The Swiss healthcare group, Novartis, has been given the green light to sell its "Starlix" treatment for type 2 diabetes in the European Union. The company says it expects the drug to bring in annual revenues of more than SFr1 billion.

Starlix is the first in a new class of type 2 diabetes treatments, and is already on sale in the United States, Switzerland and Brazil.

Novartis said on Thursday that it had been approved in the EU for use in combination with a second drug, metformin. Together, they help to prevent the body's insulin levels from falling at mealtimes, and they assist in the development of insulin resistance.

The group's head of drug development, Joerg Reinhardt, said the drug's approval could generate annual sales of more than SFr1 billion.

Eric Berhardt of Clariden Bank said Starlix could command revenues of around $1 billion in the US by 2005.

"The first sales data is quite positive for Starlix," Bernhardt said. "But you have to convince doctors to prescribe it. It might take longer than some people expected. I think it will take an educational process to make this a billion dollar product."

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