Pharmacy chain CVS Caremark Corp. and pharmaceutical distributor Cardinal Health Inc. said on Tuesday they would form the largest U.S. generic drug sourcing operation in a 10-year agreement to serve the world's biggest market for generic drugs.

The 50-50 joint venture will be operational as soon as July 1, 2014. Under the agreement, Cardinal will pay CVS $25 million on a quarterly basis for the duration of the contract, with an estimated after-tax value of $435 million.

The U.S. market for medicines has seen a major shift toward cheaper generic drugs following a wave of patent expiries in recent years for major brand-name treatments and a growing effort to lower costs throughout the healthcare system.