864268--3/14/2007--BRADLEY_PHARMACEUTICALS

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RISKS RELATED TO OUR BUSINESS We derive a majority of our net sales from our core branded products, and any factor that hurts our sales of these products could reduce our revenues and profitability. Our revenues and profitability would be adversely affected if we cannot launch VEREGEN or ELESTRIN on a timely basis or if these products are not commercially accepted. ADOXA net sales make up a substantial portion of our revenues and profitability and failure to maintain its sales would reduce our revenues and profitability. Our sales suffer from competition by generic or therapeutically equivalent products because we do not have proprietary protection for most of our existing branded pharmaceutical products. If we cannot purchase or develop new products and bring them to market, our business could suffer. We may not be successful in establishing additional, or expanding existing, joint venture partnerships or strategic alliances, which could adversely affect our ability to develop and commercialize products. Delays in the research and development or testing processes will cause a corresponding delay in revenue generation from potential new products developed for or acquired by us, which could adversely affect our business and our income. If we are not able to obtain required regulatory approvals, we will not be able to commercialize additional new product candidates, and our ability to generate revenue will be materially impaired. The manufacture and packaging of pharmaceutical products are subject to the requirements of the FDA and similar foreign regulatory bodies. If our third party manufacturers fail to satisfy these requirements, our product development and commercialization efforts may be materially harmed. If VEREGEN , ELESTRIN or other new product offerings fail to achieve market acceptance, the revenues that we generate from their sales will be limited and our profitability could be affected. The introduction of line extensions of our existing products or of new products that compete with our existing products, or unanticipated generic competition, could result in unexpected changes in our estimates for future product returns and reserves for obsolete inventory, which would adversely affect our operating results. We depend on a limited number of customers, and if we lose any of them, our business could be harmed. Further consolidation of wholesalers of pharmaceutical products can negatively affect our distribution terms and sales of our products. We are subject to chargebacks and rebates when our products are resold to or reimbursed by governmental agencies and managed care buying groups, which may reduce our future profit margins. If our estimates for returned products are incorrect, there may be a materially adverse impact on our net sales as well as an impact on our operating results. Distribution Service Agreements (DSAs) with our wholesalers have affected our sales and product returns and may result in us paying an additional service fee to the wholesalers in the future. Because we rely on independent manufacturers for our products, any production or regulatory problems these third parties experience could be disruptive to our inventory supply. Any disruption in the supply of raw materials for our products or an increase in the cost of raw materials to our manufacturers could have a significant effect on their ability to supply us with our products and could adversely affect our sales. If we cannot sell our products in amounts greater than our minimum purchase requirements under some of our supply agreements or sell our products in accordance with our forecasts, our results of operations and cash flows may be adversely affected. We selectively outsource some of our non-sales and non-marketing services, and cannot assure you that we will be able to obtain these services on acceptable terms. We may need additional financing to implement our business strategy, which may not be available on terms acceptable to us. We have outstanding indebtedness, which could adversely affect our financial condition. We may be subject to product liability claims, and if we do not have adequate insurance coverage, we could face substantial losses and legal costs, and our reputation could suffer. If we suffer negative publicity concerning the safety of our products, our sales may be harmed and we may be forced to withdraw products. Rising insurance costs could negatively impact profitability. The loss of our key personnel could limit our ability to operate our business successfully. RISKS RELATED TO INTELLECTUAL PROPERTY Our intellectual property rights might not afford us with meaningful protection. We could be sued regarding the intellectual and proprietary rights of others, which could seriously harm our business and cost us a significant amount of time and money. RISKS RELATED TO OUR INDUSTRY We face significant competition within our industry. Failure to comply with government regulations could affect our ability to operate our business. If we market products in a manner that violates health care fraud and abuse laws, we may be subject to civil or criminal penalties. The FDA may change its enforcement policies and take action against products marketed without an approved application such as some of our products. State pharmaceutical marketing compliance and reporting requirements may expose us to regulatory and legal action by state governments or other government authorities. New legislation or regulatory proposals may adversely affect our revenues. Changes in Medicare, Medicaid or similar governmental programs or the amounts paid by those programs for our products may adversely affect our earnings. Changes in the reimbursement policies of managed care organizations and other third party payors may reduce our gross margins. RISKS RELATED TO OUR COMMON STOCK Shareholder lawsuits could have a material adverse effect on our results of operations and liquidity. Securities class action and shareholder derivative lawsuits due to stock price volatility or other factors could cause us to incur substantial costs and divert management s attention and resources. We could be subject to fines, penalties, or other sanctions as a result of the inquiry by the SEC. Because our Class B common stock has the right, as a class, to elect a majority of our Board of Directors and has disparate voting rights with respect to all other matters on which our stockholders vote, your voting rights will be limited and the market price of our common stock may be affected adversely. Our founder and President and Chief Executive Officer could exercise substantial control over our affairs. Our certificate of incorporation and Delaware law may delay or prevent our change of control, even if beneficial to investors. Our operating results and financial condition may fluctuate which could negatively affect the price of our stock. Our stock price has fluctuated considerably and could decline. The exercise of outstanding options or the issuance of other shares could reduce the market price of our stock. We may sell equity securities in the future, which would cause dilution.

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864268--3/14/2007--BRADLEY_PHARMACEUTICALS_INC