AstraZeneca is said to be in talks to acquire US drugmaker Bristol Myers Squibb in a deal that would create a pharmaceutical group worth almost $400bn (£300bn).

The proposed transaction, first reported by the Financial Times this morning, would rank among the largest pharmaceutical mergers ever completed and create the world's fourth-largest listed drugmaker by market value.

Cambridge-based AstraZeneca is valued at around £196bn while Bristol Myers, based in Princeton, New Jersey, has a market capitalisation of about $133bn.

Neither company has publicly confirmed the talks.

AstraZeneca shares fell more than 7% on the news in London trading, while Bristol Myers shares rose between 6% and 8% in pre-market trading in New York.

A takeover would significantly expand AstraZeneca's US presence, where it has already committed $50bn to research and manufacturing by 2030. It would also represent a rare example of a major London-listed company acquiring a smaller US rival, as AstraZeneca is one of the largest companies in the FTSE 100.

But analysts questioned the strategic rationale for the merger despite the prospect of creating a dominant oncology business. Any deal is also expected to face significant regulatory scrutiny because of the companies' overlapping oncology businesses.

AJ Bell investment director Russ Mould said the blockbuster merger would have implications outside of the pharmaceutical sector.

Mould said: “Assuming it went through, AstraZeneca would likely overtake HSBC to become comfortably the largest company on the FTSE 100. However, the fear will be that such a move, coming on top of the company’s recent direct listing in New York, would pull its centre of gravity across the Atlantic and ultimately see the UK stock market lose one of its crown jewels.

“The initial market reaction to the reports is highly circumspect, reflecting understandable caution about the scale of the deal. Major transactions of this kind often run into difficulties around integration and matching up different workplace cultures. Getting a deal across the line could be as difficult as putting together a 10,000-piece jigsaw with the companies’ overlapping focus in oncology likely to attract scrutiny from competition authorities.”

Back in 2014, Pfizer, the US pharmaceutical giant, pursued AstraZeneca with a series of bids culminating in an offer worth about £69bn ($118bn at the time). AstraZeneca's board, led by CEO Pascal Soriot, rejected the proposal. Soriot, who is still in charge, recently reaffirmed the company's target of generating $80bn in annual revenue by 2030, driven by continued growth in oncology and rare disease medicines.

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