Bowing to pressure from an Icos shareholder, Eli Lilly said it has increased its offer for the biotechnology company to $2.3 billion from an earlier bid of $2.1 billion.
The revised price of $34 a share follows objections from HealthCor, a big Icos shareholder, to the earlier $32-a-share offer. HealthCor argued that Icos was worth more than $40 a share.
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Lilly, which agreed in October to acquire Icos to gain full ownership of the erectile dysfunction drug Cialis, said its latest offer is its "best and final offer."
"We are confident that Icos shareholders will recognize the substantial value and the certainty that Lilly is offering," Sidney Taurel, Lilly's chief executive officer, said in a statement.
Indianapolis-based Lilly, which currently markets Cialis with Icos through a joint venture, said the boards of both companies have unanimously approved the new offer.
Lilly is eager to take advantage of a revival in the erectile dysfunction market, which was hurt last year by concerns that drugs to treat the condition, including Pfizer Viagra, could cause blindness.
News of the increased Icos bid comes a day after a report on the New York Times' Web site that Eli Lilly downplayed risks associated with Zyprexa, a drug it makes for the treatment of schizophrenia. Zyprexa is Eli Lilly's best-selling product, the Times said.