Japan stock market week to March 20, 2006

Tokyo saw a further advance in the week ended March 20, following mixed movements. The Nikkei 225 rose 1.6%, to close at the 16,600 level, the highest since February 7, while the Topix Index ended up 0.8%. Profit-taking on a broad range of stocks prevailed until mid-week, as investors found it difficult to see new buying incentives. In particular, domestic buyers stayed on the sidelines due to the approaching March-end book closing. However, the market strengthened toward the end of the review week, encouraged by the comment of the Governor of the Bank of Japan, that it is too early to expect the timing of a correction of short-term interest rates. The comment helped to remove worries about a hike of Japanese interest rates near term.

The pharmaceutical index was up 1.3%, but underperformed the market. Shionogi advanced 5.6%, reacting to a report that AstraZeneca, the licensee of its cholesterol-lowering agent Crestor (rosuvastatin), had reported positive outcomes from the ASTEROID study. This showed that the drug brought about a 0.79% reduction in atheroma volume in the entire target vessels, the first primary endpoint (Marketletter March 20). Crestor also produced around a 53% reduction low-density lipoprotein cholesterol and a 15% increase in high-density lipoprotein cholesterol. ASTEROID (A Study To Evaluate the Effect of Rosuvastatin On Intravascular Ultrasound-Derived Coronary Atheroma Burden) is a two-year evaluation and a part of AstraZeneca's GALAXY Program, which is designed to address the impact of Crestor in cardiovascular risk reduction and patient outcomes.

Dainippon Sumitomo gained 3.4%, supported by a positive presentation at its R&D meeting. The company has filed New Drug Applications in Japan for six compounds, including: AD-5423 (blonanserin), for the treatment of schizophrenia; and AD-810N, a new application for zonisamide in the treatment of Parkinson's disease. The company featured several compounds in clinical trials, including: SM-13496 (lurasidone), an oral treatment for schizophrenia, which is in preparation for Phase III clinical study overseas by the licensee Merck & Co (in late Phase II clinical trials in Japan); and AC-5216, an oral treatment for anxiety and depression, which is in early Phase II clinical study overseas by the licensee Novartis and in early Phase II clinical trials in Japan.