Stock Commentary - Europe - week to Jan 19, 2009

EUROPEAN: bourses mainly went into reverse during the reporting period to January 12, after a strong start to the new year. Drug majors' stocks  largely outperformed their domestic markets,  and  Fortis strategist  Philippe Gijsels, reported by the Wall Street Journal, said  "pharmaceuticals are one of my favorite sectors this year. Companies  with very strong balance sheets, not much debt and strong cash-flow  generation will come out of this crisis as the winners." There were some  dramatic increases caused by takeover news and speculation, including  that of Fidia in MILAN, which rocketed 73% on news that its merger with  Simav and Sitra had been booked in the Trade Register. AMSTERDAM saw  Crucell leap 49.3%, after it confirmed a takeover approach from US drug  major Wyeth (Marketletter January 5 & 12), that led to speculation of  other bidders coming on the scene. Bayer in FRANKFURT and Sanofi-Aventis  on the PARIS bourse put in good showings over the week, rising 2.8% and  3.4%, against market declines of 5.3% and 3.4%, respectively.

LONDON: share prices were mixed, with the FTSE 100 down 3.3%, while  pharmaceutical majors AstraZeneca and GlaxoSmithKline advanced 2.2% and  5.0%, respectively. SkyePharma leapt 21.9%, on news that the arthritis  drug candidate Lodotra (prednisone), which uses the firm's Geoclock  delivery system, had been recommended for European Union approval  (Marketletter January 5 & 12), with the UK firm destined to receive  royalties on sales of the product when it it launched. Elan advanced  17.4% on speculation that it had become an acquisition target for  global drug giant Pfizer, and later taking on Citi to advise on options  (page 4).