Stock Commentary - Europe - week to Sept 15, 2008

EUROPEAN: bourses suffered another traumatic week in the reporting period to September 15, culminating in the collapse of US financial major Lehman Brothers on the last day, which resulted in market meltdown. The pharmaceutical sector seemed not to provide a defensive play, although this was attributed to the 5.5% rise by Bayer on the FRANKFURT exchange. News that the firm is acquiring Direvo Biotech (see page 5) and a first approval for its anti thrombolytic Xarelto (rivaroxaban; page 17), also lifted the stock. There were also vague rumors of a possible takeover approach from US drugs giant Pfizer. However, Evotec a co-founder of Direvo which stands to gain from the transaction, saw its shares plunge 9.7%. PARIS saw a strong 7.5% gain for drug major Sanofi-Aventis, which was buoyed by the news of a change of chief executive, with the appointment of GlaxoSmithKline executive Chris Viehbacher effective December (Marketletter September 15 and pages 2 and 4 this issue). Major investors have been disappointed with the performance of CEO Gerard Le Fur, under whose tenure the firm's stock has fallen around 35%. Novartis was 1.7% higher on a downturned ZURICH market, helped by news of clinical trial developments (see page 20).

LONDON: saw drug stocks decline, with the exception of Alizyme, which rocketed 50%, after a 33% gain the previous week, fueled by speculation that its obesity drug cetilistat is due to enter Phase III (see page 28), which would trigger a milestone payment from Japanese partner Takeda. This also sparked rumors that the latter may bid for the UK firm. GlaxoSmithKline dipped 1.6%, not helped by a downgrade from Exane BNP Paribas.