Stock Commentary - Europe - week to Jan 5, 2009

EUROPEAN: bourses all saw an advance in the extended, holiday-impacted three-week reporting period to January 5, many seeing a particularly  strong performance when trading resumed on January 2. However, over the  course of 2008, the Eurofirst 300 Index plunged 44.8%. Drug majors were  largely seen as defensive plays, in what continued to be a very volatile  market, though encountering some profit-taking from time to time. In  FRANKFURT, Bayer and Merck KGaA both outperformed the Xetra Dax' 7.1%  rise, advancing 8.5% and 8.9% respectively, over the reporting weeks.  Merck took a battering early in the period, falling 11% on December 16,  after it lowered the margin targets for its important liquid crystals  business. Having initiated a three-for one stock split,  MorphoSys leapt  14.8%. In PARIS, newly-added drugmaker Ipsen increased 6.4%, despite a  one-day fall of 5.5%, after the US Food and Drug Administration asked  the company to provide additional information relating to its Biologics  License Application for its botulinum toxin Type A, Dysport (see page  26).

LONDON: share prices were mixed, with drug majors AstraZeneca and  GlaxoSmithKline underperforming the FTSE 100's 7.1% rise, advancing just  6.3% and 5.0%, respectively. The likes of Alizyme (which rose 11.5%),  Antisoma (up 12.5%) and Shire  (9.6% higher) benefited from speculation  that they could become takeover targets for Big Pharma. Meantime,  SkyePharma dipped just 0.4%, despite falling sharply on the news that it  expects to take writedowns and charges of up to $12.0 million, after it  failed to win US approval for its formoterol Certihaler asthma drug (see  page 40).