Japan stock market week to May 4, 2009

Tokyo bounced back in the review period to May 4 (three trading days only because April 29 and May 4 were national holidays in Japan),  following sluggish movement in the previous two weeks. The Nikkei 225  rallied 2.9%, to close at a four-month high of 8,970l, while the Topix  Index was up 1.7%. The solid market was likely caused by the general  assessment that the Japanese companies' earnings downturn might have  bottomed. Players were not discouraged by negative macro data showing  that Japan's March jobless rate rose to 4.8% from 4.4% in February,  hitting a four-year high as well as the US report of carmaker Chrysler's  filing of Chapter 11 bankruptcy. The pharmaceutical index edged up 0.5%,  underperforming the market.

Within the modest performance of the drug sector, Kyowa Hakko Kirin rose  6.0% due to a favorable earnings report and investor expectations for  synergistic effects from its integration with Kirin Pharma in April  2008. It reported year-on-year growth in sales and operating income for  the fiscal year ended March 2009 reflecting an addition of Kirin  Pharma's products and an upfront payment from out-licensing to Amgen the  cancer drug KW0761. Revenue was up 17.4% to 460.2 billion yen ($4.65  billion) and operating income rose 15.2% to 45.4 billion yen. Leading  the sales growth were pharmaceuticals, while chemicals turnover and  profits declined due to the yen's rise and weak demand. The company is  changing its fiscal year end from March to December and expects that the  nine-month operating income for the year ending December 2009 will be  down 37% to 27.0 billion yen because of special factors, including the  absence of the one-time upfront royalty revenue and the elimination from  consolidated sales of the foodstuff division, which became the equity  income method joint venture, Kyowa Kirin Foods in April. Revenue from  the mainstay anemia drug Nesp (darbepoetin alfa)/Espo (epoetin alfa)  increased 5.3% year-on-year (versus the simple sum of the two company's  sales of the products in the previous year) to 43.7 billion yen.

Dainippon Sumitomo gained 2.2%, overcoming its termination of Phase II  trials in Japan and overseas of AC-3933 for the treatment of dementia,  because clinical study data in the USA did not meet the criteria that  the company had envisaged.