January 11, 2011
Eli Lilly Teaming Up With German Drugmaker
Eli Lilly and Co. will join forces with German drugmaker Boehringer Ingelheim to develop diabetes treatments, as the U.S. pharmaceutical company pushes to fill a looming revenue gap created by expiring patents for several key drugs.
Lilly will pay Boehringer Ingelheim $387.4 million as part of a joint bid to develop and sell up to five drugs. The two companies will split revenues from any approved drugs, not counting costs for making and selling the product.
Each drugmaker will receive payments based on whether their products reach certain milestones, like submissions for approval.
Lilly could receive over $1 billion in milestone payments, and the collaboration includes two of its potential long-lasting insulins expected to enter late-stage testing this year.
Boehringer Ingelheim will also have an option to work with Lilly on a third drug in mid-stage testing that treats diabetes patients with chronic kidney disease.
The German drugmaker could bank future payments totaling about $807 million from the two drugs it contributes to the deal.
Lilly also will contribute decades of experience in the diabetes market, while one of Boehringer Ingelheim's potential drugs could be launched as soon as this year.
Lilly loses patent protection later this year for its top seller, the anti-psychotic Zyprexa. That drug brings in over $4 billion annually. It also faces the loss of patients protecting key drugs like the antidepressant Cymbalta in the next few years.
Enrique Conterno, president of Lilly Diabetes, said linagliptin plus another Boehringer Ingelheim drug that could be submitted for approval in 2013 can generate a "long revenue stream" for Lilly.
"For us, it is important that we get into a growth mode (after) our patent expirations," he told The Associated Press.
The company said its drugs are under development as a key for filling that revenue hold, along with growth opportunities in biotechnology drugs, animal health and emerging international markets.
Diabetes treatments have been a cornerstone of Lilly's business for decades. The company introduced the world's first commercial insulin in 1923, and some of its current bets sellers treat diabetes.
The German company has no diabetes products on the market, and Chairman Andreas Barner said it will benefit from Lilly's expertise. Its products include the blood thinner Pradaxa, which was approved last year by the Food and Drug Administration (FDA).
Conterno said that about 300 million people around the world have diabetes, and that total is expected to climb to 430 million in the next 20 years.
"In that context, this is an epidemic," he told AP. "We feel that this alliance basically puts together four products that truly have significant potential to benefit patients."
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