WASHINGTON (AFP) - US pharmaceutical giant Merck & Co. finalized its acquisition of rival Schering-Plough on Tuesday, a 41-billion-dollar deal creating the number two firm in the sector.

The completion follows clearance from regulatory authorities in various countries, allowing the two companies to begin combined operations on Wednesday.

The combined firm will have annual revenues of 47 billion dollars, behind US rival Pfizer, which following its acquisition of Wyeth has annual sales of around 75 billion dollars.

The deal announced in March is the latest tie-up of big drugmakers facing increased cost pressures as key patents expire.

Merck expects to achieve cost savings of approximately 3.5 billion dollars annually beyond 2011 as a result of the transaction.

The two firms already had a joint venture to market the cholesterol treaments Vytorin and Zeita.

Executives said the combined company will have a more diverse portfolio across important therapeutic areas, including cardiovascular, respiratory, oncology, neuroscience, infectious disease, immunology, women's health and other areas.

Schering-Plough generates about 70 percent of its revenue outside of the United States, including more than two billion dollars in annual revenue from emerging markets.

As a result, the merger will dramatically accelerate Merck's own international growth efforts, including the company's goal of reaching top five market share in targeted emerging markets, company officials said.