March 29 (Reuters) - Generative-AI drug developer

Insilico Medicine said on Sunday it has agreed a

global licensing and research deal with U.S. drugmaker Eli Lilly ( LLY )

, that could be worth up to $2.75 billion, including

milestone payments.

Pharmaceutical companies are increasingly turning to AI to

accelerate R&D, betting on new modelling tools and automated

labs to unlock efficiency gains across their pipeline, and in

line with a push by the U.S. Food and Drug Administration to

reduce animal testing in the near future.

Under the agreement, Lilly will receive an exclusive licence

to develop, manufacture and commercialize preclinical oral drug

candidates by Insilico Medicine for selected disease areas, the

Hong Kong-listed company said in a regulatory filing.

Insilico Medicine also said that it will receive an upfront

payment of $115 million and is eligible for development,

regulatory and commercial milestone payments that could take the

total deal value to about $2.75 billion, as well as tiered

royalties on future sales.

The Financial Times had earlier reported on this deal. The

newspaper, citing unnamed sources, said that Lilly will acquire

exclusive rights to sell a GLP-1 drug for diabetes from Insilico

Medicine.