The Board of Directors of Ipsen (Paris:IPN) (Euronext : IPN ; ADR : IPSEY), chaired by Marc de Garidel, met on 1 March 2011 to review the Group's results for 2010, 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.
Commenting on the 2010 performance, Marc de Garidel, Chairman and Chief Executive Officer of Ipsen, said: « Results for the year 2010 highlight Ipsen's strategy: strong growth of Specialty Care products, a historical presence in the very dynamic emerging countries, an important contribution from partnerships to the Group's growth and profitability, as well as sustained investment in Research and Development. These results also underline the challenges that the Group is confronted to: further price pressure, notably in Primary Care, attrition of some of our R&D projects, break-even still to be reached in North America. Furthermore, several one-off events weighted on Ipsen's profitability in 2010. Nevertheless, on a recurring and adjusted basis, all 2010 financial objectives have been met.»
Review of full year 2010 results
In 2010, Group drug sales grew 5.1% year-on-year - at constant currency - exceeding the objective set a year ago of 3.0% to 5.0%, fuelled notably by the sales of Specialty Care products throughout all the geographical regions where the Group operates.
Consolidated Group sales reached €1,100.2 million for the full year 2010, up 5.0% year-on-year excluding foreign exchange impact.
Other revenues reached €70.1 million in 2010, down 11.9% year-on-year. In 2009, the Group recorded a non-recurring amount of €39.2 million relating to the favourable settlement of a dispute. In 2010, other revenues included industrial development expenses on OBI-1 of €15.0 million that the Group invoiced to Inspiration Biopharmaceuticals Inc.. Excluding these non-recurring items in both 2009 and 2010, other revenues increased by 36.3% year-on-year.
Total revenues amounted to €1,170.3 million, up 5.2% compared with 2009.
Cost of goods sold amounted to €236.2 million, or 21.5% of sales, compared to 23.0% a year ago. The strong improvement of the COGS to sale ratio reflected both the Group's productivity efforts and the favourable mix associated with the growth in specialist care products.
Research and Development expenses reached €221.1 million in 2010, or 20.1% of sales, compared to 19.1% the previous year. Excluding the OBI-1 industrial development expenses which were entirely billed to Inspiration Biopharmaceuticals Inc., R&D expenses represented 18.8% of sales, up 1.8% year-on-year excluding foreign exchange impacts. In 2010, the main R&D projects included the clinical development of Somatuline® in neuroendocrine tumours (NET), the Post Marketing Approval studies requested by the FDA on Dysport®, the phase II clinical study for the sulfatase inhibitor, Irosustat® (BN-83495), and the analysis of the GuidAge® clinical trial results for Tanakan®. Furthermore, during this period, the Group recorded costs relating to the discontinuation of the BIM23A760 phase II clinical trial program in acromegaly.
Selling, general and administrative expenses represented €521.1 million in 2010, or 47.4% of sales, up 7.5% year-on-year. The Group rigorously implemented its marketing strategy, with the launches of its botulinum toxin type A in therapeutic use in the United States and aesthetic use both in the United States and in Europe, as well as the launch of the Decapeptyl® 6-month formulation in Europe and Adenuric® in France. The selling expenses increased by 4.5% year on year excluding foreign exchange impacts, reflecting the Group's selective allocation policy to growth geographies such as China and Russia, in the context of declining French Primary care sales. Moreover, the Group wrote-down some receivables, mainly from public hospitals, particularly in Southern Europe (Greece, Spain, Portugal and Italy).
Reported operating income in 2010 amounted to €128.8 million, or 11.7% of sales, compared to €172.5 million, or 16.7% of sales, for the same period in 2009.
The 2010 reported operating income was notably affected by:
- A non recurring profit of €48.7 million relating to the accelerated recognition of the deferred revenues following the return of the rights for taspoglutide announced by Roche on 2 February 2011.
- A set of impairment charges, partially offset by a provision write-back, for a non-recurring net amount of €88.8 million. These impairments stemmed from: reduced forecast assumptions on the development and commercial prospects of IGF-1, depreciation of milestones relating to the agreement between the Group and GTx in oncology and to recent uncertainties in some neurology partnership development timelines.
Excluding purchase price allocation impacts and non-recurring elements relating to the return of taspoglutide's rights and to the impairment charges, the Group's recurring adjusted operating income amounted to €183.2 million in 2010, or 16.6% of sales, up 26.8% year on year, above the 15% growth target set a year ago.
The effective tax rate amounted to 13.5% of result of continued activities before tax excluding the share of loss from associates, compared to an effective tax rate of 6.3% in 2009 when the Group had benefited from a tax relief relating to the favourable settlement of a previous tax dispute. Excluding non-recurring operational, financial and fiscal items, the Group's effective tax rate amounted to 17.2% in 2010, compared to 11.1% in 2009.
In 2010, the Group recorded a share of loss from associated companies of €(12.8) million representing its share in Inspiration Biopharmaceuticals Inc.'s net loss consolidated since January 2010, and a non-recurring net loss of €5.9 million further to the depreciation of an underlying asset, resulting from an increase in the discount rate of its future cash flows. In 2009, the Group did not record any share of loss from associated companies.
Consolidated net profit amounted to €95.7 million in 2010 (attributable to the shareholders of Ipsen S.A.: €95.3 million), down 39.1% compared to €157.2 million (attributable to the shareholders of Ipsen S.A.: €156.6 million) in 2009. The fully diluted earnings per share amounted to €1.13, down 39.2% from €1.86 in 2009.
The 2010 consolidated net income was strongly and notably impacted by:
- The net impacts of the non-recurring items that affected the Group's operating income, as described above;
- The non-recurring depreciation of €15.2 million related mainly to the reduction of the book value of some deferred tax assets considering their local statute of limitations and further to new development and commercialisation sales prospects of IGF-I;
- a €5.9 million non recurring net loss from associates related to an increase in the discount rate of Inspiration Biopharmaceuticals Inc. future cash flows.
Excluding the impacts of the purchase price allocation on the Group's acquisitions and the non-recurring elements mentioned above, the recurring adjusted fully diluted EPS amounted to €1.64 as of 31 December 2010, up 2.5% compared to €1.60 a year ago.
Net cash generated by operating activities amounted to €253.9 million in 2010, nearly stable year-on-year. At 31 December 2010, the net cash position stood at €156.0 million after its subscription of newly issued shares and bonds of Inspiration Biopharmaceuticals Inc. during the year, compared to €185.6 million a year ago.
Total milestones received in cash by the Group but not yet recognized as revenues in its consolidated income statement amounted to €215.9 million at 31 December 2010, compared to €230.3 million a year earlier.
Dividend for the 2010 financial year proposed for the approval of Ipsen's shareholders assembly
Ipsen's Board of Directors, which gathered on 1 March 2011, has decided to propose at Ipsen's annual shareholders' meeting to be held on May 27, 2011, the payment of a dividend of €0.80 per share, up 6.7% year-on-year and representing a pay-out ratio of around 71% (attributable to the Group's shareholders) of consolidated net profit and of around 49%(attributable to the Group's shareholders) of recurring adjusted consolidated net profit..
Financial objectives for 2011
Ipsen confirms its global biopharmaceutical profile, driven by dynamic Specialty care sales.
Commenting on the Group's perspectives, Marc de Garidel added: « Ipsen's development and growth rely on particularly solid fundamentals. Ipsen will thus continue to leverage its talented and motivated teams, its international commercial presence, its innovative and differentiated R&D platforms, and its drug portfolio combining products with high sales potential, products which are well established on their markets and innovative therapeutic solutions in late stage clinical trials. Looking forward, Ipsen is currently conducting a thorough strategic review of its assets to identify the growth drivers that will enable the Group to maximize its full potential."
As a result and on the basis of currently available information, the Group has set for itself the following objectives for 2011:
- Specialty Care drug sales growth close to 8.0% year-on-year
- Primary Care drug sales decrease of 8.0% to 10.0% year-on-year, notably pending the evolution in France.
The above objectives are set excluding any foreign exchange impacts.
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