GlaxoSmithKline is taking a 16% stake in South African partner Aspen Pharmacare Holdings as it continues its strategy of expanding in the emerging markets.

Under the terms of the deal, Aspen, South Africa’s largest generic drugmaker, will issue 68.5 million new shares in exchange for the transfer of GSK’s manufacturing plant in Bad Oldesloe, Germany, and eight specialist medicines. They are the chemotherapy drugs Alkeran (melphalan; excluding the USA), Leukeran (hlorambucil), Purinethol (mercaptopurine), Myleran (busulfan) and Lanvis (tioguanine), plus Kemadrin (procyclidine) for Parkinson’s disease, the antibiotic Septrin (co-trimoxazole) and the beta-blocker Trandate (labetalol). Combined sales of these products were £56 million in 2008.

Aspen will also distribute GSK products in South Africa, which generated sales of about £45 million last year and the companies will collaborate to market drugs in Sub-Saharan Africa, which had sales of £65 million in 2008.

Aspen has a current market capitalisation value of £1.4 billion, so GSK’s stake is worth about £224 million. The UK-based major will get a seat on Aspen's board.

The companies have been working together since last summer when they agreed to sell branded generics in emerging markets from 2010. Abbas Hussain, president of emerging markets at GSK said that “the combination of our commercial activities in Sub-Saharan Africa is highly complementary”, adding that the firm “will also benefit from investing in one of Africa’s leading healthcare companies with a formidable track record of delivery”.

News of the deal has been greeted with some disappointment among Aspen investors however and the share price has fallen. The company revealed earlier this year that it was in talks with a firm that was going to take a significant stake in the South African drugmaker and many backers believe 16% is not exactly earth-shattering.