“With marginally worse incremental exchange-rate headwind, we believe these strong underlying overall trends in the U.S. Pharmaceuticals and Consumer businesses to bode well for Johnson & Johnson’s second-quarter results and remainder-of-2015 outlook,” Wells Fargo added.

Later this year, J&J plans to file for approval for the experimental drug daratumumab for multiple myeloma, a type of blood cancer, in the U.S. and Europe. Wells Fargo analyst Larry Biegelsen projects daratumumab sales could hit $1.3 billion by 2019. [Innovators to Support Healthcare Sector, ETFs’ Growth]

The shift into research and development comes at a time as big pharmaceutical names brace for large drug patent expirations. Looking ahead, industry growth will be propelled by a slew of niche or specialized drugs with a targeted application for specific diseases.

“From an innovation standpoint, drug companies are focusing most on specialty care,” according to Morningstar analyst Robert Goldsborough. “As a result, pharmaceutical and biotech firms are targeting smaller patient populations, particularly in oncology, virology, and immunology. Innovating in areas of previously-unmet needs should offer higher odds of approval by U.S. regulators and better pricing power for drug firms.”

For more information on the healthcare sector, visit our healthcare category.

Max Chen contributed to this article.