NEW YORK (CNNMoney.com) - The FDA has approved Zostavax, a new vaccine from Merck that prevents shingles, for patients 60 or older.

"We are thrilled to be able to make Zostavax available for older people who are at risk for shingles, a frequently painful disease that can occur without warning in anyone who has ever had the chicken pox," said Jeffery Silber, senior director for clinical research for Merck.

Zostavax is a vaccine that prevents shingles, a blistering rash that affects one out of five people and is caused by the latent varicella virus, which also causes chicken pox. The vaccine has been tested in 38,000 patients 60 or older, an age group that represents at least half of all cases.

Merck studies have shown that the vaccine reduced the occurrence of shingles by 51 percent. In patients who took the vaccine but were not successfully inoculated against shingles, Zostavax still managed to reduce pain and discomfort by 61 percent and reduced persistent nerve pain, the most common symptom, by 67 percent.

"This is the only U.S.-licensed vaccine that reduces the risk of the zoster virus," Norman Baylor, director of the Food and Drug Administration's office of vaccines research and review, said at a press conference.

The approval of Zostavax will have a relatively minimal impact on Merck sales. Analysts for Sanford C. Bernstein project a peak of $300 million in annual sales by 2010, a figure that is dwarfed by Merck's (unchanged at $34.39, Research) 2005 sales tally of $22 billion.

But the approval demonstrates to investors that Merck is making progress getting new products onto the market, to fill the impending sales vacuum from blockbuster products losing patent protection, like the cholesterol-cutting drug Zocor, worth $4.4 billion in annual sales. Also, Merck needs to make up for the loss of Vioxx, the withdrawn arthritis painkiller that used to total $2.5 billion in annual sales but is now the subject of 11,500 lawsuits.

"This would be the third approval of a vaccine for Merck this year," wrote Les Funtleyder of Miller Tabak in an analyst note. "While not unexpected, this approval shows that the company is capable of developing new therapeutics and also deliver on product guidance."

In the next couple weeks, the Food and Drug Administration will complete its review of a vaccine that could have a much greater impact on Merck sales. On June 8, the FDA will decide whether to approve Gardasil, a cervical cancer vaccine that has been supported by strong data. Approval was recommended by a FDA panel of experts. Jami Rubin, analyst for J.P. Morgan, projects annual sales of $2 billion.

In clinical trials, Gardasil has shown 100 percent efficacy in preventing the sexually-transmitted human papillomavirus, which causes 70 percent of cervical cancer cases, Merck said. This type of cancer kills nearly 4,000 women in the U.S. annually and nearly 300,000 worldwide, according to the National Cervical Cancer Coalition.

Gardasil has also shown 100 percent efficacy in preventing the sexually-transmitted viruses that cause 90 percent of vaginal and vulvar lesions in young women, including vaginal warts, according to Merck.

Because of the strong data and an adept public relations campaign, Merck was able to overcome the controversy from religious groups surrounding Gardasil, which is most effective when taken by young girls, years before they would become sexually active.

Merck, based in Whitehouse Station, N.J., is the second-biggest drug company in America, behind Pfizer (unchanged at $23.85, Research), the biggest drug maker in the world.

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To read about the upcoming cancer drug battle between Merck and Novartis, click here.