Japan stock market week to July 17, 2006

Tokyo saw another pullback in the week to July 17 (four trading days because July 17 was a national holiday in Japan), with a four-day losing streak. The Nikkei 225 dropped 4.5% to close below the 15,000 mark for the first time since June 28, while the Topix index fell 4.5%. Among factors which pushed down the market were concerns and uncertainties about external issues including a pullback of New York markets, a resurgence of a hike in crude oil prices and tensions in the Middle East region. Players were not encouraged by the Bank of Japan's raising of the short-term interest rate target to 0.25% from nearly zero for the first time in six years.

The pharmaceutical index ended down 2.3% but outperformed the market. Astellas inched up 0.5% as it reported, together with Ono Pharmaceuticals, that they had submitted an application for marketing approval in Japan for their jointly-developed ONO-5920/YM529 (minodronic acid hydrate) for the treatment of osteoporosis. The drug is expected to be one of the most potent bisphosphonates which increases bone mass by suppressing osteoclasts (cells involved in bone destruction). Astellas' share action was also helped by the announcement that the company and the co-development partner Cardiome Pharma of the USA had discussed with the Food and Drug Administration the "refusal to file" letter issued by the FDA in May for RSD1235 for the acute conversion of atrial fibrillation. Following the talks, it was decided that the amended New Drug Application would be re-submitted after a comprehensive reappraisal and audit of the NDA documents. Ono dipped 0.9%.

Daiichi Sankyo closed 1.7% lower, without responding to the launch, with GlaxoSmithKline, of a new dry syrup formulation of Zyrtec (cetirizine), a selective H1 receptor antagonist for the treatment of allergic rhinitis. Along with the marketed tablet of Zyrtec, the dry syrup formulation will be manufactured by UCB Japan and distributed by Daiichi Sankyo and GSK. The new formulation is targeted for patients who have difficulty taking tablet or capsule agents.