Japan stock market week to June 25, 2007

Tokyo staged a modest pullback in the week to June 25. The Nikkei 225 dipped 0.3%, while the Topix index fell 1.3%. The market climbed to record the highest finish in seven years on June 21 at 18,240.30 but fell thereafter due to profit-taking moves. Behind the strong market early in the week was Japanese companies' positive business outlook and the investor recognition that many domestic stocks still lagged behind overseas equities. Further depreciation of the yen against the US dollar and euro drove investors to expect that export-oriented companies may be able to revise upward their earnings projection for the current fiscal year. Best performers were export-led issues and selected domestic-economy based stocks. The pharmaceutical index was off 0.7%, slightly underperforming the market.

Daiichi Sankyo rose 1.9% after its previous week's announcement that the Canadian Federal Appeal Court had affirmed the decision of the Federal Court in Toronto which ruled that the company's patent on the antibacterial drug levofloxacin (trade name Levaquin) is valid. The Court also said that the patent is infringed by generic levofloxacin from Novopharm. As a result of the decision, Novopharm is ordered not to market a generic version of levofloxacin in Canada until the expiry of the patent on June 23, 2009. Levaquin in Canada has been distributed by licensee Janssen-Ortho which was a co-plaintiff in the litigation.

Eisai lost 1.5%, even though it launched Inovelon (rufinamide) in Germany for the treatment of epilepsy as an adjunctive therapy in Lennox-Gastaut Syndrome. Inovelon is available in Denmark, Finland, Sweden and Norway as well, while the drug will be marketed in other European countries in due course. Inovelon, in-licensed from Novartis, is a broad-spectrum anticonvulsant and Eisai expects the drug to achieve sales of 20.0 million euros ($26.9 million) at peak in Europe.