Pharmaceutical investors are always searching for drug companies with the proverbial billion-dollar blockbuster drug, a treatment for chronic or life-threatening indications that will provide years of high-margin revenues. GlaxoSmithKline (NYSE:GSK) already had such a drug in Avandia, and the results of a recent clinical trial could vastly expand both the drug's use and its potential for huge profits.

Companies seeking surefire blockbusters often develop drugs that help treat a disease associated with a negative lifestyle trend, like unhealthy eating and lack of exercise. That was Glaxo's goal with Avandia, which is currently approved to lower blood sugar levels in people with type 2 diabetes. Today, Glaxo announced results from a clinical trial that could potentially expand Avandia's use to pre-diabetics -- people at a significant risk of developing diabetes.

Statistically significant results from the three-year trial showed that Avandia reduced the risk of pre-diabetics developing type 2 diabetes by 62% compared with placebo. Furthermore, 51% of patients taking Avandia returned to normal blood sugar levels, compared with only 30% taking a placebo.

Almost as importantly, those who took the drug in the trial showed very few adverse reactions. Most of these results were expected, since Avandia has already been tested in multiple large clinical trials for its type 2 diabetes indication, but the results are reassuring nonetheless.

With an estimated 41 million pre-diabetic people in the U.S., and 29%-55% of these individuals moving on to full-blown type 2 diabetes, Avandia could capture a significant market. Since there are no other treatments for pre-diabetes besides healthy eating and exercise habits, Glaxo could have this multibillion-dollar market all to itself.

Even without formal approval to market Avandia to pre-diabetics, the drug (and its related compound Avandamet) has achieved impressive sales growth for the past few quarters, as show below.

Worldwide Sales*

Y-O-Y Change

Q2 06

$860

32%

Q1 06

$651

19%

Q4 05

$580

9%

Q3 05

$637

23%

Q2 05

$653

17%
*For Avandia and Avandamet. All sales in millions.

Formal FDA approval to market Avandia to pre-diabetics should only accelerate that growth.

With a deep drug pipeline filled with potential blockbusters for nearly every major disease, and an attractive 3% dividend yield, Glaxo makes a fine investment opportunity for investors willing to brave the pharmaceutical sector.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy .