Japan stock market week to Feb 5, 2007

Tokyo saw a modest retreat in the week to February 5, with a steep daily decline on the last trading day of the review week. The Nikkei 225 inched down 0.7%, to close at the 17,300 level, while the Topix index was off 1.0%. The pullback likely reflected investor's recognition that the recent rally was too fast and Japanese stocks were not undervalued anymore. Players stood on the profit-taking side and refrained from positive buying. Disappointment in some core technology companies' earnings reports, although reports in general were favorable as expected. Companies which lowered their full-year projections met selling pressure.

The pharmaceutical index ended down 0.2%, marginally outperforming the market. Daiichi Sankyo rose 1.7% due to its favorable results for the first three quarters of the fiscal year ending March 2007, exceeding the company's plan, on growth of the anti-hypertensive agent olmesartan (Olmetic in Japan and Europe, Benicar in the USA). Turnover was up 3.8% year-on-year to 730.6 billion yen ($5.98 billion). Operating income edged down 1.7% to 132.0 billion yen, above the old full-year forecast of 127.0 billion yen. Based on results, the company has raised its full-year forecast. Global sales of olmesartan jumped 83.8% to 123.7 billion yen.

Eisai gained 0.8% after it reported strong results for the first nine months on continued growth of the Alzheimer's drug Aricept (donepezil) and the antiulcerant AcipHex/Pariet (rabeprazole) in global markets. Based on solid results, the company has upgraded its full-year projection. Turnover climbed 11.3% year-on-year to 500.8 billion yen and operating income rose 7.2% to 83.8 billion yen. Global sales of Aricept expanded 28.1% to 182.7 billion yen, while that of AcipHex/Pariet increased 14.8% to 130.9 billion yen.