Japan stock market week to Oct 29, 2007

Tokyo rallied in the week ended October 29. The Nikkei 225 ended up 1.6%, to close at the 16,600 level, and the Topix index rose 2.8%. In the beginning of the review week, banks and other financial companies were sold off due to continued worries about the anticipated losses associated with the US subprime loan problems. Trading volume was generally thin. However, robust daily gains took place on the last two trading days with buying of autos and electronics companies backed by their reporting of favorable first-half earnings. Mining issues also drew buying attention due to further rise of crude oil prices. The pharmaceutical index lost 1.6%, underperforming the market.

Chugai leapt 11.2% after it reported better-than-forecast results for the third quarter of the fiscal year ending December, on growth of its anti-influenza drug Tamiflu (oseltamivir phosphate) and oncology products, as well as a year-on-year decline in R&D expenses. Turnover was up 10.3% to 250.5 billion yen ($2.18 billion) and operating income advanced 24.2% to 49.0 billion yen, achieving 83.8% of the full year projection. Revenue from Epogen (epoetin beta) for the treatment of renal anemia fell 10.2% to 40.4 billion yen due to the lowering of the product's shipment price to cope with the competition. Ordinary demand for Tamiflu plummeted 49.0% to 5.0 billion yen, due to the report of adverse events but, for the government's stockpiling, revenues expanded to 26.8 billion yen from 11.9 billion yen a year earlier. Sales of the anti-cancer agent Herceptin (trastuzumab) grew 15.8% to 11.7 billion yen.

Astellas gained 1.2%, despite announcing that its US subsidiary and Theravance had received an "approvable letter" for telavancin, a once-daily injectable antibiotic originated by the latter and co-developed with Astellas for the treatment of complicated skin and skin structure infections caused by Gram-positive bacterial (Marketletter October 29). The letter states that the telavancin application is approvable, subject to resolution of current Good Manufacturing Practices compliance issues and submission of revised labeling or re-analyses of clinical data. The companies believe that no additional clinical trials will be required to respond to the Food and Drug Administration, although the drug's approval is likely to be delayed into next year.