INDIANAPOLIS – Eli Lilly and Co. will team with German drugmaker Boehringer Ingelheim to develop diabetes treatments, as the U.S. pharmaceutical company pushes to fill a looming revenue gap created by expiring patents for several key drugs.

Lilly, which is based in Indianapolis, will pay Boehringer Ingelheim about $387.4 million as part of a joint bid to develop and sell up to five drugs. The companies will split revenues from any approved drugs, not counting costs for making and selling the product. Each drugmaker also will receive payments based on whether their products reach certain milestones, like submissions for approval.

Lilly could receive more than $1 billion in milestone payments. The collaboration includes two of its potential long-lasting insulins expected to enter late-stage testing this year. Boehringer Ingelheim will also have an option to work with Lilly on a third drug in mid-stage testing that treats diabetes patients with chronic kidney disease.

Boehringer Ingelheim could bank future payments totaling about $807 million from the two potential diabetes drugs it contributes to the deal, both of which are pills.

Lilly also will contribute decades of experience in the diabetes market, while one of Boehringer Ingelheim's potential drugs — a Type 2 diabetes treatment called linagliptin that has been submitted for approval — could be launched as soon as this year. That would provide an important new revenue source for Lilly.

The U.S. drugmaker loses patent protection later this year for its top seller, the anti-psychotic Zyprexa. That will expose the drug, which brings in more than $4 billion annually, to generic competition. It also faces the loss of patents protecting key drugs like the antidepressant Cymbalta, its second-best seller, in the next few years.

Enrique Conterno, president of Lilly Diabetes, said linagliptin plus another Boehringer Ingelheim drug that could be submitted for approval in 2013 can generate a "long revenue stream" for Lilly.

"For us, it is important that we get into a growth mode (after) our patent expirations," he said.

The company also has touted its pipeline of drugs under development as a key for filling that revenue hole, along with growth opportunities in biotechnology drugs, animal health and emerging international markets.

Analysts have expressed doubt about Lilly's ability to deal with the patent expirations, and Erik Gordon said he wasn't sure what the Boehringer Ingelheim deal accomplishes. Gordon is a professor at the University of Michigan's Ross School of Business who follows the pharmaceutical industry