Japan stock market week to Jan 21, 2008

Tokyo continued its losing streak in the week to January 21. The Nikkei 225 fell 5.6% to close at 13,326, the lowest finish since October 25, 2005, while the Topix index plummeted 6.1%. The plunge reflected worries about Japanese export-oriented companies' earnings prospects due to the yen's further appreciation and the anticipated slowing of the global economy which will result in a reduction of demand for Japanese exports. Investors were also upset by the setback of New York markets reflecting fears that the US government's economic stimulus proposal would be insufficient to prevent recession. Another reason for Tokyo's tumble was the report that a leading US brokerage firm wrote down larger-than-expected losses from subprime loan related investments in the fourth quarter. The pharmaceutical index, however, rose 2.8%, significantly outperforming the market.

Kissei gained 1.1% after it decided to in-license from USA-based Pneuma Partners, calfactant, a treatment for acute lung injury and acute respiratory distress syndrome (see page 28). Kissei has obtained rights to research, develop and market the compound in Japan and hopes to receive early approval in Japan utilizing the results of a Phase III clinical trial to be conducted by Pneuma in the USA. A Phase II clinical study of ALI and ARDS patients showed that calfactant demonstrated improvement in survival rate.

Eisai edged down 1.4%, even though it announced that, through its subsidiary, it had begon an all-cash, $3.9 billion offer to purchase the outstanding shares of MGI Pharma as previously announced (Marketletter December 17, 2007). The offer followed the grant from the Federal Trade Commission of the early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvement Act applicable to the acquisition.