I've been a big fan of the generic drug industry for the past several months because of the patent expiry for numerous blockbuster drugs coming up over the next several years, not to mention the positive changing regulatory and competitive environment. Also, the clamoring for cheaper health care may bring future legislative changes favorable to generic drug producers.

Teva Pharmaceuticals (NASDAQ:TEVA) is more of a hybrid generic producer (since it derives a good portion of its sales from a branded drug), as this quarter's earnings showed, but still, it's a good time to be even a hybrid generic drug company.

Third-quarter revenues were $2.3 billion, up 74% over last year, but part of this growth was due to favorable comps with its acquisition of IVAX this year. Gross margins were up 8 percentage points to 55%, and operating margins hit 32%. Earnings per share climbed 85% to $0.74 a share.

One thing that has been interesting to see this quarter is that sales of the three other major treatments for multiple sclerosis were each up 19% this quarter, with Teva's Copaxone being the laggard, growing sales 15%. Even though it only recently relaunched, it'll be important to see whether Biogen Idec (NASDAQ:BIIB) and Elan's (NYSE:ELN) Tysabri sales start to cannibalize sales of the older multiple sclerosis drugs. With such torrid growth among all the marketed MS drugs this quarter, I doubt this will be much of a factor for Copaxone, but it's a risk nonetheless.

Teva currently has more than $2 billion in cash sitting on the balance sheet. With cash flows from operations this quarter at nearly $800 million, and an increased guidance of earnings per share to be in the range of $2.25 to $2.35 for the year, it will be flush with cash by year's end. With the $7.4 billion buyout of IVAX last year (not all cash), we know Teva isn't afraid to use its cash hoard for acquisitions. While the IVAX buyout appears to be coming along successfully, it would have been nice to see Teva pay out a larger dividend this quarter.

The bottom line is that with 13 proprietary drugs in phase 2 trials or later for some very large indications, plus 144 applications to sell generic versions of branded drugs waiting at the FDA (44 of these were first to file), Teva's near-term future is strong.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. The Fool has a disclosure policy.