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Will Johnson & Johnson Win Approval for Its Diabetes Drug?

In addition to its well-known personal-care products such as Listerine and Neutrogena, Johnson & Johnson (NYSE: JNJ  ) boasts an impressive portfolio of market-leading therapeutic compounds. In fact, the health-care leader was one of the few to show growth last year in both worldwide pharmaceutical sales ($25 billion) and earnings ($3.86 per share). It finds itself in an enviable position heading into 2013 as one of the best-positioned companies to tackle the patent cliff head-on.

Even with that recent success, though, there's no time for J&J to rest on laurels in the highly competitive landscape of pharma and biotech. Even the industry's most successful drugs are under constant pressure from generics, which are either already on the market or timing their entrance for the moment exclusivity is lost. Fortunately for J&J, 2012 showed that several new drugs are already shaping up to be critical driving forces in the company's future. Today, we'll look at the Type 2 diabetes drug-hopeful Invokana.

The future of Type 2 diabetes treatment?
Invokana (canagliflozin) is a small molecule that inhibits the SGLT2 protein, which is responsible for transporting and retaining glucose in the kidney and thereby lowers glucose levels in diabetic patients. At the beginning of the year, an FDA advisory committee voted 10-to-5 in favor of approving the drug for patients with Type 2 diabetes, and final approval is expected by the end of the first quarter.

The same panel also voted 8-to-7 that it had concerns over the drug's long-term cardiovascular effects, but while the final vote will require additional safety data, it's unlikely that approval will be deraild. In fact, J&J has an ongoing trial evaluating long-term cardiovascular safety, which is expected to be completed in 2015. That should suffice for now.

The U.S. market is wide open
Approval would grant Invokana exclusive access to the U.S. market as the only approved SGLT2 inhibitor. Bristol-Myers Squibb (NYSE: BMY  ) and AstraZeneca (NYSE: AZN  ) took a crack at the 26 million Americans with Type 2 diabetes last January with its SGLT2 inhibitor Forxiga (dapagliflozin), only to be denied approval over cancer risk concerns. Despite the setback, the drug was approved in the European Union in November.

The potential for J&J is enormous. Consider that Merck (NYSE: MRK  ) generated more than $5.75 billion in worldwide sales last year with its Type 2 diabetes blockbusters Januvia and Janumet. Better yet, the company maintains that the largest drivers for growth were the U.S. and Japanese markets.  

Oh, yeah -- Invokana also went head to head against Januvia in recent trials and won. That gives Johnson & Johnson an impressive track record in taking down market-leading drugs, considering that the company's immunology drug Stelara also recently crushed Enbrel in a head-to-head study. Both drugs are great news for the company, but they represent small pieces of the entire story. And there appears to be plenty for investors to like.

Johnson & Johnson is involved in everything from baby powder to biotech, and critics are convinced that the company is spread way too thin. If you want to know whether J&J is nothing but a bloated corporate whale -- or a well-diversified giant that's perfect for your portfolio -- check out the Fool's new premium report outlining the Johnson & Johnson story in terms that any investor can understand. Claim your copy, and a year of free analyst updates, by clicking here now.

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