SHARES in GlaxoSmithKline climbed yesterday as investors warmed to news of consolidation in the European pharmaceuticals industry.

All UK drugmakers' shares received a shot in the arm from the news that Novartis was about to become the world's largest generic drug manufacturer.

Glaxo - which employs more than 1,000 people in Barnard Castle, County Durham - AstraZeneca and Shire were among the top risers on the FTSE 100 Index after Swiss rival Novartis announced deals that will turn it into the world's largest generic drug maker.

Glaxo shares rose 54p as Novartis announced details of a £3.9bn acquisition spree.

Novartis, which employs more than 3,000 people in the UK, has agreed to buy Germany's Hexal and a majority stake in Eon Labs, which will make it the world's largest generic drug manufacturer.

Investor confidence in pharmaceuticals companies has been dented in recent months by safety concerns about blockbuster treatments, but the news tempted investors back to the sector.

The acquisitions will allow Novartis to cash in on increasing demand for generic drugs - cheaper copies of branded rivals - which can be produced once the patent on the original treatment expires. Novartis's generics division will overtake Israel's Teva Pharmaceuticals as the world leader. It will have strong positions in major markets, such as the US and Germany, as well as a significant foothold in Asia and Latin America.