7 billion-dollar buyout of the generic drugs unit of India's Piramal Healthcare, as it moves to boost its presence in emerging markets.
Abbott, which announced the acquisition in a statement late Friday, said the deal would make it the leading pharma company in India with a market share of seven percent.
The US firm has agreed to pay 2.1 billion dollars as a down payment, with the remainder to be paid in annual installments of 400 million dollars over the next four years.
Abbott said the deal would accelerate its growth in emerging markets "giving it the number one position in the Indian pharmaceutical market".
Pharmaceutical sector analysts called the deal a "benchmark", which could see more Indian firms selling out businesses to multinationals who are keen to expand in one of the world's fastest-growing markets.
India's pharma sector is growing at between 12 to 15 percent each year, compared to about three percent for Western countries.
Low production costs and skilled scientific talent make Indian acquisitions particularly attractive.
In 2008, India's biggest generic drug maker Ranbaxy sold a m