While the market was panicking yesterday, Teva Pharmaceuticals (NASDAQ:TEVA) was jumping up 4%. The company's adjusted earnings beat estimates by three cents, but I think it was the generic-drug maker raising the expectations for its acquisition of Barr Pharmaceuticals late last year that had investors excited.

Teva now expects the deal to be accretive to earnings in the third quarter, a full quarter earlier than expected. It also expects the deal to yield cost savings of $400 million, up $100 million from initial estimates, on the $7.5 billion purchase of the former Stock Advisor pick. That looks pretty good compared to Pfizer's (NYSE:PFE) acquisition of Wyeth (NYSE:WYE), which Pfizer expects won't be accretive to earnings until the second full year after closing and will save $4 billion on the $68 billion mega-deal.

The main benefit from Teva buying the American company probably won't even come from the U.S., but from Europe. Barr has a presence there through its acquisition of Pliva a few years ago, which should help Teva expand its worldwide dominance. Generic drugs are a low-margin business, so spreading out development and manufacturing costs over a higher volume should help Teva compete on price against other large generic-drug companies like the Sandoz subsidiary of Novartis (NYSE:NVS) and Mylan (NYSE:MYL).

The other benefit will come from Barr's women's health drugs, many of which are branded products that sport higher margins. They'll be a nice addition to Teva's own branded multiple sclerosis drug, Copaxone, which saw sales jump 32% last year. It continues to compete well against other multiple sclerosis drugs, like Biogen Idec's (NASDAQ:BIIB) Avonex and Pfizer's Rebif, driving U.S. prescriptions up 10.5%. I'm sure the slowing growth of Biogen's and Elan's (NYSE:ELN) Tysabri after new cases of progressive multifocal leukoencephalopathy (PML) showed up also helped Copaxone's whopping growth.

Generic drugs are likely to be a major solution that governments use to tackle the problem of rising health-care costs, and the new, larger Teva looks well-poised to grab that growth as it happens.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.