Big Pharma was a bit of a dud in 2009, when many of the stocks in the sector trailed the broader market rally. But drug companies may be poised for a break-out year, at least if Novartis (NVS) is any indicator.

The giant Swiss drug maker posted a 28% surge in revenue Tuesday to $12.93 billion in the fourth quarter. Operating or core earnings rose 47% to $1.26 a share, handily beating estimates of $1.19. Novartis s pharmaceutical sales grew a healthy 21% to $7.8 billion, and revenues in its vaccines and diagnostic division surged 182% to $1.4 billion, thanks in part to sales of H1N1 flu vaccine. Better yet for investors, Novartis said it plans to hike its dividend 5% to 2.1 francs ($2.01) a share. The company also announced that CEO Daniel Vasella will be replaced by Joe Jimenez in February, though Vasella will stay on as chairman. Jimenez has a background in the packaged goods industry, previously working at Clorox (CLX) and H.J. Heinz (HNZ), and he won the top job after leading Novartis s pharmaceutical division in the past two years.

Despite those strong results Novartis, like other big drug makers, faces a patent cliff in a few years, when some top-selling branded drugs will go generic, wiping out sales. The patent on Novartis s biggest drug -- the hypertension pill Diovan expires in 2012, and Novartis could have a tough time replacing the revenue, which now makes up around $5 billion in annual sales. The company has been making progress on cost-cutting, but those savings will eventually dwindle, forcing the firm to boost profits through top-line growth.

Still, some analysts say Novartis is well-prepared to fill the Diovan hole. The firm is in the midst of buying eyecare company Alcon (ACL), which should eventually add to earnings, notes Jefferies International analyst Jeffrey Holford. He also argues that Novartis has plenty of other growth areas, including generics, vaccines and over-the-counter medicines and a strong base in pharmaceuticals, driven by new product launches. Add it all up, he says, and there shouldn t be a significant earnings gap in any one year as a result of the Diovan patent expiry.

This article is an excerpt from our Early Bird markets story, which was originally published the morning of Jan. 26.