SAN FRANCISCO -- Everybody hates needles.

Millions of diabetics aggravate their disease by skipping insulin injections. Countless Americans would rather risk the flu than get inoculated against the virus each year.

Seeing financial promise in this fear of the needle, several biotechnology companies are scrambling to develop alternative delivery systems, including inhaled versions of injectable drugs.

Gaithersburg, Md.-based MedImmune Inc. is hoping the Food and Drug Administration will approve its nasal spray flu vaccine in time for the upcoming flu season.

Many doctors have eagerly awaited the spray vaccine, saying the pain-free method would encourage more vaccinations.

Each year, about 70 million get today's flu vaccine, a shot in the arm. Yet influenza still kills 20,000 Americans and hospitalizes about 100,000 annually, according to the Centers for Disease Control and Prevention.

In the San Francisco area, Inhale Therapeutics Systems Inc. and Aradigm Corp., along with their respective pharmaceutical partners, are racing to get their versions of inhaled insulin approved by the government.

If one or both companies succeed, analysts and biotech executives believe drug makers will try to convert other injectable drugs, including cancer therapies.

Boon for patients, industry

Such a breakthrough would not only make patients' lives easier, it could prove to be a big boon for the biotechnology industry itself.

Most biotechnology drugs on the market or near approval must be injected.

One reason: The nascent industry devoted most of its resources to developing novel therapies and paid little attention to drug delivery. Also, most biotechnology drugs involve bigger molecules than traditional medicines, so they require injections.

"This has kept in check a lot of growth in the biotechnology industry," said San Carlos-based Inhale chairman Robert Chess. "There aren't very many big-selling drugs that are injectable."

One exception is insulin.

An estimated 17 million Americans suffer from diabetes, though up to six million are undiagnosed. Not all diabetics require insulin injections, but the drug rang up $3.6 billion in sales last year. Needle-free insulin could double annual sales by 2006, some optimistic analysts predict.

"If proven safe, they will be very broadly adopted," said analyst Ian Sanderson at S.G. Cowen Securities Inc. "A lot of diabetics are going to adopt this very quickly."

Tough sell to regulators

Still, convincing the FDA that inhaled insulin is safe and effective has proven tougher than expected.

Inhale's partner, Pfizer Inc., announced in July it would delay filing for FDA approval this year as planned. The company said it would conduct additional safety tests.

Aradigm and its Danish partner earlier this month launched a planned two-year human trial. They hope the results will persuade the FDA to approve their product.

The delays have spooked the biotechnology companies' investors. Inhale's stock trades in the $6-a-share range, far off its 52-week high of $20.25. Aradigm's stock hovers around $2.25 a share, less than a third of its 52-week high of $7.42.