Stock Commentary - Europe - week to Dec 1, 2008

EUROPEAN: bourses, with the exception of Switzerland, were down to some degree, in what was another volatile week for markets in the reporting period to December 1. The last day was particularly poor, as Wall Street plunged and European investors took stock of the fact that a deeper and longer recession was anticipated. Pharmaceutical issues had several good sessions, outperforming domestic markets, but others when they moved into negative territory. The sector was not helped by the European Commission's raids on drugmakers aimed at revealing market distortion and then its report finding that some had blocked generics (see pages 11-12). In ZURICH, where the SMI notched up 1.1% on the week, defensive issues were in favor on November 28, Roche moved up 4.5% with Novartis rising 4.4%, but they ended 1.0% higher and unchanged, respectively. FRANKFURT saw the Xetra Dax fall 3.5%, but Merck KGaA advanced 2.7%, helped by news of European Union approval of extended use for its cancer drug Erbitux (cetuximab; see page 23).

LONDON: saw a mixed performance in the drug sector, with this seeing defensive buying on November 28, when AstraZeneca, GlaxoSmithKline and Shire advanced 5.3%, 5.1% and 6.2%, respectively, but they failed to hold on to these gains, ending the week -2.1%, -4.1% and +0.3%, respectively. Little Antisoma was the star of the week, with a rise of 15.9%. The view among some observers was that there would be further consolidation in the biotechnology sector and Antisoma may be a target, as could Ark Therapeutics and York Pharma (both not tracked). Protherics still traded 9.3% higher, despite having been taken over by BTG (see page 28).