GLAXOSMITHKLINE'S position as the world's second largest drugs firm is under threat from an expansion drive by a French rival.

Sanofi-Synthelabo has tabled a takeover bid for its larger rival Aventis, which rejected the hostile approach.

If the move goes ahead, the combined firm would join Glaxo in the fight for the number two spot behind US company Pfizer.

The new company would hold a five per cent market share, creeping up behind Glaxo's seven per cent - a figure helped by a greater presence outside Europe.

Sanofi's hostile bid, which it said would make it the biggest drugs firm in the European market, valued Aventis at £32.9bn.

However, Aventis said the offer undervalued its business and that alternative strategies were still being examined.

Glaxo, based in Brentford, Middlesex, has more than 100,000 employees worldwide, including about 1,170 in Barnard Castle.

Last month, it unveiled a range of drugs to treat heart disease, cancer and breathing disorders that it said could become blockbusters.

The company is hoping to bring more than 20 products to patient trial stage during the next three years.

A spokesman for GlaxoSmithKline refused to make any comment on the implications of any Sanofi/Aventis merger.

But Andy Penman, a pharmaceuticals analyst at stockbroker Gerrard, said that while a merger would create the largest company in Europe, recent patent problems at Aventis had to be taken into account.

He said: "I don't think Glaxo should be overly worried."

Specialist areas of the Sanofi business include cardiovascular disease, thrombosis and diseases of the central nervous system.

Aventis was created in 2000 by a merger between French pharmaceuticals company Rhone-Poulenc Rorer and German chemical and drug firm Hoechst.