Japan stock market week to Jan 19, 2009

Tokyo continued a downturn in the week to January 19. The Nikkei 225 lost 6.6%, while the Topix index declined 4.4%. The sluggish market was  caused by a plunge towards the weekend of New York markets and the yen's  rise against major currencies. Another negative factor was the  government's report that Japanese machinery orders (seasonally adjusted)  in November plummeted to a 21-year low and recorded a month-on-month  fall of 16.2%. Investors affirmed the deteriorating economy and  anticipated additional financial indicators that would see a worsening  of the situation. The pharmaceutical index was off 4.8%, outperforming  the market.

Taisho edged down 1.0%, without reacting to news that it had obtained  from UK drug giant GlaxoSmithKline the rights to develop and market the  anti-obesity agent orlistat in Japan (page 18). Orlistat was originated  by Swiss major Roche for the prevention of the absorption of fat by  inhibiting lipases, enzymes which break down fat, and is marketed as a  prescription drug under the brand name Xenical in many countries, except  Japan. GSK has the rights to develop orlistat for the over-the-counter  use, and markets the drug in the USA as alli. Orlistat for OTC use  received approval from the European Medicines Agency last year  (Marketletter November 3, 2008.

Mitsubishi Tanabe fell 3.1%, even though it continued efforts to  streamline its operation following the merger of the two names. In late  December 2008, the company announced the transfer a portion of the  outstanding shares of a consolidated subsidiary, API Corp, to Mitsubishi  Chemical and plans to make API an affiliated company. API has been  engaged in manufacturing and selling pharmaceutical ingredients and  intermediates and Mitsubishi Tanabe contracts out the manufacture of  ingredients for its major drugs to the unit. Mitsubishi Tanabe believes  that API will require a stronger alliance with Mitsubishi Chemical in  areas of biosynthesis and process technology.