Ranbaxy, India's largest drugs company, has bought Romanian pharmaceutical business Terapia for $324m (£186m).
Both firms specialise in producing generic drugs and Ranbaxy said the move was key to its European expansion plan.
"The transaction is compelling and furthers us on our path to becoming a top five global generic company," said Ranbaxy boss Malvinder Singh.
Ranbaxy enjoyed sales of $1.2bn last year. Terapia's products are on sale in 15 eastern European countries.
Fast-growing market
The Indian firm now has a 97.5% stake in Terapia.
Ranbaxy said Romania was the fastest growing drug market in the central and eastern Europe region, expanding at 34% annually.
It added that Romania's future membership of the European Union would create further room for expansion.
Ranbaxy employs people in 46 countries and has its products on sale in 125.
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