Japan stock market week to March 2, 2009

Tokyo experienced a losing streak for the third week in the review  period ended March 2. The Nikkei 225 was off 1.3%, closing at the 7,200  level, while the Topix index inched down 0.1%. The first four sessions  saw relatively firm movement backed by the weaker yen against major  currencies, which encouraged investors to buy back export-oriented  issues. However, the market nose-dived on the last trading day amid  pessimism regarding the global economic outlook and the financial  industry in the USA, with New York markets sinking to historic lows.  Active early-week purchasing was reportedly related to establishment of  some investment trust funds and moves for "window-dressing" by  investment funds trying to make their portfolios look favorable at the  end of the financial year. The pharmaceutical index dropped 3.9%,  underperforming the market.

Daiichi Sankyo was the weakest player, with an 18.3% slump, as its  affiliate Ranbaxy Laboratories of India received a letter from the Food  and Drug Administration stating that all pending and approved  Abbreviated New Drug Applications from its Panta Sahib facility had  become subject to an Application Integrity Policy (see page 2). The  FDA's decision was reportedly due to it finding falsified data and test  results submitted in approved and pending drug applications. However,  the move has limited significance for US marketed drugs because the  agency blocked imports from the facility in September 2008 due to  manufacturing problems. This negative development outweighed the  encouraging report that Daiichi Sankyo, together with Eli Lilly,  received a marketing authorization from the European Commission for  Efient (prasugrel) for the prevention of atherothrombotic events in  patients with acute coronary syndromes undergoing percutaneous coronary  intervention (Marketletter March 2). The approval was granted following  a positive opinion from the Committee for Medicinal Products for Human  Use (CHMP) of the European Medicines Agency (EMEA) in December 2008. In  a Phase III study, prasugrel was superior to Sanofi-Aventis'  Plavix/Iscover (clopidogrel) in reducing the risk of cardiovascular  events, while the risk of non-coronary artery bypass graft major  bleeding was higher with prasugrel than clopidogrel.

Astellas widened its loss with a 4.5% drop after it filed a law suit  against CV Therapeutics of the USA to prevent the firm from applying a  recently-amended stockholder rights plan to prevent its takeover (see  page 7). The law suit filing immediately followed a commencement of a  cash tender offer to obtain all outstanding common stock of CV at $16.00  per share or a total of around $1.1 billion. The hostile bid came after  CV's board refused Astellas' offer twice. Investors are worried that the  law suit settlement might take a long time, negatively affecting  earnings.