The panel will weigh the benefits and risks of the drug, used by millions to treat adult onset diabetes.
Rezulin is associated with potentially fatal liver damage.
Based on its findings, the FDA could require stricter monitoring of liver functioning in patients, or pull the drug off the market entirely, among other options.
Several analysts said that halting the sale of Rezulin is not likely. But they agreed that Warner-Lambert will probably be hurt by increased competition.
Sales of Rezulin grew 78 percent to $748 million in 1998, representing about 13 percent of Warner Lambert's global pharmaceutical sales, according to David Saks, an analyst at Gruntal & Co.
Uncertainty about the outcome of the panel review has placed pressure on the stock. On Thursday, shares of Warner-Lambert (WLA) fell 5/32 to close at 69, though it's rebounded slightly from a recent decline.
Earlier this week, the British Medicines Control Agency, the near-equivalent of the FDA, rejected British drugmaker Glaxo-Wellcome's (GLX) re-application for U.K. regulatory approval of Rezulin.
"That gives a little more ammo to anybody (who's been) negative about the drug," said Sam Isaly an analyst investment research firm OrbiMed.
Warner-Lambert is more likely to be hurt by competition, Isaly said.
Similar drugs, SmithKline Beecham's (SBH) Avandia and Eli Lilly & Co.'s (LLY) Actos, are awaiting approval from the FDA. Hearings will be held late in April to consider marketing approval for them.
They will probably be approved by the FDA, Isaly said. In that case, "sales will be wiped away by competitors," he said.
Another analyst agreed that alternatives to Rezulin, rather than its withdrawal, pose the biggest concern for the drug maker.
"Of course nobody can predict the outcome of the panel review, but we think it's unlikely that the FDA will pull the drug off the market," said Sharon Doering an analyst at Madison Securities in Chicago.
Doering said the FDA might require more stringent liver monitoring, though she said it might be unrealistic to ask doctors to monitor patients with greater frequency than they do already.
"The bigger concern is Rezulin's competition," she said. "We expect approval (of the two competing drugs) by mid-year."
"Competition will curb sales. The data that are available seem to suggest that these drugs may be more effective, more potent and possibly safer," Doering said.
Written By Stephanie O'Brien, CBS MarketWatch