1100962--2/26/2008--ENDO_PHARMACEUTICALS_HOLDINGS

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Risks Related to Our Business We face intense competition, in particular from companies that develop rival products to our branded products and from companies with which we compete to acquire rights to intellectual property assets. If generic manufacturers use litigation and regulatory means to obtain approval for generic versions of our branded drugs, our sales may suffer. Most of our net sales come from a small number of products. We face intense competition from brand-name companies that sell or license their own generic versions of our generic products or seek to delay the introduction of generic products. Our ability to protect our proprietary technology, which is vital to our business, is uncertain. We may incur significant liability if it is determined that we are promoting the off-label use of drugs. We may incur liability if our continuing medical or health education programs and/or product promotions are determined, or are perceived, to be inconsistent with regulatory guidelines. We are subject to various regulations pertaining to the marketing of our products. Most of our core products contain narcotic ingredients. As a result of reports of misuse or abuse of prescription narcotics, the sale of such drugs may be subject to new regulation, including the development and implementation of risk minimization action plans, which may prove difficult or expensive to comply with, and we and other pharmaceutical companies may face lawsuits. The pharmaceutical industry is heavily regulated, which creates uncertainty about our ability to bring new products to market and imposes substantial compliance costs on our business. Timing and results of clinical trials to demonstrate the safety and efficacy of products as well as the FDA s approval of products are uncertain. The success of our acquisition and licensing strategy is subject to uncertainty and any completed acquisitions or licenses may reduce our earnings, be difficult to integrate, not perform as expected or require us to obtain additional financing. Our growth and development will depend on developing, commercializing and marketing new products, including both our own products and those developed with our collaboration partners. If we do not do so successfully, our growth and development will be impaired. We face intense competition from other manufacturers of generic versions of our generic products. If the efforts of manufacturers of branded pharmaceuticals to use litigation and legislative and regulatory means to limit the use of generics and certain other products are successful, our sales may suffer. We may be the subject of product liability claims or product recalls, and we may be unable to obtain or maintain insurance adequate to cover potential liabilities. The availability of third party reimbursement for our products is uncertain, and thus we may find it difficult to maintain current price levels. Additionally, the market may not accept those products for which third party reimbursement is not adequately provided. Our reporting and payment obligations under the Medicaid rebate program and other governmental pricing programs are complex and may involve subjective decisions. Any failure to comply with those obligations could subject us to penalties and sanctions. Once approved, there is no guarantee that the market will accept our future products, and regulatory requirements could limit the commercial usage of our products. We are dependent on outside manufacturers for the manufacture of our products; therefore, we will have limited control of the manufacturing process and related costs. Certain of our manufacturers currently constitute the sole source of one or more of our products, including Teikoku, our sole source of Lidoderm . We are dependent on third parties to supply all raw materials used in our products and to provide services for certain core aspects of our business. Any interruption or failure by these suppliers, distributors and collaboration partners to meet their obligations pursuant to various agreements with us could have a material adverse effect on our business, results of operations and financial condition. The DEA limits the availability of the active ingredients used in many of our current products and products in development and, as a result, our procurement quota may not be sufficient to meet commercial demand or complete clinical trials. Patent litigation which is often time-consuming and expensive could have a material adverse effect on our business, results of operations and financial condition. We invest in securities that are subject to market risk and the recent issues in the financial markets could adversely affect the value of our assets. Sales of our products may be adversely affected by the consolidation of the wholesale drug distribution and retail pharmacy industries, a trend which may continue. We may not be able to maintain our current insurance policies covering our business, assets, directors and officers and product liability claims and we may not be able to obtain new policies in the future. If we are unable to retain our key personnel, and continue to attract additional professional staff, we may be unable to maintain or expand our business. We have significant goodwill and other intangible assets. Consequently, potential impairment of goodwill and other intangibles may significantly impact our profitability. We are a holding company with no operations. Our revenues and operating results may fluctuate in future periods and we may fail to meet expectations, which may cause the price of our common stock to decline. Our stock price may be volatile, and your investment in our common stock could decline in value. If our stockholders sell substantial amounts of our common stock, the market price of our common stock may fall. We have not paid, and may not pay, dividends and therefore, unless our stock appreciates in value, investors in our stock may not benefit from holding our stock. We are exposed to risks if we are unable to comply with changes to laws affecting public companies, including the Sarbanes-Oxley Act of 2002, and also to increased costs associated with complying with such laws. Our operations could be disrupted if our information systems fail or if we are unsuccessful in implementing necessary upgrades. The publication of negative results of studies or clinical trials may adversely impact our sales revenue.

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1100962--2/26/2008--ENDO_PHARMACEUTICALS_HOLDINGS_INC