Japan stock market week to March 31, 2008

Tokyo continued a modest rise in the week ended March 31 following seesaw movements. The Nikkei 225 edged up 0.4%, while the Topix index was off 0.9%. Supporting the market technically was the window-dressing purchasing by investment trusts that hoped to improve their portfolio before their book closing at March end. However, investors were cautious in general, worrying about the prospects of the Japanese economy. The Bank of Japan's "Tankan" survey for March, which is due next week, is anticipated to register a substantial worsening of large corporations' sentiment. The pharmaceutical index was down 0.3%.

Daiichi Sankyo advanced 4.6%, following its announcement of the extension of its joint research with MorphoSys AG of Germany for another three years until March 2011, based on the original contract which included the option of the extension (Marketletter March 31). The company has been engaged in joint research on MorphoSys' advanced human combinational antibody library phage display technologies. The option allows Daiichi Sankyo to continue using the HuCAL technology and to increase the number of therapeutic antibody programs from one to a maximum six against the targets it selects. The share performance was also aided by the scheduled price listing next month of Gracevit (sitafloxacin hydrate), a new quinolone antibiotic. At a list price of 228 yen/50mg tablet, the company expects the drug to achieve peak annual sales of 4.3 billion yen ($43.2 million) with 10.6 million patients using it.

Dainippon Sumitomo rose 3.9% after the Central Social Medical Insurance Council, the advisory panel of the Ministry of Health, Labor and Welfare, accepted the proposed price listing next month of several new drugs, including Dainippon Sumitomo's Lonasen (blonanserin) for the treatment of schizophrenia (see page 16). The drug blocks dopamine-2 and serotonin-2 receptors and is expected to be effective for both positive and negative symptoms of the ailment. The company projects that the drug, at the list price of 77.3 yen/2mg tablet, could achieve peak annual sales of 11.8 billion yen eight years after the launch, assuming that 91,000 patients will use it.