Lilly announces $2.1 billion Icos acquisition

Eli Lilly has revealed it has signed a merger agreement with Icos, its marketing and manufacturing partner of eight years for Cialis, the erectile dysfunction drug.

Icos’ board voted unanimously to approve Lilly’s $2.1 billion (1.2 billion pounds) bid and the deal is expected to conclude later this year or in early 2007, depending on regulatory antitrust approval.

Lilly has not quantified the charges for incorporating Icos’ research and development programmes into the newly-merged company, claiming it is “premature” to estimate what they will be. However, the company expects the impact of the acquisition to be “mostly dilutive” for 2007, before the increased revenue from Icos starts to filter through to yield a positive effect on earnings in 2008.

Sidney Taurel, Lilly’s chairman and chief executive officer, claims that the transaction will allow the companies to fully realise the value of Cialis treatment for erectile dysfunction.

He said: “This transaction provides financial and operational benefits to Lilly while providing substantial value to both Lilly and Icos shareholders.”

“Our longstanding relationship will allow for a smooth integration of operations that will be mindful of the needs of patients, employees and the impacted business operations,” Mr Taurel added.

He concluded by saying that the companies would continue to look at new indications for tadalafil, the active ingredient in Cialis.

Cialis has delivered an increased market share in the erectile dysfunction market every year since the drug’s launch in 2003.

Icos and Lilly recently developed a once-a-day formulation of Cialis after patients expressed an interest in treating their condition using a once-a-day format.