1106773--2/28/2006--FIRST_HORIZON_PHARMACEUTICAL

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Risks Related to Our Business Our operating results are substantially dependent upon the contribution of Sular, which has been below our acquisition expectations since we acquired the product and which has adversely affected our operating results. The potential growth rate for Sular may be limited by the contraction of the market for the class of drugs to which Sular belongs. Competitors could offer a product competitive with Sular and our other products. Sales of our Robinul products have been adversely affected by the introduction of generic products. We may not be able to successfully integrate Fortamet, Altoprev and Triglide into our existing operations. Pohl-Boskamp can terminate our rights to Nitrolingual Pumpspray. In the future, we may not be able to increase our sales of promoted products sufficiently to compensate for the decrease in sales of our non-promoted products. If we are unable to introduce line extensions of our existing products, we may not achieve our sales plan. Introductions of line extensions of our existing products may require that we make unexpected changes in our estimates for future product returns and reserves for obsolete inventory which would adversely affect our operating results. Our ability to grow will suffer if we do not acquire or license rights to new products and integrate them successfully. As part of our growth strategy, we may acquire businesses, which will subject us to additional risks. We may incur charges for intangible asset impairment. We may encounter problems in the manufacture or supply of our products that could limit our ability to sell our products. We face generic and other strong competition that could lower prices and unit sales, and competitors have recently introduced new products and therapies that could make some of our products obsolete. A small number of customers account for a large portion of our sales and the loss of one of them, or changes in their purchasing patterns, could result in reduced sales or adversely impact our financial performance. If our products under development fail in clinical studies, if we fail or encounter difficulties in obtaining regulatory approval for new products or new uses of existing products, or if our development agreements are terminated, we will have expended significant resources for no return. If third-party payors do not adequately reimburse patients for our products, doctors may not prescribe them. We rely on data obtained from IMS which could be inaccurate. We depend on highly trained management, and we may not be able to keep current management or hire qualified management personnel in the future. The incurrence of debt could reduce our growth and profitability. The regulatory status of some of our products makes these products subject to increased competition and Our business is heavily regulated by governmental authorities, and failure to comply with such regulation or changes in such regulations could negatively affect our results. An adverse judgment in the securities class action litigation in which we and certain directors and executive officers are defendants could have a material adverse effect on our results of operations and liquidity. We are subject to risks associated with taxation in multiple jurisdictions. If we do not secure or enforce patents and other intellectual property rights, we could encounter increased competition that would adversely affect our operating results. Our products could infringe the intellectual property rights of third parties, which could require us to pay license fees or defend litigation that would be expensive or prevent us from selling products. Product liability claims and product recalls could limit sales and increase costs. We face an exchange risk on foreign currency. We face market risk that we could be adversely affected by certain fluctuations in interest rates. Risks Related to our Common Stock Our stock price has been volatile. Existing officers, directors and our principal stockholder own a substantial block of our common stock. Anti-takeover provisions could discourage a third party from making a takeover offer that could be beneficial to stockholders.

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1106773--2/28/2006--FIRST_HORIZON_PHARMACEUTICAL_CORP