Joining to Treat, and Beat, Diabetes

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What do you do with that company that's always pitching the same potential clients, but isn't really a competitor? Make it a partner, of course.

Medical-device maker Medtronic (NYSE: MDT) and drugmaker Eli Lilly (NYSE: LLY) are teaming up to co-promote the companies' diabetes products to doctors and patients. Medtronic makes insulin pumping devices and Eli Lilly makes insulin. Seems like a pretty good match, and a marketing partnership is like getting the efficiency from a merger without the messy parts.

Of course, no terms were given in the press release, so it's a little hard to tell how much each company will benefit. But having an extra set of hands to promote their products should help Medtronic compete with other pump makers like Roche, Johnson & Johnson (NYSE: JNJ), and Insulet (Nasdaq: PODD) and help Eli Lilly tout the benefits of its insulin products over others from companies like Novo Nordisk (NYSE: NVO) and sanofi-aventis (NYSE: SNY).

We're seeing an increased propensity for pharmaceutical companies to team up at the research and development level, too, and it seems likely that this will expand into partnerships between drug and medical device companies as well. In fact, Medtronic already has a partnership with Alnylam (Nasdaq: ALNY) to develop RNAi therapeutics. As companies go after increasingly complex diseases, drugs may need to be teamed up with medical devices to ensure that the drug is delivered in the correct dosage.

Whether the marketing relationship between Medtronic and Eli Lilly will result in the development of new products remains to be seen, but as a first date, the fit seems perfect.

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