On Wednesday, biopharma powerhouse Genentech (NYSE:DNA) announced first-quarter financial results. Revenue grew a solid 43% year over year, and net income was up 68% with earnings of $0.66 per share. It was nice to see operating income showing some scale with expenditures only up 33% this quarter. This type of high-margined income scaling is what can make drug stocks such great investments.

With biotech, though, it's not the past that matters so much as the future. To gauge the future outlook for large biopharmas like Genentech, you have to look at other companies' drug pipelines. For example, just last month GlaxoSmithKline (NYSE:GSK) received regulatory approval for its breast cancer treatment Tykerb. So expect Genentech's Herceptin sales to come under even more pressure and possibly decline in future quarters if GSK can improve upon the Tykerb label.

Investors don't need to sweat the financials so much at Genentech as compared to the pipeline and potential competitors for its top cancer products. Whether sales are growing at 30% or 35% for the quarter isn't going to dictate how bright Genentech's star shines in the future. Rather, what matters is how its drugs compare to its competitors and if compounds like Avastin can be used in combination with other potent new cancer treatments.

Just look at shares of Amgen (NASDAQ:AMGN) this year to see what can happen when competitive pressures and safety issues pop up for a biotech's top compounds. The American Society of Clinical Oncology (ASCO) medical conference in the beginning of June will be a much more important event for Genentech than this quarter's financial results, since ASCO is where investors will get a better idea of the competitive landscape facing its top compounds such as Avastin and prospects for its drugs like Omnitarg.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. GlaxoSmithKline is an Income Investor recommendation. The Fool has a disclosure policy.