GlaxoSmithKline (GSK), Europe’s largest drugmaker, moved into the branded generics market today through an alliance with Aspen Pharmacare Holdings, the South African group.

The deal illustrates GSK's tilt towards emerging markets as the group faces increasingly tough conditions for its patented drugs in the US and Western Europe.

The move was announced as Andrew Witty, GSK's new chief executive, presented his strategy for the business with results for the second-quarter.

Profits fell from £1.3 billion in the second quarter last year to £1.2 billion while revenue rose 3.5 percent to £5.9 billion.

Under the terms of the tie-up, the British-based group will gain access to a range of low-cost branded but unpatented drugs owned by Aspen.

Today's alliance is a break from the company's strategy of focusing on high-cost patented drugs which can be sold to the US and European markets, which have higher margins than generics but suffer when patents expire.

Emerging markets are forecast to grow by 13 per cent a year — triple the rate of Western markets — and account for 40 per cent of growth in the worldwide pharmaceutical market by 2020.

GSK will register the drugs in markets where they have not been approved and expects to start selling them from 2010. Aspen will continue to market them in sub-Saharan Africa and other countries.

The South African company will receive limited upfront payments from the pharmaceutical giant but most payments will be made through a profit-sharing arrangement based on sales.

Mr Witty is also expected to announce a shake-up of GSK’s research and development activities, in which the company’s scientists will be divided into smaller teams that compete for funding.

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