BUSINESS

Business Overview

We are a U.S. specialty pharmaceutical company focused on marketing, developing and manufacturing branded prescription pharmaceutical products in two core therapeutic categories: women’s healthcare and dermatology. We develop, manufacture, supply and market branded prescription pharmaceutical products, predominantly in the United States. Our strategy comprises four elements: focus on niche markets, continue organic growth of our pharmaceutical business, develop new proprietary products and acquire products that complement and strengthen our existing product portfolio. We have established strong franchises in our core therapeutic categories through our precision marketing techniques and specialty sales forces of approximately 400 representatives.

The U.S. pharmaceutical market generated sales of approximately $250.0 billion in 2004 and has grown at a compound annual growth rate of 12.3% since 1992, according to IMS. Large pharmaceutical companies have been consolidating and are increasingly focusing their research and development and sales and marketing capabilities on developing and marketing “blockbuster” drugs. This market dynamic creates opportunities for specialty pharmaceutical companies like us to profitably market products.

We believe that our focused promotion in the therapeutic categories of women’s healthcare and dermatology positions us well to grow revenues of our products in these areas. We believe that our sales forces represent one of the largest contingents of sales representatives dedicated to promoting and marketing branded women’s healthcare and dermatology products to OB/GYNs and dermatologists in the United States. These sales representatives specifically target physicians who are high prescribers of products in our therapeutic categories. Our experienced management team possesses significant expertise in this type of precision marketing of prescription pharmaceutical products and has an established track record of acquiring branded pharmaceuticals and developing line extensions. By engaging in focused R&D aimed at generating improvements and line extensions in our existing therapeutic categories, we are able to make modest investments in relatively low-risk projects that extend product life cycles.

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Our principal products include:

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Strategy

We intend to continue to develop our specialty pharmaceutical products business through focusing on niche markets, driving organic growth through precision marketing, developing and marketing product line extensions and selectively acquiring complementary products that enhance our existing product portfolio.

Focus on Niche Markets. While large pharmaceutical companies are primarily focusing on developing “blockbuster” drugs, we concentrate our efforts on branded products in niche markets (or high concentration of prescribing by few physicians) which can be more effectively targeted by our sales force of approximately 400 representatives. We currently market a range of established specialty pharmaceutical products in two core therapeutic categories: women’s healthcare and dermatology. In women’s healthcare, our primary areas of concentration are hormonal contraceptives and hormone therapy. In the dermatology category, we promote treatments for acne and psoriasis. Given the niche nature of our markets, our sales representatives are able to target the primary prescription writers of these products, OB/GYNs and dermatologists. The OB/GYNs and dermatologists to whom we promote our products account for a large percentage of the total prescriptions written in those markets.

Drive Organic Growth. We will continue to drive organic growth of our core women’s healthcare and dermatology product franchises through precision marketing (targeting high-prescribing OB/GYNs and dermatologists), sales force monitoring and compensation, and product pricing.

By analyzing prescription data, we are able to identify and track high-volume prescribing OB/GYNs and dermatologists in our two core therapeutic categories. These high-prescribing physicians are covered by our sales force with high frequency product promotion and sampling. Our sales representatives also seek to build strong professional relationships with their target physicians to maximize the impact of our selling efforts and promote loyalty to our brands. Our sales force’s compensation is tied to market share (prescription) growth.

Our product pricing growth is in-line with pricing growth of competing branded products and reviewed regularly by management. We believe that prices for branded products in our sectors are likely to continue to rise over time on a steady and sustainable basis, in line with historical trends.

Develop and Market Product Line Extensions. Our development efforts focus primarily on extending proprietary protection of our products through product line extensions, rather than undertaking the costly, high-risk new drug discovery usually associated with large pharmaceutical and biotechnology companies. We have an experienced development team of scientists and technicians with proven expertise in the development of line extensions and formulations and have consistently demonstrated our ability to commercialize our development efforts. Since March 2003, we have received approval from the FDA for five of our products. In addition to Femring, which was approved in March 2003, we received FDA approval for Ovcon 35 Chewable, a line extension with patent protection through June 2021, Femtrace, a new estrogen only hormone therapy available in three dosages, a new dosage form of our Doryx line of acne treatment that was approved on May 6, 2005 and femhrt Lo, a low dose combination hormone therapy approved on January 14, 2005. In addition, we expect to receive FDA approval in 2006 for Estrostep Chewable, a chewable form of our Estrostep product and Loestrin 24, an oral contraceptive with a 24-day regimen. By targeting our R&D efforts on our existing therapeutic categories, we believe we will be able to leverage the professional relationships our sales force has built with high-prescribing specialist physicians. We have also recently signed letters of intent with LEO Pharma regarding potential Dovonex and Dovobet line extensions and a right of first refusal for LEO’s other potential products in dermatology.

Selectively Acquire Complementary Products that Enhance Our Existing Product Portfolio. We intend to continue to evaluate opportunities to expand our pharmaceutical product portfolio by selectively purchasing and licensing established branded products which complement our strategic focus on women’s healthcare and dermatology and can benefit from our sales force of approximately 400 representatives. During the past five years, we have acquired a number of products, including Ovcon and Estrostep, and increased market share and revenue for these products. We intend to acquire the exclusive U.S. sales and marketing rights to Dovonex, a leading psoriasis treatment, from Bristol-Myers in January 2006 for $200.0 million plus a 5% royalty on net sales

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through 2007. Our sales force currently promotes Dovonex for Bristol-Myers, and therefore the 2006 acquisition of the Dovonex rights will not require any significant launch costs or any significant increase in the size of our sales force. In addition, we have licensed from LEO Pharma, subject to FDA approval, the exclusive U.S. sales and marketing rights to Dovobet, a combination-therapy psoriasis treatment that combines calcipotriene, the active ingredient in Dovonex, with a corticosteroid into a single topical treatment. The NDA for Dovobet was accepted for filing on May 9, 2005 and we expect to launch this product in the first half of 2006. A final milestone payment of $40.0 million will be payable to LEO Pharma upon FDA approval.

Our Competitive Strengths

Experienced Management Team. We have an experienced management team with extensive pharmaceutical industry expertise and a track record of identifying, developing and promoting specialty pharmaceutical products. Roger Boissonneault, Chief Executive Officer, Carl Reichel, President—Pharmaceuticals and Anthony Bruno, Executive Vice President—Corporate Development and General Counsel, have over 75 years of combined experience in the pharmaceutical industry, including tenures at the Parke-Davis division of Warner-Lambert. While at Warner-Lambert, Mr. Boissonneault led its successful women’s healthcare division from 1991 to 1995. In addition, our new Executive Vice President and Chief Financial Officer, Paul Herendeen, has extensive experience as a chief financial officer in the pharmaceutical industry.

Leading Sales and Marketing Expertise. We believe we have one of the largest contingents of sales representatives dedicated to calling on OB/GYNs and dermatologists in the United States. We employ precision marketing strategies to target specific physicians who are high prescribers of products in our therapeutic categories. Our marketing success is enhanced by the professional relationships our sales force has built with these prescribers. With compensation tied to new prescription growth, our sales force is highly motivated to increase our market share.

Strong Intellectual Property Portfolio. Many of our products are protected by patents. Our strategy is to extend exclusivity by developing improvements to our products with strong intellectual property protection. Such launches are currently planned for several of our product franchises, including Ovcon, Doryx and Estrostep. Additionally, several of our products that are not currently protected by current patents continue to enjoy exclusivity due to proprietary manufacturing technology and, for topical products that act locally, the challenges associated with conducting bioequivalence studies.

Substantial Development Pipeline of Branded Women’s Healthcare and Dermatological Products. Our development effort is focused on expanding our product portfolio by capitalizing on our core knowledge of women’s healthcare and dermatological products. We have an experienced development team of scientists and technicians with proven expertise in the development of line extensions and formulations. We have consistently demonstrated our ability to obtain FDA approvals for our products. Recently, we received FDA approval for five of our products, Femring, Ovcon 35 Chewable, Femtrace, a new dosage form of our Doryx line of products, and femhrt Lo.

Well-Positioned in Attractive Markets. We believe that our core therapeutic categories feature attractive long-term growth characteristics and that our products are well-positioned to capitalize on those growth trends. For example, the market for hormonal contraceptives, which are being increasingly prescribed for their benefits beyond contraception, has experienced a compound annual growth rate of 4.9% in new prescriptions from calendar year 2002 through calendar year 2004. In the HT market, treatment regimens are increasingly focused on lower dose products, and we expect to launch femhrt Lo in late 2005 to fulfill growing market demand for lower dose therapies. Due to new therapy options and price increases, sales in the psoriasis and the oral antibiotic acne medication markets have increased by approximately 135%* and 29%, respectively, from calendar year 2002 through calendar year 2004. In the psoriasis market, we plan to capitalize on the leading market position of Dovonex with the introduction of Dovobet, contingent on FDA approval.

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Branded Diversified Product Offering. We have an established portfolio of branded pharmaceutical products in the areas of women’s healthcare and dermatology. The following chart presents a breakdown of our products by percentage share of our total revenues for fiscal year 2004 (and does not include anticipated contributions from our planned acquisitions of the exclusive U.S. sales and marketing rights to Dovonex and Dovobet and revenues attributable to Loestrin product sales):

Strong Free Cash Flow Generation. Our business generates strong free cash flow, as it benefits from modest capital expenditures, a low tax rate and minimal working capital requirements. Over the three years ended September 30, 2004, capital expenditures (including the $4.0 million acquisition of our manufacturing facility in Fajardo, Puerto Rico) averaged $6.1 million and 3.4% of EBITDA from continuing operations. We have requested and expect to enter into a tax agreement with the tax authorities in Puerto Rico, whereby our earnings in Puerto Rico, which are a large component of our overall earnings, will be subject to a 2.0% income tax for a period of 15 years, thereby reducing our overall tax rate. We believe our strong free cash flow will enable us to adequately service debt and will provide us with financial flexibility to invest in our business.

Principal Shareholders With Proven Healthcare Sector Expertise. Our principal shareholders are investment funds affiliated with Bain Capital Partners LLC, DLJ Merchant Banking III, Inc., J.P. Morgan Partners, LLC and Thomas H. Lee Partners, L.P., who are among the world’s largest private equity firms. Each invests across a broad range of industries and has significant experience in the healthcare sector. Their prior healthcare investments include Barrier Therapeutics, Inc., Charles River Laboratories, Inc., Eyetech Pharmaceuticals, Inc., Fisher Scientific International Inc., Myogen, Inc., Nyco Holdings ApS, Physio-Control International Corporation, Pri-Med Healthcare, Inc., Seattle Genetics, Inc., Stericycle, Inc., Wesley Jessen Visioncare, Inc. and Wilson Greatbatch Technologies, Inc.

History and Development of the Company

We began commercial operations on January 5, 2005 when we acquired the Predecessor. On October 27, 2004, the Sponsors reached an agreement on the terms of a recommended acquisition of the Predecessor. The Acquisition became effective on January 5, 2005 and thereafter, following a series of transactions, we acquired 100% of the share capital of the Predecessor. See “The Transactions.”

Our company has been built through acquisition and divestitures. The Predecessor was founded in 1968 as a sales and marketing organization focused on branded pharmaceutical products in Northern Ireland, but in October 2000 expanded into the U.S. pharmaceuticals market through the acquisition, for $325.5 million, of a U.S. pharmaceutical business that marketed Ovcon and Estrace Cream.

Between 2000 and 2004, the Predecessor disposed of its pharmaceutical services businesses and focused its strategy on strengthening its pharmaceutical products business, specifically in the areas of women’s healthcare and dermatology. In fiscal year 2002, the Predecessor sold CSS, CTS and ICTI for aggregate consideration of approximately $235 million. In December 2003, the Predecessor sold the PDMS business for $34.0 million. In March 2004, the Predecessor granted Duramed an exclusive license in the United States and Canada to market,

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distribute and sell its then-marketed Loestrin and Minestrin hormonal contraceptive products for a cash consideration of $45.0 million. In April 2004, it sold its U.K. pharmaceutical products business for $72.0 million, and in May 2004, it sold its U.K.-based sterile solutions business for $4.5 million.

Product and Related Acquisitions

We have strengthened our pharmaceutical products business since expanding into the U.S. market in September 2000 through the following product acquisitions:

Dovonex and Dovobet Transactions

Beginning in April 2003, the Predecessor entered into a major strategic alliance in dermatology with LEO Pharma, the owner of the patents covering Dovonex and Dovobet, and Bristol-Myers, the exclusive licensee of Dovonex in the United States.

Dovonex is a leading non-steroidal topical treatment for psoriasis. Under our co-promotion agreement with Bristol-Myers, we have agreed to promote Dovonex until December 31, 2007. Under the agreement, we are compensated by Bristol-Myers for achieving sales of Dovonex above agreed levels. We also entered into an agreement giving us the option to purchase Bristol-Myers’ rights to Dovonex under pre-negotiated terms in January 2006, which we intend to exercise, for a purchase price of $200.0 million plus a 5% royalty on net sales of Dovonex through 2007. Once we have acquired Bristol-Myers’ rights to Dovonex, our license and supply agreement with LEO Pharma will become effective. Under this license and supply agreement, we will pay LEO Pharma a supply fee for Dovonex equal to 20% of net sales and a royalty equal to 10% of net sales (which will be reduced to 5% if a generic equivalent is introduced).

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Dovobet is a combination of the topical steroid betamethasone dipropionate and calcipotriene (the active ingredient found in Dovonex). Under our agreements with LEO Pharma for Dovonex and Dovobet, we paid LEO Pharma $2.0 million in December 2001, an additional $10.0 million in April 2003 and are obligated to make a final milestone payment of $40.0 million at the time Dovobet receives final FDA approval. Upon final FDA approval and the satisfaction of other conditions (including the completion of our acquisition of Bristol-Myers’ rights to Dovonex) we will become the exclusive licensee of Dovobet in the United States, subject to the terms of a pre-negotiated license and supply agreement with LEO Pharma. Under the terms of this license and supply agreement, we will pay LEO Pharma a supply fee for Dovobet ranging from 20% to 25% of net sales and royalties ranging from 10% to 15% of net sales. We have also recently signed letters of intent with LEO Pharma regarding potential Dovonex and Dovobet line extensions and a right of first refusal for LEO Pharma’s other potential products in dermatology.

Our Products

Our pharmaceutical business develops, supplies and markets branded prescription pharmaceutical products, predominantly in the United States.

Women’s Healthcare

We develop and market products for a number of segments in the women’s healthcare therapeutic category, including hormonal contraceptives, hormone therapy and therapy for premenstrual dysphoric disorder.

Principal Products.

Hormonal Contraceptives

Ovcon 35 and Ovcon 50. Ovcon, an oral contraceptive, was introduced in the late 1970s. We acquired the rights to the Ovcon products from Bristol-Myers in February 2000. Ovcon is the only branded 35 mcg. oral contraceptive without a generic equivalent in the market. Ovcon revenue for the quarter ended March 31, 2005 increased 30.8% over the prior year quarter.

We received final approval from the FDA in November 2003 for the Ovcon 35 Chewable tablet. Ovcon 35 Chewable is protected by a newly-issued U.S. patent covering chewable hormonal contraceptives running through June 2021. We intend to launch Ovcon 35 Chewable in early 2006.

Estrostep. Estrostep was introduced by Warner-Lambert in 2000 and was acquired by us in March 2003. We believe that hormonal contraceptives are increasingly being prescribed to older reproductive women and are increasingly prescribed for their benefits in addition to contraception. To take advantage of these market trends, our sales force commenced active promotion of Estrostep in the second quarter of fiscal year 2004. This product experienced a 20.2% increase in revenue in the quarter ended March 31, 2005 over the prior year quarter.

Oral Hormone Therapy

femhrt. We acquired femhrt, a continuous estrogen-progestogen therapy that was introduced in 2000, from Pfizer in April 2003. During calendar year 2004, femhrt enjoyed the #3 market share in terms of revenues and new prescriptions in the oral estrogen-progestogen therapy segment. Despite the overall decrease in the market and a decrease in femhrt prescription volume, femhrt’s share of total prescriptions in the oral estrogen-progestogen therapy segment increased over the three years following the early termination of the E&P Arm of the WHI Study.

We believe that following the early termination of the E&P Arm of the WHI Study, lower dose oral hormone therapies have experienced increased demand. We received FDA approval of our sNDA for femhrt Lo in January 2005 and expect to launch this product in late 2005. We believe that femhrt Lo will position us well to fulfill growing market demand for lower dose therapies in the HT market.

Estrace Tablets; Femtrace. Estrace Tablets are available in three dosages and were introduced in 1975. We acquired this product from Bristol-Myers in June 2001. In August 2004, we received FDA approval for Femtrace, a proprietary second generation tablet which contains estradiol acetate, and we plan to launch this product in the second half of 2005.

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Other Hormone Therapy

Estrace Cream. Estrace Cream, an estrogen therapy for the treatment of local symptoms of menopause, was introduced in 1984. We acquired the rights to this product from Bristol-Myers in February 2000. The local hormone therapy segment, unlike oral hormone therapies, was not adversely affected by the early termination of the E&P Arm of the WHI Study.

Femring. We received final approval from the FDA in March 2003 and launched Femring in June 2003. Femring is a vaginal ring containing a core of estradiol acetate.

Premenstrual Dysphoric Disorder

Sarafem. Sarafem, which contains the active ingredient fluoxetine, was introduced in 2000 and is available in two dosages: 10 mg. and 20 mg. Sarafem is a treatment for PMDD, a severe form of premenstrual syndrome. We purchased the U.S. sales and marketing rights to Sarafem from Lilly in January 2003. Sarafem is the only brand of SSRI that is exclusively indicated for treatment of PMDD and is indicated for intermittent, rather than continuous, dosing. We believe that this allows Sarafem to be a preferred treatment option for patients who wish to avoid any stigma associated with being treated with an antidepressant. We believe revenues from Sarafem have been adversely affected by increased therapeutic substitution and the discontinuation of promotion to primary care physicians after we acquired the product from Lilly. As a result of this increasingly competitive environment, Sarafem has experienced lower prescription volumes over the last two fiscal years.

Dermatology

Principal Products.

Acne

Doryx. Doryx is the leading branded oral antibiotic prescribed by dermatologists for the treatment of acne in terms of prescription volume. We acquired the rights to distribute Doryx in the United States from Warner-Lambert in June 1997 and in September 1999 repositioned the product for the dermatology market. We believe that the success of this product has been attributable in part to its dosage form of unique enterically coated doxycycline hyclate pellets in a capsule which reduces stomach upset, a common side effect of products containing doxycycline hyclate. We received FDA approval for delayed-release Doryx tablets on May 6, 2005.

Psoriasis

Dovonex. Dovonex is the leading non-steroidal topical treatment for psoriasis. For each quarter over the last four fiscal years, Dovonex has had the #1 share of both revenues and prescriptions in the non-steroidal topical treatment segment. Often prescribed as a combination therapy with a topical corticosteroid, we believe that Dovonex enjoys wide brand recognition and acceptance among dermatologists as a leading treatment for mild to moderate psoriasis. In April 2003, we entered a co-promotion agreement with Bristol-Myers for Dovonex in the United States. Under the co-promotion agreement, we agreed to promote Dovonex for Bristol-Myers, the exclusive licensee of Dovonex, until December 31, 2007. Under the agreement, we are compensated by Bristol-Myers for achieving sales of Dovonex above agreed levels. We have an option to acquire the exclusive U.S. sales and marketing rights to Dovonex from Bristol-Myers under pre-negotiated terms in January 2006, which we intend to exercise, for a purchase price of $200.0 million plus a 5% royalty on net sales of Dovonex through 2007.

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Research and Development

Our research and development activity is focused on the development of proprietary products that are complementary to our product lines, particularly line extensions of our existing branded products and new products in our core therapeutic categories. Our strategy is to pursue products that represent improvements to existing pharmaceuticals rather than create new chemical entities. Improvements to existing products generally involve less development and regulatory risk and shorter time lines from concept to market.

During fiscal year 2004, we invested $26.6 million in R&D activities, a 7% increase over our prior fiscal year investment of $24.9 million, reflecting the activities associated with our efforts to obtain regulatory approval for Loestrin 24, femhrt Lo, delayed-release Doryx tablets and Femtrace as well as advancing our research and development portfolio. We received FDA approval for Femtrace in August 2004 and plan to launch this product in the second half of 2005. Our research and development investment in fiscal year 2002 totaled $16.0 million. As of March 31, 2005, our research and development team consisted of 45 professionals. Our in-house expertise in product development and regulatory affairs allows us to prepare and submit NDAs with the FDA and other regulatory authorities for our own products.

Research and Development Portfolio

New Therapy

Dovobet. In April 2003, we entered into agreements with LEO Pharma relating to the development and U.S. commercialization of Dovobet. LEO Pharma’s NDA for Dovobet was accepted for filing by the FDA on May 9, 2005. Dovobet (also known in some countries as Daivobet) has been approved and is currently marketed by or behalf of LEO Pharma in 57 countries, including the United Kingdom, Canada and France. Under the terms of our agreements with LEO Pharma (and in addition to other payments we have made under these agreements), we paid $5.0 million in relation to R&D associated with Dovobet. We are obligated to make a final milestone payment of $40.0 million due at the time Dovobet receives final FDA approval. Thereafter, under the terms of a license and supply agreement, we will pay LEO Pharma certain supply fees and royalty payments. See “—Dovonex and Dovobet Transactions.” We expect to launch Dovobet in the first half of 2006.

Line Extensions and New Products

Ovcon 35 Chewable. In November 2003, we received approval from the FDA for our oral contraceptive product Ovcon 35 Chewable. Ovcon 35 Chewable is protected by a newly-issued U.S. patent covering chewable oral contraceptives through June 2021. We plan to launch Ovcon 35 Chewable in early 2006.

Estrostep 24. We initiated Phase III development of a 24-day oral contraceptive, Estrostep 24, in May 2004 and amended our IND for Estrostep in connection with the product during development. We plan to submit an NDA for this product in the second half of 2006.

Estrostep Chewable. Estrostep Chewable will be a chewable version of our Estrostep product. We plan to submit an NDA for this product in the second half of 2005.

Loestrin 24. Loestrin 24 is a 24-day regimen oral contraceptive. A NDA for this product was submitted to the FDA on April 15, 2005 and was accepted by the FDA for filing on June 17, 2005.

femhrt Lo. We plan to introduce a lower dose version of femhrt (femhrt 0.5/2.5 mcg. tablets) in late 2005. The NDA for femhrt Lo was approved by the FDA on January 14, 2005.

Femtrace. In August 2004, we received approval from the FDA for Femtrace tablets, our proprietary follow-on product for Estrace Tablets. We plan to introduce 0.45 mg., 0.9 mg. and 1.8 mg. doses of Femtrace in the second half of 2005.

Doryx. We submitted an NDA with the FDA for delayed-release Doryx tablets in April 2004. We received FDA approval on May 6, 2005.

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Sales and Marketing

In fiscal year 2005, we reorganized our three U.S. sales forces to permit our sales forces to focus promotional efforts by therapeutic category. We now have a Women’s Healthcare sales force that promotes oral contraceptives to OB/GYNs, a Specialty sales force that promotes dermatology products to dermatologists and the Chilcott sales force that promotes hormone therapy products and Sarafem to OB/GYNs. We believe we have one of the largest contingents of sales representatives dedicated to calling on OB/GYNs and dermatologists in the United States. As of March 31, 2005, we employed 406 sales representatives.

We employ precision marketing strategies to target specific physicians who are high prescribers of products in our categories. The execution of these strategies require comprehensive internal analysis of actual prescription data to determine the most effective allocation of our sales and marketing resources and enable us to expand market share in targeted markets. Our precision marketing team, together with their sales and marketing colleagues, analyze prescription data and develop strategies and tactics to maximize growth in our sales and market share. By employing these marketing techniques, we have been able to sustain product growth, revitalize acquired products and successfully launch new products.

Customers

While the ultimate end-users of our products are the individual patients to whom our products are prescribed by physicians, our direct customers include certain of the nation’s leading wholesale pharmaceutical distributors, such as McKesson Corporation, Cardinal Health, Inc., AmerisourceBergen Corporation and other major drug retailers. During the last three fiscal years, the following distributors each accounted for more than 10% of our net revenues: