Ipsen's New Chief Outlines Growth Plans In U.S., Emerging Markets

Tighter product focus and streamlined R&D will help double sales and triple profits by 2020, says CEO Marc de Garidel.

New Ipsen chairman and CEO Marc de Garidel on June 9 outlined the mid-sized French pharma's new, ambitious growth strategy, six months after taking the helm. Through a tighter focus on core products, accelerated expansion in the U.S. and emerging markets, and a streamlined R&D operation, the group aims by 2020 to double its revenues to €2-2.5 billion ($2.9-3.7 billion), and triple its pre-tax profits to €500-600 million.

This positive growth outlook may offer some reassurance to investors. Their confidence in the group has been shaken by a series of recent pipeline setbacks, including the failure earlier this year of Phase III diabetes candidate taspoglutide, handed back from partner Roche, and, most recently, the termination of Phase II endometrial cancer drug irosustat. Ipsen's U.S. operations remain loss-making, since the company first entered the market in 2008 via its acquisition of endocrinology partner Tercica.

Ipsen's previous CEO, Jean-Luc Belingard, stepped aside in October 2010 amid rumors of strategic disagreements with the board over the speed and extent of dealmaking that he had overseen. His replacement, formerly VP- International for Amgen Inc.'s South region (Southern Europe, MEA and Latin America) was billed as a consolidator, focused on organic growth and cost-cutting, with selected local or regional partnerships ('Ipsen CEO Leaves...Coz of Too Many Deals?' The IN VIVO Blog, Oct. 12, 2010).

The new strategy appears to confirm those hunches. De Garidel is focused on fully leveraging Ipsen's existing core products, particularly endocrinology drug Somatuline (lanreotide) for acromegaly and neuroendocrine tumors (NET),and dystonia treatment Dysport (botulinum toxin), including in the U.S. through label expansions, and via partnerships in emerging markets.

De Garidel is stepping up commercial investments to improve market share, including in emerging markets such as China. There, Ipsen's legacy primary care portfolio remains important, he says. In France, however, where sales are expected to continue to decline through 2011, pricing and reimbursement pressure has prompted the group to seek a partner for its primary care portfolio.

All this, plus a fundamental R&D overhaul to improve an early-stage pipeline that executives admitted was "empty," means that "for the next 18 months, we've got enough work to do internally ... it would be very dangerous to do a major acquisition on top of that," said de Garidel during an analyst and investor meeting announcing the new strategy. He didn't rule out targeted acquisitions in the U.S. in the near term, though, "so long as they're accretive."

Ipsen's new strategy will require an investment period over 2011-2015, followed by a period of expected solid growth from 2016-2020. This trajectory looks rather similar to that of several Big Pharma facing patent expiries, even though Ipsen's mostly specialist products are relatively less exposed to generics.

Increased Focus

Thus the unspoken message behind de Garidel's presentation: despite a successful transformation, under Belingard's watch, from a largely primary-care focused, regional player into a global biotech specialist, Ipsen has suffered the same R&D productivity issues as Big Pharma, and has failed to extract full commercial potential from the assets it does have.

Going forward, Ipsen will continue working in its traditional four franchise areas, endocrinology, neurology, oncology and hemophilia. But it will tighten its focus within those, and the latter two are being de-prioritized. Products for small stature, such as Increlex (mecasermin), are being divested, along with all non-prostate cancer programs.

In endocrinology and neurology, Ipsen will remain fully-integrated -- carrying out research through commercialization, with research driven tightly by commercial portfolio and unmet need. In uro-oncology, Ipsen will shift to a specialty pharma approach, prioritizing downstream commercial activities over R&D, as already illustrated in its April 2011 joint development deal with Active Biotech AB for castrate-resistant prostate cancer drug tasquinimod (Also see "Ipsen Signs Cancer Drug Deal With Active Biotech Ahead Of Strategic Review" - Pink Sheet, 18 Apr, 2011.).

The company's hemophilia franchise is already largely externalized via a 2010 deal with Inspiration Biopharmaceuticals Inc., which is structured to allow the French group to take control at a later date, pending certain milestones being met (Also see "Finding Inspiration: Ipsen Builds Fourth Specialist Franchise With Hemophilia Deal" - Pink Sheet, 21 Jan, 2010.).

Transformed R&D; Prioritized Market Access

Ipsen is merging its research and development activities under EVP and CSO Claude Bertrand (formerly senior VP-R&D Respiratory & Inflammation at AstraZeneca PLC) and will also specialize on just two technology platforms, peptides and toxins, halting small molecule work and closing down its R&D site in Barcelona, Spain. Bertrand's goal, apart from the life-cycle expansion strategies for Somatuline and Dysport, is to deliver "at least five novel pre-clinical candidates, of which at least three will reach proof-of-concept by 2015."

Like several of its Big Pharma peers, Ipsen is also waking up to the need for commercial and payer-driven realities to more closely drive R&D. Hence de Garidel's bid to create commercially-focused franchises in each of the core TAs, with marketing tightly aligned with medical.

Ipsen's dealmaking will, apparently, also be tightly tied in with commercial reality: within the new executive leadership team that de Garidel has put in place, Pierre Boulud becomes exec VP-strategy, business development and market access. "Market access has become a more important priority for Ipsen," de Garidel told analysts.

To accelerate its penetration in emerging markets, Ipsen declares itself open to all options, including partnerships such as that signed in 2009 with Sanofi Aventis in Latin America (which may be expanded) and its April 2010 deal with Invida to market the endocrinology and oncology drugs in Asia.

De Garidel declined to give analysts specific near-term earnings guidance, assuring them however that the company remains "fully operational" despite the strategic overhaul. Ipsen does expect to record one-off costs of €80-100 million, pre-tax, over 2011 and 2012, however, mainly related to its shifting U.S. commercial operations from California to the East Coast, and to the R&D site closure.

- Melanie Senior (m.senior @elsevier.com)