- Group sales up 7.9%1
driven by solid 12.0%1 growth of Specialty care,
notably due to Somatuline®
- Core Operating Income up 3.5%, in
view of the investment in neuroendocrine tumors
- Fully diluted core EPS up
7.0%
- 2015 objectives raised
Regulatory News:
The Board of Directors of Ipsen (Euronext: IPN; ADR: IPSEY),
chaired by Marc de Garidel, met on 30 July 2015 to approve the
financial statements for the first half 2015, published today. The
interim financial report, with regard to regulated information, is
available on the Group's website, www.ipsen.com, under the
Regulated Information tab in the Investor Relations section. The
2015 half year financial statements are subject to a limited review
by statutory auditors.
Extract of consolidated results for the
first halves 2015 and 2014
(in million euros) H1 2015
H1 2014 % change
Specialty care sales 548.9 472.5
+12.0%1
Primary care sales 165.0
166.1 -3.7%1
Group sales
713.9 638.7 +7.9%1
Core
Operating Income 167.6 162.0
+3.5% Core operating margin 23.5%
25.4%
Consolidated net
profit 90.5 104.5
-13.4%
Core EPS – fully diluted (€)
1.50 1.40 +7.0%
Net operating cash-flow 36.2
54.7 -33.8%
Closing cash
87.8 129.0* -31.9%
* As of 30 June 2014, net closing cash included € 80m withdrawn
from the syndicated credit facility
Commenting on the first half 2015 performance, Marc de
Garidel, Chairman and Chief Executive Officer of Ipsen, stated:
"Ipsen posted a strong specialty care performance in the first half
2015. Dysport® continues to benefit from solid performance in
aesthetics while Somatuline® posted double digit growth across all
geographies, with a remarkable growth in North America. The good
Somatuline® momentum following the launch in neuroendocrine tumors
(NET) allows us to raise our specialty care sales and profitability
objectives for 2015.” Marc de Garidel added: "We are
pleased with the recent FDA approval of Dysport® in adult upper
limb spasticity, which is a key step in our ambition to become
global leaders in the treatment of spasticity”.
1 Year-on-year sales growth excluding foreign exchange
impacts
Review of the first half 2015
results
Note: unless stated otherwise, all variations in sales are
stated excluding foreign exchange impacts and are computed by
restating the H1 2014 sales with the H1 2015 exchange rates.
In the first half 2015, Group sales reached €713.9
million, up 7.9% year-on-year. Specialty care sales reached
€548.9 million, up 12.0%, driven by:
- The strong performance of Somatuline®
in Europe and North America;
- The solid growth of Dysport®, driven by
product supply to Galderma for aesthetic use;
Decapeptyl® sales grew 0.8% over the period, negatively impacted
in the second quarter in China by a market slowdown and price
pressure in some regions.
In the first half 2015, primary care reached €165.0
million, down 3.7% year-on-year. Sales declined 7.7% in France, and
2.3% internationally, affected by the setup of a new commercial
model in Algeria (where Ipsen now supplies the active ingredient
instead of the finished product) and by Smecta® and Tanakan® sales
decrease in China and Russia.
Core Operating Income totaled €167.6 million in the first
half of 2015, up 3.5%. Core operating margin reached 23.5%, down
1.9 points compared to the first half 2014, mainly impacted by the
dilutive effect resulting from the setup of an oncology sales force
and the marketing and medical investments necessary to promote
Somatuline® Depot® (lanreotide) 120 mg Injection in the United
States in the treatment of gastrointestinal and pancreatic
neuroendocrine tumors (GEP NETs).
As of 30 June 2015, the Group recorded a €57 million
impairment loss to fully impair the intangible asset related
to tasquinimod following the decision to stop all clinical trials
with the product as publicly announced on 16 April, 2015.
Consolidated net profit was down 13.4% over the period.
Core earnings per share (see Appendix 4) grew 7.0%
year-on-year to reach €1.50 as of 30 June 2015, compared to €1.40
as of 30 June 2014.
Net operating cash-flow generated over the first half
2015 reached €36.2 million, compared to €54.7 million over the
first half 2014, driven by an increase of the working capital
requirement for operating activities of €106.8 million in the first
half 2015, compared to an increase of €73.3 million in the first
half 2014.
Closing cash reached €87.8 million over the period, after
dividend payment for €70.0 million, external growth for €37.3
million with the acquisitions of OctreoPharm Sciences and Canbex
Therapeutics, and share buyback for €3.9 million. As of 30 June
2014, closing cash reached €129.0 million, which included €80
million drawn from the Group's syndicated credit line.
2015 objectives
The Group revises its objectives for 2015:
- Upgrade of the Specialty care sales
growth guidance at or above 14.0% year-on-year, driven by the
strong performance of Somatuline® following the launch in
neuroendocrine tumors in the US and Europe;
- Confirmation of the Primary care
sales decline guidance between -3.0% and 0.0%
year-on-year;
As a result, the Group expects sales to grow above 9.5%.
- Upgrade of the Core Operating margin
guidance at or above 22.0% of Group sales, reflecting the
growth of specialty care and the investments required to support
the global launch of Somatuline® and that of Dysport® in the
US.
FY15 guidance (as of 03 March
2015)
FY15 guidance (as of 29 April
2015)
FY15 guidance (as of 31 July
2015)
Specialty care sales growth 8.0% – 10.0%
10.0% – 12.0% ≥ 14.0% Primary care sales
growth (3.0%) – 0.0% (3.0%) – 0.0%
(3.0%) – 0.0% Core Operating margin
19.0% – 20.0% 21.0% – 22.0% ≥ 22.0%
Sales objectives are set at constant currency and drug-related
sales (active substances and raw materials) are from now on
recorded in the Primary Care sales line.
Update on the share buyback program
initiated on 3 June 2015
The board of Directors held on 30 July 2015 decided that the
free share plans could be covered not only through issuance of new
shares but also through the acquisition of existing shares. As a
result, the 500 000 shares, or about 0.60% of the share capital, to
be purchased within the share buyback program initiated on 3 June
2015(1), which were originally intended for cancellation to
compensate dilution, will now be allocated to cover the
aforementioned free share plans. The shares purchased within this
program by 30 July 2015 will be cancelled.
(1) Mandate granted to Natixis, initiated on 3 June 2015 and
expiring 31 December 2015 (Press release issued on 3 June 2015)
Meeting, webcast and Conference Call (in English) for the
financial community
Ipsen will host an analyst meeting on Friday 31 July 2015 at
2:30 p.m. (Paris time, GMT+1) at its headquarters in
Boulogne-Billancourt (France). A web conference (audio and video
webcast) and conference call will take place simultaneously. The
web conference will be available at www.ipsen.com. Participants in
the conference call should dial in approximately 5 to 10 minutes
prior to its start. No reservation is required to participate. The
conference ID is 954323. No access code is required. Phone
numbers to call in order to connect to the conference are: from
France and continental Europe +33 (0)17 0993 209, from UK +44
(0)207 1312 711 and from the United States +1 646 461 1757. 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)17 0993 529, from UK +44 (0)207 031 4064
and from the United States +1 954 334 0342 and access
code is 954323. This replay will be available for one week
following the meeting.
About Ipsen
Ipsen is a global specialty-driven biotechnological group with
total sales exceeding €1.2 billion in 2014. Ipsen sells more than
20 drugs in more than 115 countries, with a direct commercial
presence in 30 countries. 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,
endocrinology and urology-oncology. Ipsen’s commitment to oncology
is exemplified through its growing portfolio of key therapies
improving the care of patients suffering from prostate cancer,
bladder cancer and neuro-endocrine tumors. Ipsen also has a
significant presence in primary care. 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, located in the heart of the leading biotechnological and
life sciences hubs (Les Ulis, France; Slough/Oxford, UK; Cambridge,
US). In 2014, R&D expenditure totaled close to €187 million,
representing about 15% of Group sales. The Group has more than
4,500 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.
Ipsen 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.
Use of the words "believes," "anticipates" and "expects" and
similar expressions are intended to identify forward-looking
statements, including the Group’s expectations regarding future
events, including regulatory filings and determinations. 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 generic products
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. There can be no guarantees a product will
receive the necessary regulatory approvals or that the product will
prove to be commercially successful. If underlying assumptions
prove inaccurate or risks or uncertainties materialize, actual
results may differ materially from those set forth in the
forward-looking statements. Other risks and uncertainties include
but are not limited to, general industry conditions and
competition; general economic factors, including interest rate and
currency exchange rate fluctuations; the impact of pharmaceutical
industry regulation and health care legislation; global trends
toward health care cost containment; technological advances, new
products and patents attained by competitors; challenges inherent
in new product development, including obtaining regulatory
approval; the Group's ability to accurately predict future market
conditions; manufacturing difficulties or delays; financial
instability of international economies and sovereign risk;
dependence on the effectiveness of the Group’s patents and other
protections for innovative products; and the exposure to
litigation, including patent litigation, and/or regulatory actions.
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.
The risks and uncertainties set out are not exhaustive and the
reader is advised to refer to the Group’s 2014 Registration
Document available on its website (www.ipsen.com).
Comparison of consolidated sales for the second quarters and
first halves 2015 and 2014:
Sales by therapeutic area and by product
Note: Unless stated otherwise, all variations in sales are
stated excluding foreign exchange impacts.
The following table shows sales by therapeutic area and by
product for the second quarters and first halves 2015 and 2014:
2nd Quarter
First Half
(in millions euros)
2015
2014
%Variation
%Variationat constantcurrency
2015 2014
%Variation
%Variationat constantcurrency
Urology-oncology
90,8
90,6 0,2% -5,3% 178,0 168,8
5,4% 1,0% of which Hexvix® 4,5
3,9 14,8% 13,8% 8,8 8,3 5,4% 4,6% of which Decapeptyl® 86,3 86,7
-0,4% -6,1% 169,2 160,5 5,4% 0,8% Endocrinology
120,1
88,9 35,2% 29,1% 229,8 175,1
31,2% 26,0% of which Somatuline® 98,9 70,8 39,7%
32,9% 188,2 139,3 35,2% 29,1% of which NutropinAq® 15,9 15,1 5,6%
4,5% 31,7 30,9 2,6% 1,7% of which Increlex® 5,3 3,0 76,2% 56,8% 9,9
5,0 99,2% 83,1% Neurology
72,3 67,8 6,5%
4,2% 141,1 128,6 9,7% 7,4% of
which Dysport® 72,0 67,8 6,1% 3,8% 140,6 128,6 9,3% 7,0%
Specialty care 283,2 247,3 14,5%
9,7% 548,9 472,5 16,2% 12,0%
Gastroenterology
54,6 58,7 -7,0%
-13,4% 113,8 110,6 2,9% -3,3% of
which Smecta® 26,4 30,5 -13,5% -20,6% 62,3 60,8 2,6% -5,1% of which
Forlax® 9,7 10,5 -7,3% -9,5% 18,8 18,8 -0,3% -2,0% Cognitive
disorders
13,7 14,9 -8,2% -7,6%
24,2 31,2 -22,5% -17,4% of which
Tanakan® 13,7 14,9 -8,2% -7,6% 24,2 31,2 -22,5% -17,4%
Cardiovascular
4,4 5,8 -24,5% -25,0%
9,4 11,3 -16,6% -16,9% Other
Primary Care
2,5 2,8 -9,3% -8,4%
5,5 5,7 -4,4% -4,4% Drug-related
Sales*
5,5 3,3 65,3% 64,5% 12,1
7,4 64,9% 64,2% Primary care
80,6 85,5 -5,7% -10,2% 165,0
166,1 -0,7% -3,7% Group Sales
363,8 332,7
9,3% 4,5% 713,9
638,7 11,8% 7,9%
* From January 2015 onwards, Drug-related sales (active
ingredients and raw materials) are recorded within Primary care
sales.
In the second quarter 2015, sales of Specialty care
products reached €283.2 million, up 9.7% year-on-year. In the first
half 2015, sales amounted to €548.9 million, up 12.0%. Sales in
urology-oncology, endocrinology, and neurology grew by respectively
1.0%, 26.0% and 7.4%. In the first half 2015, the relative weight
of specialty care products continued to increase to reach 76.9% of
total Group sales, compared to 74.0% the previous year.
In Urology-oncology, sales of Decapeptyl®
reached €86.3 million in the second quarter 2015, down 6.1%
year-on-year, affected by a sales decrease in China, in a context
of market slowdown and price pressure in some regions. In the first
half 2015, sales amounted to €169.2 million, up 0.8%, in a
declining European pharmaceutical market affected by a more
frequent use of co-payment in Southern Europe and continued price
reductions, notably an 11.0% cut as of 1st January 2015 in Greece
and a 3.0% cut as of 1st February 2015 in France and more than 20%
in Algeria. In the first half 2015, sales of Hexvix®
amounted to €8.8 million, up 4.6% compared to the previous year,
driven by solid performance in France and Germany, where customer
demand was strong in the second quarter. Germany represented around
70% of this product’s sales. Over the period, sales in
Urology-oncology represented 24.9% of total Group sales, compared
to 26.4% the previous year.
In Endocrinology, sales reached €120.1 million in the
second quarter 2015, up 29.1% year-on-year. In the first half 2015,
sales amounted to €229.8, up 26.0%, and represented 32.2% of total
Group sales, compared to 27.4% the previous year.
Somatuline® – In the second quarter 2015, sales
reached €98.9 million, up 32.9% year-on-year. In the first half
2015, sales of Somatuline® amounted to €188.2 million, up 29.1%,
with strong growth in Europe and in North America, driven by the
launch in neuroendocrine tumors. The product also registered good
performance in Europe, notably in Germany, the UK, Spain and
France.
NutropinAq® – In the second quarter 2015, sales
reached €15.9 million, up 4.5% year-on-year. In the first half
2015, sales of NutropinAq® amounted to €31.7 million, up 1.7%,
compared to the previous year.
Increlex® – In the second quarter 2015, sales
reached €5.3 million, up sharply compared to the same period in
2014. In the first half 2015, sales of Increlex® amounted to €9.9
million, benefitting from a favorable comparison base with a low
first half 2014 following the shortage situation that started
mid-June 2013 in the United States and in August 2013 in Europe.
Supply gradually resumed in Europe in early 2014 and in the United
States in June 2014.
In Neurology, Dysport® sales reached €72.0
million in the second quarter 2015, up 3.8% year-on-year. Second
quarter 2015 growth was affected by a slowdown of pharmaceutical
market in Brazil. In the first half 2015, sales amounted to €140.6
million, up 7.0%, driven by product supply to Galderma for
aesthetic use and by the solid performance in Russia and Mexico.
Neurology sales represented 19.8% of total Group sales in the first
half 2015, compared to 20.1% a year earlier.
In the second quarter 2015, sales of Primary care
products reached €80.6 million, down 10.2% year-on-year, mainly
affected by Smecta® sales decrease in China, Russia, Algeria (where
Ipsen now supplies the active ingredient instead of the finished
product) and Vietnam (where most of the first half sales were
anticipated in the first quarter ahead of the import license
renewal). In the first half 2015, sales amounted to €165.0 million,
down 3.7%, penalized by the 7.7% decline in French sales, affected
by the price cut on Smecta® in July 2014 and by the continued
erosion of Tanakan® sales. Internationally, sales decreased 2.3%,
affected by Smecta® and Tanakan® sales decrease in China and
Russia. Primary care sales in France accounted for 25.3% of the
Group’s total primary care sales, compared to 27.2% the previous
year.
In Gastroenterology, sales reached €54.6 million in the
second quarter 2015, down 13.4% year-on-year. In the first half
2015, sales amounted to €113.8 million euros, down 3.3%.
Smecta® – In the second quarter 2015, sales
reached €26.4 million, down 20.6% year-on-year. In the first half
2015, sales amounted to €62.3 million euros, down 5.1%. Sales were
negatively impacted by a significant destocking effect in China’s
distribution channel in the second quarter, in a context of price
pressure in some regions. Moreover, sales growth in Vietnam only
partially offset the termination of direct sales in Algeria, now
replaced by sales of the active principle to a local manufacturer,
which are recorded in “Drug-related sales”. Sales were also
affected in France by a 7.5% price cut implemented in July
2014.
Forlax® – In the second quarter 2015, sales
reached €9.7 million, down 9.5% year-on-year, affected by a
continued decline in France, where it still suffers from the
“Tiers-Payant1” regulation. In the first half 2015, sales amounted
to €18.8 million euros, down 2.0%, supported by growing sales to
our partners marketing the generic versions of the product and from
the good performance in Algeria and in Russia.
In the cognitive disorders area, sales of
Tanakan® reached €13.7 million euros in the second
quarter 2015, down 7.6% year-on-year. Sales in the first half 2015
amounted to €24.2 million euros, down 17.4%, affected by the
performance in Russia due to greater competition and declining
local sales, and in France, where the product suffers from heavy
competitive pressure.
In the cardiovascular area, sales reached €4.4 million
euros in the second quarter 2015, down 25.0% year-on-year. In the
first half 2015, sales amounted to €9.4 million euros, down 16.9%,
mainly impacted by the decline of Nisis® /
Nisisco® sales, which faced an additional 40.0% price
cut in February 2015.
1 With the “Tiers-Payant” regulation, the patient now pays
upfront for a branded drug and is reimbursed only later on
Sales of Other primary care products reached €2.5 million
in the second quarter 2015, down 8.4% year-on-year, mainly affected
by the 10.8% decline in Adrovance® sales over the
period. In the first half 2015, sales amounted to €5.5 million,
down 4.4%.
In the second quarter 2015, Drug-related sales (active
ingredients and raw materials)1 reached €5.5 million, up
64.5% year-on-year. In the first half 2015, sales amounted to €12.1
million euros, up 64.2%. This performance was mainly explained by
Smecta®’s active ingredient sales recovery in South Korea and the
shift in Algeria’s commercial model, where Ipsen now supplies
Smecta®’s active ingredient to a local manufacturer and records
sales in the “Drug-related sales” line.
1 From January 2015 onwards, Drug-related sales (active
ingredients and raw materials) are recorded within Primary care
sales
Sales by geographical area
Group sales by geographical area in the second quarters and
first halves 2015 and 2014 were as follows:
2nd Quarter
First Half (in million
euros)
2015 2014
%Variation
%Variationat constantcurrency
2015 2014
%Variation
%Variationatconstantcurrency
France 52,8 52,3 0,8% 0,8% 106,9 106,7 0,2%
0,2% Germany 18,7 16,6 12,8% -0,1% 37,1 30,4 22,2% 8,9% Italy 15,8
14,6 8,2% 8,2% 32,6 29,2 11,7% 11,7% United Kingdom 27,0 22,8 18,1%
18,1% 53,5 47,1 13,5% 13,5% Spain 20,8 21,5 -3,3% -3,3% 42,0 43,7
-4,1% -4,1%
Major Western European countries 135,0
127,9 5,6% 3,8% 272,1 257,1
5,8% 4,3% Eastern Europe 44,7 46,5 -3,8% 4,7%
84,1 90,7 -7,3% 3,9% Others Europe 39,2 37,0 5,9% 6,1% 76,6 74,4
3,0% 3,3%
Other European Countries 83,9 83,5
0,5% 5,4% 160,7 165,0 -2,7%
3,6% North America 37,6 17,2
119,0% 76,5% 67,5 31,5 114,0%
74,7% Asia 57,1 51,9 10,0% -10,9% 116,8 92,2 26,6% 4,6%
Other countries in the Rest of the world 50,2 52,3 -4,1% -5,3% 96,9
92,8 4,5% 1,9%
Rest of the World 107,3 104,2
2,9% -8,4% 213,7 185,0 15,5%
3,3% Group Sales 363,8
332,7 9,3%
4,5% 713,9 638,7
11,8% 7,9%
In the second quarter 2015, sales generated in the Major
Western European countries reached €135.0 million, up 3.8%
year-on-year. In the first half 2015, sales generated in the Major
Western European countries amounted to €272.1 million, up 4.3%.
Sales in the Major Western European countries represented 38.1% of
total Group sales in the first half 2015, compared to 40.3% the
previous year.
France – In the second quarter 2015, sales reached €52.8
million, up 0.8% year-on-year. In the first half 2015, sales
amounted to €106.9 million, up 0.2%, affected by Smecta® sales
decline over the period, penalized by the 7.5% price cut
implemented in July 2014. Moreover, sales of Tanakan® continued to
erode. Sales of specialty care products, up 6.0% over the period,
were driven by the sustained growth of Somatuline® and Dysport®,
offsetting the decrease in Decapeptyl® sales following the 3.0%
price cut implemented as of 1st February 2015. Consequently, the
relative weight of France in the Group’s consolidated sales has
continued to decrease and now represents 15.0% of sales, compared
to 16.7% the previous year.
Germany – In the second quarter 2015, sales reached €27.0
million, up 18.1% year-on-year. In the first half 2015, sales
reached €53.5 million, up 13.5%, driven by the strong growth of
Somatuline® and NutropinAq®, offsetting the decline in Dysport®
sales. Over the period, sales in Germany represented 7.5% of total
Group sales, compared to 7.4% a year earlier.
Italy – In the second quarter 2015, sales reached €20.8
million, down 3.3% year-on-year. In the first half 2015, sales
reached €42.0 million, down 4.1%. The implementation of austerity
measures targeting hospital products still affects the performance
of all specialty care products. In the first half 2015, sales in
Italy represented 5.9% of consolidated Group sales, compared to
6.9% the previous year.
United Kingdom – In the second quarter 2015, sales
reached €18.7 million, flat year-on-year. In the first half 2015,
sales amounted to €37.1 million, up 8.9%, supported by the strong
growth of Somatuline® and Decapeptyl®. In the first half 2015,
sales in the United Kingdom represented 5.2% of total Group sales,
compared to 4.8% the previous year.
Spain – In the second quarter 2015, sales reached €15.8
million, up 8.2% year-on-year. In the first half 2015, sales
amounted to €32.6 million, up 11.7%, driven by the double-digit
growth of Somatuline® and Decapeptyl®. In the first half 2015,
Spain accounted for 4.6% of total Group sales, flat
year-on-year.
In the second quarter 2015, sales generated in the Other
European countries reached €83.9 million, up 5.4% year-on-year.
In the first half 2015, sales amounted to €160.7 million, up 3.6%,
supported by solid performance in Czech Republic, Poland and
Western Europe (excluding Major Western European countries1),
mainly driven by the performance of Somatuline® in the Netherlands
and in Scandinavia. Nevertheless, sales were negatively impacted by
the contraction of activity in Ukraine as a result of the ongoing
political crisis. Over the period, sales in this region represented
22.5% of consolidated Group sales, compared to 25.8% the previous
year.
In the second quarter 2015, sales generated in North
America reached €37.6 million, up 76.5% year-on-year. In the
first half 2015, sales amounted to €67.5 million, up 74.7%, mainly
driven by strong Somatuline® growth of 87.8% associated with the
launch in neuroendocrine tumors, and by growing supply sales of
Dysport® aesthetics, and by the positive base effect resulting from
Increlex® supply interruption in the second half 2013. Sales in
North America represented 9.4% of consolidated Group sales,
compared to 4.9% a year earlier.
In the second quarter 2015, sales generated in the Rest of
the World reached €107.3 million, down 8.4% year-on-year,
notably affected by the performance of Decapeptyl® and Smecta® in
China and Algeria, and by the pharmaceutical market slowdown
impacting Dysport® in Brazil. In the first half 2015, sales
amounted to €213.7 million, up 3.3%, benefitting from solid
performance of Somatuline® and Dysport® in Algeria, in Australia,
in Mexico, and from the anticipation of sales in Vietnam ahead of
the import license renewal. In the first half 2015, sales in the
Rest of the World continued to progress given the favorable
exchange rate fluctuation, representing 29.9% of total consolidated
Group sales, compared to 29.0% the previous year.
1 France, Germany, Italy, United-Kingdom, Spain
Comparison of consolidated incomes for
the first halves 2015 and 2014
(in millions of euros)
30 June 2015 30 June
2014 Change % sales
% sales
Sales 713.9 100.0% 638.7 100.0%
11.8% Other revenues 38.0 5.3% 30.1 4.7% 26.4%
Revenue 751.9 105.3% 668.8
104.7% 12.4% Cost of goods sold (168.3) -23.6%
(155.8) -24.4% 8.0% Selling expenses (259.9) -36.4% (211.4) -33.1%
23.0% Research and development expenses (91.8) -12.9% (87.6) -13.7%
4.8% General and administrative expenses (61.3) -8.6% (51.3) -8.0%
19.5% Other core operating income 1.9 0.3% 4.0 0.6% -53.7% Other
core operating expenses (4.8) -0.7% (4.7) -0.7% 3.2%
Core
operating income 167.6 23.5% 162.0
25.4% 3.5% Other operating income 1.4 0.2% 0.4 0.1% -
Other operating expenses (8.0) -1.1% (3.4) -0.5% 134.4%
Restructuring costs (0.7) -0.1% (12.3) -1.9% - Impairment losses
(57.0) -8.0% (0.4) -0.1% -
Operating income 103.4
14.5% 146.3 22.9% -29.3% Investment
income 0.6 0.1% 0.8 0.1% -21.7% Financing costs (2.5) -0.4% (1.2)
-0.2% 104.8%
Net financing costs (1.9) -0.3%
(0.5) -0.1% - Other financial income and expense 5.1
0.7% (1.7) -0.3% - Income taxes (17.9) -2.5% (40.7) -6.4% - Share
of net profit (loss) from entities accounted for using the equity
method 1.5 0.2% 1.2 - -
Net profit (loss) from continuing
operations 90.2 12.6% 104.7 16.4%
-13.9% Net profit (loss) from discontinued operations 0.3
0.0% (0.2) 0.0% -
Consolidated net profit 90.5
12.7% 104.5 16.4% -13.4% - Attributable
to shareholders of Ipsen S.A. 90.1 104.0 - Attributable to
non-controlling interests 0.3
0.4 Basic
earnings per share - attributable to Ipsen S.A. shareholders (in €
per share) 1.10 1.27 Core basic earnings per share - attributable
to Ipsen S.A. shareholders (in € per share) (*) 1.50
1.40
(*) The core consolidated net profit is detailled in
Appendix 4.
In the half-year period ended 30 June 2015, the Group's
consolidated sales reached €713.9 million, up 11.8% year-on-year
and up 7.9% excluding foreign exchange impact1.
Other revenues at 30 June 2015 totaled €38.0 million, up 26.4%
over the €30.1 million realized the prior year. The increase
resulted primarily from royalties received, of which €3.4 million
stemmed from the recognition of an upfront payment received by
Ipsen as part of its sale to Tonipharm of Ginkor Fort® licensing
rights in the Group's territories. The increase was also driven by
royalties received from Group partners, notably for Adenuric®. At
30 June 2015, these royalties came to €14.9 million, versus €9.9
million a year earlier.
At 30 June 2015, the cost of goods sold amounted to €168.3
million, representing 23.6% of sales, compared to a cost of goods
sold totaling €155.8 million, which represented 24.4% of sales for
the period ended 30 June 2014. The improvement in the ratio was
fuelled primarily by a more favorable product-mix arising from
higher sales volumes in specialty care as well as productivity
gains from the Group's production sites.
Selling expenses totaled €259.9 million, or 36.4% of sales at 30
June 2015. That performance represents a 23.0% rise over 30 June
2014, when selling expenses reached €211.4 million, or 33.1% of
sales. The increase resulted primarily from the setup of an
oncology sales force and the marketing and medical investments
necessary to promote Somatuline® Depot® (lanreotide) 120 mg
Injection in the United States in the treatment of gastrointestinal
and pancreatic neuroendocrine tumors (GEP NETs). Somatuline® Depot®
was approved for this new indication by the US Food and Drug
Administration (FDA) on 16 December 2014.
- Research and development
expenses
At 30 June 2015, research and development expenses totaled €91.8
million, representing 12.9% of sales, compared with €87.6 million a
year earlier. The decrease of the Research and Development ratio is
notably related to the decision to stop the clinical trials of
tasquinimod in prostate cancer, as announced on 16 April 2015, as
well as the end of Somatuline® studies in neuroendocrine
tumors.
The research tax credit reached €13.6 million, down versus the
prior year period mainly as a result of provisions reversed in
2014.
- General and administrative
expenses
In the first half of 2015, general and administrative expenses
totaled €61.3 million, up 19.5% versus the prior-year period. The
increase resulted mainly from beefing up support functions in the
United States to support fast business growth, as well as the
impact of the outperformance on incentive plans.
- Other Core Operating Income and
expenses
Other Core Operating Income amounted to €1.9 million at 30 June
2015, compared with €4.0 million a year earlier, including revenue
from the sublease on Ipsen's headquarter, flat year-on-year, and
the neutral impact of cash flow hedges versus a gain at 30 June
2014.
Other core operating expenses reached €4.8 million at 30 June
2015, compared with €4.7 million a year earlier, mainly including
amortization expense for intangible assets, excluding software, as
well as the cost of subleasing the Group's headquarter.
1 Sales growth excluding foreign exchange impact was calculated
by restating the first-half 2014 consolidated financial statements
with currency rates at 30 June 2015
Core Operating Income totaled €167.6 million, representing 23.5%
of sales in the first half of 2015. That result compares to €162.0
million, or 25.4% of sales in the first half of 2014.
- Other operating income and
expenses
In the first half of 2015, other non-core operating expenses
totaled €8.0 million, versus €3.4 million the prior-year
period.
On 16 April 2015, Active Biotech and Ipsen announced the results
of the 10TasQ10 clinical study. Preliminary efficacy and safety
results did not support a positive benefit-risk balance, prompting
a decision by Ipsen and Active Biotech to discontinue all clinical
studies in prostate cancer. As a result, Ipsen recognized the full
€6.9 million committed expenses related to tasquinimod clinical
development studies at 30 June 2015.
At 30 June 2014, other non-core operating expenses stemmed
primarily from costs related to the transfer of operations of the
Group's US-based Ipsen Bioscience subsidiary from Milford to
Cambridge.
In the first half of 2015, the Group recognized €0.7 million in
restructuring costs, versus €12.3 million in the prior-year period.
First-half 2014 restructuring costs included measures to adapt
support functions, continued efforts to restructure R&D
activities and costs related to transferring the operations of the
Group's US-based Ipsen Bioscience Inc. subsidiary from Milford to
Cambridge.
At 30 June 2015, the Group recorded a €57.0 million loss to
impair all intangible assets related to the tasquinimod program,
following a decision to discontinue clinical studies in prostate
cancer.
- Net financing costs and other
financial income and expenses
At 30 June 2015, the Group had net financial income of €3.2
million, compared with net financial expense of €2.2 million a year
earlier. The financial income resulted primarily from a final €4.9
million earnout payment received in 2015 stemming from the sale of
PregLem shares in 2010.
At 30 June 2015, the effective tax rate came to 16.8% of pre-tax
profit from continuing operations (excluding the share of profit
(loss) from associated companies and joint ventures), compared with
an effective rate of 28.2% at 30 June 2014.
The Group's effective tax rate benefited from the write-off of
tasquinimod-related intangible assets, which were fiscally
deductible at 38%.
Consolidated net profit came to €90.5 million (€90.1 million
attributable to Ipsen S.A. shareholders), down 13.4% versus the
€104.5 million (€104.0 million attributable to Ipsen S.A
shareholders) recorded at 30 June 2014.
At 30 June 2015, basic earnings attributable to the Group
amounted to €1.10 per share, down from basic EPS of €1.27 a year
earlier.
Core earnings per share (see Appendix 4) for the period came to
€1.50 per share, up 7.0% over €1.40 per share at 30 June 2014. The
improvement reflected strong business growth driven primarily by
the launch of Somatuline® in the treatment of neuroendocrine
tumors.
Operating segments: Distribution of Core Operating Income by
therapeutic area
Segment information is presented according to the Group's two
operating segments, i.e. primary care and specialty care.
All costs allocated to these two segments are presented in key
performance indicators. Only research and development costs and
corporate overhead costs are not allocated to the two operating
segments.
The Group uses Core Operating Income to measure its segment
performance and to allocate resources.
Sales, revenue and Core Operating Income are presented by
therapeutic area for the 2015 and 2014 half-year periods in the
following table.
30 June 2015 30 June
2014 Change (in millions of euros)
%
Specialty Care Sales 548.9 472.5 76.4 16.2%
Revenue 565.2 487.4 77.7 16.0% Core Operating Income 239.0 220.3
18.7 8.5% % of sales 43.5% 46.6%
Primary care (*)
Sales 165.0 166.1 (1.2) -0.7% Revenue 186.7 181.3 5.4 3.0% Core
Operating Income 68.2 67.5 0.7 1.0% % of sales 41.3% 40.6%
Total
unallocated Core Operating Income (139.6) (125.8) (13.7) 10.9%
Group total Sales 713.9 638.7 75.2 11.8% Revenue
751.9 668.8 83.1 12.4% Core Operating Income 167.6 162.0 5.6 3.5% %
of sales 23.5% 25.4%
(*) including drug related sales
In specialty care, first-half 2015 sales amounted to
€548.9 million, up 16.2% versus the prior-year period. The share of
specialty care products continued to increase, reaching 76.9% of
total consolidated sales at 30 June 2015, versus 74.0% a year
earlier. Sales of Decapeptyl® grew 5.4%, taking advantage of a
favorable exchange effect and held back by a slowdown in Europe's
pharmaceutical market. Somatuline® sales increased 35.2%, driven by
the launch of the new anti-tumor indication in the treatment of
neuroendocrine tumors (NETs) in the United States and Europe.
Dysport® sales rose 9.3% on the back of a robust performance in the
aesthetics activity. After factoring in the investment to launch
Somatuline® in neuroendocrine tumors in the United States, Core
Operating Income for specialty care amounted €239.0 million,
representing 43.5% of sales in the first half of 2015. That result
compares to Core Operating Income in the prior-year period of
€220.3 million, representing 46.6% of sales.
In primary care, first-half 2015 sales came to €165.0
million, down 0.7% over the prior-year period. In France, sales of
primary care products declined 7.7%, as a result of a price cut for
Smecta® in July 2014 and continued erosion of Tanakan® sales.
International sales increased 1.9% year-over year on the back of a
favorable foreign exchange impact, which offset lower sales in
China and Russia. First-half 2015 Core Operating Income for primary
care totaled €68.2 million, representing 41.3% of sales. That
result compares to primary care Core Operating Income in the
prior-year period of €67.5 million, representing 40.6% of
sales.
Unallocated Core Operating Income came to (€139.6)
million, compared with (€125.8) million in the first half of 2014.
The expenses consisted mainly of the Group's research and
developments costs, which totaled (€90.6) million in 2015, versus
(€86.1) million in 2014, and, to a lesser extent, unallocated
general and administrative expenses.
Cash flow and financing
The consolidated cash flow statement at 30 June 2015 shows that
the Group's operating activities generated net cash flow of €36.2
million, compared with €54.7 million a year earlier.
Analysis of the consolidated cash flow
statement
(in millions of euros)
30 June
2015 30 June 2014
Cash flow from operating activities before changes in
working capital requirement 143.0 128.0 (Increase) / decrease in
working capital requirement for operations (106.8) (73.3)
Net
cash flow from operating activities 36.2 54.7 Net
investments in financial and tangible and intangible assets (53.0)
(24.0) Other cash flow from investments (4.9) (8.0)
Net cash
provided (used) by investment activities (57.8)
(32.0) Net cash provided (used) by financing
activities (74.4)
(20.5) CHANGES IN CASH AND CASH EQUIVALENTS (a)
(96.1) 2.2 Opening cash
and cash equivalents (b)
180.1 125.4 Impact of
exchange rate fluctuations (c) 3.8 1.4
At 30 June 2014, closing cash and cash equivalents included
€80.0 million drawn down from the Group's syndicated credit
line.
- Net cash flow from operating
activities
In the first half of 2015, cash flow from operating activities
before changes in working capital requirement amounted to €143.0
million, up from the €128.0 million generated in the prior-year
period.
Working capital requirement for operating activities increased
by €106.8 million in the first half of 2015, compared with growth
of €73.3 million in the prior-year period. The increase stemmed
from the following items:
- In the first half of 2015, inventories
decreased by €0.6 million, compared to a decline of €4.9 million in
the first half of 2014.
- In the first half of 2015, trade
receivables grew by €60.2 million, compared with an increase of
€46.8 million in the prior-year period. The growth resulted
primarily from higher sales and the seasonal nature of trade
receivables collection, notably in Italy, which was partially
offset by tighter management of payment delays in Russia, Spain and
Portugal.
- Trade payables in the first half of
2015 decreased by €12.4 million, compared to an increase of €0.2
million in the prior year period. The decline comes mainly from the
seasonal nature of expenditures, as well as the pace of
settlements, in particular the commissions paid annually to
distributors.
- In the first half of 2015, the change
in other operating assets and liabilities constituted a use of
funds amounting to €40.4 million, compared with the €34.3 million
use of funds recorded in the prior-year period. As in the first
half of 2014, the Group recorded no new deferred income from its
partnerships at 30 June 2015.
- In the first half of 2015, the change
in net tax liability remained a favorable source of funds totaling
€5.6 million, versus a source of funds amounting to €2.6 million in
the prior-year period.
- Net cash flow used by investment
activities
In the first half of 2015, net cash used by investment
activities came to €57.8 million in net use of funds, compared with
a €32.0 million net use of funds in the prior year period.
Investments in tangible and intangible assets, net of disposals,
totaled €21.7 million, versus €24.0 million at 30 June 2014. The
cash outflow mainly included:
- €16.4 million in acquisitions of
property, plant and equipment, compared with €20.9 million in the
first half of 2014. Those acquisitions consisted primarily of
capital expenditures needed to maintain the Group's production
equipment and R&D activities;
- €5.4 million in investments in
intangible assets, versus €3.3 million in the first half of 2014,
mainly in the area of information technology, as well as an
additional payment as part of the partnership with Lexicon.
The investment outflow in the first half of 2015 also included
the purchase of a €6.0 million option to acquire Canbex
Therapeutics.
The acquisition of OctreoPharm Sciences during the first half of
2015 led to an outflow of €31.3 million. In the first half of 2014,
cash flow used by other investment activities included €3.6 million
reflecting the change in consolidation method for the Swiss
company, Linnea.
- Net cash provided (used) by
financing activities
In the first half of 2015, net cash provided (used) by financing
activities amounted to a net use of funds of €74.4 million,
compared to a net use of funds of €20.5 million in the prior-year
period.
The change in the first half of 2015 resulted mainly from the
payment of €70.0 million in dividends, as well as the €3.9 million
repurchase of treasury shares.
In the first half of 2014, the dividend payout totaled €65.7
million and €33.4 million in treasure shares were repurchased. The
2014 movement also included the Group's €80.0 million drawdown of
the credit line.
- Analysis of Group cash flow
The Group must respect the following covenant ratios at the end
of each half-year period:
- Net debt to equity: less than 1
- Net debt to EBITDA: less than 3.5 with
the ratio assessed on a rolling 12-month basis.
The Group met all its covenant ratios at 30 June 2015.
Reconciliation of cash and cash
equivalents and net cash and cash equivalents
(in millions of euros)
30 June 2015 30 June 2014
Closing cash and cash equivalents 87.8
129.0 Credit lines and bank loans - (80.0) Other
financial liabilities (10.4) (10.9)
Non-current liabilities
(10.4) (90.9) Credit lines and bank loans (4.0) (4.0)
Financial liabilities (excluding derivative instruments) (**) (2.6)
(3.6)
Current liabilities (6.6)
(7.6) Debt (17.0)
(98.5) Net cash and cash equivalents (*)
70.8 30.4
(*) Net cash and cash equivalents: Cash and cash equivalents,
less bank overdrafts, bank loans and other financial liabilities
and excluding derivative financial instruments.
(**) Financial liabilities exclude €0.5 million in derivative
instruments at 30 June 2015, compared with no derivative
instruments at 30 June 2014.
APPENDIX 1
Consolidated income statement
(in millions of euros)
30 June 2015
30 June 2014 Sales 713.9
638.7 Other revenues 38.0 30.1
Revenue 751.9
668.8 Cost of goods sold (168.3) (155.8) Selling expenses
(259.9) (211.4) Research and development expenses (91.8) (87.6)
General and administrative expenses (61.3) (51.3) Other core
operating income 1.9 4.0 Other core operating expenses (4.8) (4.7)
Core operating income 167.6 162.0 Other
operating income 1.4 0.4 Other operating expenses (8.0) (3.4)
Restructuring costs (0.7) (12.3) Impairment losses (57.0) (0.4)
Operating income 103.4 146.3 Investment income
0.6 0.8 Financing costs (2.5) (1.2)
Net financing costs
(1.9) (0.5) Other financial income and expense 5.1
(1.7) Income taxes (17.9) (40.7) Share of net profit (loss) from
entities accounted for using the equity method 1.5 1.2
Net
profit (loss) from continuing operations 90.2
104.7 Net profit (loss) from discontinued operations 0.3
(0.2)
Consolidated net profit 90.5 104.5 -
Attributable to shareholders of Ipsen S.A. 90.1 104.0 -
Attributable to non-controlling interests 0.3 0.4
Basic earnings per share, continuing
operations (in euro) 1.09 1.27 Diluted earnings per share,
continuing operations (in euro) 1.09 1.27 Basic earnings per
share, discontinued operations (in euro) 0.00 (0.00) Diluted
earnings per share, discontinued operations (in euro) 0.00 (0.00)
Basic earnings per share (in euro) 1.10 1.27 Diluted
earnings per share (in euro) 1.09 1.26
APPENDIX 2
Consolidated balance sheet before
allocation of net profit
(in millions of euros)
30 June 2015
31 December2014
ASSETS
Goodwill 336.8 324.4 Other intangible assets 105.8 160.9 Property,
plant & equipment 336.9 309.6 Equity investments 53.3 15.0
Investments in companies accounted for using the equity method 15.4
13.7 Non-current financial assets - 4.2 Deferred tax assets 225.6
204.6 Other non-current assets 14.5 9.3
Total non-current
assets 1,088.2 1,041.7 Inventories 107.8 105.5
Trade receivables 318.0 243.5 Current tax assets 63.2 65.9 Current
financial assets 6.1 0.1 Other current assets 84.6 67.8 Cash and
cash equivalents 92.9 186.3 Assets of disposal group classified as
held for sale - 2.6
Total current assets 672.6
671.6 TOTAL ASSETS 1,760.8
1,713.3
1. EQUITY AND LIABILITIES
Share capital 83.1 82.9 Additional paid-in capital and consolidated
reserves 902.4 801.7 Net profit (loss) for the period 90.1 153.5
Exchange differences 56.3 27.1
Equity attributable to Ipsen S.A.
shareholders 1,132.0 1,065.2 Equity attributable
to non-controlling interests 2.6 2.7
Total shareholders'
equity 1,134.6 1,067.9 Retirement benefit
obligation 57.1 59.6 Non-current provisions 43.5 42.1 Other
non-current financial liabilities 10.4 12.1 Deferred tax
liabilities 10.0 5.6 Other non-current liabilities 131.0 115.8
Total non-current liabilities 251.9 235.2
Current provisions 6.0 26.0 Current bank loans 4.0 4.0 Current
financial liabilities 3.1 4.0 Trade payables 172.5 179.8 Current
tax liabilities 7.1 4.1 Other current liabilities 176.6 186.1 Bank
overdrafts 5.1 6.1
Total current liabilities 374.3
410.2 TOTAL EQUITY & LIABILITIES
1,760.8 1,713.3
APPENDIX 3
Consolidated statement of cash
flow
(in
millions of euros)
30 June 2015 30 June
2014 Total
Total Consolidated net profit 90.5
104.5 Share of profit (loss) from companies accounted for
using the equity method before impairment losses (0.8) 0.4
Profit (loss) before share from companies accounted for using
the equity method 89.6 104.9 Non-cash and
non-operating items - Depreciation, amortization, provisions
5.8 15.7 - Impairment losses included in operating income and net
financial income 57.0 0.4 - Change in fair value of financial
derivatives 2.6 (0.2) - Net gains or losses on disposals of
non-current assets 0.0 1.3 - Foreign exchange differences (4.7)
(3.5) - Change in deferred taxes (9.3) 7.1 - Share-based payment
expense 1.9 2.3 - (Gain) or loss on sales of treasury shares 0.1
0.0
Cash flow from operating activities before changes in
working capital requirement 143.0 128.0 -
(Increase)/decrease in inventories 0.6 4.9 - (Increase)/decrease in
trade receivables (60.2) (46.8) - Increase/(decrease) in trade
payables (12.4) 0.2 - Net change in income tax liability 5.6 2.6 -
Net change in other operating assets and liabilities (40.4) (34.3)
Change in working capital requirement related to operating
activities (106.8)
(73.3) NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 36.2 54.7 Acquisition of
property, plant & equipment (16.4) (20.9) Acquisition of
intangible assets (5.4) (3.3) Proceeds from disposal of intangible
assets and property, plant & equipment 0.0 0.1 Payments to
post-employment benefit plans (0.5) (0.4) Acquisition of shares in
non-consolidated companies (31.3) - Impact of changes in the
consolidation scope - (3.6) Other cash flow related to investment
activities (5.3) (2.0) Deposits paid 0.4 0.0 Change in working
capital related to operating activities 0.4 (1.9)
NET CASH
PROVIDED (USED) BY INVESTMENT ACTIVITIES (57.8)
(32.0) Additional long-term borrowings 1.1 82.2 Repayment of
long-term borrowings (3.7) (3.4) Capital increase 2.3 0.6 Treasury
shares (2.0) (33.4) Dividends paid by Ipsen S.A. (70.0) (65.5)
Dividends paid by subsidiaries to non-controlling interests (0.5)
(0.2) Change in working capital related to operating activities
(1.6) (0.7)
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES
(74.4) (20.5) CHANGE IN CASH AND CASH
EQUIVALENTS (96.1) 2.2 Opening cash and cash
equivalents 180.1 125.4 Impact of exchange rate
fluctuations 3.8 1.4
Closing cash and cash equivalents
87.8 129.0
APPENDIX 4
Core consolidated net profit for the
first-half of 2015, versus the prior-year period
(in millions of euros) 30 June
2015 Non-core items
30 June 2015Core
30 June 2014
Non-core items
30 June 2014Core
Core operating income 167.6 -
167.6 162.0
- 162.0 Other operating income 1.4
(1.4) - 0.4 (0.4) - Other operating expenses (8.0) 8.0 - (3.4) 3.4
- Restructuring costs (0.7) 0.7 - (12.3) 12.3 - Impairment losses
(57.0) 57.0 - (0.4) 0.4 -
Operating income 103.4
64.2 167.6 146.3 15.7 162.0
Investment income 0.6 - 0.6 0.8 - 0.8 Financing costs (2.5) - (2.5)
(1.2) - (1.2)
Net financing costs (1.9) -
(1.9) (0.5) - (0.5) Other financial
income and expense 5.1 (4.9) 0.2 (1.7) - (1.7) Income taxes (17.9)
(25.3) (43.2) (40.7) (4.7) (45.3) Share of net profit (loss) from
entities accounted for using the equity method 1.5 - 1.5 1.2 - 1.2
Net profit (loss) from continuing operations 90.2
34.0 124.2 104.7 11.0 115.7 Net
profit (loss) from discontinued operations 0.3 (0.3) - (0.2) 0.2 -
Consolidated net profit 90.5 33.7 124.2
104.5 11.3 115.7 - Attributable to
shareholders of Ipsen S.A. 90.1 33.7 123.9 104.0 11.3 115.3 -
Attributable to non-controlling interests 0.3
- 0.3 0.4 -
0.4 Diluted earnings per share - attributable to Ipsen S.A.
shareholders (in € per share) 1.09
1.50 1.26
1.40
Core Operating Income is the key performance indicator for
understanding and measuring the performance of the Group's
activities. Items not included in Core Operating Income are not
tabbed as "exceptional" or "extraordinary" but correspond to
unusual, abnormal or infrequent items of disclosure targeted in
paragraph 28 of the IASB Framework.
Similarly, Core consolidated net profit corresponds to net
profit adjusted for non-core items as defined above and unusual
events affecting financial income (expense) items, net of taxes, or
the taxes themselves.
GOVERNMENT MEASURES
In the current 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 have affected the Group sales and profitability in the first
half 2015. In addition, certain measures introduced in 2014 have
continued to affect the Group's accounts year-on-year.
Measures impacting the first half 2015
In the Major Western European countries:
- In France, the price of Smecta® was cut
by 7.5% as of 1st July 2014, following a first price cut of the
same magnitude as of 1st January 2014. Morever, all Decapeptyl®’s
formulations were impacted by a 3.1% price decrease in February
2015;
- In Spain, Dysport® was included in the
reference price system as the product has been on the market for
more than 10 years;
In the Other European countries:
- In the United States, Somatuline®
prices increased on June 30th, 2015 (Somatuline® 120mg: +1.6%,
Somatuline® 60mg /90mg: + 3.0%);
- In Belgium, requirement for
pharmaceutical companies to implement modulated price decreases on
their product portfolio was cancelled. Dysport® was subject to a
mandatory price cut of 2.4% in January 2015 because the product had
been reimbursed for more than 15 years;
- In the Netherlands, as of 1st April
2015, prices of Ipsen’s specialty care products (excluding Hexvix®)
were increased following an International Reference Pricing
review;
- In Poland, Ipsen’s affiliate received
positive assessment results from National HTA agency on Hexvix®
reimbursement application. The price is under negotiation with the
Ministry of Health. Somatuline®, Decapeptyl® and Dysport® prices
will be reviewed based on the lowest price in Europe. Prices are
expected to be published in January 2016;
In the Rest of the World:
- In Brazil, Dysport® therapeutics and
Somatuline® prices increased by ~5% in April 2015 due to
inflation;
- In Algeria, in the context of
continuous and sharp oil price drop, the authorities are looking at
drastically reducing importation cost. This applies to import of
Pharmaceuticals, which stands roughly for 3Bn€ in the state budget.
For Ipsen Primary Care portfolio, this also coincides with the
price reduction usually assorted to the 5-year Free Sales
Certificat renewal. On the Specialty Care segment, this resulted in
a 5% price reduction for Somatuline® and of almost 20% for
Decapeptyl®, as authorities were systematically benchmarking prices
versus that prevailing in neighboring countries and other European
countries;
Furthermore, and in the context of the 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 which will affect the Group sales and
profitability beyond 2015.
Measures impacting beyond 2015
In the Major Western European countries:
- In France, the government presented the
new Social Security Finance Bill (PLFSS), which sets forth
expenditure targets in the healthcare sector for 2015. The target
growth of healthcare expenditure has been set at 2.1% year-on-year,
down from 2.4% in 2014. This is expected to result in €3.2 billion
savings. Moreover, the two Smecta® price cuts will fully impact
countries that reference French prices (incl. European Union,
sub-Saharan Africa) starting in 2015;
- In Belgium, Somatuline® will be
impacted by a 17% price decrease as the product has been reimbursed
for between 12 and 15 years;
In the Rest of the World:
- In Algeria, part of the 2015 cost
containment measures undertaken by the Authorities aim at reducing
importation cost. For pharmaceuticals, a new importation quota is
currently being implemented to target imported products with at
least one generic that is locally manufactured;
- In China, the government announced in
May that it will remove price caps for most medicines and allow the
market to play a bigger role in determining costs.The new reform
may not cause a large hike in prices as it will be mainly
controlled by bidding price at hospital level. For pharmaceutical
treatments sold through retail channels, a more flexible drug
pricing mechanism is likely to impact pharmaceutical firms - in
particular foreign brands - who could benefit from increased
pricing flexibility that could raise their incentive for
innovation.
MAJOR DEVELOPMENTS
During the first half 2015, major developments included:
- On 10 January 2014 – Ipsen announced
topline results for two double-blind phase III studies of Dysport®
(abobotulinumtoxinA) in Pediatric Lower Limb (PLL) spasticity in
children with cerebral palsy and in Adult Lower Limb (ALL)
spasticity in patients who had experienced a stroke or traumatic
brain injury. In the PLL phase III study, conducted in children
with hemiparetic or diplegic cerebral palsy, treatment with
Dysport® showed a statistically significant response versus placebo
in the improvement of muscle tone, as measured by the Modified
Ashworth Scale (MAS; primary endpoint), and a statistically
significant overall benefit versus placebo, as measured by the
Physician Global Assessment (PGA; first secondary endpoint). In the
ALL phase III study, conducted in hemiparetic patients who had
experienced a stroke or traumatic brain injury, treatment with
Dysport® at the dose of 1500U showed a statistically significant
response versus placebo in the improvement of muscle tone, as
measured by the Modified Ashworth Scale (MAS; primary endpoint). An
overall benefit (measured by the Physician Global Assessment (PGA);
first secondary endpoint) versus placebo was observed but did not
reach statistical significance according to the pre-specified
statistical analysis.
- On 23 February 2015 – Ipsen Canbex
Therapeutics Ltd (Canbex) announced that Canbex has granted Ipsen
an option giving Ipsen the exclusive right to purchase 100% of
Canbex shares upon completion of the Phase IIa study of Canbex’s
lead candidate for the treatment of spasticity in people with
multiple sclerosis (MS), known as VSN16R. Canbex is a spin-off of
University College London (UCL) that raised a Series A financing of
GBP 2.3 million in 2013 from MS Ventures (the corporate venture arm
of Merck Serono, Merck KGaA), the Wellcome Trust and UCL Business
Plc. Under the financial terms of the agreement, Ipsen has paid an
option fee of €6 million to Canbex. If Ipsen elects to exercise its
option to acquire Canbex at the end of the proof of concept Phase
IIa study, Canbex’s shareholders will be eligible to receive a
total of up to an additional €90 million , comprising an
acquisition payment, and additional milestone payments contingent
upon launch subsequent to achievement of clinical and regulatory
success. In addition, Canbex shareholders will be eligible to
receive royalties on world-wide annual net sales of VSN16R.
- On 2 March 2015 – Ipsen announced that
Dominique Laymand has been appointed Senior Vice President, Chief
Ethics and Compliance Officer for the Ipsen group, effective as of
16th of March. She will report directly to Marc de Garidel,
Chairman and CEO of Ipsen. Dominique Laymand will be a member of
the Chairman’s Committee.
- On 1 April 2015 – Ipsen announced the
inauguration of its new R&D center, Ipsen Bioscience, in
Cambridge (MA, USA), a recognized hub in the USA for biomedical
research & innovation. Ipsen's strategic decision to invest in
the Ipsen Bioscience facility in Cambridge is an important element
of the company’s open innovation strategy and its goal of
broadening its partnerships with the American biotechnology,
medical and scientific communities.
- On 16 April 2015 – Active Biotech and
Ipsen announced top line results of the 10TASQ10 study. While the
study showed that tasquinimod reduced the risk of radiographic
cancer progression or death compared to placebo (rPFS, HR=0.69, CI
95%: 0.60 – 0.80) in patients with metastatic castration resistant
prostate cancer (mCRPC) who have not received chemotherapy,
tasquinimod did not extend overall survival (OS, HR=1.09, CI 95%:
0.94 – 1.28). Efficacy results together with preliminary safety
data do not support positive benefit risk balance in this
population. Therefore the companies have decided to discontinue all
studies in prostate cancer. Full results will be presented at an
upcoming scientific conference.
- On 19 May 2015 – Ipsen announced the
signature of an agreement to acquire OctreoPharm Sciences (referred
to as OctreoPharm), a private German life sciences company focusing
on the development of innovative radioactive labeled compounds for
molecular imaging diagnostics and therapeutic applications. Ipsen
plans to maintain the company location and staff to ensure
successful transition of know-how and expertise. Ipsen expects to
complete its acquisition once closing conditions have been cleared.
Under the terms of the agreement, which is subject to closing
conditions, OctreoPharm’s shareholders are eligible to receive up
to a total of approximately €50 million for the purchase of 100% of
the company’s shares in the form of an upfront payment and
downstream payments contingent upon clinical and regulatory
milestones.
- on 2 June 2015 – Ipsen confirmed its
eligibility for the PEA-PME scheme, in accordance with the French
decree n° 2014-283 of 4 March 2014. The Group complies with the
thresholds set by the legislator for eligibility to the PEA-PME
scheme, namely having less than 5 000 employees and total revenue
below €1 500 million or total assets below €2 000 million. As a
consequence, investment in company shares can be made through
PEA-PME accounts, benefiting from the same tax advantages as the
traditional Equity Savings Plan (PEA).
- On 3 June 2015 – Ipsen announced it has
granted Natixis a mandate to purchase 500 000 shares, or about
0.60% of the share capital. This mandate begins on 3 June 2015 and
will end on 31 December 2015. The purchased shares will be
cancelled, mainly to compensate for the dilution resulting from the
issuance of new shares within the free share plans. These
operations are part of the authorizations granted by the Combined
Shareholder’s meeting held on 27 May 2015.
- On 2 July 2015 - Ipsen hosted its
Investor Day. The Group’s management provided a comprehensive
review of its 2020 strategy and its 2020 outlook including organic
sales ranging between €1.8bn and €2bn and Core Operating Margin of
above 26%
- On 16 July 2015 – Ipsen announced that
the U.S. Food and Drug Administration (FDA) has approved its
supplemental Biologics License Application (sBLA) for Dysport®
(abobotulinumtoxinA) for the treatment of upper limb spasticity in
adult patients after the submission of the dossier in September
2014. Dysport® is now approved for the treatment of upper limb
spasticity in adult patients, to decrease the severity of increased
muscle tone in elbow flexors, wrist flexors and finger flexors.
Clinical improvement may be expected one week after administration
of Dysport®. A majority of patients in clinical studies were
retreated between 12 and 16 weeks; some patients had a duration of
response as long as 20 weeks. In Europe, regulatory procedures are
in progress for strengthening the existing upper limb spasticity
label indication of Dysport® to include key medical data such as
muscle dose recommendations, treatment intervals, efficacy data and
safety updates.
APPENDIX
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 2013 Registration Document available on its website
(www.ipsen.com).
- The Group is faced with uncertainty in
relation to the prices set for all its products, in so far as
medication prices have come under severe pressure over the last few
years as a result of various factors, including the tendency for
governments and payers to reduce prices or reimbursement rates for
certain drugs marketed by the Group in the countries in which it
operates, or even to remove those drugs from lists of reimbursable
drugs.
- The Group depends on third parties to
develop and market some of its products, which generates or may
generate substantial royalties for the Group, but these third
parties could behave in ways that 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.
- 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
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, such
as Forlax® and 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 in
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 with 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 the
Group 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 experiencing manufacturing issues with Increlex®.
Supply interruption occurred in mid-June 2013 in the US and in Q3
2013 in Europe and the rest of the world. On December 18th 2013,
Ipsen announced that Lonza had successfully re-manufactured the
active ingredient of Increlex® and that the European Medicines
Agency (EMA) had been informed that Ipsen was preparing for the
resupply of Increlex® in the European Union. Consultations with the
National competent authorities have allowed a resupply in Europe
early 2014. In the United States, Ipsen has released one batch of
Increlex®’s active ingredient on 2 June 2014. Ipsen anticipates
that additional lots will be released in the coming months, as the
company continues to work closely with the FDA to make additional
Increlex® lots available as soon as possible.
- In certain countries exposed to
significant public deficits, and where the Group sells its drugs
directly to public hospitals, the Group could face discount or
lengthened payment terms or difficulties in recovering its
receivables in full. The Group closely monitors the evolution of
the situation in Southern Europe where hospital payment terms are
especially long. 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.
- The cash pooling arrangements for
foreign subsidiaries outside the euro zone expose the Group to
financial foreign exchange risk. The variation of these exchange
rates may impact significantly the Group’s results.
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For further
information:MediaDidier VéronSenior
Vice-President, Public Affairsand CommunicationTel.: +33 (0)1 58 33
51 16Fax: +33 (0)1 58 33 50 58E-mail:
didier.veron@ipsen.comorBrigitte Le GuennecCorporate
External Communication ManagerTel.: +33 (0)1 58 33 51 17Fax: +33
(0)1 58 33 50 58E-mail:
brigitte.le.guennec@ipsen.comorFinancial
CommunityStéphane Durant des AulnoisVice-President,
Investor RelationsTel.: +33 (0)1 58 33 60 09Fax: +33 (0)1 58 33 50
63E-mail: stephane.durant.des.aulnois@ipsen.com