Tokyo pharma stock market - week to March 26, 2001

Tokyo saw a surprisingly strong rally in the week to March 26 (fourtrading days because March 20 was a national holiday) with the Nikkei 225 surging 13.7% to close significantly above the psychologically-important 13,000 mark. The Topix index also soared 11.5%. In the first and the last trading days, the Nikkei 225 posted robust day-to-day gains in heavy volume, with domestic and foreign investors participating in buying-back of core stocks. Two principal factors which lifted the market were (1) the Bank of Japan's quantitative monetary-easing policy announced later in the previous week and (2) expectation for progress in the reform of Japanese financial structures, following talks between Prime Minister Yoshiro Mori and US President George W Bush, with an agreement that the Japanese government should facilitate banks to eliminate bad debt.

Another positive factor was the reduced selling pressure from unwinding of cross-held shares with corporations' book, closing at end-March. Also, recent weakening in the yen against the US dollar, and the recovery of American markets at end-week, caused select export-oriented high technology stocks to strengthen. It appears that Japanese equities have passed the crisis situation for the moment, although the market could be affected by the decision on the successor of Prime Minister Mori and the details of the emergency economic package to be disclosed early next month.

The pharmaceutical index rose 6.7%, with select major stocks recording hefty gains but underperforming the surging market. Shionogi leapt 13.9% in response to AstraZeneca's presentation in the American College of Cardiology of Phase III clinical trial results of Crestor (rosuvastatin, originated by Shionogi; Marketletter March 26), which demonstrated that Crestor 5mg and 10mg both significantly reduce low-density lipoprotein cholesterol more than Pfizer's Lipitor (atorvastatin) 10mg, Merck's Zocor (simvastatin) 20mg or Bristol-Myers Squibb's Pravachol (pravastatin) 20mg. Although abstracts of trials presented in the meeting had already been made public, the market favored the actual reporting in the ACC meeting.