AstraZeneca specialises in cancer and respiratory treatments

The US biotechnology business, based in Maryland, has a range of successful treatments including the respiratory drug Numax and flu vaccine FluMist.

Formed in 1988, MedImmune made a $75m profit last year on sales of $1.3bn.

Consolidation is rife in the sector as firms seek to spread the massive cost of researching and developing drugs.

Research capability

MedImmune's directors have recommended the offer, which is expected to be completed by June.

It enhances AstraZeneca's research and development base through which we will deliver a stronger product pipeline David Brennan, AstraZeneca chief executive See AstraZeneca shares

AstraZeneca said the transaction would substantially increase its delivery of new medicines in key clinical areas such as cancer and respiratory treatments.

David Brennan, AstraZeneca's chief executive, described the deal as "a transformational step" in the firm's growth.

"It enhances AstraZeneca's research and development base through which we will deliver a stronger product pipeline," he said.

However, AstraZeneca's shares fell 2.6% in morning trading in London on fears the firm may have overpaid for MedImmune.

AstraZeneca's shares have been under pressure recently as investors have been concerned about the increasing competition it is facing from generic drugs manufacturers.

The firm responded earlier this year by saying that it would cut 3,000 jobs over the next three years.

Nevertheless, AstraZeneca also said on Monday that its first quarter profits had risen 11% to $2.2bn, on sales up 13% at $6.9bn.