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Lilly, BASF mull deal?
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November 17, 2000: 4:31 p.m. ET
Report: Eli Lilly nears drug marketing deal with BASF's pharmaceutical unit
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NEW YORK (CNNfn) - Eli Lilly and Co. is negotiating a deal with Germany's BASF AG to co-market a promising arthritis medication, a pact that could be a precursor to a merger between Lilly and BASF's U.S.-based drug unit, according to a published report Friday.
The Financial Times, in a story posted on its Web site, reported that Indianapolis-based Lilly has been negotiating with BASF to assist in marketing Knoll's experimental arthritis drug in the key U.S. market. The newspaper cited unidentified sources close to the talks.
Lilly declined comment when contacted by CNNfn.com. Knoll Pharmaceutical Co., based in Mount Olive, N.J., also declined comment.
The arthritis drug, known by research number D2E7, is expected to be launched in 2003, pending regulatory approval. A co-promotion deal with a major U.S. drug maker could boost sales of the drug, because BASF lacks significant marketing resources in the United States. BASF developed the drug with Cambridge Antibody Technology, a U.K.-based biotech company.
 Reports surfaced last week that BASF, a chemicals conglomerate, was trying to sell Knoll, in a deal that could be worth up to $6 billion. Germany's Handelsblatt newspaper reported last weekend that talks with Lilly were believed to be the most advanced, while other interested buyers included U.S.-based Bristol-Myers Squibb Co. (BMY: Research, Estimates) and Pharmacia Corp. (PHA: Research, Estimates) and France's Sanofi-Synthelabo.
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Knoll Pharmaceutical comprises the vast majority of BASF's pharmaceutical division. The unit had worldwide sales of $2.6 billion last year, about 8.7 percent of BASF's $30 billion in total annual revenue. Knoll's medicines include obesity drug Meridia and Synthroid, a thyroid treatment.
Lilly (LLY: Research, Estimates) has said repeatedly that it is not interested in a mega-merger like the link-ups this year of Pfizer Inc. (PFE: Research, Estimates) and Warner-Lambert Co. and the pending merger of SmithKline Beecham PLC (SBH: Research, Estimates) and Glaxo Wellcome PLC (GLX: Research, Estimates) of Britain. An acquisition of small-sized Knoll Pharmaceutical would not conflict with the company's go-it-alone strategy, the Financial Times said.
Lilly is aggressively pursuing new products in its portfolio as it faces a sooner-than-expected end to its patent on antidepressant Prozac, its flagship product. Unless the company prevails on its court appeal, Prozac could face generic competition as soon as next August.
At 4 p.m. ET on Friday, Eli Lilly shares gained $2.88, or 3.3 percent, to $89.44. 
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