Japan stock market week to Feb 12, 2007

Tokyo managed to record a marginal gain in the week to February 12 (four trading days only because February 12 was a national holiday in Japan). The Nikkei 225 rose 0.9% closing at the 17,500 level, while the Topix index finished up 1.7%. The market moved in a narrow price range in the first three sessions but posted a sizable daily advance in the last, as investors were encouraged by the government's positive projection of a 2.2% growth in machinery orders for the January-March period, although December 2006 machinery orders dropped 0.7% from the previous month, as had been expected. Players also found relief in a report that the meeting at the weekend in Essen, Germany, of the Group of Seven finance officials would not comment directly on the yen's weakness against the US dollar and the euro in the joint statement in an effort to strengthen the yen. Export-oriented, high-technology electronics and autos met buying interests.

The pharmaceutical index was up 2.3% outperforming the market. Chugai leapt 5.6%, reflecting its better-than-projected results for the fiscal year ended December 2006. Turnover edged down 0.3% to 326.1 billion yen ($2.67 billion) and operating income dropped 26.3% to 58.3 billion yen due to a drop in sales of the high-margin anti-anemia product Epogin (epoetin beta) and drug reimbursement price cuts. However, results overshot plan, thanks to cost controls. Revenue from Epogin decreased 11.7% to 63.4 billion yen. Sales of the anti-influenza drug Tamiflu (oseltamivir) rose 8.0% to 38.0 billion yen, due to increased stockpiling by government organizations.

Daiichi Sankyo advanced 4.6%, overcoming the news that it decided to discontinue development of KAI-9803 (CS-9803) for the prevention of myocardial tissue death and associated congestive heart failure in acute myocardial infarction patients, returning the development right to the originator KAI Pharmaceuticals of the USA. The decision followed a review of the R&D pipeline and the judgement that CS-9803 would not be a priority compound within the merged Daiichi Sankyo pipeline.