GlaxoSmithKline Plc and unlisted German drugmaker Boehringer Ingelheim said yesterday they had agreed to allow the widespread manufacture of cheap generic versions of their patented AIDS drugs in South Africa.

In an out-of-court settlement with the country?s Treatment Action Campaign (TAC), the companies said they would grant more licences to generic firms to produce and import antiretroviral drugs which fight the spread of the HIV virus.

South Africa has more people living with HIV/AIDS than any other country in the world ? an estimated 5.3 million, equal to to 13 per cent of the world?s infected.

The companies will charge no more than a five per cent royalty fee on the sales of those drugs in the country. Separately, South Africa?s Competition Commission said it would not fine Glaxo for anti-competitive behaviour, and was discussing a similar agreement with Boehringer.

In October, the regulator found the firms guilty of anti-competitive behaviour over the sale of AIDS drugs and recommended they be fined and forced to allow the manufacture of generics.

A Glaxo spokesman in London said the company ? the world?s biggest makers of AIDS drugs ? would extend a voluntary licence it granted to local firm Aspen Pharmacare in October 2001 for the production of antiretrovirals (ARVs) to other companies.

A second firm, Adcock-Ranbaxy, a South African affiliate of India?s Ranbaxy Laboratories Ltd, has already been offered a licence and Glaxo will consider applications for another two possible licences for the manufacture of copies of antiretroviral drugs AZT and lamivudine.

The British-based company said its preference would be to award licences to local producers but it would consider imports into South Africa if this was not practicable.