A fresh start

Our weekly review of the pharmaceutical stock market

The London markets hit a 31-month high in early trading this morning as the stock market opened for a new year of trading. New year optimism helped raise the FTSE 100 Index to the dizzy heights of the 4,800 mark and beyond as investors welcomed the chance of a fresh start.

News of the devastating earthquake and tsunami in Asia rocked the world but many of the companies listed on the FTSE 100 rallied round to provide relief and donations for the victims of the disaster. Indeed, the UK government urged members of the G8 countries to freeze the debts of the countries worst affected.

So far the UK government has pledged £50m to the relief effort, dwarfed by the massive haul from the UK public of £76m and counting.

Shire deal
Back on the London markets, pharmaceutical company Shire Pharmaceuticals led the charge, after the group announced that it has struck a deal with US pharma group New River Pharmaceuticals to develop a new treatment for hyperactivity disorders.

The agreement will see the two companies jointly develop and commercialise the drug NRP104 which is currently in phase III clinical trials.

Shire already markets a treatment for attention deficit hyperactivity disorder (ADHD), known as Adderall XR, but is expected to face generic competition from 2006 or 2007. Investors reacted positively to the news with shares in Shire climbing more than 5 per cent in early trading as the group finished as one of the top five FTSE winners of the day.

AZ gets Japan boost
Recently troubled Anglo-Swedish group, AstraZeneca, was able to start the year on a brighter note. The company announced that the Japanese Pharmaceuticals Affairs Council is close to approving its cholesterol-lowering drug Crestor.

AZ said that final approval of Crestor would be granted if a post-marketing surveillance programme was agreed. AZ are now understood to be in negotiations for this.

AZ has seen its share price plummet 30 per cent since September following a number of setbacks, including negative trial data for its lung cancer treatment Iressa and safety concerns surrounding the use of Crestor.

However, the Japanese market for Crestor is estimated as the third biggest in the world, and investors estimate that the drug could top yearly global sales of $4bn.

GSK gets vaccine nod
Pharma giant GlaxoSmithKline (GSK) was also on the up after revealing that it is soon to launch a vaccine for rotavirus in Mexico. The group is the first pharmaceutical company to skip gaining approval from the US Food and Drug Administration by getting fast track approval for the vaccine in Mexico.

The vaccine, Rotarix, will be unveiled in Mexico next week after Mexican regulators approved the vaccine in July last year. The vaccine fights the disease rotavirus which causes diarrhoea and is especially prevalent in the developing world.

Analysts expect GSK to launch the drug in Latin America and some Asian countries before going to the US Food and Drug Administration for use in the US.

Merck misery
Meanwhile, in US markets, Merck witnessed its shares drop over 3.5 per cent after rumours that fresh damning evidence surrounding the safety of its painkiller Vioxx were waiting to surface.

Reports in the Financial Times suggested that Dr David Graham, the scientist at the centre of the safety concerns of Vioxx, which has now been withdrawn, is set to publish research showing that approximately 139,000 patients died after taking the drug.

This figure, which is rumoured to appear in the Lancet, is five times higher than the original figure of 28,000.