Japan stock market week to March 27, 2006

Tokyo saw an extended advance in the week ended March 27 (four trading days because March 21 was a national holiday in Japan) amid see-saw movements. The Nikkei 225 edged up 0.2%, to close at the highest level since February 7, while the Topix Index gained 0.3%. At the beginning of the week, trading activity was modest because Japanese investors sat on the sidelines due to the approaching fiscal year closing at the end of March. However, a report released toward the end of the week on the rise of commercial land prices for the first time in 15 years generated optimism about Japan's move away from deflation and towards economic recovery. Additionally, the scheduled establishment of large-scale investment trust funds led investors to expect an improvement of the supply/demand relationship. Domestic economy-oriented issues, such as real estates and transportation, drew buying attention.

The pharmaceutical index fell 0.5%, underperforming the market, due mainly to profit taking on leading issues on their recent strength. Takeda inched up 0.3%, reflecting the fact that the company, together with ASKA Pharmaceutical, KI Pharmaceuticals of Japan and US firm BioNumerik Pharmaceuticals, had entered into a license agreement for Tavocept (dimesna), a chemoprotective agent originated by BioNumerik. Based on the agreement, KI Pharmaceuticals (a joint venture of ASKA and BioNumerik) will grant Takeda an exclusive right to market Tavocept in Japan. In November 2004, Takeda gained rights to market the drug in the USA and Canada.

Ono Pharmaceuticals was down 0.9%, despite a report that it out-licensed to Santen exclusive development, manufacturing and marketing rights in Japan to Ono-6126 for ophthalmic use for the treatment of allergic conjunctivitis. The drug is a phosphodiesterase type-4 inhibitor originated by Ono for respiratory disorders. The firm retains rights to the compound outside Japan.