Flying start

The stock market got off to a flying start in the new year's first full week of trading, with the FTSE 100 Index racing to just above the 4,850 level, a 31-month high. Importantly, the pharmaceutical and biotech sector was in the forefront of the stock market's dash to fresh peaks.

Market strategists suggested that the new year rise largely reflected buying by investors who want to put more Overall investor sentiment towards the pharmaceutical and biotech sector was boosted by news that leading pharma groups worldwide will publish more data about their clinical trials. This voluntary scheme will only include late stage trials but should help reduce patient concerns about the safety of their drugs and investor concerns about future financial implications related to the safety of drugs.

Shire Pharmaceuticals strong
Shire Pharmaceuticals led the way forward for both the FTSE 100 stocks and the pharmaceutical and biotech sector with an impressive gain of 9.1 per cent to a new 12-month high of 597p. News that the group had concluded an agreement with New River Pharmaceuticals, a US group, to develop and market a new attention deficit disorder treatment for children, expected to be launched next year, got the shares moving smartly higher.

A highly positive research report from JP Morgan upgrading Shire, kept its shares on a strong forward momentum. The investment bank increased its forecast for sales in the fourth quarter of last year and thinks Shire's main drug, Adderall XR, which treats attention deficit disorder and is facing impending generic competition most likely next year, has enjoyed strong growth. Furthermore, JP Morgan reckons that Fosrenol, a kidney drug that Shire is close to launching, will take market share away from Genzyme's rival drug Renagel.

GSK shares high
GlaxoSmithKline (GSK) made good progress with its share price fast approaching its highest level for the past year. The group is thought to be in the bidding line-up for the over-the-counter drugs business of US group Bristol-Myers Squibb, which is surrounded by mounting speculation that it is up for sale.

Earlier this week GSK was a little softer despite the group's major drive to boost sales of its NiQuitin nicotine replacement gums and patches on the Italian market where a ban on smoking in public places has been introduced. GSK also announced that it is returning most of the marketing rights of Levitra, an impotency drug, to the German group Bayer, its partner, and will receive £145m in terms of the deal.

AstraZeneca improves
Even AstraZeneca (AZ), whose shares performed abysmally last year, managed to lift itself out of the doldrums partially by posting a useful gain. Interestingly, the shares failed to react to reports that it was looking to significantly cut its US sales staff. Confirmation by AZ that a patient's death was possibly caused by taking Crestor, its cholesterol drug, had virtually no impact on its share price.

CAT softer
Shares in Cambridge Antibody Technology were softer after the announcement that David Glover, its chief medial officer in charge of product development is to take early retirement in February. His premature exit caught some analysts by surprise.

Small caps perform well
Among the smaller cap stocks, Allied Therapeutics, the vaccine maker listed on the Alternative Investment Market, stole the limelight when its shares soared to a new high of 102p, up by more than a third since they were first listed in October. The company signed an £8m deal with a privately-owned Canadian company to help with clinical tests to develop a cure for hayfever.

Shares in Antisoma, a cancer specialist, were a touch softer after it announced an all-share deal to buy Aptamera, a private US firm for around £11.5m. This deal brings the promising anti-cancer drug AGRO100 into its fold.

Biotrace International rose sharply to post a gain of more than 10 per cent after the germ detection specialist revealed that profits staged a strong recovery in the second half with profit margins widening significantly.

Pharmaceutical and medical diagnostics group, Provalis, unveiled interim sales figures that were up 5 per cent on the comparative figures in the previous year that were largely in line with expectations. Its share price, however, was a little easier after the news.