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UPDATE 1-India Cadila and Eli Lilly in drug development deal

Mon Mar 30, 2009 3:41am EDT

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MUMBAI, March 30 (Reuters) - A unit of India's Cadila Healthcare Ltd (CADI.BO) has signed a drug development deal with Eli Lilly and Co (LLY.N) that could earn it up to $300 million in milestone payments plus royalties, driving its shares up nearly 16 percent on Monday.

Zydus Cadila said it would earn royalties from any drugs for cardiovascular diseases developed by the partnership, which could run for up to six years.

Zydus Cadila will be responsible for identifying potential drug candidates and developing them through to mid-stage clinical trials. Lilly will provide the potential molecules and expertise and feedback for clinical, regulatory and research work.

Global drug giants, faced with thinning new drugs pipeline and stiff competition from generic drugs, are increasingly outsourcing drug development work to firms in countries such as India to help cut costs and shorten the time for a drug launch.

Lilly has struck partnerships with other Indian firms, including Piramal Life Sciences (PLSL.BO), Suven Life Sciences (SUVP.BO) and Jubilant Organosys (JUBO.BO).

Cadila shares rose as much as 15.6 percent of 297 rupees on the news, its highest in almost six months. At 12:51 pm 0721 GMT, its shares were up 6.3 percent at 273 rupees in a Mumbai market .BSESN down 4.2 percent. (Reporting by Bharghavi Nagaraju; Editing by John Mair)



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