By Ben Hirschler

LONDON, Nov 09 (Reuters) - African tribesmen are to share in revenues from an experimental Western anti-obesity drug derived from a rare Kalahari cactus under a legal settlement due to be finalised shortly, officials said on Friday.

The Khomani people, part of the San or bushmen of southern Africa, have for thousands of years eaten slices of the six-foot (two-metre) high Hoodia succulent to stave off hunger on hunting trips.

Now they claim that their traditional knowledge is being exploited without compensation by the pharmaceutical industry.

South Africa's Council for Scientific and Industrial Research (CSIR) isolated the Hoodia plant's active ingredient and signed over the commercial drug rights to British biotechnology firm Phytopharm Plc in 1997.

A year later, Phytopharm licensed the patented medicine, P57, to US drug giant Pfizer Inc in a deal worth up to $32 million in milestone payments.

The legal claim by the San challenged the right of the CSIR and the drug industry to profit at their expense, in a case testing the boundaries between bio-prospecting and bio-piracy.

Alida Britz, a spokeswoman for the CSIR, said a deal with the San's legal representatives was now imminent and should be concluded before the end of the month.

"There will be benefit sharing but we haven't finalised the exact benefit-sharing model yet," she told Reuters by telephone from Pretoria.

"The talks are positive and we believe both parties will be satisfied."

Obesity is the fastest-growing medical problem in the West, with one out of four adults overweight, leading to medical problems including diabetes and heart disease and creating a billion-dollar market opportunity for drug firms.

CLINICAL TRIALS

Phytopharm Chief Executive Richard Dixey, who originally thought the Hoodia-chewing tribe was extinct, said he was "very happy" that a deal with the 3,000 or so tribesmen was now close.

"It's an entirely proper and positive development," Dixey told Reuters.

However, he pointed out that the settlement would not directly affect Phytopharm or Pfizer since the San would be paid out of the CSIR's cut of sales. "We are at arms length from this as CSIR is the patent holder," Dixey said.

The San are likely to end up with only a very small percentage of eventual sales, though if the drug meets its potential the money involved could still be substantial.

Industry observers said the South African institute would probably receive a royalty of around 10% from Phytopharm, which itself will receive royalties on sales from Pfizer.

P57 is the most commercially important product for Phytopharm, which has established plantations worldwide for the plant material and is also working on synthetic derivatives of the active chemical.

However, the drug is unlikely to reach the market before 2005 or 2006, and may yet fail as it progresses through clinical trials.

Dixey hopes to be able to report the first results of human tests establishing "proof of principle" that the drug works before the loss-making company announces results on December 5. That would pave the way for Phase II trials in 2002 and lengthy final Phase III tests the following year.

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