Ipsen. Half Year 2015 Results. 31 July IPSEN pour nom de la société - 07/04/2011 / page 1

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1 Ipsen Half Year 2015 Results 31 July 2015 IPSEN pour nom de la société - 07/04/2011 / page 1

2 Disclaimer This presentation includes only summary information and does not purport to be comprehensive. Forward-looking statements, targets and estimates contained herein are for illustrative purposes only and are based on management s current views and assumptions. Such statements involve known and unknown risks and uncertainties that may cause actual results, performance or events to differ materially from those anticipated in the summary information. Actual results may depart significantly from these targets given the occurrence of certain risks and uncertainties, notably given that a new product can appear to be promising at a preparatory stage of development 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 Group must deal with or may have to deal with competition from generic that may result in market share losses, which could affect its current level of growth in sales or profitability. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements, targets or estimates contained in this presentation to reflect any change in events, conditions, assumptions or circumstances on which any such statements are based unless so required by applicable law. All product names listed in this document are either licensed to the Ipsen Group or are registered trademarks of the Ipsen Group or its partners. The implementation of the strategy has to be submitted to the relevant staff representation authorities in each country concerned, in compliance with the specific procedures, terms and conditions set forth by each national legislation. 2 Ipsen Half Year 2015 Results 2 Goldman Sachs 35th Annual Global Healthcare Conference June 2014

3 Safe Harbor The Group operates in certain geographical regions whose governmental finances, local currencies or inflation rates could be affected by the current crisis, which could in turn erode the local competitiveness of the Group s products relative to competitors operating in local currency, and/or could be detrimental to the Group s margins in those regions where the Group s drugs are billed in local currencies. In a number of countries, the Group markets its drugs via distributors or agents: some of these partners financial strength could be impacted by the crisis, potentially subjecting the Group to difficulties in recovering its receivables. Furthermore, in certain countries whose financial equilibrium is threatened by the crisis and where the Group sells its drugs directly to hospitals, the Group could be forced to lengthen its payment terms or could experience difficulties in recovering its receivables in full. Finally, in those countries in which public or private health cover is provided, the impact of the financial crisis could cause medical insurance agencies to place added pressure on drug prices, increase financial contributions by patients or adopt a more selective approach to reimbursement criteria. 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. 3 Ipsen Half Year 2015 Results 3 Goldman Sachs 35th Annual Global Healthcare Conference June 2014

4 Agenda 1 Strategy update Marc de Garidel Chairman and CEO 2 H Operational overview Christel Bories Deputy CEO 3 H Financial overview Aymeric Le Chatelier CFO outlook Marc de Garidel Chairman and CEO 4 Ipsen Half Year 2015 Results 4 Goldman Sachs 35th Annual Global Healthcare Conference June 2014

5 Marc de Garidel Chairman and CEO Strategy update

6 : A refocused strategy within specialty and primary care Global leadership in targeted diseases Focus on GI/OTx Focus on NET/spasticity/Dysport aesthetics (Galderma) Reinforce position in uro-oncology/adult endocrinology Explore adjacent therapeutic areas in GI/orphan cancers Optimize the GI portfolio Diversify into adjacent GI pathologies Reinforce geographical coverage Develop OTx capabilities 6 Ipsen Half Year 2015 Results 6 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 Note: GI:Gastrointestinal, Otx:Dual channel approach (Rx/OTC)

7 2020 outlook showing strong sales growth and profitability momentum Group organic sales Core Operating margin (1) [+6% to +8%] CAGR >+560bps [ 1.8bn to 2bn] 20.4% > 26% 1.3bn E E Potential Business Development to complement 1.8bn to 2.0bn organic sales target 7 Ipsen Half Year 2015 Results 7 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) In percentage of sales

8 H performance Solid Operating performance driven by Specialty sales growth Accelerated Somatuline momentum with significant US launch investment Readiness for US launch of Dysport in AUL spasticity after July FDA approval Continued business development efforts with acquisition of Canbex/Octreopharm 8 Ipsen Half Year 2015 Results 8 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 Note: AUL: Adult Upper Limb,

9 Turnaround of the US platform, with high potential for growth US affiliate sales growth (1) Somatuline US sales growth 64.7% 91.3% 11.5% 31.2% 18.6% 28.6% H H US affiliate to reach breakeven ahead of plan and drive significant profitability increase thanks to Somatuline US platform to be further leveraged with Dysport launch in H2 and potential business development 9 Ipsen Half Year 2015 Results 9 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) Restated for Increlex supply interruption All growth rates at constant currency

10 H Operational overview Christel Bories Deputy CEO

11 Increasing weight of specialty care and the US H sales by segment H sales by geography Top 5 affiliates ~23% Primary care Europe G5 38% 40% Emerging markets 1 France 2 China Specialty care ~77% 13% Developed RoW 9% US 3 US 4 Germany 5 Italy One of the largest emerging market presence in the industry, consolidating US footprint 11 Ipsen Half Year 2015 Results 11 Goldman Sachs 35th Annual Global Healthcare Conference June 2014

12 H Steady Specialty care growth Drug sales H in million euros % excluding foreign exchange impact Somatuline +29.1% 188 Specialty care Decapeptyl Dysport Nutropin Hexvix Increlex +1.7% % +83.1% % +7.0% Specialty care 549m +12.0% Group sales 713.9m +7.9% Primary care Smecta Tanakan Forlax (17.4%) (2.0%) (5.1%) French Primary care: (7.7%) International Primary care: (2.3%) Primary care 165m (1) (3.7%) 12 Ipsen Half Year 2015 Results 12 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) Includes 12.1m of Drug-related sales

13 80% of H1 sales growth coming from Somatuline FY sales in million euros Group sales growth: +7.9% ( 52.5m) at constant currency Somatuline 42.4 Decapeptyl 1.4 Dysport Other Specialty care French PC International PC FX (3.5) (2.9) 22.7 FX Specialty care Primary care H H Somatuline, Group s main driver of growth 13 Ipsen Half Year 2015 Results 13 Goldman Sachs 35th Annual Global Healthcare Conference June 2014

14 Somatuline growth acceleration thanks to successful NET launch Business update Geographic distribution (H1 2015) US: Ipsen present in 40% of NET centers, including all 25 major reference centers Europe: GEP NET approval granted by 21 European countries Increased penetration across geographies 44% 23% 19% 14% G5 (1) Developed RoW United States Emerging markets (2) H performance 3-year growth (cst FX) Overall acceleration of growth due to NET global launch Strong growth in North America, up 88% with positive price impact % % 188 Double digit growth in Europe, notably in Germany, the UK, Spain and France H H H Ipsen Half Year 2015 Results 14 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) France, Germany, UK, Italy, Spain (2) Notably includes China, Russia and Brazil

15 Somatuline accelerated NET penetration in the US and Europe Somatuline US quarterly data, all indications Somatuline Europe G5 (1) quarterly data, all indications sales ( m) market share (%) sales ( m) market share (%) Q Q Q Q Q Q Q Q Q Q Somatuline captured 70% (2) of market growth in Europe and 23% (2) in the US in Q Ipsen Half Year 2015 Results 15 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 Source: IMS MIDAS + Symphony Healthcare (1) G5: France, Germany, UK, Spain, Italy Market share data stop at Q (2) Months of treatment

16 Dysport driven by solid market growth Business update US launch of Dysport in AUL spasticity expected in September 2015 Build-up of US spasticity sales force Geographic distribution (H1 2015) 18% 13% 23% 46% Staffing of European Business unit European launch of additional AUL spasticity indications to start in Q G5 (1) United States Emerging markets (2) Developed RoW H performance 3-year growth (cst FX) Good Galderma performance in aesthetics in a solid underlying market growth Solid performance in emerging countries, notably in Russia +4.3% +7.0% Slowdown of pharmaceutical market in Brazil in Q2 H H H Ipsen Half Year 2015 Results 16 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) France, Germany, UK, Italy, Spain (2) Notably includes China, Russia and Brazil AUL: Adult Upper Limb

17 Decapeptyl facing slowdown in China and price pressure in Europe and Algeria Business update Geographic distribution (H1 2015) Progress on potential combination in breast cancer Launch of 3-month subcutaneous formulation in Europe from July % 8% 44% G5 (1) Developed RoW Emerging markets (2) H performance 3-year growth (cst FX) Lower sales growth in China, facing market slowdown in IVF and price pressure Continued price pressure in Southern Europe and Algeria % % 169 Good growth in UK and Spain H H H Ipsen Half Year 2015 Results 17 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) France, Germany, UK, Italy, Spain (2) Notably includes China, Russia and Brazil (2) Note: IVF: In Vitro Fertilization

18 Primary care impacted by Smecta and Tanakan slowdown Business update Geographic distribution (H1 2015) Start of Tanakan local production in Russia Expected launch of Smecta ready-to-use (liquid) and Strawberry taste in Q in France Accelerated switch of China primary care model to OTx 30% 3% 67% G5 (1) Developed RoW Emerging markets (2) H performance 3-year growth (cst FX) Smecta sales impacted by new manufacturing setup in Algeria and destocking in distribution and price pressure in China Tanakan Russia sales facing out of pocket market slowdown and tough competition (6.9)% (3.7)% France continuous decline with Tanakan market decrease and tail portfolio erosion H H H Ipsen Half Year 2015 Results 18 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) France, Germany, UK, Italy, Spain (2) Notably includes China, Russia and Brazil

19 H1 performance supporting 2015 growth expectations Somatuline to continue delivering growth in NET, both in US and Europe Dysport to benefit from market growth and US launch in AUL spasticity Decapeptyl to benefit from market rebound and new commercial model in China Primary Care growth to recover with seasonality and specific action plans on Tanakan and Smecta Strategic focus and commercial model transformation to support base business growth in both Specialty and Primary Care 19 Ipsen Half Year 2015 Results 19 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) At constant currency (2) In percentage of sales

20 H Financial overview Aymeric Le Chatelier EVP CFO

21 P&L - From sales to Core Operating Income In million euros H H Change % Change Change at constant FX Group sales % +7.9% Other revenues % Revenue % Cost of goods sold (168.3) (155.8) % Selling expenses (259.9) (211.4) % R&D expenses (91.8) (87.6) % G&A expenses (61.3) (51.3) % Other core (2.9) (0.7) -2.2 NA Core Operating Income % Core Operating margin 23.5% 25.4% -1.0 pt 21 Ipsen Half Year 2015 Results 21 Goldman Sachs 35th Annual Global Healthcare Conference June 2014

22 Ipsen exposure to foreign currencies H sales exposure by currency Evolution of major currencies vs. EUR (2) Other (1) million 17% GBP 5% CNY 10% 52% 16% USD EUR Average rates change (H vs. H2 2014) Closing rates change (Jun 2015 vs. Dec 2014) +15.5% +9.3% +14.3%+10.8% +9.0% +8.1% +9.9% -16.8% -6.6% -6.2% USD CNY GBP RUB BRL H sales growth benefiting from strong USD & CNY against EUR Hedging in place to limit impact of key currencies 22 Ipsen Half Year 2015 Results 22 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) Includes RUB, BRL, AUD, PLN and other currencies (2) 1 Foreign Currency Unit = X EUR

23 Other revenues evolution +26.4% In million euros 38.0m 30.1m H H Other Royalties received Increased Adenuric royalty stream Upfront payment received from sale of Ginkor Fort rights Decreasing co-promotion revenues in France & milestones received 23 Ipsen Half Year 2015 Results 23 Goldman Sachs 35th Annual Global Healthcare Conference June 2014

24 Drivers for operating cost evolution COGS ( m) +8.0% R&D ( m) +4.8% % 23.6% 13.7% 12.9% H H Positive mix effect and productivity efforts Selling expenses ( m) H H Tasquinimod discontinuation and lower R&D tax credit G&A ( m) +23.0% % % 36.4% 8.0% 8.6% H H Investment in NET in the US and Europe H H Support function investment and variable compensation 24 Ipsen Half Year 2015 Results 24 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 Note: All ratios in percentage of sales

25 Core Operating margin evolution In million euros Somatuline US Total other Products (1) FX Sales H H COI Margin (as % of sales) 25.4% -1.4% -0.1% -0.4% 23.5% Somatuline US significantly dilutive to Group margin in H Ipsen Half Year 2015 Results 25 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 Note: COI=Core Operating Income (1) Total contribution from all products (ex Somatuline US)

26 P&L - From Core Operating Income to EPS In million euros H H Change % Change Group sales % Core Operating Income % Core Operating margin 23.5% 25.4% -1.0 pt Other non core (6.6) (3.0) -3.6 Restructuring costs (0.7) (12.3) Impairment gain / (losses) (57.0) (0.4) Operating Income % Operating Income margin 14.5% 22.9% -8.4 pts Financial result 3.2 (2.2) +5.4 Income taxes (17.9) (40.7) Share of profit from JV Discontinued operations 0.3 (0.2) +0.5 Consolidated net profit % Consolidated profit margin 12.7% 16.4% -3.7 pts EPS fully diluted ( ) % Core EPS fully diluted ( ) % Consolidated net profit impacted by tasquinimod impairment Core EPS up 7% 26 Ipsen Half Year 2015 Results 26 Goldman Sachs 35th Annual Global Healthcare Conference June 2014

27 H cash flow generation In million euros Free cash flow: 26m (1) Operating cash flow (1) Change in working capital (2) Opening cash Capex -19 Dividends -70 Share Buyback External acquisitions Other Closing cash Dec June 2015 Solid free cash flow generation despite higher working capital Closing cash impacted by dividends, share buyback and external acquisitions 27 Ipsen Half Year 2015 Results 27 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) Before restructuring cost (2) Excluding milestone amortization

28 Balance sheet evolution ASSETS LIABILITIES In million euros FY 2014 H In million euros FY 2014 H Goodwill Capital and reserves 1, ,132.0 Other intangible assets Non-controlling interests Property, plant and equipment Investments in companies accounted for using the equity method Total equity 1, , Provisions Other non current assets Financial liabilities Non-current assets 1, ,088.2 Other non current liabilities Current assets Non-current liabilities Incl. Cash and cash equivalents Current liabilities Total Assets 1, ,760.8 Total Liabilities 1, , Ipsen Half Year 2015 Results 28 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 Solid balance sheet with net cash Intangibles impacted by tasquinimod impairment

29 H1 2015: Key financial achievements Group sales up 7.9% (1) driven by specialty care growth of 12% (1), notably Somatuline in the US and Europe Core Operating Income up 3.5%, or 23.5% margin (2), due to high investment for NET launch, notably in the US Consolidated net profit of 90.5m, impacted by tasquinimod impairment Robust Core EPS of 1.50, up 7.0% year-on-year Sound operating cash flow generation Closing net cash balance of 88m 29 Ipsen Half Year 2015 Results 29 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) At constant currency (2) In percentage of sales

30 Marc de Garidel Chairman and CEO 2015 outlook

31 Major R&D and regulatory milestones to come R&D H H Dysport PLL PhIII topline results Dysport ALL PhIII topline results Telotristat etiprate (LX1032) SOMScan PhIII results Ph3 initiation SOMther Ph1 initiation Syntaxin compound Ph1 initiation Regulatory/ Commercial DNG positive regulatory feedback Dysport PLL US filing Dysport AUL US approval Dysport AUL US launch Somatuline GEP NETs global launch Dysport ALL US filing Dysport Solution Europe/Brazil filing in cervical dystonia 31 Ipsen Half Year 2015 Results 31 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 Note: AUL: Adult Upper Limb, PLL: Pediatric Lower Limb, ALL: Adult Lower Limb

32 Financial objectives upgraded for 2015 Specialty care Drug sales Growth 14.0%, year-on-year Driven by the launch of Somatuline in neuroendocrine tumors in the US and Europe Primary care Drug sales Decline of -3.0% to 0.0%, year-on-year From 2015 onwards, drug-related sales (active substances and raw materials) to be recorded in the Primary care sales line Core Operating Income 22.0% of Group sales Reflecting the growth of Specialty care and the investments required to support the global launch of Somatuline and Dysport in the US 32 Ipsen Half Year 2015 Results 32 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 Note: Sales objectives are set at constant currency

33 2015 guidance showing strong sales and profitability momentum Group organic sales Core Operating margin (1) +9.5% (2) +160bps 1.40 bn (3) 22% 1.27bn 20.4% E E 33 Ipsen Half Year 2015 Results 33 Goldman Sachs 35th Annual Global Healthcare Conference June 2014 (1) In percentage of sales (2) At constant currency, based on the lower range of the specialty and primary care guidance (3) Excluding foreign exchange impact

34 Key takeaways 1 Focused Strategy on niche disease areas with 26% minimum profitability target by double digit organic sales growth and significant profitability enhancement thanks to Somatuline launch 3 Continuous business development effort to leverage portfolio and geographies Ipsen committed to deliver superior shareholder value 34 Ipsen Half Year 2015 Results 34 Goldman Sachs 35th Annual Global Healthcare Conference June 2014

35 Thank you