Tokyo pharma stock market week to April 16

17 April 2001

Tokyo equities staged a solid rebound in the week to April 16, carryingexpectations for the decisions in the next week on the new Prime Minister and the extent of the actual implementation of the emergency economic package (details of which were disclosed the previous week). The market was also lifted by the projection that the Liberal Democratic Party's taxation panel would reach a conclusion later this month on tax incentives to stock investments.

The Nikkei 225 advanced 3.2% and the Topix index edged up 1.1%. The recovery in the New York markets also supported Tokyo's strength. However, investors refrained from taking a big position and stood cautious about the policy stance of the next Premier, who will be determined in the LDP's presidential election among the four candidates in the race. Meanwhile, the Cabinet Office announced in its monthly economic report for April that the Japanese economy is weakening and revised down the economic forecasts for the third consecutive month. The news, however, did not cause the stock market to retreat because this had been largely discounted.

The pharmaceutical index declined 1.9%, under-performing the market, in contrast to the previous week's strength. Most of the major stocks recorded a week-to-week setback, basically on profit-taking. However, Sankyo held up, rising 2.7% on the news that the company had agreed with Kureha Chemical on the joint development of the latter's anti-HIV CXCR4 blocker which is a chemokine receptor antagonist (Marketletter April 16). The drug is at the preclinical stage, and Phase I testing is expected to begin in 2003. Kureha has agreed to provide Sankyo with an exclusive license option for the drug's manufacturing and marketing in global markets.

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