The Danish group Leo Pharma has suspended the sale of two of its drugs in Greece after the government decided to lower the price of medicines following austerity measure to cut deficits.

The move comes about a week after Novo Nordisk, the world's biggest producer of insulin, pulled out its latest diabetes drug from the Greek market. Both companies say price cuts will lead to job losses in Europe.

Leo Pharma, which specialises in critical-care drugs, claimed that Greece owed it millions of euros in debt.

Stefanos Combinos, director general of Greece's economy ministry, said his country was among the three most expensive in Europe for medicines. He added that pharmaceutical companies had an obligation to accept price cuts, according to a BBC report.

Greece, which is facing a severe financial crisis, is on a tough austerity drive as part of a €110bn (£95bn) bail-out package it accepted from eurozone members and the IMF in May.

Spain, which is under pressure to reduce deficits, has also announced plans to cut its medicines budget by €1.5bn.