By Sudip Kar-Gupta

The move would take Sanofi deeper into the field of generic drug production, an area which has traditionally been shunned by large pharmaceutical companies but is now receiving increased interest as a way to tap booming emerging markets.

Sanofi -- already a key shareholder in Zentiva -- said on Wednesday that it was planning to offer 1,050 Czech crowns for each Zentiva share.

Zentiva is already the subject of a bid from Czech group PPF which has offered 950 crowns per share.

Zentiva shares were up 5.58 percent at 1,098 crowns at 0831

GMT.

Sanofi's offer represents a premium of around 10.5 percent to PPF's bid and the French company, which is the world's third-largest drugmaker by sales, said buying Zentiva made strategic sense.

"Sanofi-Aventis is already established in the various markets where Zentiva operates. The intended acquisition of the control of Zentiva carries a strong strategic rationale," Sanofi said in a statement.

Zentiva is a dominant supplier of generic, or unpatented, drugs in the Czech Republic and Slovakia. It also has subsidiaries in Romania and Turkey.

Zentiva said it had no immediate comment on Sanofi's planned counterbid and would issue a statement later on Wednesday.

On Tuesday, Zentiva told shareholders to take no action for now concerning PPF's bid, adding it would call for a shareholder meeting.

GENERIC DRUGMAKERS IN VOGUE

Sanofi owns 24.9 percent of Zentiva. PPF, together with allies such as Italian insurer Generali , owns 19.2 percent.

PPF, controlled by the Czech Republic's richest businessman Petr Kellner, said it would proceed in line with the terms of its own offer.

Sanofi's move on Zentiva follows a surprise $4.6 billion agreed bid last week by Japan's Daiichi Sankyo Co Ltd's <4568.T> for top Indian generics company Ranbaxy Laboratories Ltd

.

The spurt of activity shows branded pharmaceutical companies, who make their money from selling patented medicines, have a major appetite for generic drugmakers despite concerns about differences in their business models.

Big pharmaceutical groups have encountered a wave of product setbacks and political uncertainty that have sent many of their stocks to multi-year lows.

Acquiring companies that specialize in making low-cost generic drugs would allow them to diversify, target developing markets and seize on international efforts by governments to promote generics to cut healthcare expenses.

Only Switzerland's Novartis among large brand firms has fully embraced generics through its Sandoz unit, which is among the world's largest generic makers.

Sanofi shares closed Tuesday at 42.05 euros, giving the French company a stock market value of around 55 billion euros.

(Additional reporting by Ben Hirschler in London and Jan Korselt in Prague; Editing by Quentin Bryar)