Tokyo pharma stock market week to May 14

Tokyo saw a retreat in the week ended May 14 due to profit-taking, adearth of encouraging financial news developments and weakness in US equities. The Nikkei 225 fell 4.5%, giving up the gain of the previous week, to close the reporting period below the 14,000 mark, while the Topix index declined 5.3%. Foreign investors bought major stocks on dips early in the week but they refrained from taking positive moves at end-week, awaiting the soon-to-come decision by the US Federal Reserve Bank of another interest cut. Domestic investors were basically sellers, taking a break after pushing up a broad range of stocks in the previous week.

With major developments such as the appointment of the new Prime Minister out of the way, investors' sentiment was discouraged by the news that details of a proposed stock-purchasing fund may not be worked out during the ongoing Diet session. Investors are eager to hear concrete policy measures from Premier Junichiro Koizumi and are also awaiting earnings reports from leading companies for the fiscal year to March 2001.

The pharmaceutical index gained 1.2%, outperforming the market, assisted by positive new developments for select companies. Tanabe stood out with a 14.5% jump due to heavy trading volume on a report by a pharmaceutical trade journal that the company had reached agreement to merge with US drug major Bristol-Myers Squibb, although Tanabe denied such a possibility, saying that the report is unfounded (see page 7). Fujisawa advanced 7.8%, in response to the restructuring of its non-pharmaceutical business by transferring animal health operations to the Japanese subsidiary of Schering-Plough. Also, news that Fujisawa and the Institute of Neuroscience in Edinburgh, Scotland (a research venture with the University of Edinburgh) had agreed to extend their collaboration for another five years to calender year 2007 had a positive effect on the company's share price.