Japan stock market week to July 10, 2006

Tokyo saw a modest retreat in the week ended July 10. The Nikkei 225 ended off 0.1%, to close at the 15,500 level, while the Topix index remained unchanged. The market plunged mid-week, on the news that North Korea had test-fired several missiles over the Sea of Japan. The incident cooled down investor sentiment and some players used the news to take profits on the market's recent rally. However, there was no heavy selling through panic or overreaction because of the difficulty to judge the real intention of the North Korean move. Investors may remain cautious and alert on further geopolitical risks. Defense-related stocks, including heavy machinery, temporarily drew buying attention. The pharmaceutical index advanced 2.6%, outperforming the market. Eisai ended 3.9% higher on the establishment of a new pharmaceutical marketing subsidiary in Singapore, Eisai (Singapore) Pte, to undertake pharmaceutical importing and marketing in order to strengthen the business (see page 6). Previously, these businesses in Singapore were handled by Eisai Asia Regional Services, Pte, which will now undertake the responsibility for specific functions at the seven local subsidiaries in the Asian region.

Astellas gained 3.4%, reflecting its announcement the previous week, together with Nippon Boehringer Ingelheim, that an additional indication for the angiotensin II receptor blocker anti-hypertensive agent Micardis (telmisartan) was filed in Japan seeking approval for the treatment of type 2 diabetic nephropathy (see page 20). Astellas distributes Micardis in Japan under a co-promotion deal with the originator Nippon Boehringer Ingelheim. The filing was based on the INNOVATION study, which evaluated the inhibitory effect of the drug on the progression of diabetic nephropathy. The share advance was also driven by media report that President Nogimori, who was newly-appointed in June, is set to solidify the marketing strength and R&D efforts aiming at growing into one of the top 10 global drug companies. Astellas is the second largest pharmaceutical company in Japan, with annual sales of 879.3 billion yen ($7.74 billion) in fiscal year ended March 2006 but is ranked number 17 in the global market at present. The company is planning to integrate three current R&D facilities in Japan to make the Tsukuba laboratory its core R&D center. The company also said it is positive on undertaking M&A activities if suitable partners emerge.

Takeda closed up 3.2%, after it announced in the previous week the establishment of a new company in the UK for European sales and marketing. The move is part of the firm's initiatives for strengthening marketing worldwide. This is also one of the strategies stipulated in the company's 2006-2010 medium-term management plan.