Stock Commentary - Europe - week to April 21, 2008

EUROPEAN: bourses were all higher week-on-week in the reporting period to April 21, although markets ran out of steam on the last day, with financial issues leading the downturn. Analysts at Lehman Brothers note that, despite the desire for "defensive" exposure, pharmaceutical stocks have failed to provide it and have underperformed the European market by 16% since the second week of January. In ZURICH, there was a good showing from Novartis, which rose 6.8% after the firm reported first-quarter figures which beat expectations, despite generic competition for its pharmaceutical division in the USA (see page 11). Fellow Swiss drug major Roche, however, suffered a small 0.9% dip, posting figures below expectations, as well as negative clinical results for majority-owned Genentech's Avastin (bevacizumab; see pages 11 and 21). In FRANKFURT Evotec jumped 10.8%, on news of its licensing deal with Japan's Ono Pharmaceuticals regarding a fragment-based drug targeting a protease of the latter's choosing. German pharmaceutical majors Bayer and Merck KGaA were up 3.7% and 3.4%, respectively, ahead of results.

LONDON: drug share prices were mixed, with the biggest riser being Ireland-based Elan Holdings, which jumped 15.7% on positive news for Tysabri (natalizumab), co-developed with Biogen Idec, presented at the American Academy of Neurology (see pages 19-20), as well as an upgrade from analysts at Goldman Sachs. Vernalis was down 5.9%. Drug major AstraZeneca advanced 6.0%, buoyed by the news of a patent infringement settlement with India's Ranbaxy over Nexium (esomeprazole; see Marketletter April 21), while GlaxoSmithKline rose 2.9%.