Shares in merger partners Boots and Alliance UniChem raced ahead after the pair cleared a major hurdle in the path of their £7 billion tie-up.
The stocks also benefited from a broker upgrade and strong trading figures from German drugs wholesaler Celesio, which owns the Lloyds chain in the UK.
Celesio was at the centre of the merger breakthrough after its last-minute appeal against the Office of Fair Trading's decision to clear the deal was thrown out by the Competition Appeal Tribunal.
Boots and Alliance UniChem said they now expected it to become effective on July 31.
Preparations for the merger were said to be "well advanced" with the pair confident that remaining conditions will be met.
A further boost came from Morgan Stanley's decision to upgrade its rating on Boots, while first quarter profits from Celesio rose by 21.4 per cent and it said it viewed the rest of the year optimistically.
The company added: "The board assumes that in 2006 the European pharmaceutical market will continue to grow at the same level as in the previous year, at approximately five per cent."
The proposed merger was announced last October and followed a pledge by Boots chief executive Richard Baker to put "the chemist back into Boots".
The new company, called Alliance Boots, will have more clout when negotiating terms with suppliers and therefore more freedom to sell at lower prices, giving it a chance of challenging the supermarkets. It will create a business with 2,600 UK stores and £13 billion of sales worldwide.
The Office of Fair Trading originally cleared the merger after the companies agreed to dispose of stores in 100 communities where the two businesses are dominant.
Celesio said the first-quarter earnings jump reflected acquisitions, extra working days and strong demand for medicines.
The company, which has operations across Europe, saw earnings before tax rise to (£95.3 million as sales climbed 8.2 per cent to £3.6 billion.