Japan stock market week to April 23, 2007

Tokyo saw an extended pullback in the reporting week ended April 23. The Nikkei 225 lost 1.0%, following mixed daily movements, while the Topix index dropped 1.2%. The market was lacking new buying incentives and a setback on the Chinese stock exchange mid-week, which discouraged investors by reminding them of the global market's crash in late February. Domestic institutional investors and international players basically stayed on the sidelines awaiting Japanese companies' earnings reports to be unveiled shortly. It is generally anticipated that results could be disappointing, as companies are likely to put out conservative forecasts for the next fiscal year.

The pharmaceutical index edged down 0.7%, but outperforming the market. Chugai ended up 0.8%, after its receipt of an approval in Japan for Avastin (bevacizumab), a humanized anti-vascular endothelial growth factor monoclonal antibody for the treatment of advanced or refractory colorectal cancer which is not suitable for surgery (Marketletter April 23). The drug was filed in April 2006 based on Japanese Phase I study data and supported by overseas Phase II and III data with the recommendation of the Investigational Committee for Usage of Unapproved Drugs in July 2005. Because of a limited number of patients in the Japanese clinical trials, a post-marketing surveillance study of all patients treated with Avastin after the drug's launch should be conducted until sufficient data are accumulated to compile a safety and efficacy profile.

Takeda remained unchanged, even though TAP, a joint venture with US group Abbott Laboratories, recorded a year-on-year 44.7% surge in net income to $293.0 million for the 2007 first quarter (Marketletter April 23). Although revenue from the anti-ulcer agent Prevacid (lansoprazole) declined 7.1% to $573.0 million and turnover of the anti-prostatic cancer drug Lupron (leuprorelin) decreased 1.8% to $165.0 million, the favorable outcome reached in a Lupron patent dispute boosted net income. Takeda's share performance was not helped by a report that the company, together with Ajinomoto and Eisai, had received an approval by the Ministry of Health, Labor and Welfare for a new once-weekly formulation of risedronate sodium hydrate for the treatment of osteoporosis. Ajinomoto and Takeda own the drug manufacturing approval of risedronate and Takeda distributes it under the brand name Benet. Eisai markets the drug under the brand name Actonel which is supplied by Ajinomoto. Risedronate was originally synthesized by then US firm Norwich Eaton Pharmaceuticals (now Procter & Gamble Pharmaceuticals).