877357--2/29/2008--SEPRACOR_INC

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{product, candidate, development}

{property, intellectual, protect}

{regulation, government, change}

{control, financial, internal}

{acquisition, growth, future}

{customer, product, revenue}

{product, liability, claim}

{competitive, industry, competition}

{regulation, change, law}

{stock, price, operating}

{stock, price, share}

{personnel, key, retain}

{debt, indebtedness, cash}

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Risks Related to Our Financial Results and Our Common Stock We have a history of net losses and we may not be able to generate revenues sufficient to achieve and maintain profitability on a quarterly and annual basis. Almost all of our revenues are derived from sales of LUNESTA and XOPENEX Inhalation Solution and our future success depends on the continued commercial success of these products as well as our other products. Sales of XOPENEX Inhalation Solution have been adversely affected as a result of the change in the Medicare Part B reimbursement rate, and if our strategy for responding to such change is not successful, our revenue will be further adversely affected. We have significant debt and we may not be able to make principal payments when due. If we exchange debt for shares of common stock, there will be additional dilution to holders of our common stock. We have identified a material weakness in our internal control over financial reporting that could adversely affect our ability to meet reporting obligations and negatively affect the trading price of our stock. If the estimates we make, or the assumptions on which we rely, in preparing our financial statements prove inaccurate, our actual results may vary from those reflected in our projections and accruals. If sufficient funds to finance our business are not available to us when needed or on acceptable terms, then we may be required to delay, scale back, eliminate or alter our strategy for our programs. Our long-term investments include auction rate securities that may not be accessible within the next twelve months and may experience a decline in value, which may adversely affect our liquidity and income. Fluctuations in the demand for our products, the success and timing of clinical trials, regulatory approvals, product introductions, collaboration and licensing arrangements, any termination of development efforts and other material events will cause fluctuations in our quarterly operating results, which could cause volatility in our stock price. We have various mechanisms in place to discourage takeover attempts, which may reduce or eliminate our stockholders' ability to sell their shares for a premium in a change of control transaction. The price of our common stock historically has been volatile, which could cause the loss of part or all of an investment in Sepracor. We face intense competition and many of our competitors have greater resources and capabilities than we have. We may be unable to successfully commercialize products for which we receive approval from the FDA or similar foreign agencies. We sell our products primarily through a direct sales force, and if we are not successful in attracting and retaining qualified sales personnel, we may not be successful in commercializing our products. If we or our third-party manufacturers do not comply with current GMP regulations, then the FDA could refuse to approve marketing applications or force us to recall or withdraw our products. We could be exposed to significant liability claims that could prevent or interfere with our product commercialization efforts. Buying patterns of our wholesalers may vary from time to time, which could have a material impact on our financial condition, cash flows and results of operations. Risks Related to the Regulatory Environment If our products do not receive government approval, we will not be able to commercialize them. If we fail to successfully develop and receive regulatory approval for product candidates, we will be unable to commercialize the product candidates and future sales and earnings growth will be substantially hampered. Our sales depend on payment and reimbursement from third-party payors, and a reduction in payment rate or reimbursement could result in decreased use or sales of our products. We will spend considerable time and money complying with Federal, state and foreign laws and regulations and, if we are unable to fully comply with such laws and regulations, we could face substantial penalties. The approval of sale of certain medications without a prescription may adversely affect our business. We recently determined that PHS discounts were provided to non-PHS covered entities. This circumstance creates uncertainty as to whether a new best price was set in prior periods. If a new best price was set, additional Medicaid rebates will be required to be paid. In addition, we may face an increased risk of investigation or litigation concerning our Medicaid price reporting or other price reporting obligations. If our drugs are not included on state Preferred Drug Lists, use of our drugs may be negatively affected. Risks Related to Our Intellectual Property If we fail to adequately protect or enforce our intellectual property rights, then we could lose revenue under our licensing agreements or lose sales to generic copies of our products. A number of our products and products for which we receive royalties are the subject of patent invalidation claims. If we face a claim of intellectual property infringement by a third party, then we could be liable for significant damages or be prevented from commercializing our products. Risks Related to Our Dependence on Third Parties If any third-party collaborator is not successful in development or commercialization of our products and product candidates, we may not realize the potential commercial benefits of the arrangement and our results of operations could be adversely affected. The royalties and other payments we receive under licensing arrangements could be delayed, reduced or terminated if our licensing partners terminate, or fail to perform their obligations under, their agreements with us, or if our licensing partners are unsuccessful in their sales efforts. We rely on third-party manufacturers, and this reliance could adversely affect our ability to meet our customers' demands. Risks Related to Growth of Our Business If we fail to acquire and develop additional product candidates or approved products, our ability to grow will be impaired. We may undertake strategic acquisitions in the future and any difficulties from integrating such acquisitions could adversely affect our stock price, business operations, financial condition or results from operations. Development and commercialization of our product candidates could be delayed or terminated if we are unable to enter into collaboration agreements in the future or if any future collaboration agreement is subject to lengthy government review.

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