Ipsen´s Half-Year 2012 Results

Regulatory News:

The Board of Directors of Ipsen (Paris:IPN) (Euronext: IPN; ADR: IPSEY), chaired by Marc de Garidel, met on 27 August 2012 to approve the financial statements for the first half 2012, published today. The interim financial report, with regard to regulated information, is available on the Group´s website, www.ipsen.com, under the Regulated Information tab in the Investor Relations section. The 2012 half year financial statements have been subject to a limited review by statutory auditors.

Commenting on the first half 2012 performance, Marc de Garidel, Chairman and Chief Executive Officer of Ipsen, said: "With drug sales up 6.3%1 year-on-year, Ipsen has once again illustrated the pertinence of focusing on specialty therapeutic areas. Each of the three Group´s specialty care franchises showed double digit growth over the period. With nine phase III clinical trials ongoing - in particular the tasquinimod study for which preliminary overall survival phase II results are promising - Ipsen is determined to strengthen its franchises. In addition, regarding hemophilia, we have recently renegotiated our partnership with Inspiration to address their financing needs and to protect the Group´s interest by gaining commercial rights in some of our key territories." Marc de Garidel added: "Regarding our primary care activity in France, recent major differences arose with our preferred partner regarding the creation of a commercial joint-venture. The lack of alignment on the level of ambition of the project led to the termination of the late-stage negotiations. As a result and in line with the strategy announced in June 2011, we will now adjust the French sales organization by approximately 100 positions. Moreover, the Group will continue to invest in its technological platforms, franchises and growth territories while closely controlling its costs. "

1 Sales growth are computed excluding foreign exchange impacts

Extract of consolidated results

(in million of euros)
These results were subject to a limited review by the auditors

Consolidated net profit
(attributable to shareholders of Ipsen)

Earnings per share "´ fully diluted (€)
(attributable to shareholders of Ipsen)

Recurring adjusted(1) consolidated net profit
(attributable to shareholders of Ipsen)

Recurring adjusted(1) earnings per share "´ fully diluted (€)
(attributable to shareholders of Ipsen)

(1) Before non-recurring elements. See appendix 4

Review of the first half 2012 sales and results

The Group´s consolidated sales amounted to €629.8 million, up 8.0% year-on-year (+6.3% excluding foreign exchange impacts2). Sales of specialty care products totalled €439.8 million, up 15.4% year-on-year (13.5% excluding foreign exchange impacts1). Specialty care products represented 69.8% of the Group´s consolidated sales, compared with 65.3% a year earlier. Sales of primary care products totalled €172.2 million, down 7.2% year-on-year (down 8.5% excluding foreign exchange impacts1).

Drug sales grew 8.0% year-on-year (+6.3% excluding foreign exchange impacts1) mainly driven by:

• Sales of the Neurology franchise, up 14.3% (+12.9% excluding foreign exchange impacts1) fuelled by strong Dysport® sales growth in Russia and supply sales to the Group´s partners in aesthetic medicine, Medicis and Galderma. This strong performance was also driven by the implementation of a new agreement with Galderma in Australia.
• The performance of the Endocrinology franchise, up 15.3% (up 13.1% excluding foreign exchange impacts3) primarily fuelled by strong Somatuline® sales growth in the United Kingdom, France, Italy, Poland, North America, Latin America and the Netherlands.
• The performance of the Uro-Oncology franchise, up 16.5% (up 14.5% excluding foreign exchange impacts1) primarily fuelled by a robust performance of Decapeptyl®, in particular in China, Russia, United Kingdom, Algeria and Poland. In addition, sales of Hexvix® reached €6.0 million, essentially generated in Germany.

In the first half 2012, sales in the major Western European countries amounted to €272.4 million, down 0.9% year-on-year excluding foreign exchange impacts1. Dynamic sales volume growth of specialty care products were more than offset by the consequences of a tougher competitive environment in the French primary care landscape and administrative measures in Spain. In the other European countries, sales amounted to €159.8 million, up 10.0% excluding foreign exchange impacts1, driven by the strong performance of Russia which, benefited from both growth in volume and numerous tenders. Sales in North America amounted to €36.3 million, up 2.1% excluding foreign exchange impacts1. Restated to exclude Apokyn® sales (no longer recorded by Ipsen in its accounts since 30 November 2011), North American sales were up 11.7% year-on-year, driven by strong supply of Dysport® for aesthetic use to Medicis, the continued penetration of Somatuline® in acromegaly and the value growth of Dysport® in the treatment of cervical dystonia. In the rest of the World, sales amounted to €161.3 million, up 22.3% year-on-year or up 17.9% excluding foreign exchange impacts1. This performance was notably driven by certain non-recurring stocking effects: in Australia where Ipsen signed an agreement in April 2012 with Galderma for the distribution and promotion of Dysport® for aesthetics use; and in Vietnam, where some orders of Primary care products were anticipated prior to the expiry of import licenses.

Other revenues amounted to €45.2 million in the first half 2012, up 24.6% year-on-year (€36.3 million at June 2011). This growth results from both increased royalties paid by Medicis, Galderma and Menarini, and, the rebilling of OBI-1 industrial development and European Hemophilia Business Unit (set up on 30 August 2011) expenses as part of the agreements signed with Inspiration Biopharmaceuticals Inc.. Under the terms of the agreement signed with Inspiration on August 21 2012, the European Hemophilia Business Unit will no longer be billed to Inspiration.

Consequently, total revenues reached €675.0 million in the first half 2012, up 9.0% year-on-year.

R&D expenses increased by €25.7 million compared with June 2011 and represented €131.5 million, or 20.9% of sales, compared with 18.1% of sales the prior year. Excluding industrial development expenses relating to OBI-1, invoiced to Inspiration Biopharmaceuticals Inc., R&D expenses represented 18.5% of sales and increased by 17.9% year-on-year.

In the first half 2012, selling, general and administrative expenses amounted to €278.6 million, or 44.2% of sales, up 12.3% compared with €248.2 million, or 42.6% of sales in the first half 2011, reflecting on the one hand the Group´s selective commercial resources allocation policy to growth geographies and, on the other hand, stable French primary care selling costs but increasing costs to sales ratio in a context of declining sales.

In the first half 2012, the Group recorded in other operating income and expenses an income of €2.5 million and expenses of €14.1 million composed of non-recurring costs related to the implementation of the new strategy announced on 9 June 2011, the settlement of a trade dispute with a partner and an administrative procedure involving the Group.

In the first half 2012, amortization charges of intangible assets represented an expense of €5.6 million, including mainly the amortization of Hexvix® rights acquired from Photocure in September 2011 and the amortization of the trademark of Nisis®-Nisisco®, primary care product deprioritized following the arrival of generics on the French market as a result from the patent loss in November 2011.

In the first half 2012, the Group recorded €3.9 million non-recurring restructuring costs as part of the strategy announced on 9 June 2011, compared to €28.1 million a year earlier.

In the first half 2012, the Group decided to retain the Dreux-based industrial facility within the scope of its activity. Consequently, the Group reassessed the value of this asset taking into account all new elements and recorded an impairment write-back of €12.5 million in its financial consolidated statements at 30 June 2012, partially offset by an additional impairment loss of €1.7 million on assets related to deprioritized R&D projects.

As a result, operating income reported in the first half 2012 amounted to €125.7 million or 20.0% of sales, up 4.1% compared to 20.7% for the same period in 2011.

The Group´s recurring adjusted4 operating income in the first half 2012 amounted to €131.5 million or 20.9% of consolidated sales, down 8.6% year-on-year.

At 30 June 2012, the Group´s financial income amounted to €15.5 million compared with €1.2 million the previous year. The cost of net financial debt represented an income of €1.5 million, including primarily the interests recorded on the five convertible bonds issued by Inspiration Biopharmaceuticals Inc. and subscribed by the Group (versus two at 30 June 2011) partially offset by the non-utilisation fees on the credit line subscribed on 31 January 2012. Other financial income and expenses represented an income of €14.0 million mainly due to positive foreign exchange rate impact, non-recurring profits from additional payments received up on the divestment by the Group in 2010 of its PregLem Holding S.A shares and profit derived from the sale of its Spirogen shares during the period.

At 30 June, 2012, Ipsen´s effective tax rate represented 25.9% of profit from continuing operations before tax and share of profit/loss from associated companies, compared to an effective tax rate of 21.5% at 30 June 2011. This increase mainly resulted from the dilution of the research tax credit positive impact associated to a higher taxable profit as compared to 30 June 2011. The implementation of the exceptional 5% French tax contribution at the end of 2011 also contributed to the effective tax rate increase. Excluding non-recurring operating, financing and tax items, the effective tax rate amounted to 23.9% at 30 June 2012, compared to 22.9% the previous year.

At 30 June 2012, the Group posted a share in the loss of associated companies of €(14.2) million, representing its share of 22% in Inspiration Biopharmaceuticals Inc.´s result, now attributed to the convertible bonds subscribed by the Group, the carrying value of the Group´s investment being nil since 31 December 2011.

Consolidated net profit decreased by 1.5% to €90.5 million (attributable to shareholders of Ipsen S.A.: €90.2 million) compared with €91.9 million (attributable to shareholders of Ipsen S.A.: €91.7 million) at 30 June 2011. Recurring adjusted1 diluted earnings per share attributable to the Group at 30 June 2012 amounted to €1.02, down 19.7% year-on-year.

At 30 June 2012, the total of milestone payments received in cash by the Group and not yet recognised as other revenues on the income statement amounted to €191.9 million, compared with €206.1 million the previous year. The Group recorded no new deferred revenue for its partnerships in 2012 against €3.7 million in 2011.

Net cash flow from operating activities represented €63.3 million, compared to €97.3 million the previous year. At 30 June 2012, the Group had a positive closing net cash and cash equivalents of €60.1 million, compared to €121.8 million as of 30 June 2011.

1 Variations excluding foreign exchange impacts are computed by restating the first half 2011 with the first half 2012 average  exchange rates
1 Before non-recurring elements. See appendix 4

About Primary care commercial activities in France

Recent major differences arose between Ipsen and its preferred partner regarding the creation of a common structure for their French primary care commercial activities. The lack of alignment regarding the level of ambition for the project led to the termination of late-stage negotiations.

In accordance with the strategy announced on 09 June 2011, the Group continues to work at optimizing this activity and remains open to the creation of a partnership ensuring the long-term viability of this business.

Recent government measures "´ Tanakan® delisting, Adrovance® and Nisis/Nisisco® price cuts "´ as well as the introduction of generics of Nisis/Nisisco® and the end of the Exforge® contract with Novartis, have significantly impacted Ipsen´s primary care activity in France in the first half 2012 with sales down 21.7% (Tanakan® sales down 33.3% in France).

As a result, an adjustment of French sales organization has become necessary. This adjustment will affect approximately 100 positions in the Group´s French commercial operations. The social consultations will start during the fourth quarter of 2012.

Update of 2012 financial targets

Based on information currently available and given its solid performance in the first half 2012, the Group is now targeting for the full year 2012:

• Specialty Care drug sales growth year-on-year in the upper range of 8.0% to 10.0%
• Primary Care drug sales decrease year-on-year of approximately 15.0%
• Recurring adjusted5 operating margin of approximately 15.0% of its sales

The above objectives are set excluding foreign exchange impacts.

Media conference call (in French)

Ipsen will host a conference call on Tuesday 28 August 2012 at 9:30 am (Paris time - GMT+1).

Participants in the conference call may connect for the meeting 5-10 minutes prior to its start. No reservations are required to participate. The conference ID is 19512749. The telephone number to call in order to connect to the conference call from France is +33 (0)1 76 74 24 28, from other countries in Europe it is +44 (0) 1452 555 566 and from the United States +1 631 510 7498. The telephone number to call in order to access a recording of the conference call is +44 (0) 1452 55 00 00. The access number is 19512749#. The conference call is available for one week following the meeting.

Meeting, webcast and Conference Call (in English) for the financial community

Ipsen will host an analyst meeting on Tuesday 28 August 2012 at 2:00 p.m. (Paris time, GMT+1) at its headquarters in Boulogne-Billancourt (France). A web conference (audio and video webcast) and conference call will take place simultaneously. The web conference will be available at www.ipsen.com. Participants in the conference call should dial in approximately 5 to 10 minutes prior to its start. No reservation is required to participate. The conference ID is 921075. No access code is required. Phone numbers to call in order to connect to the conference are: from France and continental Europe +33 (0) 1 70 99 32 08, from UK +44 (0) 20 7162 0077 and from the United States +1 334 323 6201. A recording will be available shortly after the call. Phone numbers to access the replay of the conference are: from France and continental Europe +33 (0) 1 70 99 35 29, from UK +44 (0) 20 7031 4064 and from the United States +1 954 334 0342 and access code is 921075. This replay will be available for one week following the meeting.

About Ipsen

Ipsen is a global specialty-driven pharmaceutical company with total sales exceeding €1.1 billion in 2011. Ipsen´s ambition is to become a leader in specialty healthcare solutions for targeted debilitating diseases. Its development strategy is supported by four franchises: neurology / Dysport®, endocrinology / Somatuline®, uro-oncology / Decapeptyl® and hemophilia. Moreover, the Group has an active policy of partnerships. Ipsen´s R&D is focused on its innovative and differentiated technological platforms, peptides and toxins. In 2011, R&D expenditure totalled more than €250 million, above 21% of Group sales. The Group has total worldwide staff of close to 4,500 employees. Ipsen´s shares are traded on segment A of Euronext Paris (stock code: IPN, ISIN code: FR0010259150) and eligible to the "Service de Règlement Différé" ("SRD"). The Group is part of the SBF 120 index. Ipsen has implemented a Sponsored Level I American Depositary Receipt (ADR) program, which trade on the over-the-counter market in the United States under the symbol IPSEY. For more information on Ipsen, visit www.ipsen.com.

1 Before non-recurring elements. See appendix 4

Forward Looking Statement

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. All of the above risks could affect the Group´s future ability to achieve its financial targets, which were set assuming reasonable macroeconomic conditions based on the information available today.

Moreover, the targets described in this document were prepared without taking into account external growth assumptions 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, notably the fact that a promising product in early development phase or clinical trial may end up never being launched on the market or reaching its commercial targets, notably for regulatory or competition reasons. The Group must face or might face competition from Generics that might translate into loose of market shares.

Furthermore, the Research and Development process involves several stages each of which involve the substantial risk that the Group may fail to achieve its objectives and be forced to abandon its efforts with regards to 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 also depends on third parties to develop and market some of its products which could potentially generate substantial royalties; these partners could behave in such ways which could cause damage to the Group´s activities and financial results. 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.

APPENDICES

Risk factors

The Group operates 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 the Group´s 2011 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 reduction of prices of certain of its products by public or private payers or to their possible withdrawal from the list of reimbursable products by the relevant regulatory authorities in the countries where it does business. In general terms, the Group is faced with uncertainty in relation to the prices set for all its products, in so far as medication prices have come under severe pressure over the last few years as a result of various factors, including the tendency for governments and payers to reduce prices or reimbursement rates for certain drugs marketed by the Group in the countries in which it operates, or even to remove those drugs from lists of reimbursable drugs.
• The Group depends on third parties to develop and market some of its products which generate or may generate substantial royalties for the Group, but these third parties could behave in ways which cause damage to the Group´s business. The Group cannot be certain that its partners will fulfil their obligations. It might be unable to obtain any benefit from those agreements. A default by any of the Group´s partners could generate lower revenues than expected. Such situations could have a negative impact on the Group´s business, financial position or performance. More specifically and on the basis of currently available information, the inability for Inspiration Biopharmaceuticals Inc. to raise independent third party financing could result in the depreciation of all Inspiration-related assets for a total net amount of approximately 81 million euros after tax as of 30 June 2012.
• Actual results may depart significantly from the objectives given that a new product can appear to be promising at a development stage or after clinical trials but never be launched on the market or be launched on the market but fail to sell notably for regulatory or competitive reasons.
• The Research and Development process typically lasts between eight and twelve years from the date of a discovery to a product being brought to market. This process involves several stages; at each stage, there is a substantial risk that the Group could fail to achieve its objectives and be forced to abandon its efforts in respect of products in which it has invested significant amounts. Thus, in order to develop viable products from a commercial point of view, the Group must demonstrate, by means of pre-clinical and clinical trials, that the molecules in question are effective and are not harmful to humans. The Group cannot be certain that favorable results obtained during pre-clinical trials will subsequently be confirmed during clinical trials, or that the results of clinical trials will be sufficient to demonstrate the safety and efficacy of the product in question such that the required marketing approvals can be obtained.
• The Group must deal with or may have to deal with competition (i) from generic products, particularly in relation to Group products which are not protected by patents, for example, Forlax® or Smecta® (ii), products which, although they are not strictly identical to the Group´s products or which have not demonstrated their bioequivalence, have obtained or may obtain a marketing authorization 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. Such a situation could result to the Group losing market share which could affect its current level of growth in sales or profitability.
• Third parties might claim the benefit of intellectual property rights in respect to the Group´s inventions. The Group provides the third parties with which it collaborates (including universities and other public or private entities) with information and data in various forms relating to the research, development, manufacturing and marketing of its products. Despite the precautions taken by the Group with regard to these entities, in particular of a contractual nature, they (or certain of their members or affiliates) could claim ownership of intellectual property rights arising from the trials carried out by their employees or any other intellectual property right relating to the Group´s products or molecules in development.
• The Group´s strategy includes acquiring companies or assets which may enable or facilitate access to new markets, research projects or geographical regions or enable it to realize synergies with its existing businesses. Should the growth prospects or earnings potential of such assets as well as valuation assumptions change materially from initial assumptions, the Group might be under the obligation to adjust the values of these assets in its balance sheet, thereby negatively impacting its results and financial situation.
• The marketing of certain products by the Group has been and could be affected by supply shortages and other disruptions. Such difficulties may be of both a regulatory nature (the need to correct certain technical problems in order to bring production sites into compliance with applicable regulations) and a technical nature (difficulties in obtaining supplies of satisfactory quality or difficulties in manufacturing active ingredients or drugs complying with their technical specifications on a sufficiently reliable and uniform basis). This situation may result in inventory shortages and/or in a significant reduction in the sales of one or more products. More specifically, in their US Hopkinton facility, Lonza, supplier of IGF-1 (Increlex® active ingredient), is facing a regulatory challenge by the Food and Drug Administration. Products manufactured for the US in this plant are currently on hold.
• In certain countries exposed to significant public deficits, and where the Group sells its drugs directly to public hospitals, it could face discount or lengthened payment terms or difficulties in recovering its receivables in full. In Greece notably, which represented in 2012 approximately 1.3% of consolidated sales, and where payment terms from public hospitals are particularly long, the Group is closely monitoring the current situation. More generally, the Group may also be unable to purchase sufficient credit insurance to protect itself adequately against the risk of payment default from certain customers worldwide. Such situations could negatively impact the Group´s activities, financial situation and results.
• In the normal course of business, the Group is or may be involved in legal or administrative proceedings. Financial claims are or may be brought against the Group in connection with some of these proceedings. Ipsen Pharmaceuticals, Inc. has received an administrative demand from the United States Attorney´s Office for the Northern District of Georgia seeking documents relating to its sales and marketing of Dysport® (abobotulinumtoxinA) for therapeutic use. Ipsen´s policy is to fully comply with all applicable laws, rules and regulations. Ipsen is cooperating with the U.S. Attorney´s Office in responding to the government´s administrative demand. Additionally, In February 2012, Allergan has commenced legal proceedings against Ipsen in Italy and in the United Kingdom concerning an alleged patent infringement. The patents claim certain therapeutic uses of botulinum toxin products in the field of urology. Ipsen will vigorously defend its rights in these legal proceedings, which are based on patents that are being challenged by Ipsen in opposition proceedings before the European Patent Office.

Major developments in the first half 2012

During the first half 2012, major developments included:

• On January 5, 2012 "´ Oncodesign, a Drug Discovery company and Oncology pharmacology service provider, and Ipsen announced that the two companies have entered into a research collaboration to discover and develop innovative LRRK2 kinase inhibitors as potential therapeutic agents against Parkinson´s Disease and for potential additional uses in other therapeutic areas.
• On January 24, 2012 "´ Santhera Pharmaceuticals and Ipsen announced that they had renegotiated their fipamezole licensing agreement. Santhera regains the worldwide rights to the development and commercialization of fipamezole, its first-in-class selective adrenergic alpha-2 receptor antagonist for the management of levodopa-induced Dyskinesia in Parkinson´s Disease. Under the renegotiated terms, Ipsen returns its rights for territories outside of North America and Japan in exchange for milestone payments and royalties based on future partnering and commercial success of fipamezole. Ipsen retains a call option for worldwide license to the program under certain conditions.
• On January 27, 2012 "´ Ipsen acknowledged the French government´s decision to no longer reimburse Tanakan®, Tramisal® and Ginkogink®. This decision is linked to the French policy to reassess the reimbursement of a certain number of drugs by the French Social Security. Although Tanakan®, Tramisal® and Ginkogink® have been delisted from 1st March 2012 onwards, they can continue to be prescribed and delivered by healthcare professionals to patients in France. The Group plans a decrease of Tanakan® sales of around 35%1 in France in 2012. This estimate is based on decreases of sales following the delisting of veintonics in 2008.
• On February 24, 2012 "´ Active Biotech´s and Ipsen´s castrate resistant prostate cancer project, TASQ, announced the presentation of the up to three years safety data from the TASQ Phase II study in chemotherapy-naïve metastatic castrate resistant prostate cancer (CRPC) at the 27th Annual EAU Congress.
• On April 17, 2012 "´ Ipsen announced that its partner, Inspiration Biopharmaceuticals, Inc. (Inspiration), has submitted a Biologics License Application to the U.S. Food and Drug Administration (FDA) for the approval of IB1001, an intravenous recombinant factor IX (rFIX) for the treatment and prevention of bleeding in individuals with hemophilia B. Under the terms of this partnership and following the filing, Ipsen decided to pay Inspiration a $35 million milestone payment. In return, Inspiration has issued a convertible note to Ipsen, bringing Ipsen´s fully diluted equity ownership position in Inspiration to approximately 43.5%.
• On April 25, 2012 "´ Ipsen announced the official opening of its new US commercial headquarters in Basking Ridge, New Jersey. This is an important step forward for Ipsen in the United States. This announcement confirms Ipsen´s commitment to growth for its uniquely targeted neurology and endocrinology therapeutics in the United States and to provide innovative specialty medicines to US patients in need.
• On May 3, 2012 "´ Ipsen disclosed that it had sold, under a share purchase agreement, all of its shares in Spirogen Limited (19.31% of Spirogen´s equity) on February 24, 2012, and is no longer represented on the board of Spirogen. Ipsen received an upfront cash payment and may receive deferred consideration.
• On May 3, 2012 "´ Ipsen disclosed that it had terminated its agreement with Novartis for the co-promotion of Exforge® in France effective April 30, 2012. Ipsen will receive a contractual cash exit fee payment of €4 million from Novartis.
• On May 18, 2012 "´ Active Biotech and Ipsen announced the presentation of overall survival (OS) data from the Phase II study on tasquinimod (TASQ), their prostate cancer drug candidate (CRPC), at the scientific conference "2012 ASCO Annual Meeting" held in Chicago (USA) on 1-5 June 2012.
• On May 21, 2012 "´ Active Biotech and Ipsen announced that recruitment to the global, pivotal, randomized, double-blind, placebo-controlled phase III study of tasquinimod in patients with metastatic castrate-resistant prostate cancer (CRPC) had reached an inclusion of 600 patients, half of the planned accrual. This triggered a €10 million milestone payment from Ipsen to Active Biotech.
• On June 4, 2012 "´ Active Biotech and Ipsen presented overall survival (OS) data from the tasquinimod Phase II study in chemotherapy-naïve metastatic castrate resistant prostate cancer (CRPC) at the scientific conference "2012 ASCO Annual Meeting" held in Chicago (USA).
• On June 29, 2012 "´ Ipsen announced that its partner Teijin received manufacturing and marketing approval from the Japan´s Ministry of Health, Labour and Welfare (MHLW) for Somatuline® 60/90/120 mg for s.c. injection (lanreotide acetate). In Japan, Somatuline® is indicated for the treatment of growth hormone and IGF-I (somatomedin-C) hypersecretion and related symptoms in acromegaly and pituitary gigantism (when response to surgical therapies is not satisfactory or surgical therapies are difficult to perform). Somatuline® will be available in a new enhanced presentation with a pre-filled syringe that does not need reconstitution and with a retractable needle that enhances safety for caregivers.

After 30 June 2012, major developments included:

• On July 10, 2012 "´ Ipsen announced that its partner Inspiration Biopharmaceuticals Inc. (Inspiration) was notified by the Food and Drug Administration (FDA) that both clinical trials evaluating the safety and efficacy of IB1001 were placed on clinical hold. During the course of routine laboratory evaluations conducted as part of the ongoing phase III clinical trials, Inspiration observed, and reported to the FDA, a trend towards a higher proportion of IB1001 treated individuals developing a positive response to testing of antibodies to Chinese Hamster Ovary (CHO) protein, the product´s host cell protein (HCP). A total of 86 people with hemophilia B have received IB1001 in clinical studies and, to date, no adverse events (anaphylaxis or other serious allergic type reaction and nephrotic syndrome) related to the development of antibodies to CHO protein have been reported. Furthermore, no relationship has been demonstrated between the development of antibodies to CHO protein and the development of any antibodies to factor IX. Inspiration continues to follow subjects enrolled in clinical trials of IB1001 to collect safety-related information and will share this information with regulators.
• On July 11, 2012 "´ Ipsen announced its decision to retain the Dreux (France)-based industrial facility within the scope of its activity. Considering the perspectives of Ipsen´s primary care activity internationally and as a result the higher than-expected production volumes at this site since the beginning of this year, the Group has decided to keep its Dreux industrial site.
• On August 21, 2012 "´ Ipsen announced the renegotiation of its 2010 strategic partnership agreement with Inspiration Biopharmaceuticals, Inc. (Inspiration) for the development and commercialization of Inspiration´s recombinant product portfolio: OBI-1, a recombinant porcine factor VIII (rpFVIII) being developed for the treatment of patients with acquired hemophilia A and congenital hemophilia A with inhibitors, and IB1001, a recombinant factor IX (rFIX) for the treatment and prevention of bleeding in patients with hemophilia B. The new agreement aims to establish an effective structure whereby Ipsen gains commercial rights in key territories. Inspiration remains responsible for the world-wide development of OBI-1 and IB1001. As part of the renegotiation, Ipsen paid Inspiration $30.0 million (approximately €24.0 million, based on current exchange rates) upfront. Including this upfront payment, Ipsen is entitled to pay Inspiration milestones for a total amount of up to $200m, of which $27.5m are regulatory milestones and the remaining are commercial milestones. Both companies believe this new agreement will facilitate Inspiration´s ability to raise independent third party financing to meet its financing needs until a potential equity offering in 2013.

Furthermore, under the new terms, Ipsen has agreed to invest up to $20.0 million in Inspiration, as follows:

• If Inspiration raises external funding prior to August 31, 2012, Ipsen will pay $20.0 million in exchange for equity;
• If Inspiration does not raise external funding prior to August 31, 2012, Ipsen will pay $7.5 million and receive a warrant for 15% of Inspiration´s equity. Ipsen has an option to exercise the warrant should Inspiration fail to raise external funding by September 30, 2012;
• If Inspiration raises external funding prior to September 30, 2012, Ipsen will pay an additional $12.5 million in exchange for equity.

The above elements represent an indication of impairment loss on the net investment the Group holds in Inspiration. While the Board of Directors approved the financial statements on 27 August 2012, Inspiration was still actively seeking external funds to secure its financing needs. The Group ran an impairment test under the assumption that Inspiration would successfully raise external financing in the short term. Accordingly, no further impairment loss was recorded in the consolidated financial statements as of 30 June 2012. Should Inspiration fail to raise external financing and according to the terms of the new partnership agreement signed with Inspiration, the Group would have several options available to protect its interest. As of 30 June 2012, based on the consolidated financial statements, the total after tax amount of Inspiration-related assets on the Group´s balance sheet reached approximately 81 million euros.

1 Impact estimated for full year

Government measures

In a context of financial and economic crisis, the governments of many countries in which the Group operates continue to introduce new measures to reduce public health expenses, some of which affected the Group sales and profitability in 2012. In addition, certain measures introduced in 2011 have continued to affect the Group´s accounts year-on-year.

In the Major Western European countries:

• In France, the price of Forlax® was reduced by 3.5% on October 1, 2011 and the price of Nisis®/Nisisco® by 15.0% on November 14, 2011. On January 1, 2012, the price of Decapeptyl® was reduced by 3.0% for both 3 and 6-month formulations while the price of Adrovance® was reduced by 33.0%. On 1 March 2012, Tanakan® was delisted in France. An additional tax on promotional expenses of 0.6% has also been introduced;
• As of November 1, 2011, Spain raised its tax on drug sales from 7.5% (introduced in June 2010) to 15.0% for products that have been on the market for more than 10 years and have no generic or biosimilar on the Spanish market.

In the Other European countries:

• In Belgium, as from 1 April 2012, as soon as a generic or a hybrid is launched on the market, drugs are regrouped per active ingredient regardless of their galenic form and prices are cut by up to 31.0%;

• In Poland, a new Reimbursement Law Reform was enforced on 1 January 2012, introducing a sales tax in case of budget excess and a tax on manufacturers´ income to fund clinical trials. Regulated margins have been decreased as well. As a result, prices of Decapeptyl® and Somatuline® were both reduced by 3.0% on 1 January 2012;
• Greece voted new measures designed to decrease pharmaceutical expenditure. Key measures include higher rebates to wholesalers and retail pharmacies (9% instead of 4% - retroactive effect as of 1 January 2012), an obligation to prescribe drugs labelled International Non-proprietary Name (INN) and introduction of a payback contribution in case of Health public budget overrun;
• In 2011, Portugal introduced an electronic system encouraging prescription of the cheapest product (including generics). New countries have been included in the reference basket for the International Pricing System such as Spain, Italy and Slovenia. New measures for 2013 have already been published: 6.0% price cut on all drugs and contribution of the pharmaceutical industry to the decrease of healthcare spending through the set up by every pharma company of a provision fund equal to 2.0% of sales.

In the Rest of the World:

• China is finalizing its international reference pricing system including ten countries as the USA, France, Germany, South Korea and Japan;
• In January 2011, Algeria initiated the implementati

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