Japan stock market week to Oct 20, 2008

Tokyo rallied in the week to October 20. The Nikkei 225 leapt 8.8%, recovering the 9,000 level at the closing of the review week, while the Topix index gained 10.3%. A 14.2% daily gain on the first reporting day and subsequent advances in three sessions, except on October 16, were recorded, with investors reacting to steps taken worldwide to cope with the financial crisis, including massive public fund input into leading banks by the UK and the planned purchase of equity in financial institutions by the USA. These were based on pledges from the Group of Seven leaders' meeting, which agreed on decisive action to prevent the failure of financial institutions. Looking at attractive valuations as a result of the market's recent retreat, investors bought back economy-sensitive issues, including autos, steels and trading houses. The pharmaceutical index climbed 13.4%, outperforming the market.

Hisamitsu surged 30.7%, after it reported solid earnings for the first half of the fiscal year ending February 2009 in line with the raised estimates in September 2008. Revenue was up 5.3% to 63.6 billion yen ($623.3 million) led by continued growth of Mohrus Tape (ketoprofen), its transdermal anti-inflammatory patch, which grew 10.3% year-on-year to 32.0 billion yen. Operating income leapt 20.0% to 17.0 billion yen, thanks to expansion of in-house products and shifting of part of its R&D expenses to the second half. Net income was up 26.6% to 11.2 billion yen, reflecting licensing income for HFT-290, a transdermal patch for easing cancer-associated pain. The product is to be jointly developed with Kyowa Hakko. Hisamitsu expects that HFT-290 will receive Japanese approval in the fiscal year ending February 2010. Its projection for the full year is a 6.7% increase in turnover to 127.0 billion yen and a 3.2% rise in operating income to 30.0 billion yen.

Shionogi ended up 12.3%, reflecting the news that it will launch Differin (adaparen), a topical treatment for acne vulgaris in-licensed from Galderma, this month. The drug binds to specific retinoic acid nuclear receptors and normalizes the differentiation of epidermal keratinocytes, reducing microcomedo formation linked to comedones, non-inflammatory lesions. In a Japanese Phase III clinical trial enrolling more than 200 patients, those who were treated with Differin showed a significant decrease in the number of non-inflammatory and inflammatory lesions compared to the placebo group. Because topical treatments for acne are mainly antibiotics in Japan, Shionogi expects that the drug will meet solid demand and will achieve annual sales of 2.1 billion yen in the fiscal year ending March 2013.