UPDATE 2-Lilly, Walmart to sell co-branded insulin

* Co-branding move is Lilly’s first with a retail pharmacy

* Lilly shares rise 1 percent on New York Stock Exchange (Recasts, adds details from Lilly spokesman)

CHICAGO, June 22 (Reuters) - Eli Lilly & Co LLY.N will sell its Humulin insulin product in a co-branding deal with Wal-Mart Stores Inc WMT.N beginning in mid-September, the companies said.

The product will be sold in U.S. Walmart pharmacies under the name Humulin Relion in 10 milliliter vials of Humulin R U-100, Humulin N, and Humulin 70/30 formulations.

Humulin, with $1 billion in worldwide sales for Lilly last year, will be Lilly’s first co-branded product with a retail pharmacy and will replace Walmart’s current Relion insulin brand, a Lilly spokesman said.

Lilly’s newer Humalog insulin product, which generated sales of almost $2 billion last year, will continue to be available through Walmart pharmacies, the spokesman said.

Nearly 24 million Americans have diabetes, up from 21 million in 2005, according to the American Diabetes Association. Of those, about one-quarter use insulin to manage blood sugar levels.

Lilly shares rose 20 cents, or 0.6 percent, to $34.86 in afternoon trading on the New York Stock Exchange. Wal-Mart shares were up 15 cents at $51.17. (Reporting by Susan Kelly, editing by Gerald E. McCormick)