Mumbai: GlaxoSmithKline Plc (GSK), the world's second largest pharmaceutical company, has teamed up South Africa's Aspen Pharmacare Holdings for selling branded generics drugs.
GSK, which is facing a tough market for patented drugs in the US and Europe, is shifting focus to cheaper medicines to drive growth in emerging markets and hopes to increase its market share by diversifying into branded generic drugs.
Under the deal, GSK will gain access to a broad range of Aspen's low-cost branded but unpatented drugs. It will, in turn, register them in markets where they have not already been approved.
GSK expects to start selling the drugs in the US and Europe from 2010. Aspen will continue to market these products in sub-Saharan Africa and some other countries.
Aspen, will receive limited upfront payments from Glaxo but the majority of payments will be made through a profit-sharing based on actual sales.
Major drug companies are expected to increasingly use generics to gain access to key growth markets, particularly in Asia.
The move has gained urgency since Daiichi Sankyo's bid for control of Ranbaxy Laboratories last month.
Glaxo, which is shifting market focus to emerging economies, is also believed to have weighed a deal with Ranbaxy.
Glaxo has recently set up a separate unit focused on emerging countries and has hired an Eli Lilly and Co manager, Abbas Hussain, to head it.
Glaxo expects drug sales in emerging markets to grow by 13 per cent a year - triple the rate of traditional Western markets - and account for 40 per cent of pharmaceutical market growth worldwide by 2020.