Stock Commentary - Europe - week to July 21, 2008

EUROPEAN: bourses recovered from their previous week's slump, all ending higher for the reporting period to July 21, helped by falling oil prices and improvements in financial sectors. ZURICH saw a sharp 6% downturn in Roche, following the drug major's announcement of a bid to take full control of its US affiliate Genentech (see page 3), as the general view was that it would have to pay a great deal more than the $89.00 a share it had offered. Roche also posted slightly weak first-half results. Actelion encountered profit-taking, falling 4% after gaining strongly the previous week on a deal with GlaxoSmithKline (Marketletter July 21). In BRUSSELS, there was a 7% rise for Solvay, as a result of pharmaceutical sector interest because of the Roche/Genentech move as well as Teva's bid for Barr Labs (see page 5). MorphoSys climbed 8.6% in FRANKFURT, on the back of positive news relating to its AbD Serotech generated HuCal antibodies. On the PARIS exchange, Sanofi-Aventis advanced 2%, although underperforming the market, on comments from Swiss group Sandoz that marketing authorization for a generic version of its blockbuster blood-thinner Plavix (clopidogrel) had been suspended pending a legal resolution of the dispute.

LONDON: share prices in the drug sector were mixed. Vernalis leapt 21.6% on no particular news, recovering its recent sharp declines, while Protherics slumped 10%. SkyePharma continued to suffer, falling a further 6.9% as the firm faces problems in re-financing, and Shire Pharma dipped 2.4%. Drug majors AstraZeneca and GlaxoSmithKline edged up 1.1% and 3.8%, respectively, the latter rising after its financial results (see page 10).