Pfizer and Allergan will join in a $160 billion deal to create the world's largest drugmaker.

It's the biggest health care deal ever and the largest so-called inversion, a tax-saving maneuver in which a U.S. company reorganizes in a country with a lower corporate tax rate. U.S. efforts to curb the practice have so far proven ineffectual.

Botox maker Allergan is based in Ireland but runs much of its operations out of New Jersey.

The deal would create a pharmaceutical colossus with annual sales of more than $60 billion, putting the merged group well ahead of No. 2 U.S. drugmaker Merck & Co, which has annual sales of about $40 billion.

Widely used Pfizer drugs such as Lipitor, Viagra and nerve pain treatment Lyrica would be brought together with Allergan's Namenda memory loss treatment, Restasis dry eye medication and other leading eye-care brands.

It would be the biggest merger of the year, topping beer maker Anheuser-Busch InBev's proposed $107 billion takeover of SABMiller Plc.

Pfizer’s talks with Allergan come more than a year after the U.S. firm abandoned a bid to acquire AstraZeneca and move its tax headquarters to Britain.

The U.S. Treasury last year, and again last week, updated its rules on inversions to make it harder for companies to avoid U.S. taxes by moving overseas. But experts have said these moves would do little to prevent Pfizer from inverting.

Although Pfizer has decried the high U.S. corporate tax rate, it has minimized its U.S. taxes for years by selling its drug patents to overseas subsidiaries and then using them to make drugs that are sold back to U.S. affiliates. While generating big profit margins for its overseas arm, the practice has allowed Pfizer to report losses on its higher-taxed U.S. business in each of the past five years.

The inversion deal would get Pfizer out from under the 35 percent U.S. corporate tax rate, among the world's highest. The tax rate in Ireland is 12.5 percent.

Democratic presidential candidates Hillary Clinton and Bernie Sanders on Monday spoke out against the Pfizer-Allergan inversion plan.

Clinton said it would leave "U.S. taxpayers holding the bag" and plans to propose steps to prevent future inversions.

Sanders said the merger would be a "disaster" for U.S. consumers paying high prescription drug costs, adding that the Obama administration should exercise its authority to stop it.

Republican front-runner Donald Trump, who has called for a corporate tax overhaul, called the deal "disgusting" in comments to news website Business Insider.

Many industry analysts and investors believe Pfizer could be bulking up with Allergan's fast-growing brands as a prelude to splitting by 2017 into two companies — one selling high-margin branded drugs and one selling inexpensive generics that have dragged down Pfizer results over the past few years.

Pfizer's Chief Executive Ian Read, 62, a trained accountant, has said Pfizer could decide on such a split by late 2016, after it completes separate financial analyses of the two businesses.

Pfizer's $15 billion purchase earlier this year of hospital products maker Hospira, which sells generic injectable drugs and is developing biosimilar versions of top-selling biotech medicines, was widely seen as a move to make its generics business more attractive ahead of a sale.

Pfizer and Allergan will be combined under Allergan PLC, which will be renamed Pfizer PLC.

Read will be CEO of the combined company, with Allergan's CEO Brent Saunders, 45, serving in a very senior role focused on operations and the integration, the people added.

Saunders will also have a seat on the combined company's board, one of the people said.

Al Jazeera and wire services