Mylan Laboratories ( MYL) reported first-quarter results that stomped analysts' predictions, and the generic drugmaker raised its fiscal-year guidance owing to the growth of a new product and the stabilization of its core business.

The company said Wednesday that it expects to earn $1.35 to $1.55 a share this year, excluding special items. Previously, Mylan had forecast $1.20 to $1.40 for the year ending March 31. The Wall Street consensus is $1.18 a share.

Mylan also predicted full-year sales of $1.39 billion to $1.46 billion, compared with the $1.35 billion average estimate from analysts polled by Thomson First Call.

Shares of Mylan were recently up 72 cents, or 3.6%, to $20.97. Volume was nearly five times as heavy as a normal entire session.

For the first quarter, Mylan reported earnings per share of 37 cents, excluding one-time items. The consensus was 28 cents. On a GAAP basis, Mylan earned $75.6 million, or 35 cents a share, on revenue of $356.1 million. The quarter includes a 2-cent charge for stock-based compensation, and Mylan believes full-year charges will amount to 6 cents.

Mylan earned $42.9 million, or 16 cents a share, on revenue of $323.4 million in the year-ago quarter, which included 10 cents in charges related to legal matters, restructuring and other one-time expenses.

Robert Coury, Mylan's vice chairman and CEO, said the latest quarter produced the highest quarterly EPS in the company's history. Revenue gains were led by a skin patch that delivers the painkiller fentanyl, a generic version of Duragesic from Johnson & Johnson ( JNJ).

The patch is the only generic competitor to Duragesic, but Coury noted that the upgraded full-year guidance "still reflects the potential for additional competition" for fentanyl this year.

Mylan's outlook also is improving because "we are not seeing the erosion in our core generic business that we had originally forecasted," Coury said. "Instead, we are experiencing price stabilization on many of our products along with significant earnings increases."

Mylan has filed lawsuits against a number of brand-name companies, including J&J, Pfizer ( PFE), Abbott ( ABT) and Novartis ( NVS), in which it's seeking to invalidate the patents on certain of their products and be the first to file for approval of a generic version.

Under federal law, the company that first files a generic-drug application with the Food and Drug Administration gets 180 days of exclusive marketing once the brand-name target loses patent protection. The exclusivity period is an important source of sales and profit for companies competing in a commodity-like environment after multiple generics hit the market.

However, brand-name companies have found a loophole in the law, so they license products to other generic drugmakers, a process called authorized generics.

Coury has been an outspoken advocates against authorized generics, and he reiterated his argument Wednesday by praising legislation introduced last week by three U.S. senators. Coury said he doesn't oppose all authorized generics, just those sold during the 180-day exclusivity period, which was established by a 1984 law.

"Brand pharmaceutical companies are employing multiple tactics in order to delay or block consumer access to affordable pharmaceuticals," said Heather Bresch, a Mylan senior vice president, in testimony before a Senate committee last week. She is a former chairman of the Generic Pharmaceutical Association and is currently vice chairman of the trade group that opposes authorized generics.

Critics of authorized generics say they need a legislative remedy because neither the courts nor the FDA has objected to the practice.