In the pharmaceutical world, the failure of a competitor's drug can be just as lucrative as your own compound's success. Shares of Celgene (NASDAQ:CELG) will likely enjoy this phenomenon, after its No. 3 drug, Vidaza, got a competitive boost from a rival's setback.

Vidaza has been locked in a bitter showdown with Eisai and SuperGen's (NASDAQ:SUPG) Dacogen since the latter's 2006 U.S. marketing approval. Both Dacogen and Vidaza are approved in the U.S. as treatments for myelodysplastic syndromes (MDS), a bone marrow disease.

SuperGen announced Tuesday that in a phase 3 study, Dacogen had failed to improve elderly MDS patients' overall survival, compared to other commonly used drugs for the disease. This is a significant setback for Dacogen, because Celgene's currently awaiting an FDA review toward the end of the year to expand Vidaza's label with claims about its ability to improve survival for MDS patients.

With Vidaza having proven some strong survival benefit, and Dacogen lacking such an advantage, it's easy to guess which drug doctors will prefer. Celgene last forecast sales of Vidaza at approximately $236 million in 2008, before this game-changing announcement.

Celgene received Vidaza by acquiring Pharmion, a deal it completed this year. Eisai grabbed the marketing rights to Dacogen via its $3.9 billion buyout of MGI Pharmaceuticals. (Drugs already on the market seem to be hot commodities lately, with Pfizer's (NYSE:PFE) purchase of Encysive and Alpharma's (NYSE:ALO) snatching up the Flector patch, among other recent examples.)

Gaining access to Vidaza was one of Celgene's top two reasons for buying Pharmion. It seems that acquisition's already paying off, especially now that the company will likely bump up Vidaza's 2008 sales forecast.

Although there's plenty of time left in the match between these two hematology behemoths, after yesterday's announcement, the score is unequivocally Celgene 1, Eisai 0. The next big update in this rivalry will come in the next couple of months, as the European Union decides whether to expand Vidaza's use into a broader population of patients with MDS, and the FDA rules on Vidaza's new label claims.