Tokyo stocks to February 11, 2008

Tokyo retreated in the week ended February 11 (four trading days only because February 11 was a national holiday in Japan). The Nikkei 225 dropped 6.1% to the threshold 13,000 level and the Topix index closed off 5.7%. Investors worried about Japanese companies' earnings prospects because some export-driven firms revised down their projection for the current fiscal year when they reported their third-quarter results due to expectations of lower demand in the USA and Europe. The news that machinery orders in 2007 declined 4%, the first drop in five years, caused machinery and capital goods stocks to fall. During the week, the pharmaceutical index was down 2.8% but outperformed the market.

Daiinippon Sumitomo fell 4.7% after it reported a modest year-on-year decline in operating income for the first nine months of the fiscal year ending March 2008, due to a hike in R&D and marketing expenses. Revenue grew 1.7% year-on-year to 199.2 billion yen ($1.87 billion) on growth of its strategically-important products in the domestic market. Operating income fell 2.8% to 33.2 billion yen, although it represented 81.0% of the full-year projection. Turnover of Amlodin (amlodipine besilate), a calcium antagonist for hypertension and angina pectoris, originated by world drug giant Pfizer, expanded 10.3% to 50.1 billion yen on the strong uptake of orally-disintegrating tablets. Sales of the gastroprokinetic Gasmotin (mosapride citrate) were up 6.9% to 15.3 billion yen on the back of a promotion using the results of the Japan Mosapride Meta-Study reported in April 2006, which demonstrated the drug's efficacy in the treatment of functional dyspesia.

Astellas lost 3.6% although the previous week it reported strong results for the nine months of the current fiscal year on growth of major products worldwide, as well as the absence of an extraordinary hike in R&D expenses and foreign exchange effect. Revenue was up 8.9% year-on-year to 765.2 billion yen and operating income surged 63.4% to 245.4 billion yen. Global sales of the immunosuppressant Prograf (tacrolimus) jumped 19.2% to 154 billion yen, including a 31.1% increase in Japan and a 13.7% rise in the USA. Global revenue from tamsulosin (Harnal in Japan, Flomax in the USA, Omnic in Europe) was up 5.0% to 97.8 billion yen. Although the agent suffered from generic competition in Japan and Europe, its bulk and royalty revenue rose 27.8% thanks to brisk US sales under a co-promotion deal with German drug major Boehringer Ingelheim. Global turnover of Vesicare (solifenacin) for urinary frequency and incontinence associated with overactive bladder surged 75.9% to 44.6 billion yen.