Normally, when a pharmaceutical company gets a new drug approved, it's something to get excited about. But with the FDA approval of Bradley Pharmaceuticals' (NYSE:BDY) recently in-licensed hormone therapy, Elestrin, it's surprising to see shares up more than 10% at one point upon approval last week of a product with such limited market potential.

Elestrin is an estrogen replacement gel approved to relieve hot flashes associated with menopause in women. Bradley licensed Elestrin from specialty pharma BioSante Pharmaceuticals (AMEX:BPA) back in November for $3.5 million, plus up to $10.5 million in regulatory milestone payments and royalties on sales.

Bradley and BioSante continually mention that the market for estrogen replacement therapies in the U.S. is $1.3 billion, but the vast majority of that market is made up of Wyeth's (NYSE:WYE) Premarin estrogen products, which have more than a billion-dollar sales run rate based on last quarter's revenues for the product line.

A more appropriate comparison to give investors the idea of the market potential for Elestrin is to look at how sales of Novavax's (NASDAQ:NVAX) transdermal estrogen product turned out last year. In 2005, Novavax's Estrasorb lotion brought in $2 million in revenues on 14% year-over-year growth compared with 2004. Not exactly a hit product, and with so many other estrogen replacement therapies available in pill form or patches, it will be extremely difficult for Bradley to carve out much of a profitable niche in this market.

Not only is Bradley facing micro issues related to Elestrin, but there are also macro-related concerns popping up about studies that have shown some hormone-replacement therapies to have the potential to lead to an increased incidence of breast cancer in women who use them. This may or may not be a boon to Bradley, though, if further studies can exclude estrogen therapies like Elestrin as increasing the risk of breast cancer.

In 2005, Bradley's revenues were $133 million and, in the first nine months of 2006, have increased 5% versus the same period last year. Based on my estimates for peak Elestrin sales to be under $10 million annually and with low gross margins (on account of the presence of generic competitors in the estrogen replacement market), it's hard to get excited over a product that may be so minimally accretive to sales.

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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 .