So much for FDA expert panels, huh? Although an FDA panel had vetted the experimental diabetes drug Pargluva, it looks like the road to eventual approval will be a heckuva lot rockier. That's bad news for Bristol-Myers Squibb (NYSE:BMY) and its apparently soon-to-be-former partner Merck (NYSE:MRK).

Although Pargluva seemed to have a sizable lead on other would-be dual-PPAR drugs that got bogged down in FDA requirements for additional safety tests, it appears that cardiovascular side effects will derail this project. According to Bristol-Myers, the additional info requested by the FDA would likely require further studies that could delay approval by as much as five years -- not good news for a company that needs some new high-potential drugs. In the wake of this news, it appears that Motley Fool Income Investor pick Merck wants out of the partnership. Bristol-Myers seems willing to cooperate, though it hasn't decided whether to pursue additional studies on its own.

Bristol-Myers' third-quarter results highlight the company's dilemma. Sales were flat as reported, but actually down slightly when foreign exchange benefits are netted out. Since the company continued to increase spending on advertising, SG&A, and R&D, you can imagine what happened to income and profitability. Netting out gains and charges, net income fell about 30% to just over $600 million.

I've previously referred to this company's drug portfolio as two Snow Whites and a bunch of dwarves. Plavix sales were up 9%, Pravachol was down 12%, and the two combined for nearly 40% of total pharmaceutical sales. There were certainly pockets of good growth -- Abilify was up 58% and Reyataz was up 66% -- but overall pharmaceutical sales dipped about 2%.

Bristol-Myers' pipeline isn't bad, but even company management believes it will be 2007 before the bottom line starts growing again. That could be a difficult wait for some investors, even if they are pocketing a good dividend. If you're a patient investor on a five-to-10-year timeframe, go ahead and sniff around these shares. But if you're expecting more of a near-term bang for your investment buck, this might not be the best destination.

Phurther pharmaceutical Phoolishness:

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).