LILLY SHELLS OUT $2.1 BILLION TO BUY PARTNER IN CIALIS JOINT VENTURE

Eli Lilly will buy Washington-based ICOS for an estimated $2.1 billion in cash, giving the Indiana-based drugmaker full control over the highly profitable erectile dysfunction drug Cialis.

Lilly and ICOS have been partners since 1998 in a joint venture that manufactures, markets and sells Cialis (tadalafil). Successfully launched in 2003, Cialis is an oral PDE-5 inhibitor for the treatment of erectile dysfunction that is available in more than 100 countries. It is the sales leader in many of them, including France and Brazil, and has captured more than 25 percent of the erectile dysfunction market in the U.S.

Cialis generated worldwide sales of $456 million in the first six months of 2006, representing growth of 34 percent over the first half of 2005.

"With full ownership of Cialis, we will be able to realize operational efficiencies in the further development, marketing and selling of this important product," said Sidney Taurel, Lilly chairman and chief executive officer. "We expect this acquisition will increase the company's earnings and earnings growth rate beginning in 2008 and, after a significant addition to sales in 2007, will modestly accelerate the company's sales growth rate thereafter."

Taurel said Lilly also will look to extend the profitability of Cialis through new indications.

The board of directors of ICOS voted unanimously to approve the merger agreement and to recommend that its shareholders approve the transaction. The transaction is expected to close in late 2006 or early 2007. Closing is contingent upon approval by ICOS shareholders, clearance under the Hart-Scott-Rodino Anti-Trust Improvements Act and certain other closing conditions.