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UPDATE 3-Adcock, Merck & Co in S.Africa distribution deal

* To cross-market and distribute drugs in S.Africa

* Analyst says deal may lead to bigger things

* Adcock shares up 1.1 percent, outperform sector (Recasts, adds background and updates share price)

JOHANNESBURG, June 24 (Reuters) - Merck & Co MRK.N will team up with South African drugmaker Adcock Ingram AIPJ.J to promote drugs in South Africa, increasing the presence of both companies in Africa's biggest economy.

The tie-up between U.S.-based Merck and South Africa’s No.2 drugmaker marks the latest push by big pharmaceutical companies into emerging markets, where drugmakers see much of their future revenue growth as sales stall in developed markets.

“There’s no reason why we shouldn’t have the same position in South Africa as we would have worldwide,” Stefan Oschmann, Merck’s head of emerging markets, told Reuters.

Merck expects emerging markets to eventually account for more than 25 percent of its global pharmaceutical and vaccine revenue.

The two companies will market and distribute drugs together in South Africa, working to boost Merck’s 4.7 percent market share in the country and giving Adcock access to a wider product range. Financial details of the deal were not disclosed.

One analyst said the deal could lead to bigger things between the companies. “These marketing agreements are often the foundation for larger deals in the future,” said Quinton Ivan, an analyst at Coronation Fund Managers.

Britain's GlaxoSmithKline Plc GSK.L has a product distribution agreement with Adcock's larger rival Aspen Pharmacare APNJ.J. Glaxo also owns 19 percent of Aspen.

Adcock, a 120-year-old company, has been dwarfed by fast-growing Aspen, which has made an aggressive push into overseas markets in recent years. Aspen said in May it would bid A$707 million ($657.1 million) for Australia's Sigma Pharmaceuticals SIP.AX. [ID:nSGE64J0N6]

Johannesburg-based Adcock has been searching for new revenue streams after scrapping a 2 billion rand ($266 million) takeover bid for smaller rival Cipla Medpro CMPJ.J last year.

Adcock has a market value of about $1.3 billion, while Aspen is worth about $4.5 billion.

Adcock CEO Jonathan Louw told Reuters the company would look at similar partnerships in future to expand in the rest of Africa, where it has small operations in Ghana and Kenya.

Merck products included in the five-year deal will be over-the-counter drugs currently registered in South Africa and some prescription drugs.

Shares in Adcock Ingram, which are up nearly 6 pct so far this year, rose 1.1 percent to 57.93 rand by 0935 GMT, outpacing a 0.1 percent rise on the JSE pharmaceutical index .JPHAR. (Editing by Michael Shields and David Holmes) ($1=7.575 Rand) ($1=1.076 Australian Dollar)

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