3M's Pharma Push

3M (NYSE: MMM) can justifiably refer to itself as a "diversified" technology company. The St. Paul, Minn.-based firm makes everything from Scotch tape to electronics equipment.

Even so, for anyone not intimately familiar with the company, it may be surprising that the latest news on 3M involves a drug. Reuters is reporting that some analysts believe that sales of Aldara, a treatment initially approved by the FDA for genital warts and more recently cleared for the pre-cancerous skin condition actinic keratosis, may more than triple.

One of the most exciting aspects of the medicine is the convenience it offers. Normally, actinic keratosis has to be treated at a doctor's office with liquid nitrogen. By contrast, patients can apply Aldara at home. Indeed, ease of use seems to be a priority for 3M's pharmaceutical unit, which also makes drug delivery systems, such as adhesive patches and inhalers.

3M is likewise working to gain regulatory approval for Aldara for superficial basal cell carcinoma. With all three indications, the company believes sales could reach $600 million. This doesn't put 3M in the same league as pharmaceutical powerhouses such as Pfizer (NYSE: PFE) or GlaxoSmithKline (NYSE: GSK), but it is nonetheless impressive.

While the projections for Aldara should please investors, success in the pharmaceutical industry, especially if it is concentrated in one drug, can be a double-edged sword. Eventually 3M will have to replace Aldara's sales when patent protection expires. So far, the firm has been circumspect in its revelations concerning drug development. But in the coming years, the pharmaceutical unit will no doubt be under pressure to produce another winner. For now, 3M can look forward to rising returns from its drug investments, even as it risks being drawn into the difficult cycle of blockbuster replacement.

Fool contributor Brian Gorman is a freelance writer living in Chicago, Ill. He does not own shares of any companies mentioned here.