Japan stock market week to May 18, 2009

Tokyo retreated in the week ended May 18, following a two-week uptrend. The Nikkei 225 dropped 4.4%, to close at the 9,000 mark, while the Topix  Index was down 4.5%. Since the market broke through the resistance line  of 9,000 the previous week, investors were eager to gain profits.  Although players were temporarily encouraged by a report that machinery  orders in March showed a smaller-than-anticipated decrease from  February, falling only 1.3%, a steep daily setback was registered in the  last trading day because of an outbreak of H1N1 swine flu in western  Japan that caused worries about a potential negative effect on consumer  spending and corporate activities. The pharmaceutical index was down  0.8%, outperforming the market, with the performance of major drug  stocks mixed depending on individual company earnings reports.

Kyorin leapt 17.7%, reflecting its positive earnings report with a 43.2%  rise in operating income to 9.0 billion yen ($93.6 million) for the  fiscal year ended March 2009 thanks to the consolidation in October 2008  of the generic drug company Nisshin Kyorin and growth of leading  products. Turnover of Kipres (montelukast sodium) for bronchial asthma  was up 31.9% to 25.2 billion yen and Uritos (imidafenacin) for symptoms  associated with overactive bladder expanded to 2.0 billion yen from  700.0 million yen a year earlier. The company forecasts further 28.5%  growth in the next fiscal year's operating income to 11.5 billion yen on  a sales increase of 6.1%.

Eisai extended its advance with a 6.3% gain, after it reported a  substantial recovery in earnings, as was expected due to the absence of  one-time costs recorded the previous financial year associated with the  acquisition of MGI Pharma in March 2008. Revenue was up 6.5% to 781.7  billion yen, overcoming the negative effect of the yen's appreciation to  sales by 66.1 billion yen. Operating income was 91.8 billion yen versus  17.7 billion yen a year earlier and net income was 47.7 billion yen  compared to a net deficit of 17.0 billion yen a year ago. The company  believes that excluding non-cash accounting items from the business  combination of MGI Pharma, operating income in real term would have  increased 9%. Eisai projects a double-digit increase in earnings for  fiscal 2010 assuming continued growth of worldwide sales of Alzheimer's  drug Aricept (donepezil) and cancer products in the USA.