Controlled-Release Drug Delivery

Controlled-release products are formulated to release the drug's active ingredient gradually and predictably over a 12-hour to 24-hour period. These formulations potentially provide for greater effectiveness in the treatment of chronic conditions through more consistent delivery of the medication; reduced side effects; greater convenience; and higher levels of patient compliance due to a simplified dosage schedule, compared with those of immediate-release drugs.

One of the more common applications of Biovail's drug-delivery technologies involves developing once-daily formulations of pharmaceuticals that are currently dosed two, three, four or more times per day. Once-daily dosing carries significant benefits in terms of convenience and compliance; however, the potential also exists to improve the side-effect profile and enhance the overall efficacy of existing drugs.

There are significant technical barriers to entry into the development of controlled-release drugs, with only a limited number of companies possessing the requisite expertise and technology. Despite the therapeutic advantages of controlled-release drugs versus their immediate-release counterparts, many pharmaceutical companies have not made the additional investment to develop a controlled-release version of a product while their immediate-release version is under patent protection.

Biovail is well positioned in the controlled-release segment of the pharmaceutical industry, given the breadth and depth of the Company's drug-delivery technology platforms, and its track record of success in the development and large-scale manufacturing of commercial products, including Tiazac® XC, Cardizem® LA, Wellbutrin XL® and, more recently, Ultram® ER. By funding and controlling all or most aspects of the development of controlled-release pharmaceuticals, Biovail's business strategy provides the cost savings, efficiencies in product development and acceleration of regulatory filings necessary for the Company to compete effectively in the North American pharmaceutical industry.

According to IMS, prescription growth for 2005 in the U.S. pharmaceutical market for all forms of controlled-release drugs was approximately 0.3%. The oral-dosage, controlled-release segment of the market generated approximately $22.5 billion in revenue in 2005, an increase of 2%, compared with the previous year. The growth in this segment came from applications related to the proliferation of branded drugs at or near patent expiration, and new product launches, partially offset by increased generic competition.