Financial terms of the deal were not disclosed and neither was the volume of production involved.
The agreement is with US drug major Eli Lilly, and will see Elan supplement Lilly's in-house manufacturing of duloxetine hydrochloride capsules beginning in mid-2005. The drug is marketed under the trade name Cymbalta as an antidepressant and as Yentreve (and by Boehringer Ingelheim as Aridaim) for the treatment of urinary incontinence.
Kelly Martin, Elan's president and chief executive officer, said: "This agreement represents a significant milestone for Elan as it is our first large-scale manufacturing agreement with a leading pharmaceutical company."
Duloxetine capsules will be produced at Elan's US Food and Drug Administration (FDA)/European Medicines Agency (EMEA)-approved Athlone site, which the company expanded last year at a cost of $178 million.
Meanwhile, Lilly has been expanding its own capacity to make duloxetine, announcing earlier this month an investment of €41.6 million in its Spanish manufacturing plant in Alcobendas, near Madrid, to produce the drug.
Analysts have high expectations for the drug, which is tipped to make sales of more than $2 billion (€1.66bn) at peak.