Last week, drug developer King Pharmaceuticals (NYSE:KG) announced another quarter of solid financial results with sales improvements for all of its top compounds.

In the first quarter, revenue was up 7% year over year, adjusted net income was up 11% to $118 million, and earnings per share were $0.44. Of course, earnings aren't so nice if cash flow isn't attached to it, but King brought in $108 million in operating cash flow as well.

Investors should expect more product acquisitions in the coming years, since King is sitting on over $800 million in cash and investments and this has been the company's fondest way of acquiring new product candidates. On a recent conference call, King's management said that they were looking at more compounds than they even had time for. With its top product Altace potentially facing generic competition by 2009, I'd expect an acquisition sooner rather than later.

King's future also lies with its acquired pipeline products, like the abuse-resistant pain drug, Remoxy, which it is expecting to file a new drug application for in 2008. However, the pivotal phase 3 study seems to be enrolling slower than expected (probably because of pain sufferers not wanting to risk being part of the placebo arm of the study).

If Remoxy and the other drugs King is developing don't come to market next year, King's top line is going to be in for some major pain. ZymoGenetics' (NASDAQ:ZGEN) thrombin compound will pressure the 12% of sales that King's thrombin product brought in last year, and King may also have to deal with generic competition on some of its other marketed drugs. While things look fine for King at the moment, in the coming quarters it will have to take some major steps in order to defend its crown.

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Fool contributor Brian Lawler is not a king, but he used to groove to the sounds of Prince. He doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.