Ipsen´s First Nine Months of 2008 Sales and Update of Group Financial Objectives

Regulatory News:

Ipsen (Paris:IPN) reported today its sales for the third quarter and first nine months 2008.

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

NOTE 2. 2007 sales include in–market sales of Ginkor Fort^® wherehas 2008 mostly include supply sales of the product to the new OTC partner.

Commenting on the first nine months of 2008 sales performance, Jean–Luc Bélingard, Chairman and Chief Executive Officer of Ipsen said: "Ipsen´s first nine months of 2008 performance continued to show strong growth across all specialist care products in all regions, despite a tough competitive and macroeconomic environment. We believe our business shows robustness and resilience, with a strong global specialist care franchise driven by well positioned and differentiated products, and with a French primary care presence mechanically reducing in relative weight. Over the last three months – as per plan – we have closed our US acquisitions and put in place a new organization that will enhance our ability, after the 2008 and 2009 take–off phase, to deliver on our medium and long term growth ambitions despite challenging market conditions." Jean–Luc Bélingard added: "In the context of today´s stock–market environment, we believe that Ipsen´s current stock price does not take into account our strong long–term growth prospects and rich R&D pipeline."

First nine months of 2008 sales highlight

Consolidated Group sales reached €735.1 million for the first nine months of 2008, up 7.0% year–on–year. Underlying Group sales (excluding Ginkor Fort^® sales, divested on 1 January 2008, and at constant currency) grew by a strong 10.9% year–on–year.

This positive development was fuelled notably by a strong growth in endocrinology and neuromuscular disorders franchises, up 21.3% and 16.9% respectively over the period and by the strong performance of Decapeptyl^®, up 9.0% year–on–year.

Sales generated in the Major Western European countries amounted to €414.5 million, down 1.1% year–on–year. Excluding the sales of Ginkor Fort^®, sales in this region were up 3.2% year–on–year, reflecting a good performance of all products in all countries, except for Tanakan^® in France, following the 10% price cut enforced on July 1, 2007 and an increased competitive environment. Group sales in the Major Western European countries represented 56.4% of consolidated sales compared with 61.0% a year earlier.

Sales generated in the Other European countries reached €185.3 million, up 17.5% year–on–year, mainly driven by strong growth of Decapeptyl^®, Dysport^® and Tanakan^® in Russia and Eastern European countries as well as of Somatuline^® in the Netherlands and Nordic countries. Group sales in Other European countries represented 25.2% of consolidated sales, against 22.9% a year earlier.

Sales generated in the Rest of the World reached €135.3 million, up 22.4% year–on–year thanks to the growth of Decapeptyl^® in China and Algeria, Dysport^® in Brazil, Somatuline^® in the United States and Australia and Smecta^® in Algeria. Group sales in Rest of the World represented 18.4% of consolidated sales, against 16.1% a year earlier.

Group financial objectives after consolidation of its US acquisitions

In the context of its solid performance in the first nine months of 2008, the Group reiterates its full year 2008 standalone objectives as stated on August 29, 2008, namely to reach:

• the upper–end of its sales objectives:

• an "˜other revenues´ growth of 25.0% to 30.0%;
• a reported operating margin of 23.0% to 24.0% of reported sales.

As announced on June 5, 2008, the Group updates today its financial objectives after taking into account the consolidation of Ipsen Pharmaceuticals Inc. (US neurology platform) as from July 1, 2008 and Tercica Inc. (US endocrinology platform) as from October 1, 2008. Therefore, the Group now targets for 2008:

• to add approximately €5 million to its standalone sales targets;
• no change in its "˜other revenues´ growth;
• to reach an operating margin (in % of reported sales) of 20.5 to 22.0%, before any restructuring costs, acquisition related one–off items or purchase accounting impacts.

While the Group is currently analysing the potential impacts of difficult macroeconomic conditions on its future performance, it remains confident in its ability to achieve its future financial objectives and, given its growth prospects, to significantly outpace the average pharmaceutical industry growth rate.

¹ Excluding sales of Ginkor Fort^® and at constant currency

Dispute with Bayer on royalty revenue stream

Ipsen and Bayer have come to a disagreement as to the date of the end of the royalty paying period under their agreement dated 1985, which Ipsen considers, based on strong evidence, should be during the second quarter of 2009. Bayer considers that it could stop paying royalties to Ipsen as of May 2008. Ipsen and Bayer are still exchanging views as to their respective positions in that respect. Pending resolution of their current disagreement, Ipsen will record provisions on its Bayer royalty revenue stream for the disputed periods, which will impact its operating income as one–off items. For these periods, Ipsen has included in its operating income forecasts corresponding amounts of approximately €25 million in 2008 and €11 million in 2009.

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.

Ipsen 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 any other 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 must deal with or may have to deal with competition from generic that may result in market share losses, which could affect its current level of growth in sales or profitability. 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 out 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 the Group´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.
• 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.
• 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´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 in particular for some of the Group´s products that do not benefit from any patent protection, such as Forlax^® or Smecta^® for example (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 Warrant issued by Tercica Inc., which have been registered at fair value as at 31 December 2007 in compliance with IFRS39. 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.
• As a result of its acquisitions in North America, notably Tercica Inc.´s, which closed on October 16, 2008, the Group may record certain transaction related recordings, such a purchase price allocation, restructuring costs or other one–off items that may impact the Group´s financial situation.

Major developments in the period under review

During the third quarter 2008, major developments included:

• On September 30, 2008 - The Group announced that the U.S. Food and Drug Administration (FDA) provided notification that the Prescription Drug User Fee Act (PDUFA) action date for Dysport^® (botulinum toxin of type A) Biologics License Application (BLA) for the treatment of patients with cervical dystonia has been extended to no later than 28 December 2008.
• On September 25, 2008 - The Group announced the start of the filing process in Europe of the 6–month sustained release formulation of Decapeptyl^®, a luteinizing hormone releasing hormone agonist (LHRHa) developed by Debiopharm for the treatment of locally advanced or metastatic hormone–dependent prostate cancer.
• On July 23, 2008 - The Group announced that it subscribed for additional shares of common stock of Tercica Inc. and exercised in full the warrant issued by Tercica in October 2006, and converted in full the convertible notes, issued by Tercica in October 2006 and September 2007.
• On July 17, 2008 - The Group announced that, following the announcement made on June 5, 2008 and the shareholder approval of Octagen Corporation, it has completed the purchase of all assets related to OBI–1.
• On July 1, 2008 - The Group announced that, following shareholder approval of Vernalis plc (LSE: VER), Ipsen has completed its purchase of Apokyn^® and Vernalis´ US Commercial Operations.
• On June 5, 2008 - The Group 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 did not 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 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.

After the close of the period under review, major developments included:

• On October 17, 2008 - The Group announced that stockholders of Tercica, Inc. voted to approve its previously announced acquisition of Tercica at a special meeting of shareholders held on 16 October 2008 in Brisbane, California. Over 90% of the approximately 68.5 million total votable shares were cast in favour of the transaction. Following the meeting, the closing was completed, the merger certificate was filed and the merger became effective as of 16 October 2008.
• On October 10, 2008 - The French Agence Française de Securité Sanitaire des Produits de Santé ("afssaps") informed the Group that it had granted a marketing authorisation to a generic product of Forlax^® in France.

Comparison of consolidated sales for the third quarter and first nine months of 2008 and 2007:

Sales by geographical region

Group sales by geographical region for the third quarter and first nine months of 2008 and 2007 were as follows:

For the third quarter 2008, sales generated in the Major Western European countries amounted to €133.3 million, down 1.9% year–on–year (third quarter 2007, €135.9 million). For the first nine months 2008, sales generated in the Major Western European countries amounted to €414.5 million, down 1.1% year–on–year (first nine months 2007, €419.0 million). Excluding the sales of Ginkor Fort^®, sales in this region were up 3.2% year–on–year, fuelled by strong sales in Germany, Italy and Spain. This good performance was offset by negative foreign exchange impacts in the United Kingdom (where growth in local currency reached 19.5%) and by a decrease in Tanakan^® sales in France following a 10% price cut implemented on July 1, 2007 in an increased competitive environment. Sales in this region in the first nine months 2008 represented 56.4% of total sales compared with 61.0% a year earlier.