between 60 and 80 new generic products this year.