The market has undergone a topsy-turvy second half of 2014; but for investors in leading generic drugmaker Mylan (NASDAQ:MYL), the year's brought a bountiful harvest. Mylan's stock has rocketed up more than 20% year to date, with shares vaulting higher by more than 15% in the past month alone.

Wall Street's confidence in the company's deal to acquire a portion of healthcare giant Abbott Labs' generic drug unit has certainly helped that trend both from the anticipated tax advantages, and the addition of the business' significant annual sales. However, Mylan had the chance after the market close on Thursday to add to its 2014 windfall with a solid third-quarter result. Let's take a look at how the company fared.

Beating the Street on both sides
Investors already received a welcome boost from Mylan's improved guidance earlier in October, but the company impressed, yet again, with a solid top- and bottom-line beat on Thursday. The generic drugmaker reported diluted earnings per share of $1.16, a jump of 41% year over year that topped Wall Street's quarterly projections by $0.02. Mylan's revenue surged by 18% over last year's Q3, hitting $2.08 billion to exceed average estimates of $2.07 billion for the quarter.

If earlier guidance raises weren't enough, Mylan also increased its full-year earnings projection. Now, the company expects 2014 earnings per share between $3.54 and $3.60, up from an earlier estimated range of between $3.44 and $3.54.

Why the optimism? Mylan's business revved up across all segments in the third quarter. Third-party sales of specialty drugs, in particular, highlighted Mylan's jump, with a 29% year-over-year gain in revenues.

While specialty drugs make up only around 22% of the company's total sales, it's a stellar gain that's helped the drugmaker's adjusted free cash flow jump by more than 65% year to date, according to CFO John Sheehan. Mylan also pushed its gross margin higher, gaining three percentage points, to 54% in the third quarter.

The company's generics business, its bread and butter, which is responsible for the large majority of total revenue, didn't skimp out on growth, either. Third-party net sales of generics climbed 18% year over year, with a surge in North American sales by 19% powering that gain.

Will growth keep up?
It's an exciting result for Mylan investors; but what does it mean for this company's -- and its stock's -- future?

The North American generic drug market is on fire. Mylan's strong report comes after rival Teva Pharmaceuticals (NYSE:TEVA) reported its own third-quarter results recently. Teva's U.S. generic drug sales hit a snag in the third quarter, but still have jumped 8% during the past nine months, with increased profitability making up for the Q3 sales slide.

With overall U.S. healthcare expenditures still on the rise, lower-priced generic drugs should continue to see gains against far more expensive branded drugs in terms of overall prescriptions. The IMS Institute for Healthcare Informatics projected back in Dec. 2012 that generic drugs will make up 87% of overall prescriptions by 2017, a big jump from a 78% share of prescriptions in just 2010. That bodes well for Mylan's North American business, which makes up more than half of the company's generic third-party net sales, and around 40% of total company revenues.

Mylan's European business still holds its own, with a 15% share of generic revenue -- and, unfortunately, growth hasn't been so strong across the Atlantic, with a mere 1% year-over-year gain in net third-party sales for the quarter. However, the company's overseas business should see a lift if, as expected, Mylan's agreement to acquire a portion of Abbott Labs' generic business closes by the beginning of 2015.

Wall Street estimates that the deal will add up to $2 billion in annual revenues to Mylan's coffers from drug sales in Europe, Australia, New Zealand, and Japan. The two companies have adjusted terms of the deal so that Abbott will receive a 22% stake in the new company, presumably to pass by updated U.S. regulatory laws aimed at cracking down on tax inversions. Still, with Mylan looking to incorporate overseas should the deal close, the company hopes to lower its tax hit from a current 25% rate down into the mid-teens in the coming years.

The result? The drugmaker aims at full-year diluted earnings per share of $6 by 2018. If the deal to acquire Abbott's unit succeeds, and Mylan makes the most of its new business while keeping North American generic drug growth on track, this stock is poised to emerge as a long-term winner. Today's earnings beat is another brick on the foundation of that success.

Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Teva Pharmaceutical Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.