Ipsen´s Full Year 2007 Results and Financial Objectives for the Full Year 2008

Regulatory News:

The Board of Directors of Ipsen (Paris: IPN), chaired by Jean-Luc
Belingard, met on 26 February 2008 to review the Group´s results for
2007, published today.

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Summary of audited consolidated results for 2007 and 2006
----------------------------------------------------------------------
(in millions of euros) % change
2007 2006 2007/2006
----------------------------------------------------------------------
Sales 920.5 861.7 +6.8%
Other revenues 73.3 83.6 (12.3)%
Total revenues 993.8 945.3 +5.1%
----------------------------------------------------------------------
Operating income 208.9 187.2 +11.6%
Operating margin (in % of sales) 22.7 21.7
----------------------------------------------------------------------
Consolidated net profit
(attributable to the Group) 150.6 144.0 +4.6%
Earnings per share - fully diluted
(EUR ) 1.79 1.71 +4.7%
----------------------------------------------------------------------
Average number of shares
Non diluted 83,875,853 84,000,717
Fully diluted 83,972,411 84,024,179
----------------------------------------------------------------------
*T

Commenting on the performance in 2007, Jean-Luc Belingard,
President of the Ipsen Group, stated: "The Group´s performance in 2007
is in line with our objectives despite a difficult environment marked
by sustained price pressure and increased competition, notably in
France. This set of results shows once again Ipsen´s ability to
generate a strong and recurring cash flow. We will use our solid
balance sheet as a tool to accelerate Ipsen´s growth going forward."
Jean-Luc Belingard added: "In the framework of our strategy, we have
further optimized our primary care franchise after the sale of Ginkor
Fort(R), with the launch of Adrovance(R) in France and the recent
positive CHMP opinion for Adenuric(R) (febuxostat) in Europe. With
Somatuline(R) Depot in the United States on 31 August 2007,
Increlex(R) in Europe on 9 August 2007 and Adenuric(R) on 21 February
2008, the Group has obtained 3 positive opinions from regulatory
agencies in 7 months, thereby confirming the quality of its clinical
development and regulatory teams. Furthermore, upon marketing approval
by the European Commission, Adenuric(R) will stand out as a major
therapeutic innovation in a pathology for which none has emerged
during the past 40 years, thereby illustrating Ipsen´s mission to
propose treatments for high unmet medical needs." Jean-Luc Belingard
concluded: "In 2008, we will pursue our entry into the North American
market and will reinforce our portfolio of products; notably, the
publication of clinical results, such as the phase III for
Acapodene(R), phase II for our GLP-1 analogue partnered with Roche or
phase I for our promising anti-tumor agent STX-64, will confirm
Ipsen´s strong Research & Development capabilities. Our energy in 2008
will be steered toward further developing Ipsen while ensuring we meet
the objectives set today."

Review of full year 2007 results

Consolidated Group sales reached EUR 920.5 million, up 6.8%
year-on-year. This increase was fuelled by the strong growth in
endocrinology and neuromuscular disorders franchises, up 19.7% and
13.6% respectively over the period, and by the strong performance of
gastro-enterology products in international markets, up 9.2%
year-on-year, partly offset by slower sales in France, notably of
Tanakan(R) and Ginkor Fort(R), both products suffering from price cuts
respectively enforced in July 2007 and March 2006. Price pressure
negatively impacted Ipsen´s consolidated sales growth by 2.1 points
representing EUR 17.9 million. This performance is line with the
Group´s objective set a year ago to grow its sales by 6.5 to 7.5%
year-on-year.

Other revenues reached EUR 73.3 million, down 12.3% year-on-year.
In 2007, the Group ceased billings for Research & Development services
within the framework of partnership agreements, mainly with Roche for
the development of BIM 51077.

Total revenues therefore reached EUR 993.8 million during the
period, up 5.1% year-on-year. This performance is slightly above the
objectives set by the Group a year ago (of growing total revenues by
4.0 to 5.0% year-on-year).

Research & Development expenses amounted to EUR 184.7 million, up
3.6% year-on-year, despite lower revenues received from third parties
stemming from partnership agreements (notably BIM 51077), implying a
7.9% increase in self-financed Research & Development effort.

Operating income reached EUR 208.9 million in 2007, up 11.6%
year-on-year, despite the significant negative impact of price cuts in
major Western European countries and the fall of other revenues.
Operating margin stood at 22.7% of sales versus 21.7% a year ago, in
line with the Group´s objective set a year ago to reach 22.0 to 23.0%
of sales in 2007.

The Group´s effective tax rate in 2007 reached 25.3% of net profit
from continuing operations before tax and the Group´s loss from
associates, compared with a reported effective tax rate of 21.8% a
year ago and with a recurring effective tax rate of 25.9% in 2007.

The Group´s loss from associates amounted to EUR (8.8) million
($(12.0) million) and was solely composed of the Group´s share in the
net losses of Tercica Inc. for the year 2007, 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 2007 reached EUR 150.6 million, up
4.6% compared with EUR 144.0 million in 2006.

Net cash flow generated by operating activities amounted to EUR
176.0 million in 2007, compared with EUR 327.6 million in 2006, when
the Group benefited from important payments received in relation to
its partnership agreements. At 31 December 2007, the Group´s cash
position stood at EUR 240.9 million, compared with EUR 283.7 million
at 31 December 2006.

Total milestones received in cash but not yet recognised as
revenues amounted to EUR 218.7 million, compared with EUR 184.3
million in 2006.

Dividend for the financial year 2007 proposed to the approval of
Ipsen´ shareholders

Ipsen´s Board of Directors met on 26 February 2008 and proposed a
dividend of 0.66 euros per share, up 10% year-on-year, yielding a 37%
pay-out ratio, to Ipsen´s shareholders annual meeting to be held on 4
June 2008. The payment of the dividend will be made on 11 June 2008.

2008 financial objectives

Based on currently available information, the Group has set for
itself the following objectives for 2008:

-- An underlying(1) sales growth of 6.5% to 7.5%(2) year-on-year;
at constant exchange rates, despite sustained price pressure
in most countries where the Group operates, and an increased
competitive environment notably in France, following the
recent launch of a new product containing a Ginkgo biloba
extract.

-- A reported ´other revenues´ growth of 13.0% to 16.0%, at
constant exchange rates;

-- A reported operating margin of 22.0% to 23.0% of sales,
despite the ongoing launch costs of Increlex(R) in Europe,
Adrovance(R) in France, as well as the pre-marketing costs in
connection with the launch of Adenuric(R) (febuxostat) in
France.

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

Ipsen will host a conference call on 27 February 2008 at 2.00 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 42 96 and from the
United States: +1 718 354 1385. 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 4313749#. The replay will be available for one week following the
live call.

(1) Excluding the sales of Ginkor Fort(R), which the Group is not
marketing with effect from 1 January 2008 following its
dereimbursement by the French authorities. Actual Group sales
excluding Ginkor Fort(R) in 2007 amounted to EUR 883.6 million

(2) Corresponding to a reported 3.2 to 4.2% sales growth
year-on-year

About Ipsen

Ipsen is a European 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 targeted
therapeutic 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 R&D centres (Paris, Boston, Barcelona, London) gives the
Group a competitive edge in gaining access to leading university
research teams and highly qualified personnel. In 2007, Research and
Development expenditure was EUR 185 million, in excess of 20% of
consolidated sales, which amounted to EUR 920.5 million while total
revenues amounted to EUR 993.8 million (in IFRS). More than 700 people
in Research & Development are dedicated to the discovery and
development of innovative drugs for patient care. Ipsen´s shares are
traded on Segment A of Eurolist by Euronext(TM) (stock code: IPN, ISIN
code: FR0010259150). Ipsen´s shares are eligible to the "Service de
Reglement Differe" ("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 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. The targets contained herein were prepared
without taking into account external growth assumptions, which may
alter the parameters. These targets are based on data and assumptions
regarded as reasonable by the Group and depend on conditions or facts
likely to happen in the future, and not exclusively on historical
data. Actual results may depart significantly from the 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. Moreover, 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. Moreover, the targets described in this document were
prepared without taking into account external growth assumptions,
which may alter these parameters. These targets 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. 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
Autorite des Marches Financiers.

APPENDICES

1. Comparison of the consolidated income statement for 2007 and
2006:

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31 December 2007 31 December 2006
-------------------------------------
(in (in
thousands % of thousands % of
of euros) sales of euros) sales % change
----------------------------------------------------------------------
Sales 920,475 100.0% 861,676 100.0% 6.8%
Other revenues 73,282 8.0% 83,581 9.7% (12.3)%
Total revenues 993,757 108.0% 945,257 109.7% 5.1%
Cost of goods sold (199,025) (21.6)% (181,377) (21.0)% 9.7%
Research & development
expenses (184,739) (20.1)% (178,348) (20.7)% 3.6%
Selling, general and
administrative
expenses (401,481) (43.6)% (383,015) (44.5)% 4.8%
Other operating income
and expenses 368 nm (8,223) (1.0)% nm
Restructuring costs 8 nm 190 nm nm
Impairment losses - nm (7,265) (0.8)% nm
Operating income 208,888 22.7% 187,219 21.7% 11.6%
- Income from cash and
cash equivalents 11,541 1.3% 7,974 0.9% 44.7%
- Cost of gross
financial debt (1,950) (0.2)% (2,142) (0.2)% (9.0)%
Cost of net financial
debt 9,591 1.0% 5,832 0.7,% 64.5%
Other interest income
and expense (2,855) (0.3)% (5,707) (0.7)% (50.0)%
Income tax (54,478) (5.9)% (40,891) (4.7)% 33.2%
Share of loss/profit
from associated
companies (8,764) (1.0)% (1,666) (0.2)% nm
Net profit/loss from
continuing operations 152,382 16.6% 144,787 16.8% 5.2%
Net profit/loss from
discontinued
operations (1,313) (0.1)% (290) Ns nm
Consolidated net profit 151,069 16.4% 144,497 16.8% 4.5%
- Equity holders of
Ipsen S.A. 150,611 144,006 4.6%
- Minority interests 458 491 (6.7)%
----------------------------------------------------------------------
*T

- Other revenues

In 2007, other revenues reached EUR 73.3 million, down 12.3% year
on year (2006: EUR 83.6 million).

Other revenues break down as follows:

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2007/2006 change
31 December 31 December
(in thousands of euros) 2007 2006 In value %
----------------------------------------------------------------------
Breakdown by revenue type
- Royalties received 49,767 41,650 8,117 19.5%
- Milestone payments -
licensing agreements 17,349 20,199 (2,850) (14.1%)
- Other (co-promotion
revenues, recharging) 6,166 21,732 (15,566) (71.6%)
----------------------------------------------------------------------
Total 73,282 83,581 (10,299) (12.3%)
----------------------------------------------------------------------
*T

-- Royalties received mainly comprised royalties from the
Kogenate(R) licence, which amounted to EUR 47.6 million in
2007, up 22.8% compared with the same period last year (EUR
38.7 million in 2006). The first quarter 2007 had been
particularly high due to the carry-over of some fourth quarter
2006 royalties into 2007 (for EUR 3 million).

-- Milestone payments relating to licensing agreements represent
primarily recognition of payments received over the life of
partnership agreements. In 2007, this income mainly comprised
milestones in relation to the Reloxin(R) agreement with
Medicis, the Tenstaten(R) agreement with Recordati and the BIM
51077 (GLP-1 analogue) partnership with Roche. Milestone
payments recognised in 2006 included primarily the accelerated
recognition of payments received by the Group following
termination of the Reloxin(R) distribution agreement with
Inamed.

-- Other revenues amounted to EUR 6.2 million in 2007, down 71.6%
compared to 2006. In 2007, the Group ceased billings for R&D
services within the framework of its partnership agreement for
the development of BIM 51077, for which development works are
now carried out by Roche, as well as the agreement with
Genentech concerning a new formulation of the growth hormone,
which reached the end of the research phase at the end of
2006.

Furthermore, in 2006, other revenues benefited from a one-off
payment of EUR 7.7 million relative to the termination in April 2006
of the co-promotion agreement with Pfizer for Zoxan(R), not offset by
the co-promotion income relative to Artotec(R) and Tenstaten(R).

- Cost of goods sold

In 2007, cost of goods sold amounted to EUR 199.0 million,
representing 21.6% of sales compared with 21.0% a year ago, impacted
by the negative effects of price cuts implemented during the period,
which could not be offset by an increase in activity or productivity
improvements. Also higher growth of in-licensed products and drug
related activities as well as slower sales of Ginkor Fort(R)
contributed to softening of the product mix improvement.

- Research & Development expenses

Research & Development expenses increased by 3,6 % and represented
EUR 184,7 millions year-on-year, representing 18.6% of total revenues
or 20.1% of sales. In 2006, R&D expenses reached EUR 178.3 millions ,
representing 18.9% of total revenues or 20.7% of sales. Excluding
repayments from third parties, the share of self-financed R&D grew by
7.9% year-on-year.

A comparison of research & development expenses for the years 2007
and 2006 is presented in the following table:

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2007/2006 change
31 December 31 December
(in thousands of euros) 2007 2006 in value %
----------------------------------------------------------------------
Breakdown by expense type
- Drug-related research &
development(1) 152,619 150,083 2,536 1.7 %
- Industrial development(2) 26,380 22,957 3,423 14.9 %
- Strategic development(3) 5,740 5,308 432 8.1 %
----------------------------------------------------------------------
Total 184,739 178,348 6,391 3.6%
----------------------------------------------------------------------

(1) Drug-related research & development is aimed at identifying new
agents, determining their biological characteristics and developing
small-scale manufacturing processes. Pharmaceutical development is
the process through which active agents become drugs approved by
regulatory authorities and is also used to improve existing drugs and
to research new therapeutic indications for them. Patent-related
costs are included in this type of expense.
(2) Industrial development includes chemical, biotechnical and
development-process research costs to industrialise small-scale
production of agents developed by the research laboratories.
(3) Strategic development includes costs incurred for research into
new product licences and establishing partnership agreements.
*T

-- Over the period, major Research & Development projects
included preparation for registration of Dysport(R) in the
United States and the phase III trials for a longer sustained
release formulation of Triptorelin, since then discontinued.
In 2006, the development of BIM 51077 in partnership with
Roche - R1583 for which Roche is now responsible since the
opt-in - and preparation for registration of Somatuline(R)
Autogel(R) with the FDA (Food and Drug Administration) had
represented a significant proportion of the Group´s research &
development expenses. Excluding these R&D projects - which
benefited from repayments from third parties - the share of
R&D self-financed by the Group grew by 7.9% year-on-year.

-- In the area of industrial development, the increase was mainly
linked to costs incurred in preparation for future
pre-approval inspections by the FDA at some of the Group´s
manufacturing sites, in the the framework of the Somatuline(R)
Depot filing, which received marketing authorisation on 29
August 2007, as well as Dysport(R), for which filing took
place on 31 January 2008.

- Selling, general and administrative expenses

A comparison of selling, general and administrative expenses for
the years 2007 and 2006 is presented in the following table:

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207/2006 change
31 December 31 December
(in thousands of euros) 2007 2006 in value %
----------------------------------------------------------------------
Breakdown by expense type
Royalties paid (34,723) (31,186) (3,537) 11.3%
Taxes and sales tax (10,686) (15,207) 4,521 (29.7)%
Other sales and marketing
expenses (275,643) (261,402) (14,241) 5.4%
----------------------------------------------------------------------
Selling expenses (321,052) (307,795) (13,257) 4.3%
----------------------------------------------------------------------
General and administrative
expenses (80,429) (75,220) (5,209) 6.9%
----------------------------------------------------------------------
Total (401,481) (383,015) (18,466) 4.8%
----------------------------------------------------------------------
*T

In 2007, selling, general and administrative expenses were
contained and increased by only 4.8% to EUR 401.5 million,
representing 43.6% of sales down from 44.5% a year earlier.

-- Selling expenses amounted to EUR 321.1 million, representing
34.9% of sales, up 4.3% year-on-year (2006: EUR 307.8 million,
representing 35.7% of sales). This increase stands below the
sales growth level, despite a significant increase in
royalties paid to third parties.

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*T
-- Royalties paid to third parties on sales of products
marketed by the Group amounted to EUR 34.7 million, up
11.3% year on year, stemming from the sales growth of the
corresponding products.

-- Taxes and sales taxes were down 29.7% year-on-year,
mainly due to the reduction in 2007 of a sales-based tax
rate in France from 1.76% to 1.0%.

-- Other sales and marketing expenses (i.e. marketing and
sales force costs) were up by 5.4% year on year,
amounting to EUR 275.9 million in 2007, or 30.0% of
sales, compared with EUR 261.4 million in 2006 or 30.3%
of sales. This slight reduction in relative value was
achieved despite the launch costs of Adrovance(TM) in
France and Increlex(R) in certain European countries.
Furthermore, while expenses grew sharply in fast-growing
economies such as Central European countries, China,
Korea, Algeria, Mexico and certain Western European
countries as well as Scandinavia, expenses in Major
European countries grew moderately, reflecting
productivity improvements as well as arbitrage efforts in
the Group´s resource allocation.
*T

-- General and administrative expenses grew by 6.9% to EUR 80.4
million, representing an increase of EUR 5.2 million compared
with last year. This increase stemmed mainly from an increase
in the costs of corporate functions, particularly in order to
upgrade the Group´s IT systems, as well as to support sales
growth, especially in international markets, notably North
America.

- Other operating income and expenses

In 2007, other operating income and expenses were immaterial,
compared with an expense of EUR 8.2 million in 2006 relating primarily
to a non-recurring payment of $10 million to Inamed for the recovery
of all rights related to Reloxin(R) in the United States, Canada and
Japan.

- Impairment losses

No impairment charge was recorded in 2007, compared with a EUR 7.3
million expense in 2006 relating to full impairment of the net book
value of the intangible asset in respect of Testim(R) rights.

- Operating profit

As a result of the above, the Group´s operating income for 2007
reached EUR 208.9 million, representing 21.0% of total revenues and
22.7% of sales, up 11.6% year on year, (2006: 19.8% of total revenues
and 21.7% of sales).

- Segment reporting: Operating profit by geographical region

In compliance with IAS 14 "Segment Reporting", the Group´s primary
reporting format is presented according to geographical segment, since
Ipsen operates in a single business segment, i.e. drug research and
development, production and sales.

Sales, revenues and operating income for 2007 and 2006 are
presented in the following table by geographical region:

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31 December 2007 31 December 2006 % change 2007/2006
(in (in (in
thousands thousands thousands
of euros) % of euros) % of euros) %
----------------------------------------------------------------------
Major Western European countries(1)
Sales 564,262 100,0 % 551,674 100,0% 12,588 2,3 %
Revenues 571,228 101,2 % 564,528 102,3% 6,700 1,2 %
Operating
income 216,619 38,4 % 215,829 39,1% 790 0,4 %
----------------------------------------------------------------------
Other European countries
Sales 208,121 100,0 % 184,800 100,0 % 23,321 12,6 %
Revenues 208,121 100,0 % 184,800 100,0 % 23,321 12,6 %
Operating
income 79,109 38,0 % 71,516 38,7 % 7 593 10,6 %
----------------------------------------------------------------------
Rest of the World
Sales 148,091 100,0 % 125,202 100,0 % 22,890 18,3 %
Revenues 150,182 101,4 % 125,202 100,0 % 24,980 20,0 %
Operating
income 53,710 36,3 % 42,309 33,8 % 11,401 26,9 %
----------------------------------------------------------------------
Allocated total
Sales 920,475 100,0 % 861,676 100,0% 58,799 6,8 %
Revenues 929,531 101,0 % 874,530 101,5% 55,001 6,3 %
Operating
income 349,439 38,0 % 329,654 38,3% 19,785 6,0 %
----------------------------------------------------------------------
Non-allocated tota(2)
Revenues 64,226 6,5 % 70,727 7,5% (6,501) -9,2 %
Operating
income (140,550) (67,3 %) (142,435) (76,1%) 1,885 (1,3 %)
----------------------------------------------------------------------
Ipsen total
Sales 920,475 100,0 % 861,676 100,0% 58,799 6,8 %
Revenues 993,757 108,0 % 945,257 109,7% 48,500 5,1 %
Operating
income 208,888 22,7 % 187,219 21,7% 21,669 11,6 %
----------------------------------------------------------------------
(1) France, Spain, Italy, Germany and the UK
(2) Since January 1st, 2007, the Group has been able to better
allocate to regions some international market central control costs,
previously non-allocated.
*T

-- In Major Western European countries, sales grew by only 2.3%
year on year, reflecting government measures imposing price
cuts, primarily in France and Italy. Total revenues increased
by 1.2% as sales generated by Artotec(R) in 2007 did not fully
offset the effects of EUR 7.7 million one shot payment in
connection with the termination of the Zoxan(R) co-promotion
agreement with Pfizer in 2007. Hence, operating income
increased by 0.4% to EUR 216.6 million over the period,
representing 38.4% of sales, compared with EUR 215.8 million a
year ago, representing 39.1% of sales.

-- In Other European countries (other Western European countries
and Eastern European countries), sales increased by 12.6% year
on year. Operating income increased by 10.6% over the period
to EUR 79.1 million, up from EUR 71.5 million in 2006,
representing 38.0% and 38.7% of sales respectively. This
performance reflects a fast and profitable growth, despite
price pressure , which amounted to EUR 2.0 million. Moreover,
the relative weight of drug-related activities in the region,
which generate lower margins, increased from 4.8% to 6.2% of
sales.

-- In the Rest of the World, where most of the Group´s products
are marketed by third-party distributors and agents, except in
certain countries where Ipsen has a direct presence, sales
were up 18.3%, a sharp increase year on year. Operating income
amounted to EUR 53.7 million, up 26.9% year on year (2006: EUR
42.3 million euros). Given the launch of Somatuline(R) Depot
in the United States at the end of 2007, the Rest of the World
benefited in 2007 for the first time from the recognition of
milestone payments received from Tercica Inc. in connection
with the licensing agreement of EUR 1.9 million.

-- Non-allocated operating loss totalled EUR (140.6) million
(2006; loss of EUR (142.4) million). The non-allocated
operating loss included:

-0-
*T
-- revenues of EUR 64.2 million compared with EUR 70.7
million in 2006. This includes primarily royalties
received from the Kogenate(R) licence, as well as
recognition over the life of the corresponding contracts
of revenue from these agreements. In 2007, this comprised
chiefly revenue relating to agreements with Medicis for
Reloxin(R), with Recordati for Tenstaten(R) and with
Roche for BIM 51077. The decrease of these revenues year-
on-year stems from the decrease of rebillings in the
framework of the corresponding partnerships;

-- research & development expenses of EUR (161.4) million,
up from EUR (159.9) million a year ago;

-- non-allocated selling, general and administrative
expenses of EUR (43.7) million compared with EUR (38.0)
million a year ago;

-- other operating income of EUR 0.4 million in 2007. In
2006, the Group recorded other operating expenses of EUR
(8.2) million, relating primarily to the sum paid to
Inamed in March 2006 to recover all rights relating to
Reloxin(R).
*T

- Cost of net financial debt and other financial income and
expenses

In 2007, the financial income stood at EUR 9.6 million, up 64.5%
year-on-year, compared with an income of EUR 5.8 million in 2006. This
positive trend mainly reflects primarily the evolution of monetary
rates over the period.

Other financial elements represented a EUR 2.9 million expense as
of 31 December 2007, compared with a EUR 5.7 million expense a year
ago, mainly comprising:

-- a EUR 3.6 million income charge relating to a revaluation as
at 31 December 2007 - according to IAS 39 - of financial
instruments (warrants and convertible notes) in connection
with the acquisition of Tercica Inc. in October 2006 (against
a EUR 2.7 million charge as of 31 December 2006).

-- a EUR (4.5) million charge due to foreign exchange loss (loss
of EUR (1.8) million in 2006), of which EUR (1.0) million
stemmed from the revaluation of the Tercica Inc. convertible
bond in US dollars subscribed for by the Group in October 2006
(against EUR 0.7 million in 2006).

-- For EUR (0,8) million, the indexation of the deposit paid by
the Group in respect of the lease contract for its future
headquarters.

-- The balance of other financial items is essentially related to
income and expenses on employee benefits (EUR (0,6) million)
and to a EUR (0.6) million impairment charge on investments in
non-consolidated companies.

- Income tax

In 2007, the Group´s effective tax rate amounted to 25.3% of net
profit from continuing operations and the Group´s loss from
associates, compared with 21.8% a year earlier.

The Group´s recurring tax rate amounted to 25.9% of net profit
from continuing operations and the Group´s loss from associates in
2007, compared with 25.6% a year earlier. In 2006, the effective tax
rate benefited from the non-recurring effect of the use in the United
Kingdom of capital losses of EUR 6.9 million that had previously not
been recognised.

- Group´s loss from associates

The Group´s loss from associates amounted to EUR (8.8) million
($(12.0) million) and was solely composed of the Group´s share of the
net losses of Tercica Inc. in 2007, stated as required under IFRS.
Tercica Inc. began shipments of Increlex(TM) in January 2006 and of
Somatuline(R) Depot in October 2007 and recorded sales of $9.8 million
for 2007. The cost of goods sold for the period amounted to $5.9
million. Research and development costs were $18.9 million, relating
to the continuation of clinical trials for Primary IGF-1 and severe
Primary IGF-1, as well as manufacturing development costs. Selling,
general and administrative expenses amounted to $57.6 million in 2007.
Due to Tercica Inc.´s positive net cash position of $113.5 million at
31 December 2007, interest income in 2007 was $3.0 million. Other
financial income and expenses reached EUR 7.4 millions, notably
corresponding to the change in fair value and foreign exchange impacts
on financial instruments. Finally, the Group booked $29.1 million of
tax income on Tercica Inc.´s loss before tax of $76.4 million over the
period.

- Net profit/loss from continuing operations

As a result of the items described above, profit from continuing
operations increased by 5.2% to EUR 152.4 million, compared with EUR
144.8 million in 2006, representing 15.3% of total revenues, stable
year-on-year.

- Net profit/loss from discontinued operations

The Group´s discontinued primary care business in Spain sold in
2005 generated a loss of EUR 1.3 million in 2007. This loss
accompanied the final closure in the first quarter of 2007 of the
Barcelona production plant, which continued to manufacture primary
care products in accordance with agreements signed with the buyer when
the business was sold, as well as consulting fees following a tax
audit on a former divestment (2006: EUR (0.3) million).

- Consolidated net profit

As a result of the items noted above, consolidated net profit
increased by 4.5% to EUR 151.1 million (EUR 150.6 million attributable
to equity holders of Ipsen S.A.), compared with EUR 144.5 million (EUR
144.0 million attributable to equity holders of Ipsen S.A.) in 2006.
Consolidated profit represented 15.2% of revenues in 2007, compared
with 15.3% a year earlier.

- Milestones received in cash but not yet recognised as revenues

In 2007, total milestones received in cash by the Group but not
yet recognised as revenues in its consolidated income statement
amounted to EUR 218.7 million, compared with EUR 184.3 million in
2006.

These payments will be recognised in the Group´s income statement
as revenues going forward as follows:

-0-
*T
Milestones received in cash but not
yet recognised as revenues in the
(in million euros) periods ending:
----------------------------------------------------------------------
31 December 2007 31 December 2006
----------------------------------------------------------------------
Total 218.7 184.3
These will be recognized as
revenue in the future as follows:
In 2008 22.4 13.6
In 2009 and beyond 196.3 170.7
----------------------------------------------------------------------
*T

2. Cash flow and capital resources for the years 2007 and 2006

In 2007 the Group generated EUR 176.0 million cash flow from
operating activities, against EUR 327.6 million a year earlier. In
2006, the cash position benefited from the receipt of a EUR 102.4
million ($123.1 million) milestone from Medicis under the Reloxin(R)
distribution agreement granted by the Group for the United States,
Canada and Japan in the aesthetics indication, as well as from a EUR
57.7 million option payment from Roche following their decision to
license-in BIM51077 worldwide.

Cash flow from discontinued operations was EUR 1.3 million over
the period compared with EUR 0.6 million in 2006.

- Cash flow statement

-0-
*T
31 31
December December
(in thousands of euros) 2007 2006
----------------------------------------------------------------------
- Cash flow before variation in working capital
requirements 214,254 167,626
- (Increase) / decrease in working capital
requirements for operations (38,284) 160,009
-- Net cash flow generated by operating activities 175,970 327,635

- Other items (129,677) (162,324)
- Deposits paid (4,601) -
- Variation in cash securities held for
sale (6,000) -
-- Net cash flow used in investment activities (140,278) (162,324)

-- Net cash flow used in financing activities (76,818) (83,508)

-- Net cash flow provided by discontinued
activities 1,285 647

Increase / (decrease) in cash flow for the year (39,841) 82,450

Cash and cash equivalents at beginning of the year 283,743 200,564
Impact of foreign exchange variations (2,995) 729
----------------------------------------------------------------------
Cash and cash equivalents at end of the year 240,907 283,743
----------------------------------------------------------------------
*T

- Net cash flow generated by operating activities

During 2007, net cash flow generated by operating activities
before changes in working capital reached EUR 214.3 million, compared
with EUR 167.6 million in 2006. Cash flow before variation in working
capital in 2006 was affected by an increase in deferred tax
receivables, relating primarily to the recognition of a deferred tax
asset on the milestone payment received from Medicis.

Working capital requirements for operating activities increased by
EUR 38.3 million in 2007 following a decrease of EUR 160.0 million
during 2006. This evolution is linked to the following events:

-- the balance between current assets and current liabilities
represents a debt which increased by EUR 29.5 million in 2007
following an increase of EUR 166.1 million a year ago. In
2007, the Group recognised deferred revenue of EUR 51.4
million received in connection with its partnership agreements
with Recordati, Roche, Galderma and Tercica Inc.. This income
was partly offset by the recognition in the income statement
of EUR 16.7 million mainly in relation to agreements with
Medicis, Roche, Galderma, Tercica Inc. and Recordati, as well
as changes in other operating liabilities and assets.

-- inventories increased by EUR 9.0 million in 2007 compared with
an increase of EUR 4.6 million a year ago, mainly due to the
replenishment of certain security stocks of raw material and
finished goods. Trade receivables rose by EUR 25.4 million,
compared with an increase of EUR 27.4 million in 2006, mainly
due to growth in business in international markets, in spite
of changes in payment terms for certain customers in these
areas, and due to changes in payment terms in France following
the implementation in 2007 of direct sales to pharmacies.
Meanwhile, trade payables increased by EUR 5.1 million, given
a higher level of invoicing from suppliers than that
experienced during the fourth quarter 2006.

-- tax payable decreased by EUR 38.5 million in 2007, mainly due
to the payment in early 2007 of taxes related to the
milestones paid by Medicis to the Group in 2006.

As a result of the above, net cash flow generated by operating
activities amounted to EUR 176.0 million in 2007, which included EUR
51.4 millions in payments from partnerships as well as EUR 35.8
millions of taxes paid in 2007, most of which was linked to milestone
payments cashed-in in 2006.

Net cash flow used in investment activities

In 2007, net cash flow used in investment activities comprised two
main components:

-- Reflection of net cash flow relating to investment in the
strict sense;

-- Reflection of other elements.

Net cash flow used in investment activities in the strict sense
represented EUR 129.7 million compared with EUR 162.3 million in 2006.
This comprised mainly:

-- Asset acquisitions, net of disposals, of EUR 84.0 million in
2007 compared with EUR 78.8 million in 2006.

-0-
*T
-- In 2007, tangible fixed asset acquisitions totalled EUR
58.7 million, mostly consisting of capital expenditure
required to maintain the Group´s industrial facilities,
as well as certain investment in capacity, such as EUR
17.7 million for the new Dysport(R) secondary production
plant at the Wrexham site in the United Kingdom.

-- During the same period, intangible fixed asset
acquisitions amounted to EUR 26.5 million, mainly
relating to the first milestone payment in connection
with the acquisition of a patent and to the agreement
with Tercica Inc. for Increlex(R), relating to its
approval in Europe.
*T

-- The subscription to a capital increase of Tercica Inc. for EUR
2.1 million, and EUR 42.4 million relating to the subscription
of two convertible bonds issued by Tercica Inc. in connection
with the approval of Somatuline(R) Depot in the USA.

-- EUR 5 million to fund its post-employment benefit plans.

-- An increase of EUR 7.5 million in working capital requirements
for investment activities in 2007 against a EUR 5.8 million
increase in 2006.

-0-
*T
-- This increase relates primarily to the payments in 2007
of debts due against fixed assets recognised at the end
of 2006, mainly in France and the United Kingdom.
*T

Net cash flow used for other elements represents:

-- EUR 4.6 million for guarantee deposits paid by the Group,
notably as a security against long-term public loans received
in Spain in the context of its research activities, and in
respect of the lease contract for its future head office in
France.

-- EUR 6.0 million relating to investments, as part of an active
cash management strategy, in securities offering a higher rate
of return than monetary unit trusts while maintaining a low
rate of volatility.

Net cash flow used in financing activities.

As of December 31, 2007, net cash flow used in financing
activities totalled EUR 76.8 million compared with EUR 83.5 million in
2006. The Group paid out EUR 50.4 million in dividends in 2007, in
line with the amount paid in 2006. It repaid EUR 2.1 million euros
from its credit lines, with outstandings of EUR 4.4 million as at
December 31, 2007, while in 2006, the Group had repaid EUR 31.8
million of its credit lines, with outstandings of EUR 6.3 million. The
Group also used EUR 24.8 million in 2007 to finance its share buyback
program.

Net cash flow provided by discontinued activities.

In 2007, net cash flow provided by discontinued activities
amounted to EUR 1.3 million, resulting from the decrease in working
capital requirements linked the Group´s primary care business in
Spain, sold in October 2005, compared with EUR 0.6 million in 2006.

Analysis of net cash(3) for the years 2007 and 2006

-0-
*T
(In thousand ´euros) 31 December 2007 31 December 2006
----------------------------------------------------------------------
Cash in hand 25,617 31,026
Short-term investments 195,859 243,670
Interest-bearing deposits 25,592 10,763
Cash and cash equivalents 247,068 285,459
Securities held for sale(4) 6,000 -
Total cash 253,068 285,459
Bank overdrafts liabilities (6,161) (1,716)
Closing net cash and cash
equivalents 246,907 283,743
Non-Current
Short-term debt 4,379 6,286
Other financial liabilities 16,449 15,313
Current
Short-term debt 5,375 6,973
Financial liabilities 3,831 2,251
Debt 30,034 30,823
Derivatives (908) (4)
----------------------------------------------------------------------
Net cash 217,781 252,924
----------------------------------------------------------------------
*T

At 31 December 2007, the Group´s net cash position was EUR 217.8
million, compared with EUR 252.9 million a year earlier. In addition,
the Group had three-year credit facilities totalling EUR 206.7 million
at 31 December 2007, of which EUR 4.4 million only was in use,
compared with utilisation of EUR 6.3 million a year earlier. Covenants
included in the loan agreements, namely net debt to equity and net
debt to EBITDA(5), are irrelevant in respect of the current positive
net cash situation.

(3) 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.

(4) "Securities held for sale" correspond to shares in mutual
funds held for trading which the Group intends to sell in the near
future. They are included in the calculation of the Group´s net cash
position.

(5) EBITDA: earnings before interest, tax, depreciation and
amortisation.