Eli Lilly and Co.'s planned acquisition of ImClone Systems Inc. is its boldest move yet to replace revenue it will lose once patent coverage for its bestseller Zyprexa expires in three years.

The Indianapolis-based drugmaker announced this morning it would pay $6.5 billion in cash to acquire New York-based ImClone, a biotech firm that develops cancer drugs. It's the biggest acquisition in the history of Lilly, which has shunned major acquisitions.

With the prevalence of cancer due to surge in coming years, Lilly hopes ImClone's cancer drugs can produce enough sales to help Lilly survive what it calls the Years YZ. That's the period from 2011 to 2014 when Zyprexa and four other drugs will begin to face competition from generic versions. Lilly stands to lose as much as 60 percent of its current sales.

"By bringing together ImClone's and Lilly's marketed oncology products, pipelines, and biotech capabilities, we are taking a very important step forward in addressing the challenges of patent expirations we will face early in the next decade," Lilly CEO John Lechleiter said in a statement.

ImClone's sole marketed product, Erbitux, is most famous for its role at the center of the Martha Stewart insider trading trial. But Erbitux is also making a name among doctors now, racking up $1.3 billion last year in worldwide sales.

Erbitux treats varieties of colon, head and neck cancers. ImClone shares revenue from the drug with its marketing partners, New Jersey-based Merck KGaA and New York-based Bristol-Myers Squibb Co.

Bristol-Myers bid to acquire ImClone twice in recent months, first offering $60 a share and then $62. But ImClone Chairman Carl Icahn rebuffed both bids.

Lilly's bid of $70 a share is 13 percent above Bristol-Myers' high bid.

The deal still requires the approval of trade regulators and of ImClone shareholders, although Icahn already promised to tender to Lilly his 14-percent stake in ImClone. Lilly said it expects the transaction to close in the fourth quarter of this year or the first quarter of next.

Lilly said the deal "is not subject to any financing condition." However, the statement also said the condition of the credit markets could increase the cost of financing the transaction.

It's not immediately clear how Lilly will come up with $6.5 billion in cash. As of June 30, the company held $2.9 billion in cash and cash equivalents.

Last year, ImClone generated $40 million in profit on $590 million in revenue. Lilly, by contrast earned $3 billion on revenue of $18.6 billion.

The ImClone deal is Lilly's first multi-billion-dollar acquisition since October 2006, when it announced it would pay $2.3 billion for Washington-based Icos Corp., the inventor of the impotence pill Cialis.

Lilly has been racing to replace the $4.8 billion a year in revenue it gets from Zyprexa. The company currently has 50 experimental molecules in clinical testing. One-third of those are biotech compounds.

ImClone would add several to that total. The company has three molecules that could enter Phase 3 testing next year. Those compounds are being tested to treat a myriad of cancers, including melanoma, renal, liver, ovarian, prostate, pancreatic, head and neck.