In a move likely to have a broad impact on pharmaceutical-industry economics in developing-world markets, pharmaceutical giant GlaxoSmithKline PLC says it will allow a generic-drug maker in South Africa to produce and market three of Glaxo's patent-protected AIDS medicines.

Under the deal, announced in South Africa, Glaxo of the United Kingdom will grant a license to Aspen Pharmacare Ltd. of South Africa to sell generic versions of   Glaxo's AIDS drugs, AZT, 3TC and Combivir within South Africa to the public or government sector as well as to certain nonprofits and charities. In what appears to be the first such licensing of a patented AIDS drug to a generic-drug maker in order to increase access to the medicines, Glaxo will waive its rights to any royalty payments.

Instead, Aspen, South Africa's largest generics maker, has agreed to pay a 30% fee on net sales to one or more nongovernmental organizations for AIDS education and prevention.

Shire Pharmaceuticals Group PLC, also of the U.K, which licenses 3TC to Glaxo, also agreed to the arrangement. AZT is also known as Retrovir and 3TC as Epivir; Combivir is a pill that combines both medicines. The drugs can be used as part of a multidrug cocktail to suppress the AIDS virus and prolong life. Few of the millions infected with the AIDS virus in Africa have access to these medicines because of their high cost.

While Aspen has not said exactly what the prices of the three AIDS medicines will be, Steven Saad, group chief executive of Aspen, said his company could make a generic version of Combivir for between $1 and $1.50 a day. Glaxo officials also said they assume the generic versions will be cheaper than current name-brand prices.

The deal marks another episode in a years-long battle between AIDS activists and big drug manufacturers over the high price of AIDS medicines in sub-Saharan Africa, where the epidemic has claimed more lives than in any other region. Under pressure, and with the threat of competition from generic-drug makers such as India-based Cipla Ltd., several major pharmaceutical companies have slowly cut the prices of AIDS drugs -- some even down to cost -- over the past 18 months.

For instance, last year, Glaxo, whose AIDS drugs are the most heavily used in South Africa, according to Aspen, reduced the price of Combivir to $2 a day in South Africa for the public sector, NGOs and certain private employers, compared with $17.23 a day for the drug in the U.S. But the government wasn't buying, say Glaxo officials.

Indeed, by letting Aspen take over the public-sector market only in South Africa, Glaxo concedes it isn't really losing much. "It's not giving away a substantial amount of the business," says Howard Pien,

Glaxo's president of international pharmaceuticals. Mr. Pien wouldn't quantify precisely how much might be lost, but, he said, "it's not going to be material." Furthermore, the company will continue to sell the three AIDS drugs in South Africa's private-sector market.

Earlier this year, Bristol-Myers Squibb Co. said it wouldn't sue Aspen if the generic-drug maker began producing and selling two patented AIDS drugs, Zerit and Videx. Though the offer fell short of an actual license, which is what Aspen said it wanted, the two companies are still negotiating and could reach a final deal soon.