As I said in an earlier piece today, there isn't too much middle ground in the pharma world. You're either doing well, or you're not. AstraZeneca (NYSE:AZN) is doing well. And though challenges lie ahead, I'm not betting against the company.

Revenue was fairly solid (for a big-cap pharma) this time around, rising 8% if you include the effects of foreign exchange, or rising 12% if you do not. I was even more impressed with the operating performance, though. Gross margins jumped more than four full points to nearly 80%, and operating margins also expanded notably, fueling a 33% rise in operating income.

Now, it's probably worth diving just a bit deeper into the operating income, particularly the R&D line. While R&D was flat as reported, the company said spending rose 9% in local currencies. Now, that may not sound especially robust for a company facing down some patent challenges in the coming years, but it's important to keep it in perspective.

First, in comparison with the likes of GlaxoSmithKline (NYSE:GSK), Novartis (NYSE:NVS), and Pfizer (NYSE:PFE), Astra's spending is normal and slated to move higher. Second, throwing money into the labs doesn't necessarily produce dollar-for-dollar returns. In other words, you can't spend your way out of oncoming generics trouble. Well, actually, you can, but you spend the money on licensing deals and acquisitions, not on basic R&D.

Along that latter line of thought, the company announced today that it's paying $200 million for the rights to co-promote Abraxane, a breast cancer drug developed by Abraxis (NASDAQ:ABBI). That fits in with prior deals with Targacept and Athrogenics (NASDAQ:AGIX) and augments a pipeline with drugs that include a new oral anticoagulant, a new type of diabetes medication, and formulas targeted at fighting strokes and cancer.

There are no free lunches and no risk-free rewards. So while AstraZeneca is getting its due from the market now in response to strong earnings, positive guidance, and more confidence in the future portfolio of drugs, remember to do your own due diligence first.

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GlaxoSmithKline is a Motley Fool Income Investor recommendation, and Pfizer is a Motley Fool Inside Value pick. We can help you cure your ailing portfolio -- try out any of our investing services free for 30 days.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).