Lilly agrees to sell rights to antibiotic for $116 million

Times Leader/AP Wire ^ | 10/19/2004

[Born Conservative]

INDIANAPOLIS - Eli Lilly and Co. has agreed to sell U.S. rights to its antibiotic Vancocin for $116 million and a percentage of future sales through 2011.

The buyer is the small, Exton-Pa.-based drug development firm ViroPharma Inc., The Indianapolis Star and The Philadelphia Inquirer reported Tuesday. ViroPharma aims to increase sales of Vancocin by promoting it for the first time in years to hospitals, where the capsule form is used to control gastrointestinal infections.

Vancocin generated U.S. sales of $40 million last year.

The drug's U.S. patent expired in 1988, but the antibiotic is so difficult to make that generic companies have not taken over the market from the brand drug, the Star reported.

Lilly considers Vancocin a "legacy" product and wants to sell it to a reputable buyer to concentrate resources on newer products, said Lilly spokeswoman Terra Fox.

Under the agreement, expected to be finalized next month, Lilly will keep making Vancocin until February 2006, when a contract manufacturer will take over and supply ViroPharma, she said.

ViroPharma will pay Lilly royalties of 50 percent of sales between $44 million and $65 million in 2006, for a maximum payment of $10.5 million, she said. The royalty dips to 35 percent from 2006 to 2011, based on a similar sales range, she said.