LILLY AND CHUGAI ENTER INTO A NEW COLLABORATION TO SPEED

             The Development of Lilly Compounds in Japan 

INDIANAPOLIS, March 25 /PRNewswire/ -- Eli Lilly and Company (NYSE: LLY) and Chugai Pharmaceutical Co., Ltd., announced today that they have entered into a collaborative agreement that will enable Lilly to accelerate the development of its compounds targeted for the Japanese marketplace and access additional selling capacity to ensure their success. By speeding the development process, Lilly will be better positioned to achieve its goal of launching new compounds simultaneously on a global basis. This agreement between the two companies builds upon a cooperative relationship that dates to 1995.

Under the terms of the agreement, Lilly and Chugai will establish a 50/50 joint-venture company called the Chugai Lilly Clinical Research Company, Ltd. This company will be based in Tokyo, Japan, and will manage the development of selected Lilly compounds targeted for the Japanese market. In exchange, Chugai will receive certain copromotion and comarketing rights to those products developed by the joint venture that are sold in Japan.

"This agreement will extend and deepen the strong and productive relationship that has evolved between Lilly and Chugai to the benefit of both companies," said Sidney Taurel, chairman, president and chief executive officer of Lilly. "Lilly Japan is an outstanding organization that has grown rapidly in recent years. Even so, today's strong Lilly pipeline contains more new products that we can develop and optimally market on our own in a timely fashion."

"Lilly and Chugai have developed an excellent working relationship on the projects they have collaborated on. We share many similarities in the way we conduct business and we focus our efforts in many of the same therapeutic areas," said Osamu Nagayama, president of Chugai. "Lilly's desire to realize the full potential of their products in the Japanese marketplace coupled with Chugai's strong development and marketing capabilities create a strategic fit that will benefit both companies for the long term."

Initially the joint venture, which will be primarily staffed by Chugai employees, will focus on the development of the following compounds targeted for the Japanese market:

-- Prozac - the world's most widely prescribed brand-name antidepressant -- MDR - currently being evaluated for enhancing or sustaining the effects of chemotherapies and the reversal of drug resistance

-- tomoxetine - currently being evaluated as a treatment for attention deficit hyperactivity disorder.

IC351, a PDE5 inhibitor that is being evaluated as an oral therapeutic agent for the treatment of sexual dysfunction, is also being considered for development by the joint venture. A majority of development funding will come from Lilly over time.

Headquartered in Kobe, Japan, Lilly Japan currently employs 820 people and has nearly doubled in size over the past seven years. It has a growing presence in the targeted categories of diabetes, growth hormone deficiency, central-nervous-system diseases and infectious diseases.

Prior to this agreement, the two companies had entered into an accord in 1995 to codevelop and comarket Evista for the Japanese market. In 1997, Lilly and Chugai entered into an additional collaboration in the field of combinatorial chemistry.

Chugai is a leading research- and development-oriented Japanese pharmaceutical manufacturer, employing 3,660 staff in Japan, that is focused in disease areas associated with bone, blood, the cardiovascular system, cancer and infectious diseases. It is the market leader in the field of osteoporosis. Two biotech products, epoetin beta, EPO and lenograstim, G-CSF, have also contributed to the company's success. Chugai established a presence in the U.S. in 1989 with its acquisition of Gen-probe, Inc., a leader in the field of DNA probe diagnostics and has pharmaceutical operations in a number of major overseas markets.

Lilly is a global research-based pharmaceutical corporation headquartered in Indianapolis, Ind., that is dedicated to creating and delivering innovative pharmaceutical-based health care solutions that enable people to live longer, healthier and more active lives. SOURCE Eli Lilly and Company

-0-                             03/25/99 /CONTACT:  in the US, James P. 
Kappel, 317-276-5795, or in Kobe, Ken Hirate, +81-78-242-9258, both of 
Lilly; or in Tokyo, Shizuo Kagoshima of Chugai, +81-3-3273-0881/ 

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/Web site: http://www.lilly.com/ (LLY)
CO: Eli Lilly and Company; Chugai Pharmaceutical Co., Ltd. ST:
Indiana, Japan IN: MTC SU: JVN