GlaxoSmithKline today took a bold step into the branded generics market place through an alliance with South Africa's Aspen Pharmacare.

The move, paving the way for the sale of cheap medicines in emerging markets, is the latest sign of Glaxo diversifying the focus of its business in the face of tough conditions for patented drugs in the US and Europe.

Under the terms of the deal - which Glaxo hopes will drive its emerging-market growth - the British-based group gains access to a broad range of low-cost branded but unpatented drugs.

It will register them in markets where they have not already been approved, and expects to start selling the first 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 arrangement based on actual sales.

The tie-up marks a break from Glaxo's past strategy of concentrating on high-priced patented drugs, and reflects the growing importance of emerging markets to the pharmaceuticals industry as sales in developed markets stall.

Ben Yeoh at Dresdner Kleinwort said: "Emerging markets are showing strong growth in volumes and branded generics in emerging markets do a lot better than they do in western markets."

Talk that major drug companies may use generics to gain access to key growth markets has grown since Daiichi Sankyo of Japan bid for control of India's Ranbaxy Laboratories last month.

Glaxo chief executive Andrew Witty has made emerging markets a top priority, hiring an Eli Lilly manager, Abbas Hussain, to head a unit focused on such countries.