Led by blockbusters like Nexium and Seroquel, AstraZeneca (NYSE:AZN) reported strong financial results this morning, with fourth-quarter sales up 19% and full-year revenue up 14%. Because operating profits were up 55% for the quarter and 16% for the year, this should have been the capper to a great year, right?

Well, not exactly. Remember, this is a pharmaceutical company.

Not to be left out, AstraZeneca took several hits during the year. Final clinical studies for Iressa and Exanta were not good enough for Food and Drug Administration approval, and the agency forced the company to add a two-year safety study for prospective diabetes drug Galida. On a more serious note, stories have begun to circulate that the company's cholesterol drug, Crestor, may be dangerous.

To its credit, management isn't taking these setbacks lying down. Iressa appears to work in some patients, and the company is now working hard to precisely identify those patients. On Crestor, management has come out swinging -- denying the drug's role in acute kidney disease and pointing to the large amount of prior clinical data that suggest no such link.

While it's likely that nobody knows for certain yet whether Crestor does or doesn't have problems, investors holding these shares need to follow the matter carefully. As Pfizer (NYSE:PFE) has learned in the wake of the Merck (NYSE:MRK) debacle, even the suggestion of trouble can be a problem.

Though the fate of Crestor may be in doubt, there is no doubt that AstraZeneca's late-stage pipeline is weak -- management said so itself. With virtually no meaningful new products likely coming to market until late in 2007, AstraZeneca will have to play its current hand for at least the next two years.

Investors can take some solace, though, in the refreshing level of candor from management. Instead of playing shell games and trying to distract investors from the problems, management is addressing them directly and honestly. What's more, AstraZeneca has elected to distribute all of the free cash flow generated over the next three years to investors. To that end, the company generated $3.9 billion in free cash for 2004 (up from $1.9 billion in 2003) and spent $2.2 billion of it on share buybacks and $1.4 billion on dividends.

With such a pronounced commitment to honesty and shareholder value, it's hard not to root for this company. While the going is about to get tougher, patient investors may want to stay the course. After all, good management is hard to find.

Fool contributor Stephen Simpson, a chartered financial analyst, has no ownership interest in any stocks mentioned.