At first blush, the past week seems to have been good to Bristol-Myers Squibb (NYSE:BMY). Food and Drug Administration advisory committees recommended approval for two of its experimental compounds -- Orencia for rheumatoid arthritis and Pargluva for type 2 diabetes. The recommendations do not guarantee FDA approval, especially in the post-Vioxx environment, but the chances that the two medicines eventually will receive clearance look very good.

Unfortunately for Bristol-Myers, if Pargluva reaches the market, it may not receive as warm a reception as some have anticipated. Part of the interest in Pargluva is its unique mechanism of action: It targets two genes known as peroxisome proliferator-activator receptor, or PPARs. The problem is that drugs zeroing in on PPARs have been connected to various side effects, and Pargluva is no exception. The FDA advisory panel expressed some concern about its potential link to heart failure, but it saw the drug's potential benefits as outweighing its risks. Still, the safety concerns could put a drag on sales.

Pargluva also may face stiffer competition from an older medicine. On Monday, Japan's Takeda Pharmaceutical released new data on its drug Actos, showing that in addition to lowering blood sugar, the medicine protects users from heart attacks. That new data may allow the older drug to grab market share even in the face of the new challenge from Pargluva. Like Pargluva, Actos is an oral medicine, although Actos acts on just one PPAR gene, rather than Pargluva's two.

On the plus side, Bristol-Myers has a strong marketing partner in Income Investor recommendation Merck (NYSE:MRK). The combined sales expertise of the two companies isn't a guarantee that Pargluva will succeed, but it does provide the drug a good shot.

For more on Bristol-Myers:

Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.