Ipsen´s Half Year 2008 Results and Updateon Standalone Financial Objectives for the Full Year 2008

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Regulatory News:

• Results above Group´s objectives
• Group operating income reached 29.3% of sales, up 29.2% year–on–year
• Fully diluted Earnings Per Share up 42.1% year–on–year
• Standalone⁽¹⁾ 2008 financial objectives raised

The Board of Directors of Ipsen (Paris:IPN), chaired by Jean–Luc Bélingard, met on 28 August 2008 to review the Group´s results for the first half 2008, published today.

Summary of audited consolidated results for the first halves 2008 and 2007

NOTE 1. "Standalone financial objectives" exclude the impacts of the acquisitions of Ipsen Pharmaceuticals Inc. (former Vernalis Inc.) and Tercica. Inc. in the US as well as of the development rights of OBI–1, which were announced on June 5, 2008.

NOTE 2. "Performance sales growth" or "Underlying Group sales growth" is defined as Group sales growth at constant currency, and excluding Ginkor Fort^® sales which was sold as of 1 January 2008.

NOTE 3. "Recurring operating income" corresponds to the Group´s operating income restated for non–recurring items, such as the €13.7 million in milestones from the sale of Ginkor Fort^® and €1.6 million from the sale of a land

NOTE 4. Net cash: cash, cash equivalents and securities held for sale minus bank overdrafts, bank borrowings and other financial liabilities plus or minus derivative financial instruments.

Commenting on the performance in the first half 2008, Jean–Luc Bélingard, President of the Ipsen Group, stated: "The Group´s strong operating performance in the first half 2008 confirms once again the soundness of its positioning and the relevance of the strategic actions we have taken in the past years. We have built a solid, fast growing specialist care business that allows us to seize substantial growth opportunities worldwide, further enhanced through the successful integration of our US neurology and endocrinology platforms."

Review of half year 2008 results

Consolidated Group sales reached €497.4 million for the first half 2008, up 7.4% year–on–year. Underlying Group sales (excluding Ginkor Fort^® sales, divested on 1 January 2008, and at constant currency) grew by a strong 11.2% year–on–year. This positive development was fuelled notably by a strong growth in endocrinology and neuromuscular disorders franchises, up 20.3% and 19.5% respectively over the period and by the strong performance of gastroenterology products, up 10.3% year–on–year and the sustained growth of Decapeptyl^®.

Other revenues reached €53.7 million for the first half 2008, up 51.4% year–on–year. This sharp increase is largely due to recognition of a €13.7 million milestone on the sale of Ginkor Fort^® which was signed in August 2007. This milestone includes the recognition in the first half 2008 of part of the initial milestone payment received at signing of the agreement, plus an estimate of the additional variable amount which is linked to the performance of the veinotonics market in France in 2008.

Total revenues therefore reached €551.1 million during the period, up 10.5% year–on–year.

Research and development expenses amounted to €87.3 million in the first half 2008, or 17.6% of sales, down 1.1% on the same period in 2007, when they amounted to €88.4 million and represented 19.1% of sales. At constant exchange rates, research and development expenses increased 5.2% year on year, as a significant share of these expenses is booked in US dollars and Pounds Sterling. Drug–related R&D expenses were up 7.4% on the same period last year, while industrial development expenses have fallen 37.8% compared with the first half 2007, which included substantial costs incurred in preparation for inspections by the FDA (Food and Drug Administration) for the registration of Dysport^® and Somatuline^® Depot in the United States.

Operating income reached €145.9 million for the first half 2008, representing 29.3% of sales, up 29.2% year–on–year. Restated for non–recurring items, such as the €13.7 million in proceeds from the sale of Ginkor Fort^® and €1.6 million from the sale of a plot of land, the Group´s recurring operating income amounted to €130.6 million, representing 26.3% of total sales, up 15.6% year–on–year.

The Group´s effective tax rate amounted to 21.9% of net profit from continuing operations and share of losses from associated companies, compared with 27.3% a year earlier. The effective tax rate in June 2008 benefited from the positive effect of the new research tax credit system calculation methods applicable from January 1, 2008 in France. In addition, the tax charge for the first half 2007 was affected by a reduction in value of deferred tax assets in the Netherlands following the decrease in this country´s tax rate.

The Group´s loss from associates amounted to €(5.2) million ($(8.0) million) and was solely composed of the Group´s share in the net losses of Tercica Inc. for the half year 2008, stated as required under IFRS. Tercica Inc. has been reported under the equity method in the Group´s financial statements since October 2006.

Consolidated net profit for the first half 2008 reached €111.1 million, up 42.0% compared with €78.2 million a year ago.

Net cash flow generated by operating activities amounted to €124.1 million for the first half 2008, compared with €47.3 million a year ago. At 30 June 2008, the Group´s net cash position stood at €239.4 million, compared with €198.4 million a year earlier.

Total milestones received in cash but not yet recognized as revenues amounted to €216.9 million, compared with €192.7 million a year earlier.

2008 standalone financial objectives

In the context of its solid sales performance in the first half 2008, the Group targets to reach for the full year 2008 - on a standalone basis:

• as announced on 31 July 2008, the upper–end of its sales objective: underlying sales growth (Group sales at constant currency, and excluding sales of Ginkor Fort® in 2007 and 2008) of 6.5 to 7.5%;
• an "˜other revenues´ growth of 25.0% to 30.0%, at constant exchange rates, notably with the success of the Ginkor Fort divestment, against 13.0% to 16.0%, as announced on February 27, 2008;
• An operating margin of 23.0% to 24.0% of sales, against 22.0% to 23.0% of sales as announced on February 27, 2008, notably taking into account the Group´s overall strong performance, the success of the Ginkor Fort^® divestment and despite ongoing pre–marketing and launch costs of Adenuric^® and Adrovance^® in France, and Increlex^® in Europe.

These standalone objectives were prepared without taking into account external growth assumptions, with notably the acquisitions of Ipsen Pharmaceuticals Inc. (former Vernalis Inc.) and Tercica. Inc. in the US as well as of the development rights of OBI–1, which were announced on June 5, 2008 and which may impact this outlook.

Ipsen – Analyst and Investor conference call and webcast (in English)

Ipsen will host a conference call on Friday 29 August 2008 at 1.00 p.m. (Paris time). A live webcast will be available at www.ipsen.com. The webcast will be archived on the Ipsen website for 3 months following the live call. Callers should dial in approximately 5 to 10 minutes prior to the start of the call. No reservation is necessary to participate in the call. The telephone numbers to join the conference call are, from France and Europe: + 33 (0) 1 70 99 43 01 and from the United States: +1 718 354 1387. No access code is necessary.

A replay will be available soon after the live call. The telephone numbers to access the replay are, from France and Europe: +33(0)1 71 23 02 48 and from the United States: +1 718 354 1112. The access code is 8871644#. The replay will be available for one week following the live call.

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. Its development strategy is based on a combination of specialty products, which are growth drivers, in targeted therapeutic areas (oncology, endocrinology and neuromuscular disorders), and primary care products which contribute significantly to its research financing. The location of its four Research & Development centres (Paris, Boston, Barcelona, London) and its peptide and protein engineering platform give the Group a competitive edge in gaining access to leading university research teams and highly qualified personnel. More than 700 people in R&D are dedicated to the discovery and development of innovative drugs for patient care. This strategy is also supported by an active policy of partnerships. In 2007, Research and Development expenditure was about €185 million, in excess of 20% of consolidated sales, which amounted to €920.5 million while total revenues amounted to €993.8 million. Ipsen´s shares are traded on Segment A of Euronext Paris (stock code: IPN, ISIN code: FR0010259150). Ipsen´s shares are eligible to the "Service de Règlement Différé" ("SRD") and the Group is part of the SBF 120 index. For more information on Ipsen, visit our website at www.ipsen.com

Forward–looking statements

The forward–looking statements, objectives and targets contained herein are based on the Group´s management strategy, 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. Moreover, the targets described in this document were prepared without taking into account external growth assumptions, as announced on June 5, 2008 and potential future acquisitions, which may alter these parameters. These objectives are based on data and assumptions regarded as reasonable by the Group. These targets depend on conditions or facts likely to happen in the future, and not exclusively on historical data. Actual results may depart significantly from these targets given the occurrence of certain risks and uncertainties. The Group does not commit nor gives any guarantee that it will meet the targets mentioned above. Furthermore, the Research and Development process involves several stages at each of which there is a substantial risk that the Group will fail to achieve its objectives and be forced to abandon its efforts in respect of a product in which it has invested significant sums. Therefore, the Group cannot be certain that favourable results obtained during pre–clinical trials will be confirmed subsequently during clinical trials, or that the results of clinical trials will be sufficient to demonstrate the safe and effective nature of the product concerned. The Group 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. The Group´s business is subject to the risk factors outlined in its registration 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 2007 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 (i) from generic products, (ii) products which, although they are not strictly identical to the Group´s products or which have not demonstrated their bioequivalence, may 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.
• As a result of its transaction signed in October 2006 with Tercica Inc., a NASDAQ listed company, the Group holds in its balance sheet financial assets representing the derivative components of Convertible Notes and Warrants issued by Tercica Inc., which have been registered at fair value as at 30 June 2008 in compliance with IAS39. This fair value has been determined on the basis of the best estimate made by the Group using existing information to the best of its knowledge. However, given the specific profile of Tercica Inc., the criteria used to determine the fair valuation of such derivative components are highly influenced by the following elements: illiquidity, absence of credit market, and absence of volatility market. On this basis the Group cannot guarantee that the valuation of the corresponding financial assets may not be subject in due course to unexpected and material variations. Moreover, due notably to the fact that these derivatives have been implemented within a global transaction, the Group cannot guarantee that the value at which those assets have been registered in the Group´s books corresponds to what third parties would be willing to offer to acquire similar financial assets. The Group will, at each closing of its financial statements, update the valuation of those assets based on criteria then available and could be obliged to impair significantly the value of these assets.

Major developments in the period under review

During the first half 2008, major developments included:

• On June 10, 2008 - Ipsen announced that Roche and Ipsen´s investigational diabetes drug taspoglutide has been shown to be generally well–tolerated and efficacious for the treatment of patients with type 2 diabetes, resulting in significant improvements in glucose control and weight loss after only eight weeks of treatment.
• On June 5, 2008 - Ipsen announced that it has taken significant steps forward in building a fully fledged commercial presence in North America. In the field of endocrinology, Ipsen entered into a definitive merger agreement by which it would acquire all of the publicly held shares of Tercica Inc. the Group does not currently own at a price of $9.0 per share in cash. In the field of neuromuscular disorders, the Group signed an agreement with Vernalis Ltd to acquire its US operations, Ipsen´s future platform for the launch of Dysport^®, and the rights to develop and market Apokyn^®. In the field of hematology, Ipsen entered into a purchase agreement with Octagen to acquire all its OBI–1 related assets in order to fully control its future development.
• On May 19, 2008 - Ipsen and Medicis announced that the Food and Drug Administration ("FDA") has accepted the filing of Ipsen´s Biologics License Application ("BLA") for Reloxin^®, its botulinum toxin type A in aesthetic use (glabellar lines) in the United States.
• On May 5, 2008 - Ipsen announced that the European Commission granted marketing authorisation for Adenuric^® (febuxostat) for the treatment of chronic hyperuricaemia in gout.
• On March 17, 2008 - Medicis and Ipsen announced that Ipsen has submitted a Biologics License Application ("BLA") for the botulinum toxin type A, Reloxin^® , in aesthetic indications (glabellar lines) to the U.S. Food and Drug Administration´s ("FDA") Division of Dermatology and Dental Products, within the Center for Drug Evaluation and Research.
• On February 25, 2008 - Ipsen announced that GTx Inc., from which it licensed the European rights for Acapodene^® (toremifene citrate 80 mg) in September 2006, presented the results of the first phase III study evaluating the efficacy and safety of toremifene citrate 80mg daily, on multiple side effects of androgen deprivation therapy (ADT) in advanced prostate cancer patients. Ipsen also announced its intention to submit the toremifene citrate 80 mg dossier in Europe before year–end 2008.
• On February 21, 2008 - Ipsen announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMEA) provided a positive opinion for Adenuric^® (febuxostat) 80 mg and 120 mg tablets for the treatment of chronic hyperuricaemia in gout and recommended it for marketing authorisation.
• On February 12, 2008 - Ipsen announced that its partner Debiopharm presented the results of a phase III study with its new 6–month formulation of Decapeptyl^®, a luteinizing hormone releasing hormone (LHRH) agonist for the treatment of advanced prostate cancer. The results presented showed similar efficacy and safety to the already marketed 1– and 3–month formulations of triptorelin.
• On January 31, 2008 - Ipsen announced that the Food and Drug Administration (FDA) has accepted the filing of its BLA for Dysport^® in the United States to treat patients with cervical dystonia.
• 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 the consolidated income statement for the first half 2008 and first half 2007:

Other revenues

In the first half 2008 other revenues totalled €53.7 million, up 51.4% on the first half 2007 (€35.5 million).

The breakdown of other revenues is as follows:

• Royalties received mainly comprised royalties from the Kogenate^® licence, which amounted to €23.1 million for the first half 2008 and are stable compared with the same period last year (€22.8 million in the first half 2007). Royalties received in the first halves 2007 and 2008 were benefited from the carry–over of royalties from the last quarter of the previous year into both years.
• Milestone payments relating to licensing agreements represent primarily recognition of payments received over the life of partnership agreements. In the first half 2008, this income totaled €24.1 million, increasing by €15.6 million year–on–year. This sharp increase is largely due to recognition of a €13.7 million milestone on the sale of Ginkor Fort^® which was signed in August 2007. This milestone includes recognition in the first half 2008 of part of the initial milestone payment received at signing of the agreement, plus an estimate of the additional variable amount, linked to the performance of the veinotonics market in France in 2008. In addition, the first half 2008 also comprised milestones in relation to the Reloxin^® agreement with Medicis, the Tenstaten^® agreement with Recordati and the BIM 51077 (GLP–1 analogue) partnership with Roche as was the case in the first half 2007.
• Other revenues amounted to €5.9 million in the first half 2008, compared with €3.0 million in the first half 2007. This increase is primarily due to a commission collected after the renewal of one of the Group´s co–promotion agreements.

Cost of goods sold

For the first half 2008, cost of goods sold amounted to €112.7 million, represent

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