At long last, it's over.

Large pharmaceutical players Pfizer (NYSE:PFE) and Sanofi-Aventis (NYSE:SNY) had been quibbling over Sanofi's share in the Exubera inhaled insulin product for some time. Now, though, the two companies have reached an agreement, and Sanofi will receive $1.3 billion in cash for relinquishing its rights to the as-yet-unapproved drug.

Originally, Exubera had been divvied up among partners Pfizer, Aventis, and NektarTherapeutics (NASDAQ:NKTR). Pfizer claimed that Sanofi's purchase of Aventis triggered a clause in the original agreement that allowed Pfizer to acquire Aventis' share in the project. Sanofi disagreed but then lost some court rulings, and the two companies sat down to hammer out an agreement. By the way, nothing in this agreement changes anything for Nektar -- it'll still be getting its share.

I realize a lot of investors will want to know who "won," but I think this could be a case where both parties basically got what they wanted. If you had listened to Sanofi management over the past two years or so, it wasn't hard to detect some notes of skepticism regarding the whole inhaled insulin field -- though perhaps you could argue that was just fatalism on the part of management when it realized it'd have to give up its stake.

Can Exubera be a billion-dollar drug? Maybe. There's definitely a crying need for better insulin delivery alternatives, and clinical studies have shown that patients do like to use these inhaled devices.

There are some flies in the ointment. First, the Food and Drug Administration seems to be dragging its feet a bit on the Exubera approval process -- suggesting that the FDA may be a bit nervous. Second, many people think that the Lilly (NYSE:LLY)/Alkermes (NASDAQ:ALKS) device is better designed, though about two or three years behind Exubera. Third, there are other competitors in the mix, such as MannKind (NASDAQ:MNKD) and KosPharmaceuticals (NASDAQ:KOSP), though Kos' candidate is quite a bit different. Last and not least, there are legitimate fears that doctors will be hesitant to prescribe inhaled insulin until there is very long-term data (on the order of 10 years) supporting its safety.

With that in mind, it's probably unreasonable to expect $1 billion or more in annual sales from Exubera until 2009 or 2010 at the earliest. Accordingly, I think both parties are getting a pretty fair shake -- Pfizer wants the distribution rights all to itself, and Sanofi is getting a nice chunk of change for its time and trouble.

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Fool contributor Stephen Simpson owns shares of Sanofi-Aventis but has no financial interest in any other stocks mentioned (that means he's neither long nor short the shares). The Motley Fool has a disclosure policy.

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