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AstraZeneca's

(AZN) - Get Report

best-known drugs -- Nexium, Crestor and Seroquel -- generated 48% of its revenue in the first quarter. But in a few years, the company won't be able to rely on these money-makers.

The drugmaker will lose the patents on these heavy hitters by 2014, leaving a hole in AstraZeneca's lineup that will need to be plugged if the company expects to maintain, let alone increase, its revenue.

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The London-based company has 10 drugs in phase III trials with another 31 in phase II trials. The chances of these drugs matching the success of Crestor or Nexium is slim, but the pipeline is large enough to potentially add a couple of strong drugs to help bolster revenue.

AstraZeneca's shares are cheaper than average for a drug company, and the company offers a track record of earnings growth and strong debt management. But with the threat of generic competition looming, the company will need to be aggressive in developing new products.

To advance its research efforts, the company is teaming with competitors to develop treatments for some of the most common afflictions. For example, AstraZeneca is working with larger rival

Merck & Co.

(MRK) - Get Report

in the hopes of improving a cancer drug. Should this partnership prove effective, this could lead to future collaborations and the potential for a more robust product pipeline.

AstraZeneca is also working with

Bristol-Myers Squibb

(BMY) - Get Report

on a drug to treat Type 2 diabetes, one of the most pervasive diseases in America. That drug, dapagliflozin, is currently in phase III trials and could be a big winner for AstraZeneca.

It's not clear if these efforts will be enough to counteract the patent loss for the heartburn medication Nexium, antipsychotic drug Seroquel and Crestor, which treats high cholesterol. But one fact is certain: the shares are trading at bargain prices compared to the rest of the sector.

AstraZeneca shares have a price-to-earnings ratio of 7.56 compared with 11.2 for the pharmaceutical industry. This suggests the market isn't confident in AstraZeneca's long-term prospects.

TheStreet.com Ratings recently upgraded AstraZeneca to a B-minus, a "buy" recommendation, primarily on the strength of the health care industry this year.

In 2008, the company boosted net income by 8.9% and revenue by 7%. Its management has maintained a reasonable debt level despite some major acquisitions. Its interest coverage ratio, a measure of a company's ability to repay its debt, stands at 7.6. A ratio that's higher than 5 reflects a comfortable level of interest expense.

AstraZeneca shares have returned 3.2 this year, keeping pace with the Morgan Stanley Health Care Products Index. Bigger competitors such as

Johnson and Johnson

(JNJ) - Get Report

and

Pfizer

(PFE) - Get Report

are down 5.9% and 20%, respectively.

While AstraZeneca faces a big pipeline gap to fill, it might be an opportunity for long-term investors who are comfortable with risk.

TSC Ratings provides exclusive stock, ETF and mutual fund ratings and commentary based on award-winning, proprietary tools. Its "safety first" approach to investing aims to reduce risk while seeking solid outperformance on a total return basis.

Prior to joining TheStreet.com Ratings, David MacDougall was an analyst at Cambridge Associates, an investment consulting firm, where he worked with private equity and venture capital funds. He graduated cum laude from Northeastern University with a bachelor's degree in finance and is a Level II CFA candidate.