Will This Quarter Mark the Start of a Recovery in Pharma?

Patent expirations, weakness in Europe, and a slower than anticipated recovery in the U.S. economyare just some of the headwinds that have dented pharma’s profitability in the past couple of quarters.

Johnson & Johnson
Johnson & Johnson

However, this quarter may mark the start of a recovery in earnings growth as all of these very factors have forced drug firms to become more lean and operationally efficient.

We kick off pharma earnings this week with Johnson & Johnson on Tuesday.

Given its diversified portfolio of drugs, medical devices and consumer products, Johnson & Johnson’s report is always an important read for the quarter as it provides a preview of what we could potentially expect from its peers.

Thomson Financial is estimating a 1 percent increase in Johnson & Johnson’s quarterly sales to $16.7 billion compared to the same time last year, and a similar 1 percent jump in profit growth to $1.29 a share.

With a new CEOappointed in April, analysts want to hear from the man himself, Alex Gorsky, on his overall strategy for the firm including any future M&A plans.

In June, J&J closed out its largest acquisition to date of medical device maker Synthes, for $19.7 billion. Gorsky is also expected to highlight how the recent Supreme Court ruling on health care reform will impact Johnson & Johnson’s bottom line.

Johnson & Johnson reports on Tuesday, before the markets open.

— By CNBC's Seema Mody

Questions? Comments? Email us at marketinsider@cnbc.com

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