NEW YORK (CNN/Money) - A panel of experts advising the FDA voted Thursday in favor of Exubera, the first form of inhalable insulin, a step that could lead to approval by the regulatory agency.

Exubera, developed by Pfizer Inc. (up $0.21 to $26.51, Research), Sanofi-Aventis (down $0.58 to $41.37, Research) and Nektar Therapeutics (unchanged at $19.14, Research), is a new way of delivering insulin for diabetics. Diabetics can use the Exubera inhaler to breathe a dry, powdered form of insulin through the lungs.

The advisory panel voted 7-2 in favor of using Exubera in type 1 and 2 diabetes. The Food and Drug Administration usually follows the recommendation of its advisory panels.

"I hope the FDA follows the advice of its committee, because the patients really need this drug and they've been waiting for it for a long time," said Dr. Neville Jackson, Exubera full development team leader for Pfizer. "We remain calm about it because it still requires the FDA to take that vote and weave it into an action of some sort."

Diabetes causes defects in insulin production. More than 90 percent of all cases are type 2, which can be brought on by aging, obesity, physical inactivity and genetic inheritence. Less than a tenth of all cases are type 1, the more serious form of diabetes which generally affects juveniles.

Insulin turns blood sugar into energy and is naturally produced by the pancreas in healthy individuals. Diabetics have trouble producing their own insulin, so they inject it. Injection has been the primary mode of delivering insulin since the treatment was developed in the 1920s.

Exubera's proponents consider inhalants to be more convenient than syringes. But diabetics have to inhale about seven times as much insulin as they would inject in order to get the same effect. Also, Exubera has raised concerns because of limited testing in smokers and children.

On Thursday, Declan Doogan, Pfizer's head of development, told Reuters that the company was prepared to conduct a follow-up monitoring program on Exubera patients.

Diabetes is seen as a promising area for the drug industry because it is so common in the United States and Europe. There are 18.2 million diabetics in America, including an estimated 5.2 million who have not been diagnosed yet, according to the American Diabetes Association.

An additional 1.3 million diabetics are diagnosed every year. And another 41 million Americans have "pre-diabetes," or high blood-sugar levels, and are at risk for developing adult onset type 2 diabetes. Type 2, sometimes coined "diabesity," is expected to become more prevalent among the aging baby boomer population.

Many analysts see Exubera as a potential blockbuster. Andrew Forman, analyst for WR Hambrecht, and David Steinberg of Deutsche Bank both project that Exubera sales will total $1 billion by 2008. Bernstein analysts project $1 billion by 2011. David Moskowitz of Friedman, Billings, Ramsey & Co. projects $1.3 billion by 2008.

But not everybody is bullish on Exubera. Albert Rauch, analyst for A.G. Edwards, believes that Exubera won't be as convenient as some people believe and sales will be paltry, not even reaching $1 million. In a recent interview, Rauch said diabetics would have to inhale more often than they inject and could have problems regulating how much insulin they breathe in.

The panel's vote means a lot to the five competing drug makers with inhalable insulin in the pipeline. Eli Lilly & Co. (up $0.09 to $56.45, Research), Alkermes (down $0.56 to $18.60, Research) and Mannkind Corp. (up $0.30 to $14.21, Research) are developing dry powder insulin products. Also, Novo Nordisk (up $0.56 to $53.24, Research) and Aradigm Corp. (up $0.06 to $1.11, Research) are working on inhalable liquid insulin. These products are at least two years behind Exubera in the development process.

This is a big week for diabetes drugs. On Tuesday, the FDA approved Actoplus Met, a pill from Takeda Pharmaceuticals North America that controls blood-sugar levels in diabetics.

On Friday, the FDA advisory panel is scheduled to vote on Muraglitazar, a dual-use diabetes drug developed by Bristol-Myers Squibb with partner Merck & Co. that lowers blood sugar in type 2 diabetics and reduces the risk of heart disease.

For more on Exubera, click here.