Japan stock market week to May 14, 2007

Tokyo remained virtually flat in the reporting week to May 14, following daily fluctuations in positive and negative territories. The Nikkei 225 stood unchanged, closing at the 17,600 mark, while the Topix index slid 0.1%. Investors were relieved to find that many companies announced earnings reports and projections in line with the market's forecast. However, some players sold off select electronics companies, earnings reports of which undershot their previous forecast. The market is likely to show volatility, with investors sensitive to corporate operating results. The pharmaceutical index edged up only 0.2%, performing in line with the market.

Tanabe advanced 7.6% after it reported better-than-projected results in the fiscal year ended March 2007 on growth of core products in Japan and a control of selling, general and administrative expenses. Sales were up 3.5% to 177.5 billion yen ($1.47 billion), as operating income leapt 10.5% to 30.5 billion, exceeding the target of 28.5 billion yen. Net income surged 30.4% to 20.2 billion yen on extraordinary profits of 1.6 billion yen from the sale of securities, which more than offset extraordinary expenses for the merger with Mitsubishi Pharma which will complete in October. Turnover of the rheumatoid arthritis drug Remicade (infliximab), in-licensed from US health care major Johnson & Johnson, expanded 60.2% to 20.5 billion yen.

Santen was up 0.3% as its results were in line with its own projections. Turnover rose 2.1% to 100.5 billion yen, helped by the impact of the weaker yen against the US dollar and euro. Operating income slid 2.8% to 20.4 billion yen due to a hike in sales promotion expenses for defending core products in Japan. Sales of Cravit (levofloxacin), an ophthalmic solution for the treatment of bacterial conjunctivitis, edged down 0.5% to 13.2 billion yen due to competition, while sales of Hyalein (sodium hyaluronate) for the treatment of corneal disease continued to expand 6.0% to 17.9 billion yen, benefiting from growing demand and a lack of direct competition.