Mexico fines Eli Lilly, others for collusion

* Eli Lilly fined for coordinating insulin tenders

* Fresenius Kabi, Baxter fined for solution tenders

* Eli Lilly denies wrongdoing

MEXICO CITY, Feb 23 (Reuters) - Mexico's antitrust watchdog said on Tuesday it fined Eli Lilly and Co LLY.N and other global medical companies for colluding to inflate prices in government tenders for medicine.

Eli Lilly Mexico and three Mexican pharmaceutical companies took turns placing winning bids in government tenders to buy insulin from 2003 to 2006, eliminating competition and ensuring artificially high prices, the antitrust commission said.

A spokeswoman for Eli Lilly, which had global sales of $5.93 billion in the fourth quarter of 2009, told Reuters it would appeal the ruling. “Lilly completely denies any participation in coordinated action to fix bids with competitors,” said Corporate Affairs Director Claudia Algorri.

The regulator also fined the Mexican units of Baxter International Inc BAX.N, and Fresenius Kabi, controlled by German healthcare conglomerate Fresenius FREG_p.DE, for colluding to boost prices in government tenders for intravenous solutions.

“The companies that have been fined conspired for years to make badly needed medicine artificially expensive,” commission head Eduardo Perez-Motta said in a statement.

The companies have been fined 22 million pesos ($1.7 million) each, the maximum allowed prior to 2006, when Mexico’s competition laws were beefed up.

Executives at Baxter and Fresenius Kabi could not immediately be reached for comment.

Mexican President Felipe Calderon has vowed to improve competition in industries often dominated by big just one or two big companies, but progress has been very slow.

Mexico's antitrust watchdog is probing alleged price collusion in the cement industry by heavyweight Cemex CMXCPO.MX but penalties for monopolistic practices tend to be paltry and are rarely applied.

Many U.S. drug makers have been hit with past fines in the hundreds of millions of dollars in the United States for a range of allegedly improper practices.

U.S. health officials have warned Indianapolis-based Eli Lilly about problems with the production of an ingredient used to make the company’s Humalog insulin, a letter released on Tuesday said.

The U.S. Food and Drug Administration, in a Feb. 5 letter, said inspectors found deviations from manufacturing standards in the production of Lyspro Insulin Zinc Crystals.

($1 = 12.87 pesos)

Reporting by Noel Randewich; Additional reporting by Tomas Sarmiento; Editing by Richard Chang