IHS Global Insight Perspective | |
Significance | Eli Lilly (U.S.) and Boehringer Ingelheim (Germany)'s joint venture on diabetes will see four drugs currently in late-stage development be commercialised globally. The agreement primarily zeroes in on oral diabetes agents, as well as insulin analogues. |
Implications | While the drugs come equally from Boehringer and Lilly's pipelines, Eli Lilly's depth in the diabetes market will provide the marketing and distribution strength, drawing from successful franchises such as Byetta (exenatide) and Humalog (insulin lispro injection). |
Outlook | The agreement reflects a growing trend among global pharma majors to collaborate in key therapeutic areas to build a sustainable and cost-effective growth model for the long term. |
Lilly and Boehringer Ingelheim Arrangement
Two global pharma majors—Eli Lilly (U.S.) and Boehringer Ingelheim (Germany)—have announced a pact aimed at further developing and commercialising a clutch of products in the diabetes therapy areas. The terms of the agreement involve four products from both firms' investigational drug pipelines. These include: two oral diabetes agents from Boehringer's portfolio:
- Linagliptin, a dipeptidyl peptidase 4 (DPP-4) oral once daily treatment for type 2 diabetes. The drug is currently under regulatory review in the United States, Europe, and Japan; and,
- BI-10773 sodium-dependent glucose co-transporter-2 (SGLT-2) inhibitor, considered to be a potential first-in-class of diabetes compounds blocking tubular reabsorption of glucose in the kidney.
Eli Lilly's contribution to the joint venture (JV) involves two basal insulin analogue candidates, both expected to start Phase III clinical trials in 2011, namely:
- LY2605541, a structurally novel basal insulin analogue; and
- LY2963016, a new insulin glargine product.
Furthermore, the arrangement will involve a fifth product, an anti-TGF beta monoclonal antibody in Phase II clinical trials from Eli Lilly's portfolio, for which Boehringer will have the option for co-development and co-commercialisation.
The financial aspects of the deal include a one-time payment from Eli Lilly of 300 million euro (US$389 million). Also, Boehringer will be eligible for up to a total of US$625 million in regulatory milestones for linagliptin and BI-10773. The U.S. firm, on the other hand, could receive up to US$650 million in regulatory milestones for its two basal insulin analogues, and an additional US$525 million if Boehringer decides to opt-in to development and commercialisation of the fifth product. Development and commercialisation costs are to be shared equally.
Outlook and Implications
The deal signifies a win-win deal for both firms seeking to build a successful research and development model for specific therapeutic areas. The arrangement allows the firms to spread the risk associated with developing new drugs in this area. It also props up the individual strengths of the two firms in certain areas of commercialisation. For example, Lilly has had a successful run in commercialising drugs in the diabetes therapy area such as Byetta, Humalog, and Glucagon (for injection). It is also credited with introducing the first insulin in the global market. Hence, in terms of the marketing, distribution, and commercialisation aspects, Lilly provides the best possible asset for the JV. On the other hand, it also gains two products from Boehringer, one of which is considered potentially a first-in-class drug. The deal allows the firms to spread the costs of commercialisation, as is evident from the payment terms. The transaction itself could include an overall price tag of over US$1 billion, particularly if the option for the fifth product is also included.
The arrangement is reminiscent of recent trends in the pharmaceutical sector when global pharma firms are not afraid to enter into collaborations with counterparts in order to attain specialist strengths in certain therapy areas. For example, AstraZeneca (U.K.) entered into a pact with Bristol-Myers Squibb (U.S.) to commercialise two diabetes drugs in 2007, and furthermore, Eli Lilly also entered into a licensing deal with OSI Pharma (Japan) for a diabetes drug, also in 2007. In 2009, GlaxoSmithKline (U.K.) set up a JV with Pfizer to develop and commercialise HIV drugs. Such deals are expected to continue to intensify in the new year.