Japan stock market week to Feb 13, 2006

Tokyo saw a pullback in the week ended February 13. The Nikkei 225 fell 5.2%, to close below the 16,000 mark for the first time since January 26, while the Topix index dropped 5.4%. The weakness was caused by a lack of new incentives following the completion of the reporting of third quarter earnings. Furthermore, international investors recorded heavy selling due to their concern that the Bank of Japan may discontinue its extremely easy money policy in the near term. Such concern was triggered by a remark from the BOJ's governor, that the bank's review of whether or not the conditions for ending the extremely easy monetary rein have been assessed would become important in its policy decision meetings next month.

The pharmaoceutical index was down only 1.5%, outperforming the market. Dainippon Sumitomo advanced 7.1%, reacting to its report of robust earnings for first three quarters ending December 31, 2005, and reflecting the synergistic effect on turnover and costs of the merger of the former Dainippon and Sumitomo Pharmaceuticals in October last year. On a simple sum basis, and assuming that Sumitomo's results for the full nine months are included, turnover was up 4.4% year-on-year to 246.0 billion yen ($2.09 billion) and operating income surged 29.3% to 40.2 billion yen. Sales of the antihypertensive drug Amlodin (amlodipine) rose 7.7% year-on-year to 44.7 billion yen and those of the antibiotic Meropen (meropenem) were up 27.3% to 20.5 billion yen.

Santen gained 1.3%, after it reported solid earnings growth for first three quarters reflecting growth of major ophthalmic drugs in Japan and overseas. Turnover was up 9.3% year-on-year to 76.8 billion yen and operating income rose 17.3% to 19.2 billion yen. Sales of the mainstay Cravit (levofloxacin), an ophthalmic treatment for bacterial conjunctivitis, increased 3.3% to 10.8 billion yen. Revenue from the anti-glaucoma agent Timoptol XE (a long-acting version of Timoptol) expanded 9.4% to 2.4 billion yen and sales of an anti-allergy agent Livostin (levocabastine HCl) were up 4.3% to 2.3 billion yen.