There wasn't much to complain about in Forest Labs' (NYSE: FRX) fourth-quarter numbers released yesterday, but investors still sent the stock down more than 9%. That's because they weren't too excited about Forest's outlook for its new fiscal year. The company plans to increase spending, but what other choice does it have? It's going to lose patent protection on its top two drugs early in the next decade.

Revenue for the fourth quarter increased 12%, with sales of depression drug Lexapro growing 9% and Alzheimer's drug Namenda gaining 26% year over year. Forest's income was up 18% year over year, excluding one-time charges from both quarters. Not bad at all, but investing is all about the future, and it looks like both top- and bottom-line growth won't be as good this year.

Part of the problem is that Forest's projected revenue growth for the new year will be relatively anemic at just 4%. That would be OK in an environment where it could keep spending down, but Lexapro and Namenda, which together made up a whopping 89% of Forest's revenue last quarter, will go off patent in 2012 and 2013, respectively. Because of the generic competition, Forest wants to double the potential market that its late-stage pipeline could reach by 2012. For this fiscal year that means a 27% increase in spending on research and development.

Selling, general, and administrative costs also will increase substantially. Lexapro and Namenda don't require a lot of free samples to get doctors to write prescriptions. However, it will take more of an effort to entice doctors to prescribe its newest offering, Bystolic, instead of other beta blockers that have been around a while, like generic versions of Wyeth's (NYSE: WYE) Inderal and GlaxoSmithKline's (NYSE: GSK) Coreg. That spending should pay off if it leads to a decent prescription base. Another factor in any payoff is that starting in 2011, Forest will owe Mylan (NYSE: MYL) a lower royalty rate, thanks to a recent renegotiation of their marketing partnership.

Forest is doing its best not to make this race against the clock one that goes down to the wire. In October, it should hear from the Food and Drug Administration about its marketing application for minalcipran to treat fibromyalgia. That drug would compete in a fairly wide-open market against Pfizer's (NYSE: PFE) recently launched Lyrica. The company also has a few other drugs in phase 3 trials now.

Still, replacing more than $3 billion in revenue per year before Lexapro and Namenda go off patent isn't going to be easy. Expect these shares to trade at a deep discount to their peers until Forest shows it's up to the task.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Glaxo and Pfizer are selections of the Income Investor newsletter. Pfizer is also a recommendation of Inside Value. The Fool has a disclosure policy.