Japan stock market week to August 6, 2007

Tokyo extended its loss into another week for the reporting period ended August 6. The Nikkei 225 fell 2.2%, to close at the 16,900 level, and the Topix index dropped the same amount. The major factor which caused a sluggish market was the continued concern about the direction of New York markets given the US subprime mortgage crisis. The upsurge in the value of the yen was another negative factor. Japanese investors were sellers of banks and some high-technology stocks, and international investors were also on the sell side, reportedly attempting to reduce their weighting of financial stocks. The pharmaceutical index gained 1.3%, outperforming the market.

Astellas went up 4.0%, reflecting its strong financial results for the first quarter of the financial year ending March 2008 due to growth of leading products in global market and the absence of massive R&D expenses for in-licensing. Turnover was 247.1 billion yen ($2.1 billion), up 7.3% on the comparable period in 2006. Operating income expanded to 72.2 billion yen from 23.5 billion yen the year before, achieving 57.7% of its target for the first-half. Net income increased 52.1% to 43.0 billion yen. Global sales of the immunosuppressant Prograf (tacrolimus) were up 19.8% to 49.2 billion yen. The drug saw a 29.4% surge in Japanese revenues to 5.9 billion yen, aided by the additional indication approved in January 2007 for lupus nephritis. Its sales in the USA rose 13.1% to $200.0 million, in part reflecting a 5% price hike in July 2007.

Daiichi Sankyo advanced 2.4%, as it reported solid operating performance for the first quarter on expansion of the angiotensin receptor blocker anti-hypertensive drug olmesartan (sold as Olmetec in Japan and Europe and Benicar in the USA), the effect of the weaker yen and cost controls. Turnover fell 12.9% to 235.5 billion yen due to extraordinary factors, including the change of the fiscal year-end from December to March of US subsidiaries in the previous fiscal year and European subsidiaries in the current fiscal year, as well as the integration of non-pharmaceutical businesses. Excluding extraordinary factors, sales in real terms rose 2.5% year-on-year. Operating income was up 11.6% to 67.8 billion yen but grew 34.3% in real terms. Olmesartan's Japanese revenues soared 40.5% to 13.8 billion yen and the drug's US sales grew 9.3% to $188.0 million, up 14.0%.