Japan stock market week to Nov 19, 2007

Tokyo continued to retreat in the week ended November 19. The Nikkei 225 was down 1.0% to close at 15,042.56, the lowest level since July 26, 2006, while the Topix index remained flat. Investors were somewhat relieved by the halt of the yen's appreciation and the government's report of annualized 2.6% growth of Japan's Gross Domestic Production in the July-September period, exceeding consensus projections. However, the market remained weak due to worries about prospects of Japanese corporate earnings in the second half of the current fiscal year with the anticipated economic slowing of the USA, which is a major demand market for Japanese export-oriented companies. The pharmaceutical index rose 1.8%, outperforming the market.

Ono Pharmaceuticals went up 5.5%, even though it reported weaker-than-forecast results for the first half of the fiscal year ending March 2008 and lowered its projection for the full year due to intensive generic competition to the company's main products. Sales were up 2.7% to 71.3 billion yen ($648.8 million) but were below target and operating income went down 2.3% to 26.5 billion yen, lower than the plan of 28.1 billion yen. Net income fell 5.8% to 17.2 billion yen, reflecting a decline in net extraordinary income to 393.0 million yen from 1.1 billion yen a year ago due to the absence of retirement system-related extraordinary income. Turnover of Opalmon (limaprost alfadex), for the improvement of the subjective symptoms and walking disability, managed to increase 9.0% to 18.4 billion yen overcoming generic competition, while Kinedak (epalrestat), for the treatment of diabetic peripheral neuropathy, edged up only 0.8% to 8.9 billion yen by obtaining new patients and repelling generic advances.

Shionogi gained 5.0% after it unveiled favorable year-on-year growth in sales and earnings in the first half. Revenue was up 13.0% to 104.2 billion yen. Operating income leapt 56.1% to 17.1 billion yen, though the level was slightly below target. Net income surged 68.7% to 10.8 billion yen, thanks to a decline in the effective tax rate to 38.0% from 44.1% a year earlier. Turnover of its mainstay oral cephem antibiotic Flomox (cefcapene pivoxil) fell 8.8% to 12.4 billion yen, below the target of 13.5 billion yen, while royalty revenue received from AstraZeneca on Crestor (rosuvastatin), for the treatment of hypercholesterolemia, jumped 96.0% to 14.4 billion yen. Japanese sales of Crestor expanded to 4.4 billion yen from 1.1 billion yen a year earlier.