Japan stock market week to Dec 8, 2008

Tokyo staged a modest pullback in the week ended December 8. The Nikkei 225 edged 0.8% lower, but maintained the psychologically important 8,000 level, helped by daily gains toward the end of the reporting period due to the strength of Asian markets, while the Topix index was down 1.9%. Given the continued upswing of the yen against major global currencies, investors anticipated that many Japanese companies might again lower their guidance on earnings projections for the current fiscal year. There was also concern that, if the US auto giant GM fails, it could accelerate job cuts which have been seen in worldwide financial sectors. The combination of the rising yen and worries about the global economy increased selling pressure on leading export-oriented electronics and autos. The pharmaceutical index gained 2.1%, outperforming the market.

Shionogi rose 3.4%, after it received Japanese approval for the additional indication of adults for Flomox (cefcapene pivoxil) fine granules, which are currently used for children. The extended application is expected to meet demand among adults who have a difficulty in taking tablets due to dysphagia and other reasons. Tablets and fine granules of Flomox for pediatric use have been available since June 1997.

Dainippon Sumitomo ended up 1.9%, reflecting that it decided to purchase Kyowa Hakko Kirin's manufacturing subsidiary in China in order to meet growing demand. Dainippon Sumitomo has been distributing in China through its local subsidiary the carbapenem antibiotic Mepem (meropenem), the anti-hypertensive agent Almarl (arotinolol), the anti-anxiety drug Sediel (tandospirone citrate) and the gastroprokinetic agent Gasmotin (mosapride citrate). The firm's Chinese unit started operating a packaging factory in 2007 but expected that a certain shortage in capacity would emerge in the near future.