Japan stock market week to October 1, 2007

Tokyo extended its rally into the week ended October 1. The Nikkei 225 was up 3.3% to close at the 16,800 mark, the highest finish since August 9, while the Topix index advanced 4.1%. The market strengthened because investors' worries about the confusion of Japan's political situation receded with the start on September 25 of the new cabinet led by Prime Minister Yasuo Fukoda, who succeeded Shinzo Abe who abruptly announced in mid-September he was to step down following the defeat of the ruling Liberal Democratic Party in the House of Councillors election in July. Favorable economic data also supported the equity market. The Bank of Japan reported that the business sentiment index of major manufacturers in September was 23, higher than the consensus projection, remaining unchanged from that in June. The pharmaceutical index rose 2.5% but underperformed the market.

Mitsubishi Tanabe increased 3.3% after it out-licensed to ISTA Pharmaceuticals of the USA the nasal formulation of bepotastine besylate (Japanese brand name Talion) for the treatment and prevention of allergic and non-allergic-related symptoms (see page 23). ISTA has obtained an exclusive US right to develop, manufacture and market the compound. Bepotastine besylate, jointly developed with Ube Industries, has been on the Japanese market since 2000.

Chugai ended up 1.6%, reacting to its decision to conduct an additional clinical trial for a new indication for Epogen (epoetin beta), recombinant human erythropoietin for treatment of chemotherapy-induced anemia (see page 21). The decision, which had been made following discussions with the Pharmaceuticals and Medical Devices Agency, is aimed at obtaining early approval by confirming the drug's risks and benefits. Chugai will withdraw the application for approval submitted in December 2005 and will resubmit this following completion of the new study.