I have a theory about drug pipelines, and it is a similar theory to the famous quip about Hollywood: No one knows anything.

Just in the same way that Hollywood seems to be fairly poor at allocating capital -- for every low-budget Blair Witch Project, there is some high-cost bomb like The Alamo -- it seems that punters have little real insight into what drugs are actually going to be home runs or not. Case in point are Pfizer's recent releases, Inspra and Caduet, which have generated at this point substantially less revenue than anticipated.

I remember quite well how lauded Bristol Myers' (NYSE:BMY) pipeline was in 1998, when investors bid the stock up to the stratosphere, but that same pipeline has been singled out as having holes in it as a justification for the ongoing gloom over the company.

Let me just say this: As badly as Pfizer (NYSE:PFE) has been beaten down, as much pessimism as exists over the stock, I would think that the Food and Drug Administration's acceptance of its application for an inhalable insulin called Exubera for type 1 and type 2 diabetes would be huge. Instead, share prices for Pfizer and its collaborating partner Sanofi-Aventis (NYSE:SNY) barely budged on the news. Keeping in mind that with pharmaceuticals, it seems that no one knows anything, this seems like huge news. Nektar Therapeutics (NASDAQ:NKTR), a biotechnology company that helped develop the inhalation technology, could also benefit. Alkermes (NASDAQ:ALKS) and Eli Lilly (NYSE:LLY) are working on a competing version of inhaled insulin.

Diabetes treatment is a wide-open market. An estimated 180 million people currently suffer from diabetes worldwide, and that number continues to rise. According to the press release, more than half of all diabetes patients remain poorly treated. A drug that can be taken in dry powder form, thus making it substantially more convenient than the current subcutaneous insulin administration, seems like a home run.

Of course, there is plenty of time and work between an application's being accepted and actual revenues from an approved drug. And its approval, given the long study time already taken to date, may already be figured into the company's share price.

Looking at Pfizer's current multiples, though, I'm not sure where that would be.

See also:

Bill Mann owns none of the companies mentioned in this story. The Motley Fool's disclosure statement should be admired by one and all.