Elan (NYSE:ELN) continues to bide its time and prepare for the good days ahead. The near-term positives are mostly priced into the stock, but the company has learned some valuable lessons in its two-year rebound.

The Irish pharmaceutical concern released third-quarter results Thursday. In the period, Elan lost about $122 million, versus a $103 million loss in 2003's third quarter. Revenue likewise slipped, coming in at $108 million compared with $91 million in the same period last year. For a conventional company, Elan's earnings report would be bad news indeed. But not in the drug world.

Elan, along with partner Biogen IDEC (NASDAQ:BIIB), is waiting for the Food and Drug Administration to clear a new drug, Antegren, to treat multiple sclerosis. Eventually Antegren may also eventually receive approval to treat Crohn's disease and rheumatoid arthritis, and many analysts expect it to become a blockbuster. So in the not too distant future, Elan should be on easy street.

Unfortunately, like all biotech and pharmaceutical outfits, Elan is only as exciting as the next experimental medicine in its pipeline. Investors have already richly rewarded the firm for the expected return on Antegren, while Elan's other drugs in development are in the fairly early stages. The company is also performing contract manufacturing, but this is a business that isn't likely to get investors very charged up.

Still, Elan's turnaround from near collapse shows that a pharmaceutical company serious about operating a tight ship can achieve impressive results. The firm was forced to make some painful cuts and divestitures and continues to keep a close watch on operating expenses. If it can maintain its lean structure as the good times roll, the outlook for fat profit margins looks good.

Fool contributor Brian Gorman is a freelance writer living in Chicago. He does not own shares of any companies mentioned here.