Source: GlaxoSmithKline via Facebook.

Earnings season is in full swing, which can mean only one thing: catalysts galore for investors.

A big one healthcare investors will want to closely monitor is the upcoming second-quarter earnings report from Big Pharma giant GlaxoSmithKline (NYSE:GSK) on Wednesday, July 29, 2015. Investors would certainly like to see positive results considering that the broad-based S&P 500 is up about 5% over the trailing year, while U.K.-based GlaxoSmithKline has witnessed its share price tumble 20%!

What should investors be looking for when GlaxoSmithKline reports its results? According to the consensus estimate, sales are expected to grow by 6% to £5.89 billion (about $9.1 billion) with an expected profit of 17.6 pence, or $0.27, per share, a roughly 7% contraction year over year. Over the past four quarters, GlaxoSmithKline has come up short of institutional investors' EPS expectations three times.

Three questions investors want answered
Regardless of whether GlaxoSmithKline beats expectations or adds to its recent string of misses, it's important for investors not to get too caught up in the headline figures. Instead, they should be focusing their attention on the cogs behind the headline numbers to understand the true health of the business.

With that in mind, here are three questions shareholders and interested investors in GlaxoSmithKline want answered when the company reports its second-quarter results.

1. Are Glaxo's next-generation respiratory therapies faring better post-launch?
Arguably the biggest question on everyone's minds is whether sales of GlaxoSmithKline's next-generation respiratory therapies picked up in the second quarter.

Developed in collaboration with Theravance, Breo Ellipta has been on the market for more than two years. However, a number of challenges have held back overall sales, causing it to limp forward rather than explode out of the gate. Breo Ellipta sales totaled just £41 million in the first quarter, which extrapolates out to about $250 million for the full year. Keep in mind this was widely expected to become a $1 billion-plus drug when it came to market as a long-term COPD maintenance therapy.

Source: GlaxoSmithKline. 

One of the biggest challenges for GlaxoSmithKline is the impending introduction of generic competition to blockbuster COPD/asthma drug Advair, most likely by 2017. Advair was still a $6 billion drug for GlaxoSmithKline in 2014, and it's possible it could see billions in sales evaporate in the coming years. In fact, Glaxo has noted that it expects Advair sales to plunge another 85% in the U.S. by 2020. As physicians and consumer await cheaper generic options, they may be passing on Breo Ellipta and its high prescription cost.

Additionally, Breo Ellipta's cost has kept some commercial insurers from covering the product. While coverage for Breo and Glaxo's three other Food and Drug Administration-approved next-generation COPD and asthma therapies is improving, there's still more for Glaxo to do with regard to overall commercial insurance and Medicare coverage.

Lastly, according to a Bloomberg report from last year, GlaxoSmithKline's sales representatives were no longer on individual sales quotas, which could potentially harm their motivation to generate sales.

Regardless of problems that have plagued Breo in the past, the cumulative sales of Breo Ellipta, Anoro Ellipta, Incruse Ellipta, and Arnuity Ellipta better demonstrate substantial growth in Q2 as they're being counted on in a big way to stem the impending weakness of Advair's lost revenue in the United States.

2. Are the cost savings from its multiple business shake-ups on track?
Another important factor investors are going to want to keep their eyes on is just how well GlaxoSmithKline's cost-cutting measures are translating to its bottom line.

With GlaxoSmithKline expecting to lose close to $3 billion in Advair sales by 2020 in the U.S., it understands that trimming its costs will help control the downward pressure put on its EPS and hopefully should keep its stock price from heading significantly lower. Glaxo's approach to saving money is three-pronged.

Source: GlaxoSmithKline.

First, GlaxoSmithKline has an ongoing restructuring of its pharmaceutical business that it anticipates will result in $1.55 billion in annual savings by 2017, with 50% of those savings being realized in 2016. Second, its asset swaps with Novartis, wherein it sold its oncology division, purchased Novartis' vaccine segment, and formed a consumer health products joint venture, should result in $1.55 billion in synergy savings by 2017. Finally, what's known as its "major change programme," which was implemented in 2012 to help improve and simplify Glaxo's supply chain, could deliver savings of another $1.55 billion by 2017. In other words, $4.65 billion in total savings could be on tap within two years.

What investors want to know is exactly how far along Glaxo is in recognizing those savings. Its pre-Q2 update did allude to some incremental savings projections, but investors are going to want to see how these savings are actually affecting Glaxo's operating margins.

3. How stable is vaccine growth looking in the near and intermediate term?
A big component of Glaxo's transformation was the aforementioned acquisition of Novartis' vaccine segment. GlaxoSmithKline was already no slouch with regard to the diversity and global reach of its vaccines prior to the deal. However, post-deal Glaxo is expecting vaccine revenue growth to be steadier, and it should have better pricing power considering that it has even greater leverage than before.

Source: GlaxoSmithKline

But vaccines also have a downside: They're very much tied to government orders around the globe. Vaccine makers can't just crank out production and hope it sells since vaccines only have a finite shelf life. In addition, viruses are prone to mutate, meaning large batches of vaccine could be proven worthless depending on how mutable a virus is or how long it remains dormant.

Investors (myself included) will be eager to see how successful Glaxo's newly integrated vaccine segment performed in the second quarter, as well as get a feel for growth expectations in the second half of the year and 2016/2017.

What this investor thinks
So what should investors be doing in advance of GlaxoSmithKline's second-quarter earnings release? The boring answer is probably nothing. Although earnings reports are typically big events, and they do sometimes result in big stock moves, a single good or bad quarter is not often going to change your investment thesis in a company.

My personal take on GlaxoSmithKline is that it's best to stick to the sidelines and wait for its next-generation respiratory drugs to demonstrate solid growth prospects over a number of quarters. Remember that respiratory and vaccines are a long-tail growth driver for Glaxo, meaning you're not going to "miss the boat" if the company reports even one or two quarters of notable growth from its newly launched drugs.

My hope is that we'll get some answers to these pressing questions on July 29, so make sure to mark your calendars.