Updated from 8:36 AM EST

The Food and Drug Administration cleared

Pfizer's

(PFE) - Get Report

Lyrica for the treatment of pain associated with diabetes and shingles.

The drug remains under review for treatment of partial seizures related to epilepsy.

The lack of immediate action on epilepsy is a mild setback for Pfizer, which had been counting on Lyrica to provide higher profit-margin sales to help offset the revenue erosion due to the epilepsy drug, Neurontin, being hit by generic competition. Neurontin also is approved for treating nerve pain associated with shingles.

Although Pfizer is suing generic companies over Neurontin, it also is marketing its own generic version of the drug. Neurontin produced $2.24 billion in revenue for the first nine months of 2004, making it Pfizer's fifth-best selling drug.

Pfizer's stock slipped 7 cents to $26.94 on Friday.

The FDA gave conditional approval for Lyrica in early September as an add-on treatment for epilepsy, for nerve pain associated with diabetes and for postherpetic neuralgia, which is nerve pain associated with shingles. The agency also rejected Pfizer's application that Lyrica be approved for patients with generalized anxiety disorder.

At the time, Pfizer declined to comment on what it had to do to secure FDA approval for the various uses of the drug.

Once a drug is approved by the FDA for a single disease or condition, doctors may prescribe it for any ailment. However, companies can only market a drug for the uses approved by the FDA.

Pfizer offered no comment Friday on the prospects for Lyrica being approved by the FDA for epilepsy or for general anxiety disorder. The company said Lyrica will be available to doctors and patients "in the near future."

The European Commission approved Lyrica in July for the treatment of peripheral neuropathic pain and as an add-on for partial seizures in patients with epilepsy. Neuropathic pain, or nerve pain, causes burning and tingling sensations.

Analysts have said that clinical trials show Lyrica is superior to Neurontin because it can treat a greater range of diseases, is more potent, requires fewer doses per day and has a better safety profile.

Unlike Neurontin, however, Lyrica will be classified as a controlled substance requiring restrictions for its use. "We view this is a modest disappointment," said Carl Seiden, of UBS, in a Friday report to clients. "With negotiations with the Drug Enforcement Administration ongoing to determine final language on scheduling, the commercial impact remains uncertain."

Seiden, who has a buy rating on Pfizer, said he expects Lyrica to reach the market during the first quarter of 2005, producing $550 million in sales next year. He added that FDA approval for an epilepsy indication could come "shortly." (He doesn't own shares. His firm says it seeks to conduct and does business with the companies mentioned in research reports.)