Japan stock market week to Jan 29, 2007

Tokyo remained virtually flat in the week to January 29. The Nikkei 225 was up only 0.3%, maintaining the 17,400 level, while the Topix index ended up 0.2%. The sluggish market likely reflected that near-term positive factors had been priced in, including the yen's weakness against the US dollar and the euro, anticipated positive corporate earnings reports, and the high probability that the Bank of Japan will not effect an interest rate hike next month. The pullback of New York markets also discouraged investors.

The pharmaceutical index declined 2.2%, underperforming the market. Chugai advanced 11.4%, reflecting the announcement by parent Roche that the multinational Phase III study outside of Japan of Actemra (tocilizumab), a humanized interleukin-6 receptor monoclonal antibody, had met its primary endpoint in patients with moderate-to-severe rheumatoid arthritis who showed an inadequate response to methotrexate (Marketletter January 29). The preliminary analysis did not reveal any safety concerns. The study is named OPTION (tOcilizumab Pivotal Trial in methotrexate Inadequate respONders). In Japan, Chugai launched Actemra in June 2005 for the treatment of Castleman's disease and filed for the additional indication of rheumatoid arthritis in April 2006.

Takeda ended down 1.0%, even though Abbott reported an encouraging October-December 2006 quarter results of TAP, its joint venture with Takeda, with a year-on-year 0.9% rise in turnover to $873.0 million as expected, including a 12.1% increase in sales of the anti-ulcer agent Prevacid (lansoprazole) to $709 million (see page 4). Net income decreased 12.7% to $237.0 million.