Eli Lilly (NYSE: LLY) trounced analysts' earnings estimates today, but investors sighed -- and for good reason.

First, revenue growth was a measly 2%. There's no way to get excited about that. Sure, cost cutting led to a 4% increase in adjusted operating income, but it's the future that counts for Lilly.

As outlined here -- go ahead and read, I'll wait -- Eli Lilly is facing generic competition for many of its top drugs over the next few years. Rather than focusing on quarterly earnings, investors are worried about the pipeline, which doesn't look too solid.

Earlier this week, the company announced that an approval on Bydureon, which is partnered with Amylin Pharmaceuticals (Nasdaq: AMLN) and Alkermes (Nasdaq: ALKS), would be delayed for potentially 18 months. The company also lost another diabetes drug, teplizumab, this week. That one is probably gone for good after it failed its phase 3 trial. Earlier this year, Eli Lilly lost another late-stage compound, semagacestat, which could have been a megablockbuster considering it was being tested to treat Alzheimer's disease.

What's Eli Lilly to do? Press on, of course. Its pipeline isn't completely empty, but I don't see how it can get through this mess without a concerted effort to add drugs through licensing or acquisitions. Fortunately, the cost-cutting measures will contribute to the cash hoard, which stood at $5.2 billion at the end of the second quarter.

Eli Lilly now trades at about 7.5 times this year's adjusted earnings guidance and sports a dividend yield of 5.5%. That looks cheap, even considering that its peers -- Pfizer (NYSE: PFE) and Merck (NYSE: MRK), specifically -- have been knocked down just as much over the past three years. But keep in mind that future drops in earnings and revenue are already priced in.

No amount of cost cutting is going to cause the P/E multiple to expand. That'll only occur after the patent cliff or when investors are convinced that the pipeline can put a dent in the coming revenue decline.

Interested in keeping track of Lilly as it navigates the patent cliff? Click here to add it to My Watchlist, which will help you keep track of all our Foolish analysis on Lilly.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.