Eli Lilly announced a new diabetes drug partnership with Boehringer Ingelheim at the JP Morgan Healthcare conference this week.
Lilly, which already generates 17% of its revenue from the diabetes category, will pay a one-time fee of about $388 million to BI.
Both companies - Lilly has two mid-stage insulin compounds while the privately-held German company has developed two oral diabetes medications - are slated to receive milestone payments based on performance.
Indianapolis-based Lilly, in particular, is facing a number of setbacks, both in its global business and in its diabetes business. Zyprexa, its blockbuster schizophrenia drug, is expected to go off patent this year while regulators did not approve Bydureon, a diabetes drug, during the fourth quarter of 2010.
Lilly CEO John Lechleiter told Dow Jones: "A deal like this, which offers the opportunity to participate in the launch of two products in the nearer term, I think is a very important step toward helping to replace some of the revenue that we will undoubtedly lose as some of our patents expire in this period."