Japan stock market week to Nov 20, 2006

27 November 2006

Tokyo saw a continued pullback in the week to November 20. The Nikkei 225 lost 1.9% to close at the 15,700 level, the lowest in the past two months, following the four-session consecutive daily decline before the end of the review week, while the Topix index declined 2.2%. The market was up only on the first trading day, reacting to the report that Japan's seasonally-adjusted Gross Domestic Product in the July-September quarter expanded at an annualized rate of 2.0%, significantly above a consensus projection of a 1.1% rise. However, the market weakened significantly from the second day, as investors grew concerned about a report that Japanese companies in general are forecasting only a modest year-on-year gain in their second-half earnings, despite double-digit growth recorded in the first half.

The pharmaceutical index dropped 2.0%, slightly underperforming the market. Mochida advanced 5.8%, reflecting its stronger-than-initially forecast first-half results, thanks to the growth of Epadel (ethyl icosapentate), a treatment for atherosclerosis obliterans and hyperlipidemia and less-than-planned R&D expenses. Turnover was up 4.0% to 36.2 billion yen ($307.7 million) and operating income was up 10.4% to 4.8 billion yen. Epadel's sales were assisted by the finding of a large-scale clinical trial, the Japan EPA Lipid Intervention Study (JELIS), which demonstrated that the drug significantly suppressed major coronary events.

Takeda rose 3.0%, on new data which showed that Actos (pioglitazone HCl) halted the progression of atherosclerosis as measured by carotid intima-media thickness in patients with type 2 diabetes. The finding came from the CHICAGO (Carotid intima-media tHICKness in Atherosclerosis using pioGlitazOne) trial, an 18-month study of 462 patients with type 2 diabetes. The findings were presented at the American Heart Association's Scientific Sessions 2006.

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