Eli Lilly & Co. (LLY) Wednesday said U.S. regulators have approved its new antidepressant, Cymbalta, a drug that analysts say will be central to the company's growth.

The Food and Drug Administration (search) said the highly anticipated drug is both safe and effective in treating major depression, the company said.

Industry analysts expect Cymbalta (search) to generate peak annual sales of about $2 billion, a much-needed boon for Lilly after sales of its former top-selling antidepressant, Prozac, plummeted in the face of generic competition.

"This will help ensure that Lilly continues to have double-digit sales growth" said David Moskowitz, an analyst at Friedman, Billings, Ramsey.

Moskowitz said Cymbalta will grow quickly despite cheaper, generic competition.

Cymbalta works by maximizing the presence in the brain of two chemicals, serotonin and norepinephrine. That makes it similar to Wyeth's (WYE) Effexor. Drugs like Prozac, Pfizer Inc.'s (PFE) Zoloft and GlaxoSmithKline Plc's (GSK) Paxil maximize the presence only of serotonin.

Generic forms of Paxil were recently launched in the United States and generic forms of Zoloft and Forest Laboratories' Celexa are expected to be launched by 2006.

Cymbalta comes to the market at a time of growing concern that new classes of antidepressants may increase the risk of suicidal thoughts and behavior in some people, especially the young. A 19-year-old college student involved in one of the Cymbalta trials committed suicide, though she was not depressed at the beginning of the trial.

Some analysts believe dual-action drugs like Cymbalta and Effexor will increasingly take market share from the selective serotonin re-uptake inhibitors, or SSRIs (search), such as Prozac.

"The dual mechanism affords greater remission and will increasingly take share from SSRIs," said John Boris, an analyst at Harris Nesbitt who holds Eli Lilly stock.

Effexor, which was originally used as a treatment for people who did not benefit from other depression drugs, is increasingly being used as a first-line treatment. Sales of Effexor are on track to reach $3 billion this year.

The company has said that a big advantage of Cymbalta is that it appears able to treat some of the physical pain associated with depression such as back ache and neck pain.

"That's one major difference between Cymbalta and Effexor," Boris said.

Eli Lilly is also studying Cymbalta as a treatment for neuropathic pain, or pain caused by damage in the nerves, in diabetics.

Lilly's shares rose 34 cents to $63.55 on the New York Stock Exchange (search).