SHANGHAI, Sept 17 (Reuters) - Eli Lilly & Co, the U.S. maker of antidepressant Prozac and erectile dysfunction drug Cialis, said its China sales were rising about 26 percent a year, on track to become the company's tenth biggest global market by 2010. "We're growing 10 percent faster than the market," Jorg Ostertag, president of Lilly China said over the weekend, adding that China's drug industry grew 16 percent in 2006.

China is expected to become the world's No. 7 pharmaceutical market in 2012, and the second-biggest by 2020, Ostertag said at a conference at the China Europe International Business School.

China now ranks as the company's 14th biggest market. Lilly has introduced five new drugs in China this year and expects to sell 15 more in the next five years, Osgtertag said.

Lilly competes with Tamiflu maker Roche and Viagra producer Pfizer Inc to sell drugs in the world's most populous country.

Lilly, which two years ago partnered with China's Hisun Group on drug development, has plans to start more such alliances with Chinese firms, he said.

As early as Tuesday, Lilly will sign an agreement with a unit of Hutchison Whampoa on drug development. Hutchison, a conglomerate controlled by Hong Kong tycoon Li Ka-shing, owns businesses ranging from ports to telecoms and pharmaceuticals.

In June, Lilly's Asia venture capital fund invested $10 million in Chinese startup BioVeda, and said it planned to invest $10 million on research and development in the country in the next five years.