DRAXIS Health Reports Fourth Quarter and Year E...(Since the vast majority of the Company's...),Health

Canadian dollars and a larger portion of the Company's revenue

stream is denominated in U.S dollars, the strengthening of the

Canadian dollar has a significant negative impact on the Company's

underlying gross profit margin and operating expenses. We estimate

the strengthening of the Canadian dollar has reduced operating

profitability by approximately 3 to 4 cents per share on an annual

basis relative to 2006.

- Volumes of radioactive products produced by the radiopharmaceutical

operations were lower than expected for the second half of 2007 due

to a decision by a customer to cease production of a private label

radioactive product (which historically represented $350,000 in

revenues per quarter) while the customer determines whether to

continue to supply the market in the future pending possible

formulation changes.

- During the course of 2007, two separate shortages for the supply of

radioactive isotopes occurred which impacted the financial

performance of the radiopharmaceutical segment. The first shortage

resulted in the Company obtaining the approval of a secondary source

of supply for the U.S. market. The second shortage created an

industry wide decrease in demand in late 2007 for radioactive

procedures due to a short supply in the market place of

radioisotopes, being the key ingredient.

- Hectorol(R) production volumes in 2007 were $9 million lower than

what they were in 2006 and significantly lower than what was

originally forecasted for 2007. It is our understanding that these

volumes may still vary materially either positively or negatively in

future quarters as a result of continued uncertainty in custome
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