Japan stock market week to Sept 11, 2006

Tokyo saw a pullback in the week ended September 11 following see-saw movements. The Nikkei 225 fell 3.4%, to close at the 15,700 level, the lowest in the past two weeks, while the Topix index declined 3.2%. One of the reasons for the retreat is continued concern about possible "stagflation" of the US economy, with a combination of inflation and economic slowing. The other reason is a disappointing Japanese report for July machinery orders, which plunged 16.7% from June and fell short of the consensus estimate of a 5.5% decrease. Profit-taking, principally by international investors of autos, machinery and technology issues, also caused the market to weaken.

The pharmaceutical index ended off 3.7%, underperforming the market. Takeda lost 4.5%, after it said it has discontinued development of TAK-654 (sipoglitazar), a peroxisome proliferator-activated receptor agonist for treatment of diabetes with the action of improving insulin resistance. The compound is in a Phase II clinical trial in Japan, the USA and Europe. The company said that, based on the thorough review of preclinical and clinical data obtained thus far, it found that the drug does not show a sufficiently good safety and efficacy profile compared to existing drugs. Takeda's share performance did not reflect a positive finding that the anti-diabetes drug Actos (pioglitazone) significantly reduced the risk of recurrent stroke in high-risk patients with type 2 diabetes. The finding was from PROactive (PROspective PioglitAzone Clinical Trial in MacroVascular Events). The incidence of recurrent stroke was reduced 47% and the combined risk of death, myocardial infarction or stroke was cut 28%.

Daiichi Sankyo fell 4.0%, even though it reported that CS-866AZ, its combination of the angiotensin receptor blocker anti-hypertensive drug olmesartan and the calcium blocker azelnidipine, was upgraded to a Phase III clinical study in Japan. The company has been recognizing the necessity to enhance the efficacy of olmesartan through combination with other anti-hypertensive drugs and broaden the selection for patients. It also has CS-866CMB, a combination of olmesartan and the diuretics hydrochlorothiazide in Phase II clinical study. Additionally, CS-8663, the combination of olmesartan and the calcium blocker amlodipine, is in Phase III clinical trials in the USA and Europe.