Tokyo pharma stocks week to April 30

Tokyo equities recorded day-to-day gains for the first three tradingdays in the week to April 30 (four trading days because April 30 was a national holiday) in favor of the inauguration of the new Prime Minister, Junichiro Koizumi, with the market's expectation that he would take positive policy measures as a reform-minded, non-traditional leader. The market fell on the last day of the week as investors avoided taking big positions ahead of a string of "Golden Week" holidays coming up.

The Nikkei Dow gained 1.6% and the Topix index advanced 2.6%. Mr Koizumi, a former Health and Welfare Minister, achieved a landslide victory in the presidential election of the ruling Liberal Democrat Party and was appointed as the new Prime Minister. The market has a high expectation for Mr Koizumi's leadership, hoping that he will implement economy-boosting measures and make headway in structural reform. In fact, Mr Koizumi broke with tradition in the formation of the new cabinet by appointing politicians outside the largest faction to key posts. With the political uncertainty fading away, the market from now on is likely to move sensitively to fully-fledged unveiling of corporate earnings reports.

The pharmaceutical index slipped 1.5%, under-performing the market once more, with a plunge in the share price of Yamanouchi giving some negative impact on other core drug stocks. Yamanouchi plummeted 18.4% due to a negative surprise at an analysts' meeting presenting the company's intermediate strategic plan (see page 6). Major points of the company's projections are that: consolidated operating income in the fiscal year to March 2002 will fall 15.5% year-on-year to 82 billion yen ($671.6 million) versus an estimated 97 billion yen for the fiscal year to March 2001 due to a decline in profits from bulk sales and royalties of the antiulcerant Gaster (famotidine) following its US patent expiry; consolidated operating income in the fiscal year to March 2005 will be 100 billion yen, nearly unchanged from the fiscal year to March 2001 on heavy R&D spending; the global launch of the firm's new antidepressant, YM992, will be delayed by two or more years because it will undertake a further Phase IIb trial.