Yesterday, pharmaceutical giant Bristol-Myers Squibb (NYSE:BMY) reported first-quarter revenue of $5.2 billion, a 9.6% increase. This equates to $0.41 per share, above expectations. Half of the company's gains were attributable to the depressed value of the dollar, as Bristol's overseas sales generated substantially higher revenues when converted back into dollars. It's perhaps due to the impermanent nature of such gains that reaction to the company's earnings were muted.

The company has gone through several years of slippage in comparison to its rival drug companies, but now seems to have a substantial roster of new drugs and a full pipeline to revive its fortunes. Yesterday, Bristol announced a partnership with Motley Fool Income Investor selection Merck (NYSE:MRK) to develop and market a diabetes drug. It has a similar partnership in place for Erbitux, the colorectal cancer drug developed by ImClone Systems (NASDAQ:IMCL), and a license deal with Sanofi-Synthelabo (NYSE:SNY) for Plavix, a stroke prevention drug. In the first quarter of sales for Erbitux, Bristol reported revenues of $17 million, while sales of Plavix increased 71% to $671 million.

Also producing well for Bristol is Abilify, a schizophrenia treatment licensed from Japan's Otsuka Pharmaceuticals, which not only showed a 200% jump in revenues but also doubled its market share. Bristol-Myers expects to follow these successes with approval from the Food and Drug Administration for experimental drugs combating rheumatoid arthritis and hepatitis B.

Bristol-Myers has caused its investors several weeks' worth of indigestion following its restatement of some financial results last month, which is the most recent in a string of accounting issues at the company. We can be hopeful that these issues are now firmly behind the company; unlike the 2003 restatement, the most recent one wasn't accompanied by an SEC investigation.

Still, Bristol-Myers faces some challenges. Last month, researchers announced the results of a study that found Pfizer's (NYSE:PFE) cholesterol drug Lipitor was significantly more effective in preventing heart attacks than Bristol's Pravachol, which remains one of the company's biggest sellers. Other blockbuster drugs have come or are soon to come off patent protection, leaving them vulnerable to pricing pressure from generic competition, such as Ivax's (AMEX:IVX) generic form of Taxol.

These are known issues and are certainly priced into Bristol-Myers stock at this point. Things could get worse if Canadian drug maker Apotex wins a patent battle against Bristol and Sanofi that allows the company to offer a generic form of Plavix. Although things are very much in flux at Bristol, what we don't see is a massive hole in its revenues, as promising drugs seem to be prepared to pick up the baton from its old standbys.

Bill Mann owns none of the companies mentioned in this story. Be sure to check out Ben McClure's take on the entire pharmaceutical industry in Discount Pharmacy.