Alkermes (Nasdaq: ALKS) announced the expanded approval of Vivitrol yesterday evening, but its shares have hardly moved today.

That's partly because a Food and Drug Administration approval to expand Vivitrol into treating opioid addition was widely expected after an overwhelmingly positive advisory panel meeting. The other reason is that Vivitrol has never been a major seller in its current indication to treat alcohol addiction.

Sure, it'll be a lot easier to sell Vivitrol for opioidaddiction than it is for alcoholism. Doctors have experience treating opioid dependence with drugs -- methadone and Suboxone -- and the U.S. market for the new indication reached almost $1 billion last year.

But how much of the market Alkermes will be able to take is a bit of a mystery. Patients must be free of opioids before starting Vivitrol because it's used in prevention of relapse, unlike methadone and Suboxone, which are used to switch the dependence to a less toxic substance. As many a drugmaker has discovered, it can be difficult to make inroads into a market when you have to change doctors' prescribing habits.

Even if Vivitrol sales double or even triple, they won't be as large as the manufacturing and royalty revenue that Alkermes gets from sales of Johnson & Johnson's (NYSE: JNJ) Risperdal Consta.


Revenue for 12 Months Ending March 2010 (in millions)

Fraction of Sales

Manufacturing revenue



Royalty revenue



Product sales



Net collaborative profit



Research and development and other revenue



Source: Capital IQ, a division of Standard & Poor's.

The royalty line could be increasing dramatically as well. Alkermes' extended release technology was used in Amylin Pharmaceuticals (Nasdaq: AMLN) and Eli Lilly's (NYSE: LLY) Bydureon, which is up for review at the end of next week. If Bydureon is approved, Alkermes is due royalties on worldwide sales. And remember, royalty revenue affects earnings a lot more than product sales since the margins are grossly different; it doesn't cost that much to cash a check.

The approval yesterday was nice, but it's the execution of Vivitrol's launch and the approval of Bydureon that will drive revenue -- and Alkmeres' stock price -- in the future.

Jim Royal says this stock could be an easy double.

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