Japan stock market week to Jan 30, 2006

Tokyo saw a powerful comeback in the week ended January 30. The Nikkei 225 leapt 7.8%, recovering the 16,000 level following five days of consecutive advances, while the Topix index rose 7.3%. The market staged a natural rebound against the previous week's plunge, which had been triggered by a setback of the Internet company, Livedoor. The Nikkei 225 recorded a steep daily gain on January 27, supported by continued expectation for an economic recovery with the end of the deflationary pressure. The sign of possible end of deflation was seen in the December 2005 nationwide consumer price index which grew 0.1% for the second straight month. High-technology issues were bought, backed by favorable third-quarter earnings report of select companies and domestic economy-oriented stocks, including banks, were also strong.

The pharmaceutical index gained 2.6%, underperforming the market. Eisai went up 4.8%, after it decided to establish a European strategic business center in the UK (Marketletter January 30). Eisai Europe, a subsidiary, concluded a heads of terms deal with Arlington Securities, on land sales and the development to establish a strategic business center in Europe. A new manufacturing subsidiary with plant facilities will be built on the site, with the start of construction in 2006 and the group's current European regional headquarter and R&D and sales subsidiary will be relocated to this site. The investment, including the purchase of land, will be 15.0 billion yen ($127.5 billion).

Takeda closed up 2.7%, reflecting the fact that TAP, a joint venture with Abbott Laboratories, had recorded favorable results for fourth-quarter 2005 (see page 5). Sales were up 27.1% year-on-year to $865.0 million, including a 33.2% rise in turnover of the antiulcer agent Prevacid (lansoprazole) to $632.0 million. Revenues from Lupron (leuprorelin), a treatment for prostatic cancer, fell 16.1% due to competition. Equity income generated by TAP was $136.0 million for fourth quarter and $441.0 million for the full year ended December 2005, as expected. TAP expects the approval and launch of febuxostat (TMX-67), for the management of hyperuricemia in patients with gout, in 2006. TAK390MR, an enantiomer of lansoprazole (employing new modified-release technology), is targeted for a New Drug Application filing in early 2008.