Drugs can be like the stars. Some shine brightly. Some appear seemingly out of nowhere. And some grow dimmer over time and eventually disappear from the night sky. 

Celgene (NASDAQ:CELG) has plenty of stars in its product portfolio. Revlimid currently stands as the brightest of the bunch. Abraxane and Vidaza are getting brighter. We looked at all three of these drugs previously in The Motley Fool's series on Celgene's products and pipeline. In this article we review Thalomid -- Celgene's fading star. 

A star is born
Thalomid, then known as Thalidomide, was first developed in 1954. It was considered a "wonder drug" in Europe back in the 50s, with uses ranging from insomnia to morning sickness. However, the luster wore off within a few years as doctors noticed incidents of birth defects in children of women who had taken the drug.

Although the drug was banned in many countries by the early 1960s, another usage for Thalidomide was found. A professor in Israel discovered that the drug helped patients with erythema nodosum leprosum, or ENL,  a condition associated with leprosy. While Thalidomide was used for decades for treating the disease, the drug wasn't officially sanctioned in the U.S. for ENL until Celgene obtained FDA approval in 1998 with the brand name of Synovir.

Synovir was also being used as an experimental treatment of cachexia, a serious weight loss condition suffered by AIDS patients. By the late 1990s, Celgene began exploring other indications for the drug, particularly various forms of cancer. It also began using the brand name of Thalomid. The company ultimately gained FDA approval for Thalomid as a treatment of multiple myeloma in 2004.

Slow fade
After 40 years of being used for many different indications, Thalomid began to shine as an alternative for patients with this blood cancer. However, the shine didn't burn brightly for long.

Thalomid Net Sales

Source: Company 10-K reports and 2012 earnings release.

Thalomid peaked in 2008 with around $500 million in sales, but began a steady decline in the following years. The good news for Celgene was that this decrease came about largely due to its own efforts with Revlimid. Thalomid itself contributed in a way to its own undermining. Revlimid is an analog of Thalomid, which means that it has a similar chemical structure but with different properties.

Despite the steady fall in sales, Thalomid still ranks as Celgene's fourth-highest revenue generator. That standing won't last too much longer, though, as the company introduces new products and as other drugs like Abraxane begin to really take off.

Astronomical
The story behind Thalomid illustrates the importance of research and development in the pharmaceutical industry. A drug can be viewed in the highest regard, then fall from grace -- but later be used for a totally different indication and generate billions of dollars in sales over the years. And research on drugs that don't become blockbusters can contribute to future blockbusters.

So can history, especially that of a fading star like Thalomid, teach investors a lesson? I think so. The story of Thalomid is, at its core, a story of innovation. Celgene took a has-been drug and found new ways to use it. Look for the innovators like Celgene. They're the ones that give investors the best opportunity to make great returns over the long run -- even astronomical returns.

Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.