UPDATE 1-Pfizer to buy stake in Brazil's Teuto for $240 mln

* Pfizer acquiring 40 pct stake in Teuto

* Teuto is a generic drug specialist

NEW YORK, Oct 20 (Reuters) - Pfizer Inc PFE.N will pay $240 million for a 40 percent stake in Brazil's Laboratorio Teuto Brasileiro S.A., a generic drug specialist, as the world's largest drugmaker expands in emerging markets.

Besides the upfront payment, Pfizer may pay Teuto performance-based milestones. Pfizer also has an option to acquire the remaining 60 percent of Teuto’s shares beginning in 2014.

Pfizer can register and commercialize Teuto products in Brazil and various markets outside of the country under its own brands.

The deal is expected to close by the end of the year.

The Teuto deal is the latest in a flurry of activity from Pfizer, including its deal to acquire pain-drug specialist King Pharmaceuticals Inc KG.N and tie-up with India's Biocon Ltd BION.BO over biosimilar insulin products. (Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn)