NEW YORK (CNNMoney.com) -- Merck announced Thursday that its experimental diabetes drug Januvia significantly lowers blood-sugar level when taken with another drug.

Januvia reduces A1C, a measure of blood-sugar level, in diabetics by 2.1 percent, when combined with the generic treatment metformin, according to the Merck-funded study.

In the study, 66 percent of diabetics were able to lower their A1C level to the recommended goal of 7 percent with the Januvia-metformin combination. Of the diabetics who took only metformin, 38 percent reached the goal, according to Merck.

The New Jersey-based Merck (up $0.02 to $41.11, Charts), the fourth-largest drug company in America, unveiled the study results in Copenhagen at the annual meeting of the European Association for the Study of Diabetes.

The Food and Drug Administration is expected in mid-October to make a decision on whether to approve Januvia.

The drug's likely competitor is Galvus, an experimental diabetes drug from the Swiss drug giant Novartis that is also awaiting an FDA decision. Both of these drugs are once-a-day pills, and analysts have projected annual sales exceeding $1 billion for Januvia and Galvus. The drugs are members of the same class: DDP-4 inhibitors.

In addition, Novartis announced the results of a head-to-head study today that Galvus does a better job of cutting blood-sugar levels than GlaxoSmithKline's (down $0.44 to $55.36, Charts) Avandia, which is FDA-approved and on the market.

Nearly 21 million Americans have diabetes, a disease that interferes with the production of insulin, according to the American Diabetes Association. This often results in dangerously high blood-sugar levels. Most diabetics worldwide, and all the diabetics who participated in the studies, are type 2, which often develops late in life as a result of obesity and other health factors.

Novartis vs. Merck over diabetes