It's not enough to pay attention to news being distributed by drug companies you're invested in. You also have to keep track of companies that indirectly affect your investments.

They come in all shapes and sizes.

This month, shares of Pain Therapeutics (Nasdaq: PTIE) and DURECT crashed without as much as a peep from either company. Turns out Pain and DURECT's partner, Pfizer (NYSE: PFE), held a press conference, and those that were listening got a little spooked about what Pfizer's management was saying about Remoxy, the companies' abuse-deterrent pain reliever.

The Food and Drug Administration is scheduled to make a decision about the drug by June 23, but Pfizer's management said it wasn't sure the FDA would meet that goal. Pfizer is addressing manufacturing questions the FDA has and is also dealing with the FDA's decision to establish a single comprehensive plan to instruct doctors about the benefits and dangers of long-acting and extended-release opioids.

Amylin Pharmaceuticals (Nasdaq: AMLN) is fighting it out in court with partner Eli Lilly (NYSE: LLY) over Lilly's right to double-dip with its diabetes sales force. Lilly wants to sell Byetta and Tradjenta together, while Amylin isn't hot on the idea.

Amylin is winning the courtroom battle right now -- it got a temporary restraining order to keep its partner from following through on its intentions -- but the drugmaker doesn't seem to be in the best situation whether it wins or loses the final war in court. Either way, there would seem to be a rift in the partnership that will need some serious mending.

Investors paying attention to happenings at Lilly would have noticed that the company agreed to market Tradjenta and a few other diabetes drugs with German Boehringer Ingelheim. It would have been hard to conclude for certain that Lilly would try to use its sales force to sell both drugs, but those worried enough about the possibility could have bailed before the lawsuit started.

Sales of a drug are affected by how many patients have the disease the drug treats and what other choices doctors have to treat the disease. Rooting for more patients to get sick is frowned upon, but rooting against the competition is certainly fair game.

The battle between Merck's (NYSE: MRK) Victrelis and Incivek from Vertex Pharmaceuticals (Nasdaq: VRTX) and Johnson & Johnson (NYSE: JNJ) is the biggest competition brewing in the drug space right now. The hepatitis C drugs were approved in the U.S. a little over a week apart, setting the stage for an epic battle that's intensified by the low efficacy of the current hepatitis C treatments.

Investors in both companies should be keeping an eye on what the other company is doing. Second-quarter sales won't be all that telling considering they'll include stocking orders, but I'm sure investors in both camps will be scouring the competitor's press release when they come out in a couple of months.

It used to be that the FDA left the announcing of drug approvals to the companies, but lately the agency has been jumping the gun, announcing some approvals on its own. Theoretically, whether the company or the FDA makes the announcement doesn't really matter; the shares should end up in the same place in the long run. But the FDA often doesn't wait for the markets to close like a company would, which can create some wild intraday jumps.

More importantly for investors, the actions of the FDA can give clues into how the agency might respond to the company you're invested in. The rates of FDA approvals can be helpful in gauging sentiment changes at the agency. And numerous FDA rejections after positive advisory panel votes should make investors realize that the agency doesn't always side with its outside experts.

Head on a swivel
Investing in biotech can be profitable, but it isn't easy. In addition to learning a whole new set of terms and procedures, you have to keep your eye on news coming out of multiple sources.

You can make your job a little easier by signing up for The Fool's My Watchlist feature. Just click on the green plus sign next to a ticker to add it to your watchlist and keep track of all the Foolish coverage of partners and competitors.

Sorry, there's no way to watch Foolish rants about the FDA and its rogue employees.

Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Johnson & Johnson. Motley Fool newsletter services have recommended buying shares of Pfizer, Vertex Pharmaceuticals, and Johnson & Johnson, as well as creating a diagonal call position in Johnson & Johnson. 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.