Japan stock market week to Nov 26, 2007

Tokyo staged a modest recovery in the week ended November 26 (four trading days as November 23 was a national holiday in Japan). The Nikkei 225 was up 0.6%, maintaining the critical 15,000 level at the close, although the index temporarily fell below this mark. The Topix index rose 0.7%. Following a sluggish market for the past three weeks, a rally took place. In addition, the news that China will possibly invest a part of its foreign exchange reserves into Japanese equities supported the rise. However, continued appreciation of yen against major currencies prevented investors from undertaking aggressive buying of export-oriented blue chips. The pharmaceutical index was up 3.1%, significantly outperforming the market.

Takeda rose 3.7%, on the news that it has established a new company, Takeda San Francisco, in the USA for therapeutic antibody research (see page 3). In its ongoing mid-term management plan for 2006-2010, the company is set to enhance in-house R&D activities and the new unit is expected to play a role in accelerating antibody discovery, development and manufacturing, in order to realize earliest possible launch of antibody medications. Takeda's share performance also reflected the expectation that US sales of the anti-diabetes drug Actos (pioglitazone) could benefit from a possible setback for competitive drug Avandia (rosiglitazone) from GlaxoSmithKline because the US Food and Drug Administration required the latter to add new information in a black-box warning about potential increased risk for heart attack (Marketletter November 19). Both Actos and Avandia were required in August to carry a box warning that these drugs may worsen heart failure and a year-on-year growth of new prescriptions of both has been slowing since then. However, Actos has been realizing a competitive advantage over Avandia due to its safety profile proven by the long-term clinical trial and has captured about 70% share in the US glitazone market.

Shionogi ended up 2.7%, reflecting the fact that AstraZeneca had obtained an additional indication in the USA for Crestor (rosuvastatin calcium) as an adjunct to diet to slow the progression of atherosclerosis in patients with elevated cholesterol (Marketletter November 19). Shionogi originated Crestor and out-licensed it to AstraZeneca for global marketing, while the drug is co-marketed in Japan by the two companies. The approval of the additional indication in the USA was based on results of a pivotal study named METEOR. Shionogi believes that the new indication gives Crestor an important differentiator from competitors in the US statins market and will use the information for Crestor's Japanese marketing.