Ipsen's First Half 2007 Sales and Outlook for the Second Half 2007

Regulatory News: Ipsen (Paris:IPN) reported today its sales for the second quarter and first half 2007. Second quarter and first half unaudited IFRS consolidated sales   (in million euros) 2nd quarter 6 months   2007 2006 % change 2007 2006 % change   SALES BY REGION Major Western European countries 144.2 136.7 5.5% 283.0 275.7 2.7% Other European countries 53.4 48.4 10.3% 106.1 93.3 13.7% Rest of the world 38.9 33.7 15.2% 74.1 61.6 20.1% Group Sales 236.5 218.8 8.1% 463.2 430.6 7.6%   SALES BY THERAPEUTIC AREA Specialist Care 124.1 114.4 8.5% 245.3 221.8 10.6% Primary care 105.2 97.1 8.3% 201.9 194.4 3.8% Total Drug Sales 229.3 211.5 8.4% 447.2 416.2 7.4% Drug-related Sales1 7.2 7.3 (1.6%) 16.0 14.4 10.9% Group Sales 236.5 218.8 8.1% 463.2 430.6 7.6% Note: From January 1, 2007, the Group reports its former "Other Drugs” sales in the Primary care sales in order to improve readability. This change has no impact on overall Group sales. "Other drugs” sales amounted to €1.9 million for the second quarter 2007 compared with €0.9 million a year ago. 2006 numbers are presented accordingly. 1 Active ingredients and raw materials First half 2007 sales highlights Consolidated Group sales reached €463.2 million, up 7.6% year-on-year (or up 7.7% excluding foreign exchange impacts. This increase was fuelled by the strong growth of Somatuline®, NutropinAq® and Dysport®, up 11.7%, 84.6% and 13.9% respectively over the period and by the strong performance of gastroenterology products in international markets, up 18.4% year-on-year. Excluding Ginkor Fort®, Group sales grew by 8.5% year-on-year. Group sales grew by 7.6% year-on-year, despite price pressure negatively impacting Ipsen’s consolidated sales by €6.9 million, among which €3.0 million on Decapeptyl® in Italy, due to a combination of price cuts enforced by Health authorities and price erosions linked to higher hospital distribution. Sales in the Major Western European countries amounted to €283.0 million, up 2.7% year-on-year, driven by robust growth of Decapeptyl® in Germany and of Dysport® and Decapeptyl® in the United Kingdom partially offset by negative price impacts in Italy and in France. Over the same period sales in this region represented 61.1% of total sales compared with 64.0% a year earlier. Sales generated in the Other European countries reached €106.1 million, up 13.7% year-on-year. Over the same period, sales in this region represented 22.9% of total sales, against 21.7% a year earlier. Sales generated in the Rest of the World reached €74.1 million, up 20.1% year-on-year, driven notably by strong sales of Somatuline® in the Middle East and Australia, good performance of Dysport® in Brazil and of Smecta® in China. Over the same period, sales in this region represented 16.0% of total sales, against 14.3% a year earlier. 2007 outlook The Group is pleased with its first half 2007 sales performance, and remains confident in its perspectives despite increased competition expected in the second half of 2007, notably in the area of cognitive disorders in France. Therefore, the Group retains its objective to grow its sales for the full year 2007 by 6.5% to 7.5% after taking into account the 10% price decrease implemented on 1 July 2007 on Tanakan® in France. Its former objective, announced on 19 March 2007, did not include this price cut. Moreover, the Group reiterates its objective to grow its total revenues by 4.0 to 5.0% year-on-year. The Group will update its operating margin objective when it releases its first half results on 29 August 2007. These objectives were prepared without taking into account external growth assumptions, which may alter this outlook. These objectives are based on data and assumptions regarded as reasonable by the Group. These objectives depend on conditions or facts likely to happen in the future, and not exclusively on historical data. Actual results may differ significantly from these objectives given the occurrence of certain risks and uncertainties. The Group does not commit nor gives any guarantee that it will meet the objectives mentioned above. About Ipsen Ipsen is an innovation driven international specialty pharmaceutical group with over 20 products on the market and a total worldwide staff of nearly 4,000. The company’s development strategy is based on a combination of products in specialist care areas (oncology, endocrinology and neuromuscular disorders) which are growth drivers, and primary care products which contribute significantly to its research financing. This strategy is also supported by an active policy of partnerships. The location of its four Research and Development centres (Paris, Boston, Barcelona, London) gives the Group a competitive edge in gaining access to leading university research teams and highly qualified personnel. In 2006, R&D expenditure was €178.3 million, i.e. 20.7% of consolidated sales, which amounted to €861.7 million while total revenues amounted to €945.3 million (in IFRS). 700 people in R&D are dedicated to the discovery and development of innovative drugs for patient care. Ipsen’s shares are traded on Segment A of Eurolist by EuronextTM (stock code: IPN, ISIN code: FR0010259150). Ipsen’s shares are eligible to the "Système à Règlement Différé” ("SRD”) and the Group is part of the SBF 250 index. For more information on Ipsen, visit our website at www.ipsen.com. Forward-looking statements The forward-looking statements and targets contained herein are based on Ipsen's management's current views and assumptions. Such statements involve known and unknown risks and uncertainties that may cause actual results, performance or events to differ materially from those anticipated herein. Ipsen expressly disclaims any obligation or undertaking to update or revise any forward-looking statements, targets or estimates contained in this press release to reflect any change in events, conditions, assumptions or circumstances on which any such statements are based unless so required by applicable law. Ipsen's business is subject to the risk factors outlined in its information documents filed with the French Autorité des marchés financiers. APPENDIX Risk factors The Group carries on business in an environment which is undergoing rapid change and exposes its operations to a number of risks, some of which are outside its control. The risks and uncertainties set out below are not exhaustive and the reader is advised to refer to Ipsen’s 2006 Registration Document available on its website (www.ipsen.com). The Group is dependent on the setting of prices for medicines and is vulnerable to the possible withdrawal of certain products from the list of reimbursable products by governments or by the relevant regulatory authorities in the countries where it does business. A number of products that the Group is developing are still at the very first stages of development and the Group cannot be certain that these products will be approved by the competent regulatory authorities and that they will be successfully marketed. The Group depends on third parties to develop and market some of its products, which generates substantial royalties for the Group, but these third parties could behave in ways which cause damage to the Group’s business. The Group’s competitors could infringe its patents or circumvent them through design innovations. In order to prevent infringements, the Group could engage in patent litigation which is costly and time-consuming. It is difficult to monitor the unauthorised use of the Group’s intellectual property rights and it could find itself unable to prevent the unlawful appropriation of its intellectual property rights. The Group must deal with or may have to deal with competition from (i) generic products, (ii) products which, although they are not strictly identical to the Group’s products or which have not demonstrated their bioequivalence, obtain a marketing authorisation for indications similar to those of the Group’s products pursuant to the bibliographic reference regulatory procedure (well established medicinal use) before the patents protecting its products expire, in particular Tanakan® and (iii) products sold for unauthorised uses when the protection afforded by patent law to the Group’s products and those of its competitors expires. Such a situation could result in the Group losing market share which could affect its current level of growth in sales or profitability. To avoid such situations or to reduce their impact, the Group could bring legal actions against the counterfeiters in order to protect its rights. Major developments in the period under review During the second quarter 2007, the major developments included: On 10 May 2007, Ipsen announced the launch of Adrovance™, a new treatment of postmenopausal osteoporosis in patients at risk of vitamin D deficiency following the publication of its inscription on the list of reimbursable drugs in the French Journal Officiel. On 25 May 2007, Ipsen announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMEA) adopted a positive opinion recommending marketing authorization for Increlex® (mecasermin) 10 mg/ml solution for injection. On 6 June 2007, Ipsen held its Annual Shareholders’ Meeting, chaired by Jean-Luc Bélingard, Chairman of the Board and Chief Executive Officer, in the presence of the Board of Directors and the Group’s management. All resolutions submitted to the Shareholders’ Meeting were approved, including the distribution of a dividend of €0.60 per share, paid on the same day. On 11 June 2007, Ipsen announced that the preliminary data from the ongoing phase III study for its investigational 4-month formulation of triptorelin did not support the expected sustainable blood levels of triptorelin for a duration of 4 months in all patients. Therefore, Ipsen has decided not to perform the second administration as planned in the protocol. On 27 June 2007, Ipsen announced that it had executed a license agreement with PregLem SA, a biopharmaceutical company specialising in the treatment of benign gynaecological conditions and infertility under which Ipsen grants to PregLem worldwide development and commercialisation rights to a selected range of compounds in a number of specific potential indications in the field of reproductive medicine only. In the United States, a recently completed placebo controlled pivotal phase III study performed in 120 patients (study "051”) in the indication Cervical Dystonia demonstrated a positive clinical outcome in patients treated for Cervical Dystonia and has met its primary endpoint. This is the second positive pivotal study for Dysport® in patients with Cervical Dystonia, and Ipsen is currently preparing for the FDA filing of a marketing authorization application. In Europe, a Phase II dose finding trial was performed in 381 European patients presenting a specific back pain called "upper back myofascial pain” in double blind, randomized and placebo controlled conditions. Dysport® was very well tolerated in this trial up to and including the highest tested dose, but the efficacy results were not conclusive globally. By contrast to the overall results, very consistent and significant efficacy results were observed on a limited number of patients in one center. This could lead the Group to believe that the choice of patients with a high number of "trigger points”, the limited use of analgesics as concomitant medications and the techniques of injection could influence outcomes. Ipsen is currently reviewing these results in order to decide on possible next steps in this indication. European governments continued to introduce in 2006 various measures to reduce public healthcare spending, impacting the Group’s sales and earnings in the first half 2007 and beyond: In France, the price of Ginkor Fort®, which generated sales of €38.2 million in France in 2006, was cut by 15% in February 2006. On 25 January 2006 the French Authorities published their decision to lower the reimbursement rate of Ginkor Fort® from 35% to 15% from 1 February 2006 to 31 December 2007, and to remove it from the list of reimbursable drugs on 1 January 2008. The price of NutropinAq® was also reduced in France by 7% on 1 August 2006 following a decision of the Economic Committee for Health Products (CEPS). The French authorities have also announced a reimbursement rate cut – to 35% from 65% - along with a 7% price reduction on Pfizer’s Artotec®, the promotion of which is carried out by Ipsen since 2006. These measures have been implemented on 1 January 2007. In Italy, following the repeal in October 2005 of the 6.8% discount on drug sales enacted in June 2004, a new 4.4% price discount (applicable on all reimbursed products) was implemented on 16 January 2006. An additional discount of 1.0%, granted to wholesalers by the laboratories is also applied. Furthermore, the government announced an additional 0.6% reduction in drug prices (effective as of 1 July 2006), followed by a second 5.0% reduction effective as of 1 October 2006. Other measures were enforced during the first half 2007 to reduce healthcare spending, thus impacting Ipsen’s future sales and earnings: On 26 October, 2006, the Minister of Health and Solidarities in France decided to maintain the class of vasodilators, among which Tanakan®, on the list of reimbursable drugs and to keep their reimbursement rate by the French Social Security at 35%. Furthermore, the Minister had asked the Comité Économique des Produits de Santé to implement a price cut of up to 20% to these drugs by the end of January 2007. On 15 June, 2007, a 10% price cut on Tanakan® in France as of 1 July 2007 was published in the Journal Officiel. Comparison of consolidated sales for the second quarters and first halves of 2007 and 2006: Sales by geographical region Group sales by geographical region for the second quarters and first halves 2007 and 2006 were as follows: 2nd quarter 6 months   (in thousand euros) 2007 2006 % change 2007 2006 % change   France 92,801 87,018 6.6% 177,594 176,042 0.9% Spain 14,080 13,206 6.6% 28,089 27,108 3.6% Italy 15,557 18,253 (14.8%) 34,115 35,034 (2.6%) Germany 11,432 9,797 16.7% 23,118 21,336 8.4% United Kingdom 10,325 8,371 23.3% 20,106 16,125 24.7% Major Western European countries 144,195 136,645 5.5% 283,022 275,645 2.7%   Other European countries 53,433 48,436 10.3% 106,090 93,324 13.7%   Asia 20,250 17,343 16.8% 41,116 35,118 17.1% Other countries in the rest of the world 18,593 16,372 13.6% 32,936 26,520 24.2% Rest of the world 38,843 33,715 15.2% 74,052 61,638 20.1%   Group Sales 236,471 218,796 8.1% 463,164 430,607 7.6% For the second quarter 2007, sales generated in the Major Western European countries amounted to €144.2 million, up 5.5% year-on-year (second quarter 2006, €136.7 million). For the first half 2007, sales in the Major Western European countries amounted to €283.0 million, up 2.7% year-on-year, driven by robust growth of Decapeptyl® in Germany and of Dysport® and Decapeptyl® in the United Kingdom, partially offset by negative price impacts in Italy and in France. Sales in this region represented 61.1% of total sales compared with 64.0% a year earlier. France – For the second quarter 2007, sales reached €92.8 million, up 6.6% year-on-year (second quarter 2006, €87.0 million), benefiting from the launch of Adrovance™ in April 2007 and satisfactory performance of Dysport®, Somatuline®, Nisis® & Nisisco®, Forlax® and Smecta®. For the first half 2007, solid sales growth of Specialist Care products were offset by decreasing sales of Tanakan®, down 5.2 points year-on-year and by negative price impact on Ginkor Fort® further to price cut enforced in March 2006. The weight of France in the Group’s consolidated sales continued to decline, representing 38.3% of total Group sales against 40.9% a year earlier. Spain – For the second quarter 2007, sales reached €14.1 million, up 6.6% year-on-year (second quarter 2006, €13.2 million), fuelled by strong growth of Somatuline® and NutropinAq®. For the first half 2007, sales grew by 3.6% year-on-year thanks to a double digit volume growth of Somatuline® and NutropinAq®, despite a decrease in sales of Decapeptyl®, down 2.6% year-on-year. Italy -- For the second quarter 2007, sales reached €15.6 million, down 14.8% year-on-year (second quarter 2006, €18.3 million), due to negative price impacts reaching €1.8 million during the period, combination of the mandatory 5 % price cut implemented in October 2006 and of price erosions linked to higher hospital distribution, affecting mainly the sales of Decapeptyl® and NutropinAq®. For the first half 2007, sales decreased by 2.6% year-on-year, with price pressure negatively impacting sales growth by 10.6 points. Germany -- For the second quarter 2007, sales reached €11.4 million, up 16.7% year-on-year (second quarter 2006, €9.8 million), with all products performing well. For the first half 2007, sales amounted to €23.1 million, up by 8.4% year-on-year. The good performances of Decapeptyl® and NutropinAq® were partially offset by a lower growth of Dysport®, from an exceptional high baseline in the first half of 2006 when wholesalers built stocks in anticipation of a change in the legislation modifying previous favourable commercial terms. United Kingdom -- For the second quarter 2007, sales reached €10.3 million, up 23.3% year-on-year (second quarter 2006, €8.4 million), driven by strong double digit growth of all products. For the first half 2007, sales in the United Kingdom were up 24.7% year-on-year, driven notably by a strong growth of Decapeptyl®, with sales more than doubling year-on-year. For the second quarter 2007, sales generated in the Other European countries reached €53.4 million, up 10.3% year-on-year (second quarter 2006, €48.4 million). For the first half 2007, sales generated in the Other European countries reached €106.1 million, up 13.7% year-on-year (first half 2006, €93.3 million). Over the same period, sales in this region represented 22.9% of total consolidated Group sales, against 21.7% a year earlier. For the second quarter 2007, sales generated in the Rest of the World reached €38.9 million, up 15.2% year-on-year (second quarter 2006, €33.7 million). For the first half 2007, sales generated in the Rest of the World reached €74.1 million, up 20.1% year-on-year (first half 2006, €61.6 million), driven notably by a good performance of Dysport® in Brazil and of Smecta® in China. Over the same period, sales in this region represented 16.0% of total consolidated Group sales, against 14.3% a year earlier. Sales by therapeutic area and by product The following table shows sales by product, regrouped by therapeutic area for the second quarters and first halves 2007 and 2006: 2nd quarter 6 months   (in thousand euros) 2007 2006 % change 2007 2006 % change   Oncology 57,057 58,038 (1.7%) 118,202 113,584 4.1% of which Decapeptyl® (1) 57,051 58,010 (1.7%) 118,186 113,526 4.1% Endocrinology 32,006 27,404 16.8% 63,527 52,356 21.3% of which Somatuline® (1) 25,608 23,722 8.0% 50,824 45,482 11.7% NutropinAq® (1) 5,795 3,325 74.3% 11,537 6,251 84.6% Neuromuscular disorders 35,048 28,907 21.2% 63,567 55,820 13.9% of which Dysport® (1) 35,048 28,907 21.2% 63,567 55,820 13.9% Specialist care   124,111 114,349 8.5% 245,296 221,760 10.6%   Gastroenterology 44,214 38,812 13.9% 86,751 79,156 9.6% of which Smecta® 22,156 19,551 13.3% 45,019 40,805 10.3% Forlax® 13,420 11,463 17.1% 25,317 23,046 9.9% Cognitive disorders 33,092 32,652 1.3% 64,115 64,508 (0.6%) of which Tanakan® 33,092 32,652 1.3% 64,115 64,508 (0.6%) Cardiovascular 25,938 24,733 4.9% 48,171 48,557 (0.8%) of which Nisis® & Nisisco® 13,205 11,919 10.8% 25,006 22,938 9.0% Ginkor Fort® 11,772 11,041 6.6% 20,170 22,419 (10.0%) Other Primary Care products 1,902 918 107.2% 2,872 2,242 28.1% of which Adrovance™ 1,184   0.0% 1,184   0.0% Primary care   105,146 97,115 8.3% 201,910 194,463 3.8%   Total Drug sales 229,257 211,464 8.4% 447,206 416,223 7.4% Drug-related sales 7,214 7,332 (1.6%) 15,958 14,384 10.9% Group Sales 236,471 218,796 8.1% 463,164 430,607 7.6% (1) Peptide- or protein-based products Note: From January 1, 2007, the Group reports its former "Other Drugs” sales in the Primary care sales in order to improve readability. This change has no impact on overall Group sales. "Other drugs” sales amounted to €1.9 million for the second quarter 2007 compared with €0.9 million a year ago. 2006 numbers are presented accordingly. For the second quarter 2007, sales of specialist care products reached €124.1 million, up 8.5% year-on-year (second quarter 2006, €114.4 million), representing 52.5% of the Group’s consolidated sales, against 52.3% a year earlier. For the first half 2007, sales of specialist products reached €245.3 million, up 10.6% year-on-year (first half 2006, €221.8 million), representing 53.0% of the Group’s consolidated sales, against 51.5% a year earlier. This performance was driven by strong momentum in endocrinology and neuromuscular disorders. Within the oncology franchise, Decapeptyl® sales reached €57.0 million for the second quarter 2007, down 1.7% year-on-year (second quarter 2006, €58.0 million) mainly due to negative price impacts in Italy and Poland, representing 3.1 points of sales growth and offsetting the good performances observed in Germany, the United Kingdom and Central Europe. For the first half 2007, sales of Decapeptyl® were up 4.1%, driven by strong sales in the Middle East, Germany, China and Central Europe despite the negative price impacts described above. In endocrinology, sales reached €32.0 million for the second quarter 2007, up 16.8% year-on-year (second quarter 2006, €27.4 million). NutropinAq® continued to show a good performance in its fourth year of commercialization, with sales representing 18.1% of total endocrinology sales in the second quarter, against 12.1% a year earlier. Somatuline® -- For the second quarter 2007, sales reached €25.6 million, up 8.0% year-on-year (second quarter 2006, €23.7 million). For the first half 2007, Somatuline® sales amounted for €50.8 million, up 11.7% year-on-year continuing on its robust trend. NutropinAq® -- For the second quarter 2007, sales reached €5.8 million, up 74.3% year-on-year (second quarter 2006, €3.3 million), driven by strong performance in all markets where the product is marketed and despite significant negative price pressure in Italy. For the first half 2007, sales of NutropinAq® amounted for €11.5 million, up 84.6% year-on-year. Within the neuromuscular disorders franchise, Dysport® sales reached €35.0 million, up 21.2% year-on-year (second quarter 2006, €28.9 million), driven mainly by continued double-digit growth in Central and Eastern Europe, the United Kingdom and Germany. For the first half 2007, Dysport® sales amounted to €63.6 million, up 13.9% year-on-year. For the second quarter 2007, sales of Primary Care products reached €105.2 million, up 8.3% year-on-year (second quarter 2006, €97.1 million) despite the impact of Ginkor Fort® in France. Excluding Ginkor Fort®, sales of primary care products reached €93.4 million, up 8.5% year-on-year (second quarter 2006, €86.1 million), sustained by robust sales outside of the Major Western European countries, notably for gastroenterology products, and by the launch of Adrovance™ in France. In gastroenterology, sales reached €44.2 million, up 13.9% year-on-year (second quarter 2006, €38.8 million). Smecta® -- For the second quarter 2007, sales reached €22.2 million, up 13.3% year-on-year (second quarter 2006, €19.6 million), due to strong sales in Central Europe, in China and, to a lesser extent in France. For the first half 2007, sales of Smecta® amounted to €45.0 million, up 10.3% year-on-year driven by strong sales in China, Central and Western Europe. Sales of Smecta® outside of France reached 72.0% in the first half of 2007, compared with 68.8% a year ago. Forlax® -- For the second quarter 2007, sales reached €13.4 million, up 17.1% year-on-year (second quarter 2006, €11.5 million). Sales of Forlax® in France (representing 74.4% of total Forlax® sales), were up 9.9% whereas in other markets, sales were up 44.3% year-on-year. For the first half 2007, sales of Forlax® amounted to €25.3 million, up 9.9% year-on-year. Within the cognitive disorders area, sales of Tanakan® for the second quarter of 2007 reached €33.1 million, up 1.3% year-on-year (second quarter 2006, €32.7 million). Strong growth in Algeria, Vietnam, Russia, Romania and China were almost fully offset by the sales decrease in France, which represented 68.3% of total Tanakan® sales in the second quarter 2007 compared with 69.6% a year earlier. For the first half 2007, sales of Tanakan® amounted to €64.1 million down 0.6% mainly due to decreasing volumes in France. In the cardiovascular area, sales in the second quarter of 2007 amounted to €25.9 million, up 4.9% year-on-year (second quarter 2006, €24.7 million). For the first six months of 2007, sales reached €48.2 million, down 0.8% year-on-year. Nisis® and Nisisco® -- For the second quarter 2007, sales reached €13.2 million, up 10.8% year-on-year (second quarter 2006, €11.9 million). For the first half 2007, sales reached €25.0 million, up 9.0% year-on-year. Nisis® and Nisisco® continued to show a sound performance and to gain market share despite a high competitive pressure. Ginkor Fort® -- For the second quarter 2007, sales amounted to €11.8 million, up 6.6% year-on-year (second quarter 2006, €11.0 million). The product benefited from an active communication campaign at pharmacist level ahead of its removal from the list of reimbursed products in France in January 2008. For the first half 2007, sales decreased by 10.0% year on year, down to €20.2 million despite a stronger performance in the second quarter. Other primary care products sales reached €1.9 million for the second quarter 2007, against €0.9 million a year earlier, thanks to the launch in April 2007 in France of Adrovance™, which generated sales of €1.2 million. For the first half 2007, sales of other primary care products reached €2.9 million, up 28.1% year-on-year. For the second quarter 2007, drug-related sales (active ingredients and raw materials) were down 1.6% to €7.2 million, notably due to a decrease in sales of active ingredients in South Korea. For the first half 2007, drug related sales amounted to €16.0 million, up 10.9% year-on-year compared with a low first half 2006. This growth was mainly driven by stronger sales in Switzerland and South Korea despite a slowdown in Germany and Egypt.