December 18, 2003

Eli Lilly Japan K.K.
Takeda Chemical Industries, Ltd.

Lilly and Takeda sign a Joint Development/Co-Marketing
Agreement on Ruboxistaurin Mesylate, an agent for
the treatment of diabetic microvascular complications

Eli Lilly and Company Japan K.K., Kobe, Japan ("Eli Lilly Japan") and Takeda Chemical Industries, Ltd., Osaka, Japan ("Takeda") today announced that Eli Lilly and Company, Indianapolis, Indiana and Takeda signed an agreement on December 18, 2003 (Japan time), on joint development and co-marketing for ruboxistaurin mesylate (PKC β Inhibitor, LY333531) in the Japanese market.

This agent is an investigational compound for oral administration discovered and developed by Eli Lilly and Company, that is currently in Phase 3 clinical studies outside of Japan and Phase 2 studies have been initiated in Japan. Under the agreement, Eli Lilly Japan, a subsidiary of Eli Lilly and Company and Takeda will jointly develop and submit an NDA in Japan for the treatment of diabetic peripheral neuropathy and diabetic retinopathy, and subsequently, co-market this product in Japan.

Under the hyperglycemic condition, PKC (Protein kinase C) β, one of the enzymes PKC known as adjusters of various cellular functions, becomes overactive and is implicated in the underlying process of microvascular damages of angiogenesis and vascular flow disorder, leading to diabetic microvascular complications.

Preclinical data have demonstrated that ruboxistaurin is a specific inhibitor of PKC β. Ongoing clinical trials, conducted by Eli Lilly and Company, are investigating ruboxistaurin as a treatment for diabetic peripheral neuropathy, diabetic retinopathy (damage to the small blood vessels of the eye), and diabetic nephropathy (damage to the small blood vessels of the kidneys), the three major diabetic microvascular complications.

Eli Lilly Japan and Takeda expect to contribute to the treatment of diabetic microvascular complications once this investigational agent is approved and launched, which could represent a significant benefit to the patients with diabetes.

About Eli Lilly Japan K.K. and Takeda
Eli Lilly Japan K.K. is a subsidiary of Eli Lilly and Company, a leading innovation-driven corporation, is developing a growing portfolio of first-in-class and best-in-class pharmaceutical products by applying the latest research from its own worldwide laboratories and from collaborations with eminent scientific organizations. Headquartered in Indianapolis, Ind., Lilly provides answers through medicines and information for some of the world's most urgent medical needs.

Takeda is a research-based global company with its main focus on pharmaceuticals.
As the largest pharmaceutical company in Japan and one of the industry's leaders worldwide, Takeda is committed to strive toward better health for individuals and progress in medicine by developing superior harmaceutical products. Takeda is actively dedicated to enhance its pipeline for future growth through alliance as well as in-house R&D activities.

This press release contains forward-looking statements about the potential of ruboxistaurin mesylate for the treatment of diabetic microvascular complications and reflects Lilly and Takeda's current beliefs. However, as with any pharmaceutical product, there are substantial risks and uncertainties in the process of development, regulatory review and commercialization. There is no guarantee that the product will receive regulatory approvals, and any indication for which it is approved in Japan will be determined at the discretion of the Japanese Ministry of Health, Labor and Welfare. There is also no guarantee that the product will be commercially successful. For further discussion of these and other risks and uncertainties, see Lilly's filings with the United States Securities and Exchange Commission. Lilly undertakes no duty to update forward-looking statements.

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