NEW YORK (CNN/Money) - There'll be plenty of bad news when the pharmaceutical industry starts reporting its numbers this week for the fourth quarter and last year.

But some industry experts say the worst may be over for the nation's drugmakers now that the most corrosive of the profit-sapping patent expirations appears to be over, and a handful of promising new drugs have emerged.

Pfizer, Bristol-Myers Squibb, Eli Lilly and Schering-Plough are due to report fourth quarter and 2002 profits this week. Merck, AstraZeneca, GlaxoSmithKline and Pharmacia come later this month or early in February.

Few drugmakers are expected to see year-over-year profit gains, according to forecasters, a big contrast to the double-digit surges of the 1990s.

Still, encouraged by a handful of new drugs coming to market this year, a growing number of analysts said that prospects can only improve for companies like Schering-Plough (SGP: Research, Estimates), which lost patent protection on Claritin last year, and Eli Lilly (LLY: Research, Estimates), whose Prozac endured the same fate.

Facing an inquiry into its inventory practices, Bristol-Myers Squibb (BMY: Research, Estimates) has already paid a price for saying it would restate earnings as far back as 2000. Its shares, which fell 55 percent last year, are up nearly 9 percent in 2003.

"The theme for us this year is stabilization," said Mara Goldstein, who follows the drug industry for CIBC World Markets. "And that is positive."

As for new drugs, Schering-Plough and Merck could benefit this year from Zetia, a cholesterol-lowering drug approved last October. Schering and Merck jointly market the drug that UBS Warburg expects about $200 million in sales from this year and more in 2004.

Rival cholesterol drug Lipitor took in $6.4 billion in 2001 sales, according to Pfizer, while Merck said its Zocor had $6.7 billion in sales that year.

In November, Bristol-Myers got federal approval for Abilify, a treatment for schizophrenia that Bristol on Friday said would help the company meet Wall Street profit targets this year.

As for Eli Lilly, in November it won federal marketing approval for Strattera, to treat attention deficit hyperactivity disorder. The company says more than 46,000 pharmacies have stocked the drug and can begin filling prescriptions.

Good things are also expected this year from Abbott Laboratories' (ABT: Research, Estimates) Humira, a rheumatoid arthritis treatment approved by the FDA earlier this year.

Merck (MRK: Research, Estimates), meanwhile, won recent approval to sell its allergy drug Singulair as a hay fever treatment, pitting it against Aventis' Allegra and Pfizer's Zyrtec.

"A new product cycle is slowly beginning to emerge," C.J. Sylvester, who covers the industry for UBS Warburg, told clients in a recent note.

As for new drugs, Sylvester is encouraged by the expected launches of Inspra, a drug for reducing high-blood pressure developed by Pharmacia, a company that is being acquired by Pfizer in a deal that company officials expect will be completed in the next month or two.

In Washington, a new commissioner has finally taken over the Food and Drug Administration, an agency that has surprised analysts with faster-than-expected new drug approvals during the relatively dry stretch for pharmaceutical research. Mark McClellan ended the FDA's nearly two-year leaderless stretch when he was confirmed in November as commissioner.

As for drug company stocks, they're trading at an 8 percent premium to the Standard & Poor's 500 index, UBS Warburg's Sylvester said. "We believe in the current macro environment, the group can trade slightly higher, toward a 15 percent premium," he added.

The first big report came Tuesday. Johnson & Johnson (JNJ: Research, Estimates) reported a fourth-quarter profit of 48 cents a share, up from 39 cents per share a year ago. The earnings topped Wall Street forecasts by a penny a share.

Profits at Pfizer, due Wednesday, are expected to rise to 47 cents a share, from 34 cents a year earlier. But on Thursday, when Bristol-Myers reports, the company's earnings could fall to 27 cents a share from 59 cents a share, if the analysts are right.

Drug companies, which sell heavily overseas, should benefit from the weakening dollar, which during the last 12 months has fallen 20 percent against the euro and 10 percent versus the yen.

A weaker dollar cheapens the price of U.S. exports, giving multinational companies a leg up in overseas markets. At the same time, profits earned overseas get an automatic boost. That's because offshore earnings are worth more when converted to dollars.

"I think things are starting to look up for the industry," said Arthur Wong, who follows pharmaceuticals for Standard & Poor's.

Health care will no doubt get more attention now that Sen. Bill Frist (R-Tenn.), a surgeon, is majority leader of the Senate. Lawmakers will likely take up Medicare, the government health care plan for the elderly which faces insolvency as millions of baby boomers retire.

Frist has an ally in President Bush, who wants Medicare to include a prescription drug benefit. Worried about the program's finances, Bush is seeking changes to the plan that would foster competition among health care providers. Democrats have suggested they will resist major changes in Medicare.

Handicapping the consequences of potential legislation is difficult. But by one meager measure, things are not falling apart for drug stocks. Twelve trading sessions into the new year, the AMEX Pharmaceutical Index, which fell nearly 22 percent in 2002, is up 1.1 percent 2003.