ROBERT BARR Associated Press Writer LONDON (AP) — British drug maker GlaxoSmithKline PLC said Monday it will pay $2.9 billion to buy American dermatology business Stiefel Laboratories Inc. — only the latest deal in a flurry of mergers and acquisitions in the pharmaceuticals industry. GlaxoSmithKline will also assume $400 million in debt and has agreed to a further payment of up to $300 million depending on performance, bringing the total cost of the deal to up to $3.6 billion. Stiefel, a privately owned company based in Coral Gables, Florida, makes prescription and over-the-counter medications including acne treatments and other skin creams, lotions, washes and vitamins. The company put itself up for sale earlier this year, and reportedly had drawn interest from Johnson & Johnson and Novartis AG as well as Glaxo. The world's No. 2 drug maker by revenue, Glaxo has been moving to replace falling sales of older drugs facing generic competition by diversifying. The drugmaker has said it will lose about $5 billion worth of sales as demand falls for treatments like its diabetes drug Avandia — which has suffered from safety concerns — its antidepressant Wellbutrin and heart medication Coreg. Glaxo shares were up 0.8 percent at 1046.0 pence on the London Stock Exchange. "Given near-term pressure on reported earnings, deals such as this should go some way towards reassuring investors at a time during which the company has opted not to provide short-term earnings guidance," said Jeremy Batstone-Carr, analyst at Charles Stanley & Co. The company said its existing prescription dermatological products will be combined with Stiefel's and sold under the Stiefel brand. Stiefel's leading products include Duac for acne, Olux E for dermatitis and Soriatane for severe psoriasis. Stiefel's sales in 2008 were approximately $900 million, while Glaxo's sales of dermatology products was around $550 million, the company said. "This transaction will create a new world-leading, specialist dermatology business and re-energize our existing dermatology products," said Andrew Witty, Glaxo's CEO. "The addition of Stiefel's broad portfolio will provide immediate new revenue flows to GSK with significant opportunities to enhance growth through leveraging our existing global commercial infrastructure and manufacturing capability." Glaxo's move on Stiefel follows a string of acquisitions in the pharmaceutical industry. Swiss pharmaceutical giant Roche last month agreed to pay $47 billion to buy out biotech pioneer Genentech, while other deals are uniting Pfizer Inc. and Wyeth, as well as Merck & Co. Inc. and Schering-Plough Corp. Glaxo announced this month that it would team with Pfizer Inc. to create a new company to develop and sell HIV medicines. Stiefel was founded by John David Stiefel in Offenbach-on-Main, Germany in 1847 as a candle maker, but later switched to producing medicated soaps. The company moved to the United States in 1910, and now has factories in the United States, Mexico, Brazil, Singapore, Ireland and Pakistan.