Stock Commentary - Europe - week to March 27, 2006

EUROPEAN: bourses edged up for the first four reporting days to March 27, helped to some extent by merger and acquisition activity, but went into sharp retreat on the last day, as investors booked profits. FRANKFURT saw a great deal of action on the merger front, after Bayer, up 4.6% overall, made a friendly counter bid for Schering AG (see pages 2 and 3). This pushed the latter's shares a further 4.2% higher, after they rose nearly 40% on Merck KGaA's hostile offer (Marketletter March 20). Merck dipped 0.8%. AMSTERDAM witnessed a 5.7% rise for DSM, while Akzo Nobel closed 1.4% higher, despite a 2.6% fall on March 27, discounting the firm's saying that its pharmaceutical arm, Organon, would file at least one new drug submission a year (see page 7). The market was disappointed that Organon did not provide fresh news on its antipsychotic drug asenapine. In PARIS, Sanofi-Aventis outperformed the market, rising 3.8%, despite a 2.2% fall on the last reporting day, after the firm said it would acquire a stake in the Czech drugmaker Zentiva (see page 4). The firm's stock rose early in the week on the news of a settlement with Apotex over generic Plavix (clopidogrel; Marketletter March 27). ZURICH saw Actelion leap 10.4% on the news of an approval delay for potential competitor Encysive's Thelin (sitaxsentan; see page 22).

LONDON: share prices moved up and down holding the 6,000 level for the first time in five years on March 22, but slipped back on profit-taking. Drug stocks were mixed, with majors AstraZeneca and GlaxoSmithKline up 0.5% and down 1.2%, respectively. Vernalis dropped 3.6% on disappointing results, with higher losses (Marketletter March 27).