* Stock to start trading in Tokyo on Dec. 15
* 'Defensive' pharma sector seen out of favour as mkt rallies
* But conservative pricing of IPO is still a draw
* Patent loss on key Abilify drug in 2015 seen a worry
* PE ratio of 14.7 at IPO price, versus Takeda PE of 13
By Junko Fujita
TOKYO, Dec 14 (Reuters) - Japanese pharmaceuticals company Otsuka Holdings could see about a 5 percent rise on its trading debut on Wednesday after a record $2.4 billion IPO, as a market recovery dampens enthusiasm for defensive stocks.
That would offset the boost from the conservative pricing to the IPO by the country's second-largest drugmaker by revenue after Takeda Pharmaceuticals .
"I am not expecting a big jump in their shares tomorrow," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management Co, who expects the stock to open somewhere between 2,100 yen and 2,200 yen. "These days the market has got better. Under this environment investors want to stay away from a defensive stock like Otsuka," Akino added. Another analyst forecast gains of about 5 percent, while a third one saw a rise of about 9 percent. Japan's Nikkei average posted a seven-month closing high on Tuesday and has gained more than 12 percent over the past six weeks as foreign funds have been aggressively buying lagging Tokyo shares.
Even a mild pop on debut would be welcome news for Japanese IPO investors, who have lately been used to disappointments.
In April Dai-ichi Life Insurance Co , Japan's second-largest life insurer, went public with Japan's largest IPO worth $11 billion.
The shares, which were also cautiously priced, have been trading below the offer price for almost six months.
And shares of cosmetic maker Pola Orbis Holdings , which debuted on Dec. 10, dipped below the IPO price of 1,800 yen on the first day. The shares closed at 1,727 yen on Tuesday.
CONCERNS ON KEY PRODUCT
Otsuka sold 198.6 billion yen worth of shares in the IPO making it the largest on record in the pharmaceutical industry, surpassing the $1.7 billion IPO of Merck KGaA's in 1995.
The IPO was priced at 2,100 yen a share, the lower end of an initial price range of between 2,000 and 2,400 yen.
That was to allay investor concerns about Abilify, a schizophrenia drug that accounts for a third of the company's revenue and which helped turn the family-run firm transform into a global business. The drug is losing patent protection in 2015.
Otsuka's IPO was five times oversubscribed, with the overseas portion three times covered, according to IFR. Of 90 million Otsuka shares sold, 60 percent have been allocated to overseas investors. A further 4.5 million shares were earmarked for a greenshoe option.
Nomura Holdings , UBS AG and Morgan Stanley arranged the IPO.
Otsuka said last month it expects net profit to grow 18 percent to 79.7 billion yen in the year to March 2011 on revenue of 1.14 trillion yen, up 5 percent.
At its offer price, Otsuka, which also sells sports drinks, instant meals and skincare products, will trade at 14.7 times forecast 2011 earnings compared with 12.9 times for Takeda and 19.9 times for smaller rival Daiichi Sankyo . ($1=83.45 Yen) (Editing by Tim Kelly and Muralikumar Anantharaman)