Stock Commentary - Europe - week to July 24, 2006

European: bourses were all down significantly for the reporting week to July 17, with investor sentiment heavily influenced by the hostilities in the Middle East, along with some corporate profit concerns, although the local pharmaceutical sector had generally yet to report. The exception was Novartis, which rose 0.6% on the ZURICH bourse on the last reporting day, after posting solid second-quarter figures despite a significant toll of its Chiron integration (see page 3), but still ended the week down 0.1%. The results were below consensus expectations because of the Chiron-associated costs but, according to WestLB's Andreas Theisen, "Novartis has delivered a remarkable underlying performance." The winner here was Actelion, which was up 2.5% on the week, boosted by news of a deal worth up to $555.0 million with fellow Switzerland-based Roche (see page 21), although the latter dipped 0.1%. BRUSSELS saw a positive performance from UCB, which gained 2.9% on the week, helped by positive results for its new psoriasis product Cimzia (certolizumab; see page 18).

LONDON: share prices moved down on four of the reporting days, leaving the FTSE 100 3.3% lower overall. Little Protherics was the only drug stock to see a rise, albeit of just 1%. Both drug majors underperformed the market, with AstraZeneca plunging 5.5%, not helped by a recent downgrade from analysts at ING, and GlaxoSmithKline falling 3.7%, for no particular reason. However, the fall in the two FTSE 100 stocks contributed to the decline in the overall index, observers noted. Alizyme gyrated through the week, ending with a 14% decline, while Antisoma and XTL BIO each fell 8.9%.