864268--5/19/2006--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. Failure to maintain ADOXA net sales would reduce our revenues and profitability. Net sales of KERALAC TM and CARMOL 40 have been, and may continue to be, adversely affected by the introduction of competitive products and net sales of ADOXA may be affected by the recent introduction of competitive products. Our growth depends upon our ability to develop new products, including products, if any, to be developed in connection with our collaboration and license agreement with Medigene. Failure of our products to gain, or otherwise maintain, market acceptance would hurt our revenues and profitability. We do not have proprietary protection for most of our branded pharmaceutical products, and our sales could suffer from competition by generic or comparable products. Our intellectual property rights might not afford us with meaningful protection. Generic competition and introductions by us of line extensions of our existing products or new 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. The restatement of our consolidated financial statements for the Third Quarter 2004 and SEC inquiry have, and will continue to have, an adverse impact on us, including increased costs and the increased possibility of legal or administrative proceedings. Under our $110 million senior credit facility, we are required to continually satisfy certain financial and other covenants. If we were unable to maintain these covenants and payment obligations under this credit facility were to become immediately due and payable, we may be unable to repay these amounts which could adversely affect our financial condition. We may need additional financing to implement our business strategy, which may not be available on terms acceptable to us. We have identified material weaknesses in our internal control over financial reporting, and our business and stock price may be adversely affected if we do not adequately address those weaknesses or if we have other material weaknesses or significant deficiencies in our internal control over financial reporting. We may incur charges for intangible asset impairment. Our operating results and financial condition may fluctuate which could negatively affect the price of our stock. We have outstanding indebtedness, which could adversely affect our financial condition. Because we rely on independent manufacturers for our products, any regulatory or production problems could affect our product supply. Our reliance on third party manufacturers and suppliers can be disruptive to our inventory supply. If we cannot purchase or integrate new products or companies, our business may suffer. 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. We depend on a limited number of customers, and if we lose any of them, our business could be harmed. 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. Consolidation of wholesalers of pharmaceutical products can negatively affect our distribution terms and sales of our products. Elimination of buying and selling among wholesalers affects our sales and returns of our products. We may be subject to product liability claims, in which case we may not have adequate insurance coverage, we could face substantial losses and legal costs, and our reputation could suffer. 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. Rising insurance costs could negatively impact profitability. If we suffer negative publicity concerning the safety of our products, our sales may be harmed and we may be forced to withdraw products. We selectively outsource some of our non-sales and non-marketing services, and cannot assure you that we will be able to obtain adequate supplies of these services on acceptable terms. The loss of our key personnel could limit our ability to operate our business successfully. Shareholder lawsuits could have a material adverse effect on our results of operations and liquidity. We could be subject to fines, penalties, or other sanctions as a result of the inquiry by the SEC. We could face adverse consequences as a result of our late SEC filings. Because we were unable to obtain a waiver from the SEC of the requirement to include pre-March 22, 2002 statements of income and cash flows for Bioglan Pharmaceuticals, we are currently prevented from having registration statements for public offerings of our securities declared effective by the SEC. 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. 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. The FDA may change its enforcement policies and take action against products marketed without an approved application such as some of our products. If we market products in a manner that violates health care fraud and abuse laws, we may be subject to civil or criminal penalties. State pharmaceutical marketing compliance and reporting requirements may expose us to regulatory and legal action by state governments or other government authorities. Changes in the reimbursement policies of managed care organizations and other third party payors may reduce our gross margins. New legislation or regulatory proposals may adversely affect our revenues. RISKS RELATED TO OUR COMMON STOCK 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 Chairman of the Board, President and Chief Executive Officer exercises 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 stock price has fluctuated considerably and may decline. 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. The exercise of outstanding warrants and 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--5/19/2006--BRADLEY_PHARMACEUTICALS_INC