Japanese stock prices week to Feb 2, 2009

After a 7% drop the previous reporting period, Tokyo rebounded in the week to February 2. The Nikkei 225 advanced 2.5%, to close at the 78,000  level, while the Topix index was up 1.2%. Solid daily gains were  recorded in the first three sessions, on the buy-back of oversold issues  by short-term oriented investors. The market lost strength in the last  two sessions due to increasing worries about Japanese companies' current  fiscal year earnings projections, amid ongoing reporting of  third-quarter results with which many companies lowered their guidance  for the full year. The report that Japan's industrial production in  December plunged 9.6% served as another negative factor. Some investors  were concerned about US economic prospects, anticipating that the  congressional passage of the economic stimulus package may be difficult  to get through. The pharmaceutical index rose 2.0%, underperforming the  market.

Daiichi Sankyo leapt 11.8%, overcoming its reporting of a net deficit of  297.8 billion yen ($3.33 billion) for the third quarter, due to a  one-time write-down of goodwill in extraordinary losses of 354.0 billion  yen pertaining to its investment in Ranbaxy Laboratories, which was  consolidated as a subsidiary effective in October 2008 (Marketletters  passim). The report likely eliminated investors' previous concerns about  uncertainty on the negative effect of the acquisition on earnings. The  Japanese drugmaker revised down its full-year guidance, projecting a net  deficit of 316.0 billion yen (versus a net profit of 97.6 billion yen a  year ago). Cumulative nine-month revenue declined 9.8% year-on-year to  627.6 billion yen, reflecting the yen's rise against the US dollar and  the euro, the transfer of marketing rights on select compounds and the  drug reimbursement price cut in Japan. Operating income fell 37.5% to  98.1 billion yen, reflecting an expansion of R&D and marketing costs.

Mitsubishi Tanabe rose 2.2%, as its cumulative nine-month performance  was basically in line with the company's plan. Revenue was up 0.6% to  325.3 billion yen and achieved 77.5% of the full-year target. Operating  income was down 6.4% to 65.1 billion yen but achieved 89.2% of full-year  expectations. The decline in operating income was caused by a 2.1% hike  in R&D expenses to 53.9 billion yen and a rise in goodwill amortization  associated with business integration. Turnover of Remicade (infliximab)  expanded 28.9% to 28.6 billion yen, while that from the cerebral  neuroprotective drug Radicut (edaravone) edged down 1.5% to 22.3 billion  yen, reflecting a price cut, but achieved 77.6% of the 12-month target.