Ipsen's 2012 Results and 2013 Financial Objectives

  Ipsen's 2012 Results and 2013 Financial Objectives

  *Strong Sales Growth above Objectives
  *Solid Operating Performance in Light of Significant Decline of the French
    Primary Care Contribution: Group Recurring Adjusted^1 Operating Profit of
    16.1%^2
  *Reported Consolidated Loss, Impacted by Exit from Hemophilia and
    Implementation of the New Commercial Operations Organization for French
    Primary Care
  *Recurring Adjusted^1 Fully Diluted EPS of €1.74

Business Wire

PARIS -- February 27, 2013

Regulatory News:

The Board of Directors of Ipsen (Euronext: IPN; ADR: IPSEY) (Paris:IPN),
chaired by Marc de Garidel, met on 26 February 2013 to review the Group’s
results for 2012, published today. The annual financial report, with regards
to the regulated information, will be available on the Group’s website,
www.ipsen.com, Investor Relations section.

Extract from audited consolidated results for 2012 and 2011 (in million euros)
                                2012          2011          % change
                                                     Proforma^3
Drug sales                       1 187.0       1 127.9       +5.2%
Sales                            1 219.5       1 159.8       +5.1%
Total revenues                   1 277.4       1 210.2       +5.6%
Operating profit                 114.8         72.6          +58.2%
Operating margin^2               9.4%          6.3%          -
Recurring adjusted^1                196.0            197.5            (0.8%)
operating profit
Recurring adjusted^1             16.1%         17.0%         -
operating margin^2
Consolidated profit              (29.0)        0.9           -
Earnings per share – fully          (0.35)           0.01             -
diluted (€)
Recurring adjusted^1                145.5            154.4            (5.8%)
consolidated profit
Recurring adjusted^1 EPS –       1.74          1.85          (5.9%)
fully diluted (€)
Weighted average number of
shares:
Outstanding                         83 155 604       83 217 638       (0.07%)
Fully diluted                    83 460 232    83 465 467    (0.01%)
                                                                      

Commenting the 2012 performance, Marc de Garidel, Chairman and Chief Executive
Officer of Ipsen, stated:«2012 results highlight the Group’s resilience,
with both sales and profitability objectives beaten in the context of a
challenging French primary care environment, showing a 30% sales decline
year-on-year. » Marc de Garidel added: « 2013 will be marked by the
implementation of a new French primary care commercial operations organization
and the publication of crucial clinical data. On a different note, I am
pleased to announce the appointment of Christel Bories as Deputy Chief
Executive Officer. Christel will help us accelerate the execution of the Group
strategy. »

^1 «Recurring adjusted»: Reconciliations between results and recurring
adjusted results for 2012 and 2011 are detailed in appendix 4
^2 In percentage of sales
^3 In compliance with provisions on “discontinued activities”, 2011 figures
have been restated to provide comparative information between 2011 and 2012
(see appendix 5)


Comparison between the Group’s 2012 performance and its financial objectives

                               Financial objectives^4    2012 actuals
Specialty Care drug sales       Around 10.0%              +11.3%
growth
Primary Care drug sales         Approximately -15.0%      -13.2%
growth
Recurring adjusted^5            Approximately 15.0% of    16.1% of sales
                                   sales

Review of full year 2012 results

Note: Comparisons are made on a proforma basis with all income and expense
related to Inspiration recorded in discontinued operations

In 2012, Group drug sales grew 3.4% year-on-year excluding foreign exchange
impact^1, fuelled notably by the dynamic growth of specialty care sales.

Consolidated Group sales reached €1,219.5 million in 2012, up 3.3%
year-on-year excluding foreign exchange impact^1.

Other revenues reached €57.9 million in 2012, up 14.9% year-on-year. In 2012,
the Group recorded a revenue of €20.9 million, against €17.8 million the
previous year, related to the Group’s co-promotion and co-marketing agreements
in France as well as promotion of Hexvix^® in some countries. Royalties
received amounted to €11.9 million in 2012, up 30.9% year-on-year, driven by
the increase in royalties paid by the Group’s partners.

Total revenues amounted to €1,277.4 million, up 5.6% compared with 2011.

Cost of goods sold amounted to €254.8million, or 20.9% of sales, against
21.5% in 2011. The cost of goods sold, positively impacted by the favourable
mix related to the growth in specialty care sales and the Group’s productivity
efforts, was partially offset by custom duties in high growth countries.

Research and Development expenses reached €248.6 million in 2012, up 5.9%
year-on-year, mainly driven by the major programmes conducted during the
period on Dysport^®, Somatuline^® and tasquinimod. Increase of Research and
Development drug-related costs was partially offset by a favourable comparison
basis: costs related to the phase II clinical study of Irosustat (BN-83495)
were no longer recorded in 2012 as the program was discontinued on 6 June
2011. Moreover, industrial and pharmaceutical development expenses grew by
14.9% in 2012, mainly resulting from investments in the Group’s toxins and
peptides technology platforms.

Selling, general and administrative expenses amounted to €572.6million at 31
December 2012, or 46.9% of sales, up 9.3% year-on-year. In line with the
strategy announced on 9 June 2011, the Group continued to increase commercial
investments in specialty care while selectively allocating business resources
to high growth areas mainly China, Russia and Brazil. Furthermore, selling
expenses related to primary care in France increased proportionally to
declining sales. Synergies from the new organization of French primary care
commercial operations are expected to materialize in 2014.

^1 Sales growth excluding foreign exchange impacts. Variations excluding
foreign exchange impacts are computed by restating the 2011 figures with the
2012 average exchange rates
^2 «Recurring adjusted»: Reconciliations between results and recurring
adjusted results for 2012 and 2011 are detailed in appendix 4

Reported operating income in 2012 reached  €114.8 million, up 58.2%
year-on-year, notably affected by:

  *Other operating expenses of €25.8 million, mainly comprising non-recurring
    costs resulting from the search for potential acquirers for the Dreux
    industrial site and partners for the primary care commercial activity in
    France, the settlement of a trade dispute with a partner and an
    administrative procedure involving the Group.
  *Amortisation of intangible assets (excluding software), a  charge of €5.8
    million, compared to €7.8 million the previous year. This decrease is
    mainly due to the change in the amortization plan of IGF-1 following the
    impairment loss recorded on 31 December 2011 and to the total amortization
    of Exforge^® (end of co-promotion contract in France with Novartis
    effective since 30 April 2012). This decrease was partially offset by
    initiation of the amortization of Hexvix^®.
  *Restructuring costs of €63.1 million, mainly related to the implementation
    of the new organization of French primary care commercial operations and
    to the transfer to the East coast of the Group’s North American commercial
    subsidiary that occurred between June 2011 and June 2012.
  *Impairment losses representing a non-recurring revenue of €2.4 million.
    Following the announcement to retain the Dreux-based industrial facility
    within its scope of activity, the Group reassessed the value of this asset
    and recorded an impairment write-back of €12.5 million in its consolidated
    financial statements as of 30 June 2012. The Group recorded a €10.1
    million impairment charge on the brand of Nisis^®/Nisisco^®, following a
    step-up in July 2012 in France in the regulation known as « Tiers-Payant
    », whereby the patient now pays upfront for a branded drug and is later
    reimbursed. This has generated an unprecedented increase in generic
    penetration in France.

Excluding purchase price allocation impacts, non-recurring impairment charges
and restructuring costs, the Group’s recurring adjusted^6 operating income
amounted to  €196.0million in 2012, or 16.1% of sales, down 0.8%
year-on-year.

The effective tax rate amounted in 2012 to 20.3% of profit from continuing
activities before tax. Excluding non-recurring operating, financing and tax
items, the effective tax rate amounted to 23.2% in 2012 compared to 19.3% in
2011.

Net profit from continuing operations amounted to €95.8 million as of 31
December 2012, up 29.9% compared to €73.8 million in 2011.

Consolidated net profit in 2012 was a loss of €29.0 million (attributable to
shareholders of Ipsen S.A.: (€29.5) million) compared with a profit of €0.9
million in 2011 (attributable to shareholders of Ipsen S.A.: €0.4 million).
2012 consolidated net profit was notably affected by:

Profit from discontinued operations: a loss of €124.8 million as of 31
December 2012, compared to a loss of €72.9 million in 2011, composed of
activities related to Inspiration:

  *a non-recurring impairment charge of €100 million after tax on tangible,
    intangible and financial assets;
  *receivables related to the OBI-1 development costs for the second and
    third quarters 2012;
  *rebilling of the costs associated with the implementation of the European
    platform;
  *share of loss in Inspiration’s result over the period before
    classification as “discontinued operations”;
  *all of the above, partially offset by acceleration of recognition of
    hemophilia related deferred revenues.

^1 «Recurring adjusted»: Reconciliations between results and recurring
adjusted results for 2012 and 2011 are detailed in appendix 4

The Recurring adjusted^1 consolidated net profit amounted to €145.5 million at
31 December 2012, down 5.8% compared with €154.4 million in 2011.

Net cash generated by operating activities (continuing operations) amounted to
€165.0 million in 2012, slightly down year-on-year. At 31 December 2012, the
net cash position^7 stood at €113.3 million, compared with a net cash position
of €144.8 million a year earlier, notably affected by the Group’s active
partnership policy: Inspiration, Active Biotech for tasquinimod and Photocure
for Hexvix^®.

Dividend for the 2012 financial year proposed for the approval of Ipsen’s
shareholders

Ipsen’s Board of Directors, which met on 26 February 2013, has decided to
propose at Ipsen’s annual shareholders’ meeting to be held on 31 May 2013 the
payment of a dividend of €0.80 per share, stable year-on-year, representing a
pay-out ratio of approximately 46% of recurring adjusted^8 consolidated net
profit (attributable to the Group’s shareholders), compared to a pay-out ratio
of approximately 47% for the 2011 financial year.

Financial objectives for 2013

Based on information currently available, the Group has set the following
financial targets for 2013:

  *Specialty Care drug sales growth year-on-year between 6.0% and 8.0%,
    driven by continued and solid volume growth, in a context of increased
    pricing pressure and uncertainty as of today on Increlex^® supply.
  *Primary Care drug sales decrease year-on-year between -8.0% and -6.0%,
    with French activity to remain under pressure
  *Recurring adjusted^2 operating margin around 16.0% of sales. The Group
    expects a continued decrease of French primary care margin in 2013.
    Synergies from the new organization of French primary care commercial
    operations are expected to materialize in 2014.

The above sales objectives are set excluding foreign exchange impacts.

^1 Net cash and cash equivalents: Cash and cash equivalents after deduction of
bank overdrafts, short-term bank borrowings, other financial liabilities plus
or minus derivative financial instruments.
^2 «Recurring adjusted»: Reconciliations between results and recurring
adjusted results for 2012 and 2011 are detailed in appendix 4

Press conference (in French)

Ipsen will host a press conference on Wednesday 27 February 2013 at 11:30 a.m.
(Paris time, GMT +1) at Pavillon Kléber - 7 rue Cimarosa - 75116 Paris
(France).

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

Ipsen will host an analyst meeting on Wednesday 27 February 2013 at 8:30 a.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 929339. 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. No access
code is required. 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 929339. 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 €1.2 billion in 2012. Ipsen’s ambition is to become a leader in
specialty healthcare solutions for targeted debilitating diseases. Its
development strategy is supported by 3 franchises: neurology / Dysport^®,
endocrinology / Somatuline^® and uro-oncology / Decapeptyl^®. 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
2012, R&D expenditure totaled close to €250 million, representing more than
20% of Group sales. The Group has close to 4,900 employees worldwide. 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.

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 a loss of market share.

Furthermore, the Research and Development process involves several stages each
of which involves 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 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.

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 private 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
    fulfill 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 available information, according to the
    auction procedure under the supervision of the US Federal Bankruptcy Court
    for the common sale of Ipsen’s and Inspiration’s assets, the Group has
    impaired haemophilia-related assets (mainly composed of the convertible
    bonds and the Milford manufacturing site) for a total amount, as of 31
    December 2012, of €100 million after tax. (Excluding DIP financing, fully
    covered by the upfront payment in the deal recently announced with
    Baxter).
  *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, 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, our supplier of IGF-1 (Increlex^® drug substance), is facing a
    regulatory challenge by the Food and Drug Administration that may result
    in a supply shortage in the US and in Europe.
  *In certain countries exposed to significant public deficits, and where it
    sells its drugs directly to public hospitals, the Group could face
    discount or lengthened payment terms or difficulties in recovering its
    receivables in full. In Greece notably, which represented in 2011
    approximately 1.6% 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 2012

In 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% 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.
  *On July 10, 2012 – Ipsen announced that its partner Inspiration
    Biopharmaceuticals Inc. (Inspiration) was notified by the Food and Drug
    Administration (FDA) that the two 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.
  *On September 10, 2012 – Ipsen announced that it has avoided an
    interruption in US supply of Increlex^® (IGF-1) for the treatment of
    Severe Primary IGF-1 Deficiency due to delays in manufacturing site
    approval. Increlex^® is an important drug used to treat patients with
    Severe Primary IGF-1 Deficiency (Primary IGFD) and is considered to be a
    drug of medical necessity. As a result, Ipsen has worked closely with the
    US Food and Drug Administration to maintain product supply.
  *On October 1, 2012 – Active Biotech and Ipsen have presented a new set of
    data on biomarkers from the previously concluded tasquinimod Phase II
    study in chemotherapy-naïve metastatic castrate resistant prostate cancer
    (CRPC) at the scientific congress ESMO (European Society for Medical
    Oncology) held in Vienna from 28 September to 02 October 2012.
  *On October 3, 2012 – Ipsen and Active Biotech announced the initiation of
    a new phase II proof of concept clinical trial, evaluating the activity of
    tasquinimod in advanced metastatic castrate resistant prostate cancer
    patients. The study aims at establishing the clinical efficacy of
    tasquinimod used as maintenance therapy in patients with metastatic
    castrate-resistant prostate cancer (mCRPC) who have not progressed after a
    first line docetaxel based chemotherapy.
  *On October 3, 2012 – Ipsen announced that Inspiration Biopharmaceuticals
    Inc. (Inspiration) had not raised third party financing by the contractual
    deadline of 30 September 2012. Consequently, Ipsen is no longer obligated
    to pay the additional $12.5 million in exchange for Inspiration equity.
    The parties continue to explore various options.
  *On October 19, 2012 – Ipsen announced that it will shortly initiate a new
    phase II, proof-of-concept clinical trial with tasquinimod in a so-called
    umbrella study evaluating the compound in four different tumour types. The
    study will evaluate the safety and efficacy of tasquinimod in advanced or
    metastatic hepato-cellular, ovarian, renal cell and gastric carcinomas in
    patients who have progressed after standard anti-tumor therapies.
  *On October 31 2012 - Ipsen announced that Inspiration Biopharmaceuticals
    Inc. (Inspiration) has commenced a voluntary reorganization case pursuant
    to Chapter 11’s provisions of the United States Bankruptcy Code.
    Inspiration's Chapter 11 case was filed on October 30, 2012 with the
    United States Bankruptcy Court in Boston, Massachusetts. With this filing,
    Inspiration seeked to have the Bankruptcy Court’s approval on detailed
    bidding and auction procedures for the sale of its assets to a third party
    purchaser. Inspiration’s assets are notably comprised of commercial rights
    to OBI-1, a recombinant porcine factor VIII (rpFVIII) for the treatment of
    hemophilia A with inhibitors and IB1001, a recombinant factor IX (rFIX)
    for the treatment of hemophilia B. Through its $200 million of convertible
    bonds, Ipsen is Inspiration's only senior secured creditor. Ipsen has
    agreed to include its hemophilia assets in the sale process under certain
    conditions. Ipsen’s assets are comprised of commercial rights to OBI-1 and
    IB1001 as well as its OBI-1 industrial facility in Milford (Boston, MA).
  *On November 20 2012 - Ipsen and Inspiration Biopharmaceuticals Inc.
    (Inspiration) announced that Inspiration has received Fast Track
    designation from the US Food and Drug Administration (FDA) for OBI-1 in
    acquired hemophilia A. OBI-1, an intravenous recombinant porcine factor
    VIII (FVIII), is being evaluated for the treatment of individuals with
    acquired hemophilia A, who have developed inhibitory antibodies
    (inhibitors) against their innate FVIII. Fast track is a designation that
    the FDA reserves for a drug intended to treat a serious disease and has a
    potential to fill an unmet medical need. Fast track designation is
    designed to facilitate the development and expedite the review of new
    drugs. Marketing applications for fast track development programs are
    likely to be considered appropriate for priority review, which implies an
    abbreviated review time of eight months. Inspiration intends to submit a
    biologics license application (BLA) to FDA in the first half of 2013.
  *On December 3, 2012 –Ipsen and Galderma, a leading global pharmaceutical
    company focused on dermatology, announced that their collaboration for the
    promotion and distribution of Dysport^®, Ipsen’s botulinum toxin type A in
    aesthetic indications, has been extended. Both companies renewed their
    collaboration in Brazil and Argentina and extended their partnership to
    Australia where Galderma has the exclusive promotion and distribution
    rights for Ipsen’s Dysport^® in aesthetic indications. Both companies also
    entered into a co-promotion agreement in South Korea where Galderma and
    Ipsen will co-promote Dysport^® and Restylane^®.
  *On December 10, 2012 – Active Biotech and Ipsen announced that the Phase
    III clinical trial for tasquinimod, a novel compound for the treatment of
    prostate cancer, is successfully enrolled with over 1,200 randomized
    patients as planned in the clinical protocol. This achievement triggers a
    €10 million milestone payment from Ipsen to Active Biotech.
  *On December 18, 2012 – Oncodesign, a Drug Discovery company and oncology
    pharmacology service provider, and the Laboratory for Neurobiology and
    Gene Therapy (LNGT) at the Department of Neurosciences at the KU Leuven,
    an expert academic group exploring the roles of LRRK2 and α-synuclein in
    Parkinson’s disease headed by Professor Veerle Baekelandt, announced that
    they have entered into a research collaboration. The collaboration builds
    on Oncodesign's LRRK2 program with advanced Nanocyclix^® lead molecules
    that was partnered with Ipsen in January 2012.

After 31 December 2012, major developments included:

  *On January 17, 2013 – Teijin Pharma Limited, the core company of the
    Teijin Group’s healthcare business, and Ipsen announced the launch of
    Somatuline^® 60/90/120 mg for subcutaneous injection in Japan for the
    treatment of acromegaly and pituitary gigantism (when response to surgical
    therapies is not satisfactory or surgical therapies are difficult to
    perform). In Japan, Teijin Pharma holds the rights to develop and market
    the drug.
  *On January 24, 2013 – Ipsen and Inspiration Biopharmaceuticals Inc.
    (Inspiration) today announced they entered into an Asset Purchase
    Agreement (APA) whereby Baxter International (Baxter) agrees to acquire
    the worldwide rights to OBI-1, a recombinant porcine factor VIII (rpFVIII)
    in development for congenital hemophilia A with inhibitors and acquired
    hemophilia A, and Ipsen’s industrial facility in Milford (Boston, MA). The
    APA was filed on 23 January 2013, with the US Federal Bankruptcy Court in
    Boston (MA). The sale is a result of joint marketing and sale process
    pursued by Ipsen and Inspiration shortly after Inspiration filed for
    protection under Chapter 11 of the U.S. Bankruptcy Code on October 30,
    2012. The APA is subject to certain closing conditions, including
    Bankruptcy Court and regulatory approvals. Ipsen has agreed to extend the
    DIP to Inspiration for a period of 45 days i.e. for an additional amount
    of up to c. $5 million.
  *On 6 February 2013 - Ipsen and Inspiration Biopharmaceuticals Inc.
    (Inspiration) announced they entered into an Asset Purchase Agreement
    (APA) whereby Cangene Corporation (Cangene) agrees to acquire the
    worldwide rights to IB1001, a recombinant factor IX (rFIX) for the
    treatment of hemophilia B. Under the terms of the APA, Cangene has agreed
    to pay $5.9 million upfront, up to $50 million in potential additional
    commercial milestones as well net sales payments equivalent to tiered
    double digit percentage of IB1001 annual net sales. The APA is subject to
    certain closing conditions including Bankruptcy Court approval.
  *On 7 February 2013 - Ipsen and Braintree Laboratories, Inc., a US-based
    company specializing in the development, manufacturing and marketing of
    specialty pharmaceuticals announced today that Eziclen^® / Izinova^®
    (BLI-800) successfully completed its European decentralized registration
    procedure involving sixteen countries. The product will be indicated in
    adults for bowel cleansing prior to any procedure requiring a clean bowel
    (e.g. bowel visualization including bowel endoscopy and radiology or
    surgical procedure).
  *On 20 February 2013 - Ipsen and Inspiration Biopharmaceuticals Inc.
    (Inspiration) announced the closing of the sale of the proprietary
    hemophilia B product, IB1001 (recombinant FIX), to Cangene Corporation
    (Cangene). Ipsen and Inspiration jointly agreed to sell their respective
    commercialization rights to IB1001 as part of the transaction. Cangene
    acquired worldwide rights to IB1001, a recombinant factor IX currently
    under regulatory review in the United States and Europe.

Administrative 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 are affecting 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.

Measures impacting 2012

In the Major Western European countries:

  *In France, the price of Forlax^® was reduced by 3.5% on 1 October, 2011
    and the prices of Nisis^®/Nisisco^® by 15.0% on 14 November, 2011. On 1
    January, 2012, the price of Decapeptyl^® was reduced by 3.0% for both
    3-month 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. Moreover, sales of Nisis^®/Nisisco^® and Forlax^® were
    negatively impacted by a step-up in July in the regulation known as
    «tiers-payant», whereby the patient now pays upfront for a branded drug
    (when genericized) at the pharmacy and is reimbursed only later on;
  *In Spain, as of 1 November, 2011, tax on drug sales was raised 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 addition, Tanakan^®was dereimbursedon1 September
    2012.

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
    (9.0% instead of 4.0% - retroactive effect as of 1 January 2012), an
    obligation to prescribe drugs labelled International Non-proprietary Name
    (INN) through an e-prescription system 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 Slovakia, Spain and France. 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 Hungary, a 10.0% additional tax on sales, on top of the 20.0% tax
    already in force, was introduced as of 1 August 2012 for all Somatuline^®
    formulations;
  *In Czech Republic, VAT on drugs was increased from 9.0% to 14.0% in
    January 2012.

In the Rest of the World:

  *China is finalizing its international reference pricing system including
    ten countries including the USA, France, Germany, South Korea and Japan;
  *In January 2011, Algeria set reference pricing per therapeutic class,
    hence a price alignment of Decapeptyl^® on the cheapest GnRH seems
    imminent;
  *In Korea, under the volume-control regulation in force since November
    2011, the price of the 11.25 mg formulation of Diphereline^® has been cut
    by 4.5% on 1 September, 2012;

Furthermore, and in the context of financial and economic crisis, governments
of many countries in which the Group operates continue to introduce new
measures to reduce public health expenses, some of them will affect the Group
sales and profitability beyond 2012. Health Technology Assessment (HTA)
methods are more broadly used in market access decisions in several part of
the world, including some emerging countries and Eastern European countries.

Measures which may have impacts beyond 2012

In the Major Western European countries:

  *The Spanish Health Minister confirmed a 14.0% reduction of healthcare
    budget in 2012. The new Royal Decree published in April 2011 stated that
    molecules that have been introduced in Europe for more than ten years will
    be regrouped per active ingredient and prices will be aligned on the
    cheapest daily dosage;
  *In France, the taxable basis for the promotion tax has been significantly
    extended to the institutional communication and congresses by a decree
    published in December 2012, with a retroactive impact since the beginning
    of the year;
  *In Italy, the cap for hospital expenditure has been increased from 2.4% to
    3.5%. In addition, Pharma Companies will have to pay 50.0% of any extra
    expenditure beyond this cap level;

In the Other European countries:

  *In Greece, a new price bulletin has been published in November 2011 based
    on the average of the 3 lowest prices within the Eurozone (27 countries),
    as well as a reimbursement reference price based on lower product price of
    ATC4 classification and a co-payment change. They should be in force in
    early 2013;
  *In Belgium, IRPP was updated with new rules and a reference basket of 6
    countries (France, Germany, the Netherlands, Austria, Ireland and
    Finland); it should be implemented in April 2013;
  *Within the frame of the Healthcare Reform, Russian Health Authorities are
    considering a possible change in the price-setting methodology for drugs
    on the Essential Drug List (EDL). Future registered prices for drugs on
    EDL should be set as the weighted average price of all drugs with the same
    International Non-proprietary Name (INN);

In the Rest of the World:

  *In Colombia, a new International Reference pricing system was implemented
    during the second semester 2012, as well as maximum reimbursement prices
    on expensive drugs. Somatuline^® could face a price cut in the range of
    40%-50%;
  *Twelve Latin American countries (Argentina, Bolivia, Brazil, Chile,
    Colombia, Ecuador, Guyana, Paraguay, Peru, Surinam, Uruguay, and
    Venezuela) agreed to create a regional drug-pricing database in order to
    harmonize drug prices. Launch and impacts are unknown at this stage;
  *In South Korea, price-volume agreements negotiated in 2011 which have led
    to a 7.0% price decrease of Decapetpyl^® and Dysport^® will continue to
    negatively impact prices in 2013 with a further 7,5% decrease.

Comparison of consolidated income statement for 2012 and 2011

                  31 December 2012        31 December 2011       
(in million                                     Proforma ^(2)              %
euros)                      % of                % of      change
                                   sales                      sales
Sales                1,219.5    100.0%       1,159.8    100.0%       5.1%
Other revenues       57.9          4.7%         50.4          4.3%         14.9%
Revenues             1,277.4       104.7%       1,210.2       104.3%       5.6%
Cost of goods        (254.8)       -20.9%       (249.2)       -21.5%       2.2%
sold
Research and
development          (248.6)       -20.4%       (234.6)       -20.2%       5.9%
expenses
Selling              (473.5)       -38.8%       (424.4)       -36.6%       11.6%
expenses
General and
administrative       (99.1)        -8.1%        (99.7)        -8.6%        -0.6%
expenses
Other
operating            5.6           0.5%         17.5          1.5%         -68.0%
income
Other
operating            (25.8)        -2.1%        (17.6)        -1.5%        46.4%
expenses
Depreciation
of intangible        (5.8)         -0.5%        (7.8)         -0.7%        -26.5%
assets
Restructuring        (63.1)        -5.2%        (36.5)        -3.2%        72.8%
costs
Impairment           2.4           0.2%         (85.2)        -7.3%        -102.8%
gain/(losses)
Operating            114.8         9.4%         72.6          6.3%         58.2%
income
Recurring
Adjusted             196.0         16.1%        197.5         17.0%        -0.8%
operating
income ^(1)
- Investment         1.0           0.1%         1.6           0.1%         -37.8%
income
- Costs of           (2.3)         -0.2%        (1.8)         -0.2%        31.9%
financing
Net financing        (1.3)         -0.1%        (0.2)         -0.0%        -
cost
Other
financial            6.8           0.6%         (0.5)         -0.0%        -
income and
expense
Income taxes         (24.4)        -2.0%        1.9           0.2%         -
Share of
profit/loss
from                 -             -            -             -            -
associated
companies
Net
profit/loss
from                 95.8          7.9%         73.8          6.4%         29.9%
continuing
operations
Net
profit/loss
from                 (124.8)       -10.2%       (72.9)        -6.3%        71.3%
discontinued
operations
Consolidated         (29.0)        -2.4%        0.9           0.1%         -
net profit
- Attributable
to                   (29.5)                     0.4
shareholders
of Ipsen S.A.
- Minority        0.5                 0.5                 
interests
^(1) See appendix 4
^(2) In compliance with provisions on “discontinued activities”, 2011 figures have
been restated to provide comparative information
between 2011 and 2012 (see appendix 5)


  *Sales

Consolidated Group sales reached € 1,219.5million as of 31 December 2012, up
5.1% year-on-year or up 3.3% excluding foreign exchange impact^1.

  *Other revenues

Other revenues amounted to € 57.9million in 2012, up 14.9% compared to € 50.4
million in 2011.

Other revenues breakdown is as follows:

                                                  
                                          31           Change
(in million                31                December
euros)                     December          2011            In
                        2012           Proforma     value    in %
                                             ^(2)
Breakdown by type                                                    
of revenue
- Royalties                11.9              9.1             2.8         30.9%
received
- Milestone
payments –                 25.1              23.5            1.6         6.7%
licensing
agreements ^(1)
- Other
(co-promotion           20.9           17.8         3.1      17.6%
revenues,
re-billings)
Total                   57.9           50.4         7.5      14.9%
^(1) Milestone payments relating to licensing agreements primarily represent
recognition of payments received over the life of
partnership agreements
^(2) In compliance with provisions on “discontinued activities”, 2011 figures
have been restated to provide comparative information
between 2011 and 2012 (see appendix 5)


  *Royalties received amounted to €11.9 million in 2012, up €2.8 million
    year-on-year, driven by the increase in royalties paid by the Group’s
    partners.
  *Milestone payments relating to licensing agreements amounted to €25.1
    million, mainly generated by the partnerships with Medicis, Menarini and
    Galderma.
  *Other revenues amounted to €20.9 million in 2012 compared with €17.8
    million a year earlier, driven by the revenues relating to the Group’s
    co-promotion and co-marketing agreements in France as well as promotion of
    Hexvix^® in some countries.

^1 Variations excluding foreign exchange impacts are computed by restating the
2011 figures with the 2012 average exchange rates

  *Cost of goods sold

In 2012, cost of goods sold amounted to €254.8 million, representing 20.9% of
sales, compared with €249.2 million, or 21.5% of sales, for the same period in
2011.

The cost of goods sold, positively impacted by the favourable mix related to
the growth in specialty care sales and the Group’s productivity efforts, was
partially offset by custom duties in high growth countries.

  *Research and development expenses

At 31 December 2012, research and development expenses represented €248.6
million or 20.4% of sales, compared with 20.2% the previous year.

The table below provides a comparison of research and development expenses
during the full years 2012 and 2011, according to the new segmentation of
research and development expenses as defined by the new strategy announced on
9 June 2011:

                                                 
(in million               31          31 December     Change
euros)                 December    2011            In        in %
                          2012           Proforma^(4)       value
Breakdown by                                                         
expenses type
- Drug-related
research and              (199.4)        (192.0)            (7.3)        3.8%
development^(1)
- Industrial and
pharmaceutical            (40.8)         (35.5)             (5.3)        14.9%
development^(2)
- Strategic            (8.4)       (7.1)           (1.3)     18.6%
development^(3)
Total                  (248.6)     (234.6)         (13.9)    5.9%
(1) Drug-related research & development is aimed at identifying new agents,
determining their biological characteristics and developing
small-scale manufacturing processes. The expenses relating to patents are also
included in this type of expense
(2) Industrial development includes chemical, biotechnical and
development-process research costs to industrialize small-scale
production of agents developed by the research laboratories. 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 search new therapeutic
indications for them. Pharmaceutical development is associated to industrial
development after bringing together both activities in
the framework of the new strategy announced on 9 June 2011, in order to build
a Department «Chemistry, Manufacturing,
Controls & Engineering»
(3) Strategic development includes costs incurred for research into new
product licenses and establishing partnership agreements


In compliance with provisions on “discontinued activities”, 2011 figures have
been restated to provide comparative information between 2011 and 2012 (see
appendix 5)

  *Research and development drug-related costs increased by 3.8% compared to
    the prior year. The main research and development projects conducted in
    2012 focused on Dysport^®, Somatuline^® and tasquinimod. This increase was
    partially offset by a favourable comparison basis: costs related to the
    phase II clinical study of Irosustat (BN-83495) were no longer recorded in
    2012 as the program was discontinued on 6 June 2011.
  *Industrial and pharmaceutical development expenses increased by 14.9%
    year-on-year in 2012, mainly resulting from investments in the Group’s
    toxins and peptides technology platforms.
  *Selling, general and administrative expenses

Selling, general and administrative expenses amounted to €572.6million in
2012, representing 46.9% of sales, up 9.3% versus 2011.

                                                
                         31          31 December     Change
(in million euros)    December    2011            In         in %
                         2012           Proforma^(1)       value
Breakdown by                                                         
expense type
Royalties paid           (51.7)         (46.6)             (5.1)         11.0%
Other sales and          (421.7)     (377.8)         (43.9)     11.6%
marketing expenses
Selling expenses         (473.5)        (424.4)            (49.1)        11.6%
General and
administrative        (99.1)      (99.7)          0.6        -0.6%
expenses
Total                 (572.6)     (524.1)         (48.5)     9.3%

The table below provides a comparison of selling, general and administrative
expenses in 2012 and 2011:

(1) In compliance with provisions on “discontinued activities”, 2011 figures
have been restated to provide comparative information between 2011 and 2012
(see appendix 5)

  *Selling expenses amounted to €473.5million in 2012, or 38.8% of sales,
    compared to €424.4million, or 36.6% of sales, in 2011.
  *Royalties paid to third parties on sales of products marketed by the Group
    amounted to €51.7million in 2012, up 11.0% year-on-year. This increase
    was driven by improved in-market sales of in-licensed products ;
  *Other selling expenses amounted to €421.7million, or 34.6% of sales, up
    11.6% compared to €377.8million, or 32.6% of sales, in 2011. In line with
    the strategy announced on 9 June 2011, the Group continued to increase
    commercial investments in specialty care while selectively allocating
    business resources to high growth areas mainly China, Russia and Brazil.
    Furthermore selling expenses related to primary care in France increased
    proportionally to declining sales. Synergies from the new organization of
    French primary care commercial operations are expected to materialize in
    2014.
  *General and administrative expenses slightly decreased by 0.6% in 2012.
  *Other operating income and expenses

Other operating income amounted to €5.6 million in 2012, compared with €17.5
million the previous year, mainly composed of revenues from the sublease of
Ipsen’s headquarters building. In 2011, the other operating income was
composed of a non-recurring income of €17.2 million following the enforceable
court judgment relating to the trade dispute between the Group and Mylan.

Other operating expenses amounted to €25.8 million, compared with €17.6
million for the same period in 2011. The other operating expenses were mainly
composed of non-recurring costs resulting from the search for potential
acquirers for the Dreux industrial site, for potential partners for the
primary care activity in France, the settlement of a trade dispute with a
partner and an administrative procedure involving the Group.

  *Amortisation of intangible assets (excluding software)

In 2012, amortization charges of intangible assets reached €5.8 million,
compared to €7.8 million the previous year. This decrease is mainly due to the
change in the amortization plan of IGF-1 following the impairment loss
recorded on 31 December 2011 and to the amortization completion of Exforge^®
(end of co-promotion contract in France with Novartis effective since 30 April
2012). This decrease was partially offset by the initiation of Hexvix^®
amortization.

  *Restructuring costs

At 31 December 2012, the Group recorded non-recurring restructuring costs of
€63.1 million, mainly related to the implementation of the new organization of
French primary care commercial operations and to the transfer to the East
coast of the Group’s North American commercial subsidiary that occurred
between June 2011 and June 2012.

  *Impairment losses

At 31 December 2012, the Group recorded a non-recurring revenue of
€2.4million. Following the announcement to retain the Dreux-based industrial
facility within its scope of activity, the Group reassessed the value of this
asset and recorded an impairment write-back of €12.5 million in its
consolidated financial statements as of 30 June 2012. The Group recorded a
€10.1 million impairment charge on the brand of Nisis^®/Nisisco^®, following a
step-up in July 2012 in France in the regulation known as « Tiers-Payant »,
whereby the patient now pays upfront for a branded drug and is later
reimbursed. This has generated an unprecedented and sudden increase in generic
penetration in France.

  *Operating income

Based on above items, the operating income reported in 2012 amounted to
€114.8million or 9.4% of sales, up 58.2% compared to 2011, where it
represented 6.3% of Group’s sales.

The Group’s recurring adjusted^2 operating income in 2012 amounted to
€196million or 16.1% of consolidated sales, down 0.8% year-on-year.

  *Operating segments: Operating income by geographical regions

Internal reporting provided to the Executive Committee corresponds to the
Group’s managerial organisation based on the geographical regions within which
the Group operates. Accordingly, operating segments as defined by IFRS8, equal
to long-term groupings of countries.

The operating segments existing as of 31 December 2012 are as follows:

  *“Main Western European countries”, which combines France, Italy, Spain,
    United Kingdom and Germany;
  *“Other European countries”, which combines Other in Western European
    countries and Eastern European countries;
  *“North America”, which includes essentially the United States;
  *“Rest of the world”, which includes the countries not included in the
    three preceding segments.

The table below provides an analysis of sales, revenues and operating income
by operating segment for the 2012 and 2011 periods:

                                                               
                    31 December 2012        31 December 2011        Change
                                               Proforma*
(in thousand               % of                % of               %
euros)                            sales                      sales
Major Western
European                                                                     
countries (1)
Sales of            518.5         100.0%       542.0         100.0%       (23.5)       -4.3%
goods
Revenue             549.9         106.0%       567.5         104.7%       (17.6)       -3.1%
Operating           138.3         26.7%        155.9         28.8%        (17.6)       -11.3%
income
Other
European
countries
Sales of            306.0         100.0%       279.6         100.0%       26.5         9.5%
goods
Revenue             312.2         102.0%       284.8         101.8%       27.4         9.6%
Operating           135.7         44.4%        118.4         42.3%        17.4         14.7%
income
North America
Sales of            72.8          100.0%       65.7          100.0%       7.1          10.8%
goods
Revenue             90.5          124.4%       82.8          126.0%       7.7          9.3%
Operating           (10.5)        -14.5%       (35.7)        -54.4%       25.2         -70.6%
income
Rest of the
World
Sales of            322.2         100.0%       272.5         100.0%       49.7         18.2%
goods
Revenue             323.5         100.4%       273.2         100.3%       50.3         18.4%
Operating           123.2         38.2%        106.4         39.1%        16.7         15.7%
income
Total
Allocated
Sales of            1 219.5       100.0%       1 159.8       100.0%       59.7         5.1%
goods
Revenue             1 276.1       104.6%       1 208.3       104.2%       67.8         5.6%
Operating           386.7         31.7%        345.0         29.7%        41.7         12.1%
income
Total
non-allocated
Revenue             1.3           -            1.9           -            (0.6)        -30.6%
Operating           (271.9)       -            (272.4)       -            0.5          -0.2%
income
Total Group
Sales of            1 219.5       100.0%       1 159.8       100.0%       59.7         5.1%
goods
Revenue             1 277.4       104.7%       1 210.2       104.3%       67.2         5.6%
Operating        114.8      9.4%      72.6       6.3%      42.2      58.2%
income
* In compliance with provisions on “discontinued activities”, 2011 figures have been restated
to provide comparative information between 2011 and 2012
(see appendix 5)
                                                                                       

Sales generated in the Major Western European countries amounted to €518.5
million in 2012, down 4.9% year-on-year excluding foreign exchange impacts^3.
Dynamic volume sales 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. As a result, sales in the
Major Western European countries represented 42.5% of total Group sales at the
end of 2012, compared to 46.7% a year earlier. The Group recorded a €10.1
million impairment charge on the brand of Nisis^®/Nisisco^®, following a
step-up in July 2012 in France in the regulation known as « Tiers-Payant »,
which has generated an unprecedented and sudden increase in generic
penetration. The Group also recorded non-recurring restructuring cost related
to the implementation of the new organization of French primary care
commercial operations. Operating income in 2012 amounted to €138.3 million,
down 11.3% year-on-year, representing 26.7% of sales, compared to 28.8% for
the same period in 2011. Excluding non-recurring impacts, operating income in
2012 reached €204.1 million, compared to €223.9 million in 2011.

Sales generated in the Other European countries reached €306.0 million in
2012, up 8.5% year-on-year excluding foreign exchange impacts^4. Sales were
mainly driven by Russia with the good performance of specialty care products
and Tanakan^®. Over the period, Poland, the Netherlands, Ukraine and Belgium
also contributed to the volume growth. In 2012, sales in this region
represented 25.1% of total consolidated Group sales, compared to 24.1% a year
earlier. Operating income in 2012 amounted to €135.7 million compared to
€118.4 million in 2011, representing 44.4% of sales for 2012, compared with
42.3% over the same period in 2011.

In 2012, sales generated in North America amounted to €72.8 million, up 2.3%
excluding foreign exchange impacts^1. Restated to exclude Apokyn^® sales,
North American sales were up 11.5% year-on-year, driven by strong supply of
Dysport^® for aesthetic use to Medicis, by the continuous penetration of
Somatuline^® in acromegaly and by the growth of Dysport^® in the treatment of
cervical dystonia. Sales in North America represented 6.0% of total
consolidated Group sales, compared to 5.7% a year earlier. Operating income in
2012 amounted to (€10.5) million, up €25.2 million compared to 2011. This
increase is mainly due to non-recurring costs booked in 2011, of which €10.9
million related to the transfer to the East coast of the Group’s North
American commercial subsidiary and €24.4 million impairment charge on IGF-1.

In 2012, in the Rest of the World, where the Group  markets most of its
products through distributors or commercial agents, sales reached €322.2
million, up 14.1% excluding foreign exchange impacts^1, driven by a strong
volume growth in China, Colombia, Vietnam, Australia, Brazil and Mexico. In
2012, sales in the Rest of the World continued to increase, representing 26.4%
of total consolidated Group sales, compared to 23.5% a year earlier. Operating
income in 2012 amounted to €123.2 million, or 38.2% of sales, up 15.7%
compared to €106.4 million, or 39.1% of sales, in 2011.

Non allocated operating income amounted to (€271.9) million in 2012 versus
(€272.4) million in 2011. It mainly included the Group’s central research and
developments costs for (€203.9) million in 2012 and (€194.2) million in 2011
and, to a lesser extent, unallocated general and administrative expenses.

^1 See appendix 4
^1 Variations excluding foreign exchange impacts are computed by restating the
2011 figures with the 2012 average exchange rates

  *Costs of net financial debt and other financial income and expenses

In 2012, the Group’s financial result amounted to (€5.5) million compared with
(€0.7) million the prior year

  *The cost of net financial debt amounted to €1.3 million in 2012, compared
    to €0.2 million in 2011, mainly including the non-utilisation fees on the
    new credit line subscribed on 31 January 2012, partially offset by cash
    investment income.
  *The other financial income and expenses amounted to €6.8 million in 2012
    versus €(0.5) million in 2011. As of 31 December 2011, the Group had
    recorded a €36.4 million loss, mainly comprising a €42.0 million
    non-recurring impairment loss on the four convertible bonds issued by
    Inspiration and subscribed by the Group, partially offset by a €6.1
    million positive foreign exchange impact mainly related to the revaluation
    of these four convertible bonds. In the 2011 proforma accounts, those
    impacts are recorded in the discontinued operations line following Ipsen
    announcement on 30 October 2012 to sell all its hemophilia-related assets
    and to exit this therapeutic area. Restated to exclude the above elements,
    the year-on- year increase mainly resulted from positive foreign exchange
    rates, a profit derived from the sale of its Spirogen shares, and a
    non-recurring profit derived from additional payments received upon the
    divestment by the Group in 2010 of its shares in PregLem Holding SA.
  *Income taxes

On 31 December 2012, the effective tax rate (ETR) was 20.3% of profit before
tax from continuing activities, compared to an ETR of (2.6)% on 31 December
2011.

The items reducing the Group's effective tax rate were applied to an increased
profit before tax. As a consequence, the research tax credit, while stable in
volume between 2011 and 2012, had a diluted positive impact, down 13 points.
Also, the effect of reduced corporate tax rates in comparison with standard
French corporate tax rate was diluted by 8 points between 2011 and 2012.

Excluding non-recurring operating, financing and tax items, the effective tax
rate amounted to 23.2% in 2012 compared to 19.3% in 2011.

^1 Variations excluding foreign exchange impacts are computed by restating the
2011 figures with the 2012 average exchange rates

  *Share of profit / loss from associated companies

At 31 December 2011 and 2012, share of profit / loss from associated companies
was nil. The Group’s 22.0% stake in Inspiration’s net loss was recorded in the
discontinued operations line as mentioned below.

  *Net profit from continuing operations

As a result of the items above, the profit from continuing operations in 2012
amounted to €95.8million, up 29.9% compared to €73.8million in 2011. It
represented 7.9% Group’s sales in 2012 and 6.4% in 2011.

Recurring adjusted^5 profit from continuing operations amounted to €145.5
million in 2012, compared to €154.4 million in 2011, down 5.8% year-on-year.

  *Profit from discontinued operations

Profit from discontinued operations amounted to (€124.8 million) as of 31
December 2012, versus (€72.9) millions at the end of 2011. It comprised the
activities related to Inspiration. On 30 October 2012, Ipsen and Inspiration
decided to sell all their hemophilia-related assets and Ipsen announced its
exit from this therapeutic area.

Reminder of the evolution of Inspiration’s situation

On 10 July 2012, Ipsen’s partner in hemophilia, Inspiration, was notified by
the Food and Drug Administration (FDA) that both clinical trials evaluating
the safety and efficacy of IB1001, an investigational intravenous recombinant
factor IX (rFIX) therapy for the treatment and prevention of bleeding episodes
in people with hemophilia B, were placed on clinical hold.

In this context, on 21 August 2012, Ipsen announced the renegotiation of its
2010 strategic partnership agreement with Inspiration for the development and
commercialization of IB1001 and 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. The new agreement
aimed to establish a structure whereby Ipsen gained commercial rights in its
key territories while Inspiration remained responsible for the world-wide
development of OBI-1 and IB1001. As part of the renegotiation, Ipsen paid
Inspiration $30.0 million upfront and, in certain countries^6, has:

  *recovered OBI-1 commercial rights
  *gained IB1001 commercial rights

Ipsen had agreed to pay Inspiration an additional financing if Inspiration
raised third party financing by the end of the third quarter 2012.

As Inspiration did not manage to raise external financing and was cash
constrained, it commenced, on 30 October 2012, a voluntary reorganization case
pursuant to Chapter 11’s provisions of the United States Bankruptcy Code with
the objective of leading a joint marketing and sales process. Inspiration’s
assets include commercial rights on OBI-1 and IB1001 on several countries.
With this filing, Inspiration sought to have the Bankruptcy Court’s approval
on detailed bidding and auction procedures for the sale of its assets to a
third party purchaser. Inspiration’s assets are notably comprised of
commercial rights to OBI-1 and IB1001 in certain countries^7.

Ipsen agreed to include its hemophilia assets in the sale process. Ipsen’s
assets are comprised of commercial rights to OBI-1 and IB1001 as well as its
OBI-1 industrial facility in Milford (Boston, MA). Inspiration and Ipsen
jointly mandated an investment bank for the transaction.

Under the Chapter 11 procedure, Ipsen agreed to provide Inspiration with
so-called: "Debtor-in-Possession financing" (DIP) for an amount of up to $18.3
million assuming certain conditions were met. The DIP financing allows a
company with debt to undertake, under acceptance by its creditors, some
restructuring actions according to a plan which has been defined and approved
by the Court. It was anticipated that the DIP financing was sufficient to
enable Inspiration and Ipsen to successfully sell their assets.

As Ipsen announced it put all its hemophilia-related assets up for sale, it
officially showed its intention to exit the specialized therapeutic area of
hemophilia. As a consequence, in compliance with IFRS5, the Group classified
all its hemophilia-related income and expense in « Profit from discontinued
operations ». Furthermore, in compliance with IFRS5 « Non-current Assets Held
for Sale and Discontinued Operations », all assets and liabilities related to
hemophilia (excluding DIP financing) have been classified as of 31 December
2012 in « non-current asset as held for sale» in the Group’s consolidated
financial statements.

Hemophilia was one of the four focus and investment therapeutic areas for
Ipsen. Furthermore, flows from this activity are clearly identified and the
business is included in an exclusive and organized sales plan. In this regard,
this activity meets the “discontinued operations” requirements; hence the
associated result for the period is recorded on a separate line on the
consolidated Income statement. This line is composed of the loss from
“discontinued operations” and the loss after tax resulting from valuation at
fair value less the estimated costs necessary to make the sale.

On 24 January 2013, Ipsen and Inspiration announced that they entered into an
Asset Purchase Agreement (APA) for the sale of OBI-1 to Baxter International.
Under the terms of the APA, Baxter has agreed to pay $50 million upfront, and
potential additional development and commercial milestones.

This APA is subject to Fair Trade Commission (FTC) approval.

On 6 February 2013, Ipsen and Inspiration announced they entered into an Asset
Purchase Agreement (APA) whereby Cangene Corporation (Cangene) agrees to
acquire the worldwide rights to IB1001. Under the terms of the APA, Cangene
has agreed to pay $5.9 million upfront and potential additional commercial
milestones.

The Group reassessed the value of its hemophilia assets, now recorded in
«non-current asset held for sale», and valued at the lower of carrying amount
and fair value less the estimated costs necessary to make the sale. The
milestones payments being contingent on regulatory approvals and products
sales, the Group estimated that they were not certain income and, hence, did
not include them in the fair value calculation of hemophilia assets held for
sale as of 31 December 2012.

On the basis of available information at closing date, the share of upfront
payment to be received by Ipsen should mainly cover the total amount of DIP
financing provided to Inspiration. As a consequence, the Group, as of 31
December 2012, impaired all hemophilia related assets and liabilities,
classified as « non-current asset as held for sale » on the balance sheet.

Hence, profit from discontinued operations mainly comprised non-recurring
provisions of €100m after tax on tangible, intangible and financial assets,
receivables related to the OBI-1 development costs for the second and third
quarters of 2012, the rebilling of the costs associated with the
implementation of the European platform, partially offset by acceleration of
recognition of deferred revenues related to hemophilia. It also comprised the
share of loss in Inspiration’s result for the period before it was classified
as “discontinued operations”.

^1 See appendix 4
^2 Europe (EU, Switzerland, Monaco, Norway, Lichtenstein, Georgia, Bosnia,
Albania and all EU candidates excluding Turkey), Russia and CIS (Community of
Independent States), part of Asia Pacific (main countries are Australia, New
Zealand, China, Singapore, South Korea and Vietnam) and certain countries in
North Africa (Morocco, Algeria, Tunisia, Libya)
^1 Mainly the Americas and Japan

  *Consolidated net profit

As a result of the items above, consolidated net profit in 2012 was a loss of
€29 (attributable to shareholders of Ipsen S.A.: (€29.5)million) compared
with a profit of €0.9million (attributable to shareholders of Ipsen S.A.:
€0.4million) in 2011.

The Recurring adjusted consolidated net profit^8 amounted to €145.5 million at
31 December 2012, down 5.8% compared with €154.4 million in 2011.

  *Earnings per share

The Group’s earnings per share at 31 December 2012 amounted to €(0.35),
compared with €0.01a year earlier.

The recurring adjusted^1 diluted earnings per share attributable to the Group
at 31 December 2012 amounted to €1.74, down by 5.9% year-on-year.

  *Milestone payments received in cash but not yet recognised in the Group
    income statement

At 31 December 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 €152.4million, compared with €199.0million the previous year.

The Group recorded no new deferred revenue for its partnerships. All deferred
income related to Inspiration (€28.0 million) was written back in 2012
following Inspiration decision to seek protection under Chapter 11 of the
United States Bankruptcy Code on 30 October 2012.

These deferred revenues will be recognised in the Group’s future income
statements as follows:

                                                            
(in million euros)                            31 December       31 December
                                           2012              2011**
Total*                                     152.4             199.0
Deferred revenues will be recognised
over time as follows:
In the year n+1                            22.4                 26.0
In the years n+2                       130.0             173.0
and beyond
* Amounts converted at average exchange rate at 31 December 2012 and 31
December 2011 respectively
** In compliance with provisions on “discontinued activities”, 2011 figures
have been restated to provide comparative information
between 2011 and 2012 (see appendix 5)


^1 See appendix 4

CASH FLOW AND CAPITAL

The consolidated cash flow statement shows that the Group’s operating
activities in December 2012 generated a net cash flow of €165.0million,
slightly down compared with €168.8million generated over the same period in
2011.

Analysis of the cash flow statement
                                                            
                                                31 December        31 December
(in million euros)                           2012            2011
                                                                   Proforma*
– Cash generated from operating
activities before changes in working            175.3           189.5
capital
requirements
– (Increases) / Decreases in working            (10.3)             (20.7)
capital requirements for operations
  *Net cash flow from operating                165.0              168.8
    activities
– Net investments in tangible and               (76.5)             (95.2)
intangible assets
– Impact of changes in consolidation            (0.2)              -
scope
– Other cash flow from investments              11.9               (2.6)
  *Net cash flow from investing                (64.8)             (95.7)
    activities
                                                                   
  *Net cash flow from financing                (73.2)             (65.2)
    activities
  *Net cash flow from discontinued             (56.2)             (40.2)
    operations**
CHANGES IN CASH AND CASH EQUIVALENTS            (29.2)             (32.9)
Opening cash and cash equivalents               144.8              177.9
Forex impact                                 (2.3)           (0.2)
Closing cash and cash equivalents            113.3           144.8
* In compliance with provisions on “discontinued activities”, 2011 figures
have been restated to provide comparative information
between 2011 and 2012 (see appendix 5)
** see “ Net cash flow from discontinued operations”


  *Net cash flow from operating activities

Cash flow from operating activities in 2012 amounted to €175.3million, down
compared with €189.5million generated in 2011.

Working capital requirements for operating activities increased by
€10.3million in 2012, against an increase of €20.7million in 2011. This
change in 2012 was related to the following:

  *Inventories increased by €7.1 million in 2012 as a result of
    reconstitution of stocks in high growth territories such as Russia and
    Brazil.
  *Accounts receivables decreased by €10.1 million in 2012, compared with an
    increase of €16.7million in 2011, mainly due to decrease of public
    receivables in Southern Europe, mainly Italy, Spain and Portugal.
  *Trade payables increased by €15.0million in 2012, compared with an
    increase of €9.4 million in 2011.
  *The change in other assets and liabilities comprised a use of fund of
    €10.9 million in 2012, against a use of fund of €13.1million in 2011. In
    2012, the Group recorded no deferred revenues from partnerships, against
    €10.6million in 2011. The Group recorded €24.5 million of deferred
    revenues from partnerships on its income statement, against of
    €25.8million in 2011.
  *The change in net tax liability in 2012 represented a use of funds of
    €17.4million related to the payment of an excess amount of tax to
    authorities with an expected reimbursement in 2013.
  *Net cash flow from investing activities

In 2012, the net cash flow from investing activities represented a net use of
funds of €64.8 million, compared to a net use of €95.7 million in 2011. It
included:

  *Investments in tangible and intangible assets net of disposals, amounting
    to €76.5million, compared with €95.2million the previous year. This cash
    flow mainly included:
  *Acquisition of property, plant and equipment totalling €49.0million,
    compared with €44.3 million in 2011. These investments mainly comprised
    items required for the maintenance of the Group’s industrial facilities
    and in capacity investments in the Wrexham and Signes factories;
  *Investments in intangible assets for €27.7million, compared with
    €58.0million in 2011, mainly related to the partnership with Active
    Biotech for the rights of tasquinimod (€20 million) and Photocure pour
    Hexvix^® (€1.5 million);
  *A net cash flow of €13.9 million composed of the disposal of shares,
    mainly from additional payments received upon the divestment by the Group
    in 2010 of its shares in PregLem Holding SA;
  *A use of funds of €7.5 million related to investing activities, mainly
    related to a €6.1 million payment of plan asset;
  *A decrease of €5.3 million in working capital requirements related to
    investment activity, mainly related to a liability recorded in 2012 and
    payable to Active Biotech following the announcement of the completion of
    the recruitment of the clinical trial of phase III with tasquinimod;
  *Net cash flow from financing activities

In 2012, the net cash flow used in financing activities amounted to
€66.0million, compared with a net use of €65.2million over the same period
in 2011. In 2012, the Group paid €67.5million in dividends to its
shareholders, up 1.5% compared with €66.5million paid a year earlier.

Under the Chapter 11 procedure, the Group provided Inspiration with
“Debtor-in–possession” (DIP) financing amounting to €7.5 million as of 31
December 2012. The purpose of this financing is to enable the sale of
Inspiration and Ipsen assets.

  *Net cash flow from discontinued operations

As of 31 December 2012, the net cash flow from discontinued activities related
to Inspiration amounted to (€56.2) million, against (€40.8) million in 2011.

                                                            
(in millions euros)                      31 December 2012    31 December
                                                                   2011
- Cash flow before changes in working       (3.5)               17.6
capital requirement
- Change in working capital related         (17.3)                 (10.9)
to discontinued activities
  *Net cash flow provided by               (20.8)                 6.7
    discontinued activities
- Investment in intangible assets           (5.8)                  -
- Convertible bond subscriptions            (26.7)                 (45.3)
- Other cash flow related to                (2.9)                  (2.2)
investment activities
  *Net cash flow used in investing         (35,4)                 (47.5)
    activities
  *Net cash flow used in financing         -                      -
    activities
Change in cash and cash equivalents      (56.2)              (40.8)

This change in cash and cash equivalents from discontinued operations
included:

  *A net cash flow from discontinued activities of (€20.8) million against
    €6.7 million in 2011, mainly composed of the regained OBI-1 commercial
    rights ($22.5 million) according to the renegotiation of the partnership
    with Inspiration on 21 August 2012.
  *A use of fund of €35.4 million composed of the subscription by the Group
    to a €26.7 million convertible bond issued by Inspiration and to the
    acquisition of the IB1001 intangible asset for €6.1 million. In 2011, the
    Group had subscribed to two convertible bond issued by Inspiration for
    €45.3 million. Also, in 2012, the Group recorded €2.9 million interest to
    be received on those obligations, against €2.2 million the previous year.

APPENDIX 1
  *Condensed consolidated income statement
(in million euros)                    31 December           31 December
                                         2012                     2011 ^ (1)
                                                          
Sales of goods                        1 219.5               1 159.8
Other revenues                        57.9                  50.4
Revenue                               1 277.4               1 210.2
Cost of goods sold                    (254.8)               (249.2)
Research and development              (248.6)               (234.6)
expenses
Selling expenses                      (473.5)               (424.4)
General and administrative            (99.1)                (99.7)
expenses
Other operating income                5.6                   17.5
Other operating expenses              (25.8)                (17.6)
Amortisation of intangible            (5.8)                 (7.8)
assets
Restructuring costs                   (63.1)                (36.5)
Impairment losses                     2.4                   (85.2)
Operating income                      114.8                 72.6
Investment income                     1.0                   1.6
Financing costs                       (2.3)                 (1.8)
Net financing costs                   (1.3)                 (0.2)
Other financial income and            6.8                   (0.5)
expense
Income taxes                          (24.4)                1.9
Share of profit / loss from           -                     -
associated companies
                                                          
Net profit from continuing            95.8                  73.8
operations
                                                          
Net profit from                       (124.8)               (72.9)
discontinued operations
                                                          
Consolidated net profit               (29.0)                0.9
– Attributable to                     (29.5)                0.4
shareholders of Ipsen
– attributable to minority            0.5                   0.5
interests
                                                          
Basic earnings per share,
continuing operations (in             1.15                  0.88
euros)
Diluted earnings per share
for continuing operations             1.14                  0.88
(in euros)
                                                          
Basic earnings per share
from discontinued                     (1.50)                (0.88)
operations (in euros)
Diluted earnings per share
from discontinued                     (1.50)                (0.88)
operations (in euros)
                                                          
Basic earnings per share              (0.35)                0.01
(in euros)
Diluted earnings per share            (0.35)                0.01
(in euros)
(1) In compliance with provisions on “discontinued activities”, 2011 figures
have been restated to provide comparative information between 2011 and
2012 (see appendix 5)

APPENDIX 2
  *Condensed consolidated balance sheet
(in million euros)                    31 December           31 December
                                         2012                     2011
ASSETS                                                     
Goodwill                              298.2                 299.5
Other intangible assets               129.2                 135.6
Property, plant & equipment           281.8                 271.7
Equity investments                    12                    12.3
Investments in associated             0                     -
companies
Non-current financial                 6.7                   2.9
assets
Other non-current assets              18.7                  94
Deferred tax assets                   208.2                 184.6
Total non-current assets              954.7                 1 000.6
Inventories                           127.9                 117.8
Trade receivables                     256.3                 259.4
Current tax assets                    54.4                  39.1
Other current assets                  53.6                  71.4
Current financial assets              0.5                   -
Cash and cash equivalents             113.6                 145
Assets from discontinued              -                     -
operations
Total current assets                  606.3                 632.8
TOTAL ASSETS                          1 561.1               1 633.4
                                                          
EQUITY AND LIABILITIES                                     
Share capital                         84.3                  84.2
Additional paid-in capital            867.8                 929.6
and consolidated reserves
Net profit for the period             (29.5)                0.4
Exchange differences                  1.6                   (1.4)
Equity - attributable to              924.2                 1 012.8
shareholders of Ipsen
Attributable to minority              2                     2.6
interests
Total shareholders' equity            926.3                 1 015.4
Retirement benefit                    19.9                  19.5
obligation
Provisions                            25.6                  25.7
Short term debt                       0                     -
Other financial liabilities           15.9                  16.6
Deferred tax liabilities              2.8                   2.6
Other non-current                     133.8                 183.3
liabilities
Total non-current                     197.9                 247.6
liabilities
Provisions                            66.2                  24.5
Short term debt                       4                     4
Other financial liabilities           4.5                   5
Accounts payable                      159.8                 149.8
Current tax liabilities               3.3                   5.6
Other current liabilities             198.3                 181.3
Bank overdrafts                       0.4                   0.2
Liabilities from                      0.5                   -
discontinued operations
Total current liabilities             437                   370.4
TOTAL EQUITY AND                      1 561.1               1 633.4
LIABILITIES
                                                         

APPENDIX 3
  *Condensed consolidated cash flow statement
                       31 December 2012                              31 December 2011
                      Continued    Discontinued    Total      Continued    Discontinued    Total
                          activity        activity                         activity        activity
Consolidated net       95.8         (124.8)         (29.0)     73 763       (72 856)        907
profit
Net profit/loss
from discontinued      -            21.7            21.7       -            20.2            20.2
operations
Share of
profit/loss from       -            -               -          -            34.3            34.3
associated
companies
Net profit/loss
from continuing
operations before
share of               95.8         (103.2)         (7.4)      73.8         (18.4)          55.4
profit/loss from
associated
companies
Non-cash and                                                                           
non-operating items
– Amortisation,
provisions and         72.6         -               72.6       71.1         1.0             72.0
impairment losses
– Impairment losses    (2.4)        125.4           123.1      85.2         42.0            127.2
– Change in fair
value of derivative    (2.5)        -               (2.5)      2.2          -               2.2
financial
instruments
– Net gains or
losses on disposals    1.9          -               1.9        4.6          -               4.6
of non-current
assets
– Share of
government grants      (0.1)        -               (0.1)      (0.1)        -               (0.1)
released to profit
and loss
– Exchange             (1.4)        6.1             4.6        (2.3)        (6.1)           (8.4)
differences
– Change in            6.9          (31.8)          (24.9)     (49.0)       (1.0)           (50.0)
deferred taxes
– Share-based          4.6          -               4.6        4.1          -               4.1
payment expense
– Gain/loss on
sales of treasury      0.1          -               0.1        (0.1)        -               (0.1)
shares
– Other non-cash       (0.2)        -               (0.2)      0.2          -               0.2
items
Cash flow from
operating
activities before      175.3        (3.5)           171.8      189.5        17.6            207.1
changes in
working capital
requirement
–
(Increase)/decrease    (7.1)        -               (7.1)      (5.1)        -               (5.1)
in inventories
–
(Increase)/decrease    10.1         -               10.1       (16.7)       -               (16.7)
in trade
receivables
–
Increase/(decrease)    15.0         -               15.0       9.4          -               9.4
in trade payables
– Change in income     (17.4)       -               (17.4)     4.7          -               4.7
tax liability
– Net change in
other operating        (10.9)       (17.3)          (28.2)     (13.1)       (10.9)          (24.0)
assets and
liabilities
Change in working
capital related to     (10.3)       (17.3)          (27.6)     (20.7)       (10.9)          (31.6)
operating
activities
NET CASH FLOW
PROVIDED BY            165.0        (20.8)          144.2      168.8        6.7             175.4
OPERATING
ACTIVITIES
Investment in
property, plant &      (49.0)       0.0             (49.0)     (44.3)       -               (44.3)
equipment
Investment in          (27.7)       (6.1)           (33.8)     (58.0)       -               (58.0)
intangible assets
Proceeds from
disposal of
intangible assets      0.3          0.3             0.6        7.0          -               7.0
and property, plant
& equipment
Acquisition of
shares in              (0.4)        -               (0.4)      (5.7)        -               (5.7)
non-consolidated
companies
Convertible bond       (0.2)        (26.7)          (26.9)     -            (45.3)          (45.3)
subscriptions
Proceeds of            13.9         -               13.9       -            -               -
financial assets
Payments to
post-employment        (6.1)        -               (6.1)      (2.0)        -               (2.0)
benefit plans
Other cash flow
related to             (0.5)        (2.9)           (3.4)      (0.7)        (2.2)           (2.9)
investment
activities
Deposits               (0.4)        -               (0.4)      (0.1)        -               (0.1)
Change in working
capital related to     5.3          -               5.3        8.0          -               8.0
investing
activities
NET CASH USED IN
INVESTING              (64.8)       (35.4)          (100.2)    (95.7)       (47.5)          (143.2)
ACTIVITIES
Repayment of
long-term              (0.3)        -               (0.3)      (0.3)        0.0             (0.3)
borrowings
Capital increase by    -            -               -          0.1          -               0.1
Ipsen
Treasury shares        0.2          -               0.2        1.0          -               1.0
Dividends paid by      (66.5)       -               (66.5)     (66.5)       -               (66.5)
Ipsen
Dividends paid by
subsidiaries to        (1.0)        -               (1.0)      -            -               -
minority interests
Deposits               -            -               -          -            -               -
"DIP" financing        (7.2)        -               (7.2)      0.0          -               0.0
Change in working
capital related to     1.6          -               1.6        0.6          -               0.6
financing
activities
NET CASH USED IN
FINANCING              (73.2)       -               (73.2)     (65.2)       -               (65.2)
ACTIVITIES
CHANGE IN CASH AND     27.0         (56.2)          (29.2)     7.9          (40.8)          (32.9)
CASH EQUIVALENTS
Opening cash and       144.8        -               144.8      177.9        -               177.9
cash equivalents
Impact of exchange     (2.3)        -               (2.3)      (0.2)        -               (0.2)
rate fluctuations
Closing cash and       169.5        (56.2)          113.3      185.6        (40.8)          144.8
cash equivalents
                                                                                              

APPENDIX 4
  *Reconciliation between the income statement at 31 December 2012 and the recurring adjusted income
    statement at 31 December 2012
                    31 December 2012        Assets from     Other            31 December 2011
                       restated                   discontinued       non-recurring
(in million                   %         operations ^    items^(2)                  %
euros)                               Sales        (1)                                                  Sales
Revenue                1 277.4    104.7%                                              1 277.4    104.7%
Cost of goods          (254.8)       -20.9%                                              (254.8)       -20.9%
sold
Research and
development            (248.6)       -20.4%                                              (248.6)       -20.4%
expenses
Selling expenses       (473.5)       -38.8%                                              (473.5)       -38.8%
General and
administrative         (99.1)        -8.1%                                               (99.1)        -8.1%
expenses
Other operating        5.6           0.5%                                                5.6           0.5%
income
Other operating        (7.8)         -0.6%                           (18.0)              (25.8)        -2.1%
expenses
Amortisation of
intangible             (3.3)         -0.3%                           (2.5)               (5.8)         -0.5%
assets
Restructuring          -             -                               (63.1)              (63.1)        -5.2%
costs
Impairment             -             -                               2.4                 2.4           0.2%
losses
Operating income       196.0         16.1%                           (81.2)              114.8         9.4%
Financial              (6.5)         -0.5%                           11.9                5.5           0.4%
income/(expense)
Income taxes           (44.0)        -3.6%                           19.6                (24.4)        -2.0%
Share of
profit/loss from       -             -                                                   -             -
associated
companies
Net profit from
continuing             145.5         11.9%                           (49.7)              95.8          7.9%
operations
Profit from
discontinued           -             -            (124.8)                                (124.8)       -10.2%
operations
Consolidated net       145.5         11.9%        (124.8)            (49.7)              (29.0)        -2.4%
profit
– attributable
to shareholders        145.0         -            (124.8)            (49.7)              (29.5)        -
of Ipsen S.A.
– attributable
to minority            0.5           -                                                   0.5           -
interests
Diluted earnings
per share (in       1.74                                               (0.35)     
euros)

^(1) Income statement impact linked to Inspiration Biopharmaceuticals Inc.

^(2) Other non-recurring items include:

  *non-recurring fees incurred during the preparation and early
    implementation of the strategy announced on 9 June 2011
  *non-recurring expenses linked with restructuring corresponding to the
    transfer of the Group’s North American commercial subsidiary to the East
    Coast
  *the settlement of a trade dispute with a partner
  *an administrative proceeding towards the Group
  *and proceed on disposal of PregLem shares
  *non-recurring tax elements

  *Reconciliation between the income statement at 31 December 2011 and the recurring adjusted income statement at 31
    December 2011
                       31 December 2011           Assets from                         Other           31 December 2011
                    Proforma                discontinued    Impairment    non-         Proforma
                       Recurring Adjusted         operations ^                        recurring
(in million                   %         (1)             ^(2)          items^(2)              %
euros)                               Sales                                                                          Sales
Revenue                1 210.2    104.3%                                                           1 210.2    104.3%
Cost of goods          (249.2)       -21.5%                                                           (249.2)       -21.5%
sold
Research and
development            (234.6)       -20.2%                                                           (234.6)       -20.2%
expenses
Selling expenses       (424.4)       -36.6%                                                           (424.4)       -36.6%
General and
administrative         (99.7)        -8.6%                                                            (99.7)        -8.6%
expenses
Other operating        0.4           -                                                17.2            17.5          1.5%
income
Other operating        (0.4)         -                                                (17.3)          (17.6)        -1.5%
expenses
Amortisation of
intangible             (4.7)         -0.4%                                            (3.1)           (7.8)         -0.7%
assets
Restructuring          -             -                                                (36.5)          (36.5)        -3.2%
costs
Impairment             -             -                               (85.2)                           (85.2)        -7.3%
losses
Operating income       197.5         17.0%                           (85.2)           (39.7)          72.6          6.3%
Financial              (0.7)         -0.1%                           -                -               (0.7)         -0.1%
income/(expense)
Income taxes           (43.1)        -3.7%                           32.3             12.7            1.9           0.2%
Share of
profit/loss from       -             -                                                                -             -
associated
companies
Net profit from
continuing             153.7         13.3%                           (52.9)           (27.0)          73.8          6.4%
operations
Profit from
discontinued           0.7           -1.0%        (73.5)                                              (72.9)        -6.3%
operations
Consolidated net       154.4         12.2%        (73.5)             (52.9)           (27.0)          0.9           0.1%
profit
– attributable
to shareholders        153.9                      (73.5)             (52.9)           (27.0)          0.4
of Ipsen S.A.
– attributable
to minority            0.5                                                                            0.5
interests
Diluted earnings
per share (in       1.86                                                        0.01       
euros)

^(1) The 2011 presentation is compliant with IFRS5: 2011 has been restated to
provide a comparative information between 2011 and 2012 (see appendix5).

^(2) Impairment booked over the period 2012 (details in note «Impaiment»

^(3) Other non-recurring items include:

  *non-recurring fees incurred during the preparation and early
    implementation of the strategy announced on 9 June 2011
  *impact related to allocation of purchase price acquisition on North
    America transactions
  *non-recurring expenses linked with restructuring corresponding to the
    transfer of the Group’s North American commercial subsidiary to the East
    Coast
  *the settlement of a trade dispute with a partner
  *an administrative proceeding towards the Group

APPENDIX 5


  *Reconciliation between the income statement at 31 December 2011 as published and the
    income statement proforma at 31 December 2011
                    31 December 2011        Restatements    31 December 2011
                       Proforma                   according to       As published
(in million                   %         IFRS 5                    %
euros)                               sales                                         sales
Revenue                1 210.2    104.3%       (24.7)             1 234.9    106.5%
Cost of goods          (249.2)       -21.5%       -                  (249.2)       -21.5%
sold
Research and
development            (234.6)       -20.2%       19.0               (253.6)       -21.9%
expenses
Selling expenses       (424.4)       -36.6%       0.7                (425.2)       -36.7%
General and
administrative         (99.7)        -8.6%        1.8                (101.5)       -8.7%
expenses
Other operating        17.5          1.5%         -                  17.5          1.5%
income
Other operating        (17.6)        -1.5%        -                  (17.6)        -1.5%
expenses
Amortisation of
intangible             (7.8)         -0.7%        -                  (7.8)         -0.7%
assets
Restructuring          (36.5)        -3.2%        -                  (36.5)        -3.2%
costs
Impairment             (85.2)        -7.3%        -                  (85.2)        -7.3%
losses
Operating income       72.6          6.3%         (3.2)              75.8          6.5%
Financial              (0.7)         -0.1%        33.7               (34.4)        -3.0%
income/(expense)
Income taxes           1.9           0.2%         (11.5)             13.3          1.2%
Share of
profit/loss from       -             -            54.5               (54.5)        -4.7%
associated
companies
Net profit from
continuing             73.8          6.4%         73.5               0.2           0.0%
operations
Profit from
discontinued           (72.9)        -6.3%        (73.5)             0.7           0.1%
operations
Consolidated net       0.9           0.1%         -                  0.9           0.1%
profit
– attributable
to shareholders        0.4                                           0.4
of Ipsen S.A.
– attributable
to minority            0.5                                           0.5
interests
Diluted earnings
per share (in       0.01                               0.01       
euros)

Contact:

Ipsen
Media
Didier Véron
Vice President, Public Affairs and Corporate Communications
Tel.: +33 (0)1 58 33 51 16
Fax: +33 (0)1 58 33 50 58
didier.veron@ipsen.com
or
Financial Community
Pierre Kemula
Vice President, Corporate Finance, Treasury and Financial Markets
Tel.: +33 (0)1 58 33 60 08
Fax: +33 (0)1 58 33 50 63
pierre.kemula@ipsen.com
or
Stéphane Durant des Aulnois
Investor Relations Manager
Tel.: +33 (0)1 58 33 60 09
Fax: +33 (0)1 58 33 50 63
stephane.durant.des.aulnois@ipsen.com
 
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