Japan stock market week to Oct 13, 2008

Tokyo continued to tumble in the week to October 13 (four trading days only because the last was a national holiday in Japan). The Nikkei 225 plunged 21.0% to the 8,200 mark, the lowest closing since end-May 2003, while the Topix index was down 15.8%. The market's downward spiral reflected accelerated anxiety about the worldwide financial crisis and recession. The steep appreciation of the yen against the US dollar and the euro exacerbated the equity market's downswing. Its depressed sentiment was not encouraged by the coordinated interest rate reductions from major central banks, including those of the USA and Europe. Investors expected that the major factor for the stock market's recovery would be the implementation of the US financial rescue plan, with public funds being injected into those banks that are in trouble. The pharmaceutical index dropped 25.0%, underperforming the market.

Daiichi Sankyo plummeted 34.2%, despite a corporate strategy meeting held by chief executive Takashi Shoda. The company aims to extend its global reach including developed and emerging countries (see page 3). Pharmaceutical R&D will focus on treatments for thrombotic disorders, hoping to become the leader in this area. Key new compounds to achieve this objective are the anti-platelet drug prasugrel, jointly under development with Eli Lilly, and the anticoagulant agent DU-176b. The company did not specify the expected timeframe for the US Food and Drug Administration to complete the review of a New Drug Application for prasugrel with the indication of acute coronary syndrome managed by percutaneous coronary intervention, although the company is confident about the content of its filing and expects to receive approval. The review had previously been expected to be completed at the end of September. The oral factor Xa inhibitor's dose-finding Phase II studies have been completed worldwide for the scheduled start of global Phase III trials in the prevention of venous thromboembolism.

Kyorin fell 23.9%, after it announced in the previous week that it voluntarily discontinued commercialization of the broad-spectrum antibacterial agent Gatiflo (gatifloxacin) in Japan due to a safety issue. Since the drug's launch in June 2002, cases of serious hyperglycemia and hypoglycemia, of which the relationship with Gatiflo was not denied, have been reported, leading to a change of the product's label to contraindicate use in diabetes patients and the issuance of the warning. Kyorin's latest decision followed the move by the US licensee Bristol-Myers Squibb, which discontinued marketing of gatifloxacin (US trade name Tequin) for commercial reason in June 2006 and the decision of the FDA to delist the drug from the Orange Book.