Japan stock market week to October 15, 2007

Tokyo continued a modest uptrend in the week ended October 15. The Nikkei 225 rose 1.7%, to close at the 17,300 level, while the Topix index edged up 0.1%. The market temporarily lost upward momentum mid-week due to a lack of new buying incentives. Trading volume was thin with limited participation from international investors. However, the basic undertone appeared firm due to the fact that Tokyo had been lagging behind overseas equity market and some stocks attracted buying interest. Large capitalization autos and electricals, as well as marine transportation, issues moved up. The pharmaceutical index rose 0.4%, underperforming the market.

Taisho advanced 3.7% after it revised upward its forecast for first-half fiscal year ending March 2008 operating results due to better than projected turnover of prescription drugs and shifting to the second half a part of R&D and selling/ promotion expenses. Sales of over-the-counter products, including health drinks, are likely to be in line with the initial forecast, as the reduction of excess inventories is as expected. First-half sales are now forecast to be 120.5 billion yen ($1.02 billion), down 1.2% year-on-year, or 1.5 billion yen more than the initial plan, and operating income is projected at 18.5 billion yen (up 25.7% year-on-year) exceeding the previous projection by 6.0 billion yen. The company also raised the full-year estimate of operating income to 29.5 billion yen (up 31.9% year-on-year).

Kyowa Hakko rose 1.2%, reflecting a media report that the company is set to accelerate the development of monoclonal antibody-based pharmaceuticals utilizing its proprietary Potelligent technology to achieve a competitive edge. Potelligent technology is expected to enhance antibody-dependent cellular cytotoxicity by reducing the amount of fucose in the carbohydrate structure of an antibody. KW-0761 is in Phase I clinical trial in Japan for the treatment of cancer and in Europe for allergy. KW-8405 for bronchial asthma is in a Phase I study in the USA, where it is out-licensed to MedImmune, a firm recently acquired by AstraZeneca (Marketletters passim).