It's Nobel Prize week! On Monday, the Nobel Prize in Physiology or Medicine was awarded to James Rothman, Randy Schekman, and Thomas Sudhof for discovering the way molecules are packaged and shipped within the cell or secreted out of the cell. Naturally, I started to wonder how these discoveries have affected the pharmaceutical industry.

The postal service of biology
Each little compartment within a cell has its own function, its own metabolic needs, and its own chemistry. The Nobel prize this year reflects volumes of work dedicated to understanding how these chemicals are packaged, sorted, and shipped to the appropriate place in little packages called vesicles. Sometimes this shipment is domestic (within the cell), and sometimes it's international (between cells), allowing the cells of the body to communicate. A failure of this system may contribute to diseases as diverse as diabetes and depression, and some others you might not expect.

Vesicles in diabetes
When a healthy person eats a meal, the body instantly turns on its sugar-processing mechanism. The first step, the release of a hormone called GLP-1 from the small intestine, causes a whole host of effects to regulate blood sugar. One of these effects is to start the cascade of events leading to the release of insulin from vesicles in beta cells of the pancreas. In some patients with type 2 diabetes, blood sugar can spike after eating because the amount of insulin released from these vesicles is insufficient.

So, the industry has sought innovative ways to to trick the body into releasing more insulin (in addition to the traditional treatment -- just giving more insulin). The first drug intended to directly increase the amount of insulin secreted from vesicles was Merck's (NYSE:MRK) Januvia, which blocks the DPP-4 enzyme that breaks down GLP-1. Januvia was approved in 2006, and remains Merck's best-selling drug, bringing in just over $1 billion in the most recent quarter. Sales growth for Januvia has slowed, but other formulations of the active ingredient, like Janumet, continue to post impressive 16% year-over-year sales growth to $474 million.

It will be interesting to see how this growth proceeds, though, in the face of an up-and-coming class of drugs that activate GLP-1 directly, rather than block its breakdown by DPP-4. There are many players in the space, but one to watch is Eli Lilly's (NYSE:LLY) dulaglutide. Dulaglutide is Lilly's best prospect for digging itself out of the hole left by a crippled Alzheimer's franchise, and looks to have trial data on its side. It bested Januvia in a phase 3 trial, and top analyst estimates are $1.7 billion in sales by 2020. The space is crowded, though, with Novo Nordisk, Bristol-Myers SquibbAstraZeneca, and GlaxoSmithKline boasting GLP-1 drugs in various stages of development and marketing.

More than cosmetic
Believe it or not, the well known cosmetic agent Botox is a biologic drug that directly inhibits the vesicle machinery discovered by Rothman. Marketed by Allergan (UNKNOWN:AGN.DL), Botox prevents the vesicles required for muscle contraction from releasing their neurotransmitter contents. In essence, Botox paralyzes muscle. It was approved in 2002 as a cosmetic remedy for glabellar (frown) lines, and Allergan continues to seek FDA approval for other cosmetic indications.

But that's not all Botox is good for. It turns out that blocking vesicle function is also useful in treating excessive sweating, urinary incontinence, or chronic migraine. Allergan's most recent annual guidance update called for $2 billion in sales for 2013, comprising almost a third of total product sales. As the label on Botox expands, it will continue to contribute to a neuromodulator franchise that grew 10.7% in 2012.

The bottom line
The recipients of the Nobel Prize dedicated their lives to the study of very specific biological processes. Like the painstaking experiments that uncovered the basic science of cellular transport, watch as the industry gradually converts these ideas into novel therapeutics that treat real patients and reward investors with patience. Brilliant science breeds brilliant investments.

Seth Robey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.