Last week biopharmaceutical drug delivery expert Alkermes (NASDAQ:ALKS) announced that it had initiated clinical testing of an inhalable version of Eli Lilly's (NYSE:LLY) osteoporosis treatment Forteo.

Forteo has been one of the fastest growing of Eli Lilly's top 10 compounds. Sales of Forteo grew more than 50% last year to nearly $600 million. Lilly has achieved this high rate of sales growth despite the drug being used primarily as a third line agent in treating osteoporosis and requiring a daily injection (as opposed to oral medications like GlaxoSmithKline's (NYSE:GSK) Boniva, that only need to be taken once a month). Alkermes' inhalable version of Forteo has the promise to expand the drug's use into patients that previously wouldn't use the compound due to fear of needles or other compliance issues.

Alkermes has already proven its ability to reformulate existing blockbuster drugs into improved formulations using its drug delivery technology. The long-lasting version of Johnson & Johnson's (NYSE:JNJ) Risperdal Consta that Alkermes developed had annual sales in excess of $900 million for the last fiscal year. For fiscal 2008 Risperdal Consta is expected to bring in around $100 million in royalty and manufacturing revenues to Alkermes.

Any potential inhalable version of Forteo is years away from approval, with the top-line results from the phase 1 study coming in "by early 2008." The experience of Nektar Therapeutics (NASDAQ:NKTR) and its inhalable insulin diabetes treatment Exubera, which is marketed by Pfizer (NYSE:PFE), shows that developing an inhalable version of an injectable drug is no guarantee of market acceptance. However, if Alkermes can bring inhaled Forteo to the market, there are differences between the osteoporosis and diabetic patient populations that should make inhaled Forteo more successful if it shows comparable efficacy to injected Forteo.

Eli Lilly, GlaxoSmithKline, and Johnson & Johnson are Income Investor recommendations. Pfizer is an Inside Value selection.

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