Japan stock market week to Feb 19, 2007

Tokyo extended its recent advances in the current reporting period ended February 19. The Nikkei 225 rose 2.5% to close at 17,940.09, the highest since May 7, 2000, and approaching the psychologically-important mark of 18,000. The Topix index gained 2.0%. The strong market was triggered by the report that Japan's Gross Domestic Product for the October-December 2006 period, in real terms, grew an annualized 4.8% from the previous quarter, exceeding the consensus projection, due to the recovery of consumer spending and solid corporate capital expenditures. The report caused investors to regain confidence about the prospects for the Japanese economy. Other factors which underpinned the market were the recent expansion of international investors' participation and the firmness of New York exchanges. Domestic economy-oriented stocks, including retailers and banks as well as basic material issues, drew buying attention backed by the GDP report.

The pharmaceutical index went up 3.0%, outperforming the market. Daiichi Sankyo advanced 8.5% after it unveiled its aggressive mid-term business management objectives for the fiscal years ending March 2008 through 2010 positioning the plan as the first step toward realization of a "Japan-based global pharma innovator" (see page 3). The company aims to expand turnover from 785.0 billion yen ($6.44 billion) in the current fiscal year to 960.0 billion yen in that ending March 2010 and raise operating income from 120.0 billion yen to 240.0 billion yen in the final year of the plan. Core new products scheduled for marketing in the USA and European Union during the term are CS-747 (prasugrel), the antiplatelet agent co-developed with Eli Lilly with the expected US New Drug Application filing by the end of the financial year ending March 2008 with an initial submission for acute coronary syndromes and CS-8663, a fixed-dose combination of the company's angiotensin receptor blocker olmesartan and Pfizer's amlodipine (calcium blocker anti-hypertensive drug), with an expected launch in the latter part of the fiscal year ending March 2008.

Shionogi leapt 7.1%, reflecting its launch of OxiNorm (oxycodone HCl hydrate), an immediate-release powder analgesic for cancer pain in-licensed from Mundipharma. Shionogi has been marketing the sustained-release analgesic OxyContin which has the same ingredient as OxiNorm in-licensed from Mundipharma. The combined use of sustained- and immediate-release analgesics with the same active ingredient is a method of cancer pain management recommended by the World Health Organization.