Sometimes, side effects can be a good thing. Really.

The goal of diabetes drugs is to get the patient's blood glucose levels under control, but one class of drugs, called GLP1 agonists, have a nice side effect: weight loss. About 90% of type 2 diabetics are overweight or obese, so most of the potential patients can thrive with a beneficial side effect.

So far, Amylin Pharmaceuticals (NASDAQ:AMLN) and Eli Lilly's (NYSE:LLY) Byetta is the only GLP1 agonist on the market, but that's likely to change.

Fewer injections. More sales?
Byetta garnered just $679 million in sales last year, well short of a blockbuster even though it has been on the market since 2005. The main reason for the lackluster performance is that it has to be injected twice a day. That's a lot of injections when oral diabetes drugs work well at controlling glucose levels -- even if they don't have that nice weight-loss side effect.

Novo Nordisk (NYSE:NVO) is hoping it'll be able to top that with its once-daily injection, liraglutide. The Food and Drug Administration already has the marketing application for the drug on its desk, but the agency isn't likely to make its PDUFA goal of March 23; the FDA has scheduled an advisory panel meeting for the beginning of April to get experts' input on whether the drug should be approved. The FDA has become a lot more cautious with diabetes drugs after potential heart problems with GlaxoSmithKline's (NYSE:GSK) Avandia were discovered.

Not to be outdone, Amylin and Eli Lilly are developing a once-weekly version of Byetta using Alkermes' long-lasting technology. The companies are planning to file a marketing application with the FDA before the end of the second quarter after they prove that the drug used in the successful phase 3 trial is equivalent to the stuff being produced in their new manufacturing plant. That shouldn't be a major obstacle, but with drug development, nothing is certain.

At the moment, it looks to me like Amylin and Eli Lilly are in the driver's seat. Some patients may switch to liraglutide when it's approved, but with once-weekly Byetta hot on its heels, doctors may recommend that patients wait and switch from the short-acting to the long-acting version of Byetta rather than switch back and forth between molecules.

In the pipeline
But wait, there's more! This is far from a two-person race. Roche has a GLP1 drug, taspoglutide, in phase 3 trials, and this week Glaxo announced that it's going to start a phase 3 trial for Syncria, a drug in the same class that was developed using technology from Human Genome Sciences (NASDAQ:HGSI). Both offer dosages of once a week.

Being behind liraglutide and Byetta could be problematic, but these two latecomers could easily take market share from whichever drug is the established leader at the time if they can show that they work better, or perhaps if they have more of that wonderful weight-loss side effect, or a better safety profile -- Byetta has been linked to reports of pancreatitis.

If not, there's the risk that these me-too drugs could fall flat on their faces. Neither Johnson & Johnson's (NYSE:JNJ) antipsychotic Invega nor Wyeth's (NYSE:WYE) antidepressant Pristiq have wowed patients or investors with their launches. Roche and Glaxo are taking a risk being late to the party, although it's still possible that it'll pay off.

Going with a pill
Actually, all the drugmakers are taking a big risk in developing GLP1 drugs because they have to be injected. Patients don't want to inject themselves if they don't have to. For instance, Merck's oral medication Januvia was approved a year after Byetta, but managed $1.4 billion in sales last year. Once-weekly injections will certainly trump once- or twice-daily injections, but only time will tell whether the pokes are infrequent enough to divert patients from the oral medication.

Novo Nordisk seems to have realized this and is developing an oral GLP1 drug using technology from an Irish company called Merrion Pharmaceuticals. Any drug from that partnership is many years away from the market, but it could be a blockbuster if it has the same effect as the injected drugs -- weight loss included.

Diabetes isn't going away anytime soon, and investors would be smart to keep an eye on the GLP1 drug fight. It could increase your portfolio's value.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.