57725--9/24/2010--LANNETT_CO

related topics

{product, liability, claim}

{customer, product, revenue}

{tax, income, asset}

{product, candidate, development}

{product, market, service}

{regulation, government, change}

{property, intellectual, protect}

{personnel, key, retain}

{cost, operation, labor}

{loss, insurance, financial}

{financial, litigation, operation}

We materially rely on an uninterrupted supply of finished products from Jerome Stevens Pharmaceutical ( JSP ) for a majority of our sales. If we were to experience an interruption of that supply, our operating results would suffer. Extensive industry regulation has had, and will continue to have, a significant impact on our business, especially our product development, manufacturing and distribution capabilities. Our manufacturing operations as well as our suppliers manufacturing are subject to licensing by the FDA and/or DEA. If we or our suppliers were unable to maintain the proper agency licensing arrangements, our operating results would be materially negatively impacted. If we are unable to successfully develop or commercialize new products, our operating results will suffer. The generic pharmaceutical industry is highly competitive. The loss of Arthur P. Bedrosian or our other key personnel could cause our business to suffer. Our gross profit may fluctuate from period to period depending upon our product sales mix, our product pricing and our costs to manufacture or purchase products. If branded pharmaceutical companies are successful in limiting the use of generics through their legislative and regulatory efforts, our sales of generic products may suffer. Third parties may claim that we infringe their proprietary rights and may prevent us from manufacturing and selling some of our products. If we are unable to obtain sufficient supplies from key suppliers that in some cases may be the only source of finished products or raw materials, our ability to deliver our products to the market may be impeded. Our policies regarding returns, allowances and chargebacks, and marketing programs adopted by wholesalers may reduce our revenues in future fiscal periods. Health care initiatives and other third-party payor cost-containment pressures could cause us to sell our products at lower prices, resulting in decreased revenues. We may need to change our business practices to comply with changes to fraud and abuse laws. We may become subject to federal and state false claims litigation brought by private individuals and the government. Sales of our products may continue to be adversely affected by the continuing consolidation of our distribution network and the concentration of our customer base. The design, development, manufacture and sale of our products involves the risk of product liability claims by consumers and other third parties, and insurance against such potential claims is expensive and may be difficult to obtain. Rising insurance costs, as well as the inability to obtain certain insurance coverage for risks faced by Lannett, could negatively impact profitability. Significant balances of intangible assets, including product rights acquired, are subject to impairment testing and may result in impairment charges, which will adversely affect our results of operations and financial condition. Federal regulation of arrangements between manufacturers of branded and generic products could adversely affect our business.

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57725--9/24/2010--LANNETT_CO_INC