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DRAXIS Health Reports Results for the First Quarter of 2008
Date:5/9/2008

MONTREAL, May 9 /PRNewswire-FirstCall/ - DRAXIS Health Inc. (TSX: DAX) (NASDAQ: DRAX) reported first quarter financial results for the three months ended March 31, 2008. Revenues and earnings for the first quarter of 2008 were below those in the first quarter of 2007 as a result of lower sales of sterile products, the negative impact of a significantly stronger Canadian dollar relative to the first quarter of 2007, the inclusion in the first quarter of 2007 of non-recurring items and the inclusion in the first quarter of 2008 of the direct and indirect costs related to the potential sale of the Company. All amounts are expressed in U.S. dollars.

Highlights

- Consolidated revenues for the first quarter of 2008 were

$19.2 million versus $21.0 million in the first quarter of 2007.

Product sales in the first quarter of 2008 were $18.7 million,

down 5% from $19.6 million in the first quarter of 2007. Contract

manufacturing sales were down 11%, primarily as a result of lower

revenues from sterile products during the first two months of the

quarter, and radiopharmaceutical sales were up 6%. Product gross

margins for the first quarter of 2008 were impacted by the

stronger Canadian dollar relative to the first quarter of 2007 and

by the change in product mix related to lower sterile product

volumes.

- Operating loss for the first quarter of 2008 was $2.4 million

compared to operating income of $2.5 million in the same period in

2007. Operating income in the first quarter of 2007 benefited from

the receipt of two non-recurring items, namely cont ($2,412) $2,446 (198.6%)

Adjustments:

(a) Non-recurring Shire

milestone receipt(2) - (791)

(b) Insurance proceeds(3) - (517)

(c) DSU (recovery) expense(4) 197 348 (43.4%)

(d) Transaction costs 544 -

Anipryl(R) deferred revenues (30) (30) -

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Operating (Loss) Income -

Adjusted(1) ($1,701) $1,456 (216.9%)

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Diluted EPS - Reported ($0.03) $0.05

Adjustments:

(a) Non-recurring Shire

milestone receipt(2) - ($0.01)

(b) Insurance proceeds(3) - ($0.01)

(c) DSU (recovery) expense(4) - 0.01

(d) Transaction costs 0.01

Anipryl(R) deferred revenues - -

---------------------------------------------------------

Diluted EPS - Adjusted(1) ($0.02) $0.04

---------------------------------------------------------

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(1) "Adjusted Operating (Loss) Income" and "Adjusted Diluted EPS" are

defined, respectively, as reported operating (loss) income and diluted

EPS, excluding certain items. These terms do not have a standardized

meaning prescribed by U.S. GAAP and therefore may not be comparable to

similar measures used by other companies. Management uses adjusted

operating (loss) income, among other factors, to set performance goals

and to measure the performance of the overall company. The Company

believes that investors' understanding of our performance is enhanced by

disclosing these measures.

(2) The Company became entitled to and received non-recurring contingent

milestone payments from Shire.

(3) Insurance proceeds related to a business interruption claim filed

resulting from equipment damage during 2005 shutdown period.

(4) Reflects the change in the value of Deferred Share Unit Plan based on

the market price of the Company's common stock. See Note 7 of

accompanying interim financial statements.

Interim Financial Report

This release incorporates by reference the first quarter Interim Report to Shareholders ("Q1 Report"), which includes the full Management's Discussion & Analysis (MD&A) for the quarter ended March 31, 2008 as well as financial statements for such quarter, prepared in accordance with U.S. GAAP. The Q1 Report has been filed with applicable Canadian and U.S. securities regulatory authorities and is accessible on the Company's website at http://www.draxis.com in the Investor Relations section under Financial Reports. It is also available on the SEDAR (at http://www.sedar.com) and EDGAR (at http://www.sec.gov) databases or upon request by contacting DRAXIS Investor Relations at 1-877-441-1984.

Annual and Special Meeting of Shareholders

The annual and special meeting (the "Meeting") of shareholders of the Company is scheduled to be held at the offices of McCarthy Tetrault LLP, Suite 5300, TD Bank Tower, Toronto, Ontario, Canada on Friday, May 23, 2008 at 10:00 a.m. (Toronto time).

At the Meeting, shareholders will be asked to approve a plan of arrangement under the Canada Business Corporations Act, involving DRAXIS, its shareholders and Jubilant Acquisition Inc. (the "Purchaser"), an indirect wholly-owned subsidiary of Jubilant Organosys Ltd. The plan of arrangement will result in the acquisition by the Purchaser of all the outstanding common shares of DRAXIS for a consideration of U.S.$6.00 per common share.

About DRAXIS Health Inc.

DRAXIS Health, through its wholly owned operating subsidiary, DRAXIS Specialty Pharmaceuticals Inc., provides products in three categories: sterile products, non-sterile products and radiopharmaceuticals. Sterile products include liquid and freeze-dried (lyophilized) injectables plus sterile ointments and creams. Non-sterile products are produced as solid oral and semi-solid dosage forms. Radiopharmaceuticals are used for both therapeutic and diagnostic molecular imaging applications. Pharmaceutical contract manufacturing services are provided through the DRAXIS Pharma division and radiopharmaceuticals are developed, produced, and sold through the DRAXIMAGE division. DRAXIS employs approximately 500 staff in its Montreal facility.
For additional information please visit http://www.draxis.com.

Caution Concerning Forward-Looking Statements

This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and as contemplated under other applicable securities legislation. These statements can be identified by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "estimate," "continue," "plan," "intend," "believe" or other similar words. These statements discuss future expectations concerning results of operations or financial condition or provide other forward-looking information. Our actual results, performance or achievements could be significantly different from the results expressed in, or implied by, those forward-looking statements. You should not place undue reliance on any forward-looking statement, which speaks only as of the date made.

These statements are not guarantees of future performance. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks, uncertainties and other factors that may cause the actual results or performance of the Company to be materially different from such statements or from any future results or performance implied thereby. Factors that could cause the Company's results or performance to differ materially from a conclusion, forecast or projection in the forward-looking statements include, but are not limited to:

- the potential acquisition of DRAXIS by Jubilant, by way of plan of

arrangement, in an all cash transaction at US$6.00 per outstanding

share (the "Acquisition);

- a special meeting of DRAXIS' shareholders to consider the

Acquisition, currently scheduled to be held on May 23, 2008;

- the approval of the Acquisition by DRAXIS' shareholders;

- the ability of each of Jubilant and DRAXIS to satisfy all of the

closing conditions to complete the Acquisition;

- the possibility that DRAXIS' shareholders do not approve the

Acquisition at the special meeting of shareholders;

- the achievement of desired clinical trial results related to DRAXIS'

pipeline products;

- timely regulatory approval of DRAXIS' products;

- the ability to comply with regulatory requirements applicable to the

manufacture and marketing of DRAXIS' products;

- DRAXIS' ability to obtain and enforce effective patents;

- the non-infringement of third party patents or proprietary rights by

DRAXIS and its products;

- factors beyond DRAXIS' control that could cause interruptions in

operations in its single manufacturing facility (including, without

limitation, material equipment breakdowns);

- reimbursement policies related to health care;

- the establishment and maintenance of strategic collaborative and

commercial relationships;

- DRAXIS' dependence on a small number of key customers;

- the disclosure of confidential information by DRAXIS' collaborators,

employees or consultants;

- the preservation of healthy working relationships with DRAXIS' union

and employees;

- DRAXIS' ability to grow the business;

- the fluctuation of DRAXIS' financial results and exchange and

interest rate fluctuations;

- the adaptation to changing technologies;

- the loss of key personnel;

- the avoidance of product liability claims;

- the loss incurred if current lawsuits against DRAXIS succeed;

- the volatility of the price of DRAXIS' common shares;

- market acceptance of DRAXIS' products; and

- the risks described in "Item 3. Key Information - Risk Factors" in

the Annual Report Form 20-F filed by DRAXIS with the United States

Securities and Exchange Commission and which is also filed as

DRAXIS' Annual Information Form with Canadian securities regulators.

For additional information with respect to certain of these and other factors, and relating to DRAXIS generally, reference is made to DRAXIS' most recent filings with the United States Securities and Exchange Commission (available on EDGAR at http://www.sec.gov) and the filings made by DRAXIS with Canadian securities regulators (available on SEDAR at http://www.sedar.com). The forward-looking statements contained in this new release represent DRAXIS' expectations as at May 8, 2008. Unless otherwise required by applicable securities laws, DRAXIS disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Financial Tables Attached

DRAXIS HEALTH INC.

Consolidated Statements of Operations

In Accordance with U.S. GAAP

-------------------------------------------------------------------------

(in thousands of U.S. dollars except share related data)

(unaudited)

For the

Three Month Periods

Ended March 31,

------------------------------

2008 2007

-------------- --------------

REVENUES

Product sales $ 18,656 $ 19,630

Royalty and licensing 495 1,348

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19,151 20,978

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EXPENSES

Cost of goods sold, excluding

depreciation and amortization (Note 3) 13,857 12,178

Selling, general and administration 5,444 4,184

Research and development 729 924

Depreciation and amortization 1,533 1,246

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21,563 18,532

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Operating (loss) income (2,412) 2,446

Financing income, net 213 186

Foreign exchange gain (loss) 168 (108)

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(Loss) income before income taxes (2,031) 2,524

Income taxes (recovery) expense (639) 514

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Net (loss) income $ (1,392) $ 2,010

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Basic (loss) earnings per share (Note 4) $ (0.03) $ 0.05

----------------------------------------

Diluted (loss) earnings per share (Note 4) $ (0.03) $ 0.05

------------------------------------------

Weighted-average number of shares

outstanding

- basic 42,063,197 41,734,615

- diluted 42,063,197 41,889,281

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See the accompanying notes to the Consolidated Financial Statements.

These interim financial statements should be read in conjunction with

the annual Consolidated Financial Statements.

DRAXIS HEALTH INC.

Consolidated Balance Sheets

In Accordance with U.S. GAAP

-------------------------------------------------------------------------

(in thousands of U.S. dollars except share related data)

(unaudited)

March 31, December 31,

2008 2007

-------------- --------------

ASSETS

Current assets

Cash and cash equivalents $ 22,529 $ 24,796

Restricted cash 1,266 1,326

Accounts receivable 16,460 18,059

Inventories (Note 5) 10,130 9,620

Prepaid expenses 1,165 1,358

Deferred income taxes, net 4,119 4,119

-------------------------------------------------------------------------

Total current assets 55,669 59,278

Accounts receivable, long term 3,657 2,514

Property, plant and equipment, net 57,425 58,494

Goodwill, net 854 885

Intangible assets, net 230 240

Other assets 362 310

Deferred income taxes, net 6,626 6,213

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Total assets $ 124,823 $ 127,934

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LIABILITIES

Current liabilities

Accounts payable and accrued

liabilities (Note 6) $ 10,514 $ 11,904

Current portion of deferred revenues 621 411

Customer deposits 207 385

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Total current liabilities 11,342 12,700

Other liabilities 185 164

Deferred revenues 564 594

Customer financing 5,841 3,135

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Total liabilities $ 17,932 $ 16,593

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SHAREHOLDERS' EQUITY

Common stock, without par value of

unlimited shares authorized $ 79,831 $ 79,814

Additional paid-in capital 16,193 15,984

Deficit (7,968) (6,576)

Accumulated other comprehensive income 18,835 22,119

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Total shareholders' equity 106,891 111,341

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Total liabilities and shareholders' equity $ 124,823 $ 127,934

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See the accompanying notes to the Consolidated Financial Statements.

These interim financial statements should be read in conjunction with

the annual Consolidated Financial Statements.

DRAXIS HEALTH INC.

Consolidated Statements of Changes in Equity and

Comprehensive Income (Loss)

In Accordance with U.S. GAAP

-------------------------------------------------------------------------

(in thousands of U.S. dollars except share related data)

(unaudited)

For the

Three Month Periods

Ended March 31,

------------------------------

2008 2007

------------------------------

Common Stock (Number of Shares)

Balance, beginning of period 42,062,538 41,522,138

Exercise of options 5,000 462,501

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Balance, end of period 42,067,538 41,984,639

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Common Stock

Balance, beginning of period $ 79,814 $ 77,749

Exercise of options 11 1,453

Fair values of options exercised 6 -

-------------------------------------------------------------------------

Balance, end of period $ 79,831 $ 79,202

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Additional Paid In Capital

Balance, beginning of period $ 15,984 $ 15,475

Stock-based compensation 215 281

Fair values of options exercised (6) -

-------------------------------------------------------------------------

Balance, end of period $ 16,193 $ 15,756

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Deficit

Balance, beginning of period $ (6,576) $ (8,234)

Net (loss) income (1,392) 2,010

------------------------------------------------------ingent

milestone payments from Shire BioChem Inc. of approximately

$0.8 million and $0.5 million in insurance proceeds.

- For the first quarter of 2008, diluted EPS was negative 3 cents

(or negative 2 cents adjusted diluted EPS excluding transaction

costs - See Schedule of Supplemental Information, including

footnotes) compared to diluted EPS of 5 cents (or 4 cents adjusted

diluted EPS) in the first quarter of 2007.

- Cash outflows from operating activities in the first quarter of

2008 were $2.3 million, compared to cash inflows of $5.5 million

in the same period in 2007. The decrease was related to lower

cash earnings and the timing of specific payments, including

severance payments.

- Subsequent to the end of the first quarter of 2008, on April 4,

2008 DRAXIS and Jubilant Organosys Ltd. ("Jubilant") announced

that they had entered into an arrangement agreement whereby an

indirect wholly-owned subsidiary of Jubilant will acquire all the

outstanding common shares of DRAXIS at a price of US$6.00 per

share in cash by way of a plan of arrangement.

"The first quarter of 2008 continued to be impacted by lower revenues in contract manufacturing, particularly for sterile products," said Dan Brazier, President and CEO of DRAXIS. "Product sales in contract manufacturing were down 11% but were close to plan for the radiopharmaceuticals business. Margins were negatively impacted this quarter relative to previous quarters due to the low volume of sterile production, which is generally a higher margin contributor in the overall product mix. In addition, margins and expenses in both our business units were adversely impacted by a much stronger Canadian dollar in the first quarter of 2008 compared to the same quarter of 2007.

Mr. Brazier con-------------------

Balance, end of period $ (7,968) $ (6,224)

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Accumulated Other Comprehensive

Income (Loss)

Balance, beginning of period $ 22,119 $ 7,425

Other comprehensive (loss) income (3,284) 791

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Balance, end of period 18,835 8,216

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Total shareholders' equity $ 106,891 $ 96,950

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Comprehensive (Loss) Income

Foreign currency translation adjustments $ (3,284) $ 791

Net (loss) income (1,392) 2,010

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Total comprehensive (loss) income $ (4,676) $ 2,801

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See the accompanying notes to the Consolidated Financial Statements.

These interim financial statements should be read in conjunction with

the annual Consolidated Financial Statements.

DRAXIS HEALTH INC.

Consolidated Statements of Cash Flows

In Accordance with U.S. GAAP

-------------------------------------------------------------------------

(in thousands of U.S. dollars)

(unaudited)

For the

Three Month Periods

Ended March 31,

------------------------------

2008 2007

------------------------------

CASH FLOWS FROM (USED IN) OPERATING

ACTIVITIES

Net (loss) income $ (1,392) $ 2,010

Adjustments to reconcile net (loss)

income to net cash from (used in)

operating activities

Amortization of deferred revenues (30) (30)

Depreciation and amortization 1,533 1,246

Stock-based compensation 215 281

Deferred income taxes (877) 353

Foreign exchange 10 108

Deferred Share Unit expense (Note 7) 197 347

Other 25 177

Changes in operating assets and liabilities

Accounts receivable (253) 3,639

Accounts receivable, long term (1,143) -

Proceeds from customer financing used in

operations 1,006 -

Inventories (881) 452

Prepaid expenses 149 (484)

Accounts payable and accrued liabilities (1,077) (2,176)

Other liabilities 27 (232)

Deferred revenues 186 (158)

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Net cash from (used in) operating

activities (2,305) 5,533

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CASH FLOWS FROM (USED IN) INVESTING

ACTIVITIES

Expenditures for property,

plant and equipment (2,236) (2,780)

Decrease in receivables related to

property, plant and equipment 1,226 -

Increase in intangible assets - (174)

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Net cash from (used in) investing activities (1,010) (2,954)

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CASH FLOWS FROM (USED IN) FINANCING

ACTIVITIES

Proceeds from customer financing 2,706 -

Proceeds from customer financing used in

operations (1,006) -

Customer deposits, net (173) (38)

Exercise of options 11 1,453

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Net cash from (used in) financing activities 1,538 1,415

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Effect of foreign exchange rate changes on

cash and cash equivalents (490) 55

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Net increase (decrease) in cash and cash

equivalents (2,267) 4,049

Cash and cash equivalents,

beginning of period 24,796 21,446

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Cash and cash equivalents,

end of period $ 22,529 $ 25,495

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Additional Information

Interest paid $ - $ -

Income taxes paid $ 541 $ 203

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See the accompanying notes to the Consolidated Financial Statements.

These interim financial statements should be read in conjunction with

the annual Consolidated Financial Statements

DRAXIS HEALTH INC.

Notes to the Consolidated Financial Statements

In Accordance with U.S. GAAP

-------------------------------------------------------------------------

(in thousands of U.S. dollars except share related data)

(unaudited)

1. Significant Accounting Policy

These interim consolidated financial statements have been prepared in

accordance with generally accepted accounting principles ("GAAP") in

the United States of America.

The functional currency of the Company is the Canadian dollar however

its reporting currency is the U.S. dollar. For the current and prior

periods, the financial statements of the Company's operations whose

reporting currency is other than the U.S. dollar are translated from

such reporting currency to U.S. dollars using the current rate

method. Under the current rate method, assets and liabilities are

translated at the exchange rates in effect at the balance sheet date.

Revenues and expenses, including gains and losses on foreign exchange

transactions, are translated at average rates for the period. The

resulting unrealized translation gains and losses on the Company's

net investment in these operations, including long-term intercompany

advances, are accumulated in a separate component of shareholders'

equity, described in the consolidated balance sheets as accumulated

other comprehensive income.

The disclosures contained in these unaudited interim consolidated

financial statements do not include all requirements of GAAP for

annual financial statements. The unaudited interim consolidated

financial statements should be read in conjunction with the audited

consolidated financial statements for the year ended December 31,

2007.

The unaudited interim consolidated financial statements are based

upon accounting principles consistent with those used and described

in the audited consolidated financial statements for the year ended

December 31, 2007, other than as noted herein.

The unaudited interim consolidated financial statements reflect all

adjustments, consisting only of normal recurring adjustments, which

are, in the opinion of management, necessary to present fairly the

financial position of the Company as at March 31, 2008 and the

results of operations and cash flows for the three-month period ended

March 31, 2008 and 2007.

2. Recent Accounting Pronouncements

Effective January 1, 2008, the Company adopted SFAS # 157, "Fair

Value Measurements" ("SFAS 157"). In February 2008, the FASB issued

FASB Staff Position # FAS 157-2, "Effective Date of FASB Statement

# 157", which provides a one year deferral of the effective date of

SFAS 157 for non-financial assets and non-financial liabilities,

except those that are recognized or disclosed in the financial

statements at fair value on a recurring basis (at least annually).

Therefore, the Company has adopted the provisions of SFAS 157 with

respect to its financial assets and liabilities only. SFAS 157

defines fair value, establishes a framework for measuring fair value

under generally accepted accounting principles and enhances

disclosures about fair value measurements. Fair value is defined

under SFAS 157 as the exchange price that would be received for an

asset or paid to transfer a liability (an exit price) in the

principal or most advantageous market for the asset or liability in

an orderly transaction between market participants on the measurement

date. Valuation techniques used to measure fair value under SFAS 157

must maximize the use of observable inputs and minimize the use of

unobservable inputs. The standard describes a fair value hierarchy

based on three levels of inputs, of which the first two are

considered observable and the last unobservable, that may be used to

measure fair value which are the following:

- Level 1 - Quoted prices in active markets for identical assets

or liabilities.

- Level 2 - Inputs other than Level 1 that are observable, either

directly or indirectly, such as quoted prices for similar

assets or liabilities; quoted prices in markets that are not

active; or other inputs that are observable or can be

corroborated by observable market data for substantially the

full term of the assets or liabilities.

- Level 3 - Unobservable inputs that are supported by little or

no market activity and that are significant to the fair value

of the assets or liabilities.

The adoption of this statement did not have a material impact on the

Company's consolidated results of operations and financial condition.

Effective January 1, 2008, the Company adopted SFAS # 159 "The Fair

Value Option for Financial Assets and Financial Liabilities"

("SFAS 159"). SFAS 159 allows an entity the irrevocable option to

elect fair value for the initial and subsequent measurement for

specified financial assets and liabilities on a contract-by-contract

basis. The Company did not elect to adopt the fair value option under

this Statement.

Fair Value

In accordance with SFAS 157, the following table represents the

Company's fair value hierarchy for its financial assets and

liabilities measured at fair value on a recurring basis as of

March 31, 2008 (in thousands):

Assets Level 1

------ --------

Other assets indexed to value of the

Company's share price $ 362

Liabilities

-----------

Deferred share unit liabilities indexed to

value of the Company's share price (1,105)

3. Cost of Goods Sold

In the first quarter of 2007, DRAXIS received insurance proceeds of

$517 in settlement of business interruption losses related to the

extended shutdown in the third quarter of 2005. No accrual for

insurance proceeds had been previously recorded as the claim

represented a contingent gain. The proceeds were recognized as a

reduction to cost of goods sold in the first quarter of 2007.

4. Earnings (loss) per Share

Basic earnings (loss) per common share is calculated by dividing the

net income by the weighted-average number of the Company's common

shares outstanding during the period. Diluted earnings per common

share is calculated by dividing the net (loss) income by the sum of

the weighted-average number of common shares that would have been

outstanding if potentially dilutive common shares had been issued

during the period. The treasury stock method is used to compute the

dilutive effect of stock options. The calculation of diluted earnings

(loss) per common share excludes any potential conversion of options

that would increase earnings per share.

The following table sets forth the computation of basic and diluted

earnings (loss) per share:

For the

Three Month Periods

Ended March 31,

------------------------------

2008 2007

------------------------------

Numerator:

Net (loss) income $ (1,392) $ 2,010

Denominator:

Weighted-average number of common

shares outstanding - basic 42,063,197 41,734,615

Weighted-average effect of dilutive

securities-stock options - 154,666

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Weighted-average number of common

shares outstanding-diluted 42,063,197 41,889,281

-------------------------------------------------------------------------

-------------------------------------------------------------------------

Basic earnings (loss) per share $ (0.03) $ 0.05

Diluted earnings (loss) per share $ (0.03) $ 0.05

-------------------------------------------------------------------------

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5. Inventories

March 31, December 31,

2008 2007

-------------------------------------------------------------------------

Raw materials $ 4,655 $ 4,707

Work-in-process 1,519 1,330

Finished goods 3,956 3,583

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$ 10,130 $ 9,620

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6. Accounts Payable and Accrued Liabilities

March 31, December 31,

2008 2007

-------------------------------------------------------------------------

Trade $ 6,876 $ 6,575

Accrued liabilities 1,322 2,313

Employee-related items 2,316 3,016

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$ 10,514 $ 11,904

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7. Shareholders' Equity

(a) Stock Option Plan

The following is a summary of the number of common shares issuable

pursuant to outstanding stock options:

For the

Three Month Periods

Ended March 31,

------------------------------

2008 2007

Balance, beginning of period 1,875,828 2,257,995

Increase (decrease) resulting from:

Granted 260,000 420,000

Exercised (5,000) (462,501)

Cancelled (10,000) -

Expired - -

------------------------------

Balance, end of period 2,120,828 2,215,494

------------------------------

------------------------------

Exercisable at March 31 938,328 869,105

As of March 31:

Remaining unrecognized compensation cost

related to non-vested stock options $ 1,591 $ 2,222

Weighted-average remaining requisite

service period 1.4 years 1.9 years

Weighted-average exercise price of options:

Outstanding, end of period CDN$4.69 CDN$4.62

Exercisable, end of period CDN$5.25 CDN$4.64

Granted CDN$4.07 CDN$5.69

Exercised CDN$2.30 CDN$3.68

Cancelled CDN$2.63 -

Expired - -

The following table summarizes information abouttinued, "Our key development projects remain on track. DRAXIMAGE(R) Sestamibi is under active review by the US Food and Drug Administration following our filing of an ANDA in February 2007. We established a marketing and distribution agreement for this product in December 2007 with GE Healthcare and are now in discussions with potential partners for markets outside North America. We are also making progress in developing strategic alliances for the commercialization of our MOLY-FILL(TM) Tc-99m Generator following a successful external evaluation in late 2007, as we prepare for the next step in that product's regulatory review process. Discussions are ongoing with potential partners for the marketing and distribution of radiopharmaceutical products in Europe and we continue to receive country-specific approvals for our products. Product transfer activities under our expanded relationship with Johnson & Johnson Consumer are ongoing and are expected to increase throughout 2008. Construction of the new secondary packaging facility associated with this expanded relationship is on schedule toward completion during the second half of this year."

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FINANCIAL HIGHLIGHTS

(in thousands of U.S. dollars except share related data and in

accordance with U.S. GAAP)

For the

Three Month Periods

Ended March 31,

2008 2007

(unaudited) (unaudited)

REVENUES

Product sales $ 18,656 $ 19,630

Royalty and licensing 465 1,318

Anipryl( stock options

outstanding at March 31, 2008:

Options Outstanding

---------------------------------------------------

Weighted-

Average

Remaining Weighted- Aggregate

Contractual Average Intrinsic

Range of Exercise Number Life Exercise Value

Prices Outstanding (in years) Price ($000's)

$2.01 - $2.50 350,001 5.29 $2.36 $1,383

$2.51 - $3.00 27,500 5.37 $2.63 $101

$3.01 - $3.50 15,000 0.59 $3.25 $46

$3.51 - $4.00 - - - -

$4.01 - $4.50 385,000 3.46 $4.14 $834

$4.51 - $5.00 130,000 1.36 $4.70 $209

$5.01 - $6.65 1,213,327 3.39 $5.58 $895

---------------------------------------------------

2,120,828 3.61 $4.69 $3,467

---------------------------------------------------

---------------------------------------------------

Options Exercisable

---------------------------------------------------

Weighted-

Average

Remaining Weighted- Aggregate

Contractual Average Intrinsic

Range of Exercise Number Life Exercise Value

Prices Exercisable (in years) Price ($000's)

$2.01 - $2.50 1 0.13 $2.29 $0

$2.51 - $3.00 - - - -

$3.01 - $3.50 15,000 0.59 $3.25 $46

$3.51 - $4.00 - - - -

$4.01 - $4.50 125,000 0.75 $4.30 $251

$4.51 - $5.00 130,000 1.36 $4.70 $209

$5.01 - $6.65 668,327 2.48 $5.54 $517

---------------------------------------------------

938,328 2.08 $5.25 $1,024

---------------------------------------------------

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(b) Deferred Share Unit Plan

Under the Company's Deferred Share Unit Plan, members of senior

management can elect to receive up to 20% of base salary and up to 100%

of any bonus payable in respect of that year in deferred share units

("DSUs") in lieu of cash compensation. An election must be made by

December 1 of each year in respect of base salary and bonus for the

following year. The elected amount is converted to a number of DSUs equal

to the elected amount divided by the closing price of the common shares

on TSX or NASDAQ on December 31 of each year, based on a purchase

commitment as of December 1 of the prior year. Participants are not

entitled to redeem any DSUs until cessation of employment with the

Company for any reason. The value of DSUs redeemable by the participants

will be equivalent to the market value of the common share at the time of

redemption. The DSUs must be redeemed no later than the end of the first

calendar year commencing after the date of cessation of employment. The

DSU liability is re-measured at the end of each reporting period based on

the market price of the Company's common stock. The net increase or

decrease in the value of the DSUs is recorded as compensation cost

included in selling, general and administration expense.

The following summarizes the number of DSUs issued and outstanding and

its impact on SG&A:

For the

Three Month Periods

Ended March 31,

------------------------------

2008 2007

------------------------------

Balance, beginning of period 230,018 230,447

Issued - -

Cancelled - (429)

-------------------------------------------------------------------------

Balance, end of period 230,018 230,018

-------------------------------------------------------------------------

-------------------------------------------------------------------------

DSU expense $197 $347

-------------------------------------------------------------------------

-------------------------------------------------------------------------

8. Segmented Information

Industry Segmentation

For purposes of operating decision-making and assessing performance,

management considers that it operates in three segments:

Radiopharmaceuticals, Manufacturing, and Corporate and Other. Executive

management assesses the performance of each segment based on segment

income. The segments are identified as reporting segments based on the

distinct management teams, customer base, production process and

regulatory requirements of each. The Corporate and Other segment includes

revenues earned via royalties and milestones, inter-segment eliminations

and corporate expenses. The accounting policies used to determine

segmented results and measure segmented assets are the same as those

described in the summary of significant accounting policies in the 2007

annual Consolidated Financial Statements.

For the

Three Month Periods

Ended March 31,

------------------------------

2008 2007

-------------- --------------

PRODUCT SALES REVENUES

Radiopharmaceuticals $ 6,086 $ 5,757

Manufacturing 12,623 14,235

Corporate and Other (53) (362)

-------------------------------------------------------------------------

$ 18,656 $ 19,630

-----------------------------R) deferred revenues 30 30

-------------------------------------------------------------------------

19,151 $ 20,978

-------------------------------------------------------------------------

-------------------------------------------------------------------------

Product Gross Margin $ 4,799 $ 7,452

Product Gross Margin % 25.7% 38.0%

Operating (loss) income ($2,412) $2,446

Operating Margin % -12.6% 11.7%

Cash and cash equivalents $ 22,529 $ 25,495

Total debt $ 0 $ 0

Cash flows from operating activities ($2,305) $ 5,533

Cash flows used in investing activities (1,010) (2,954)

-------------------------------------------------------------------------

($3,315) $ 2,579

-------------------------------------------------------------------------

-------------------------------------------------------------------------

Net (loss) income ($1,392) $ 2,010

Basic and diluted (loss) earnings per share ($0.03) $ 0.05

-------------------------------------------------------------------------

Two significant non-recurring items included in the financial results of the first quarter of 2007 positively affected financial performance relative to the first quarter of 2008. During the first quarter of 2007, the Company received non-recurring milestone payments of approximately $0.8 million from Shire BioChem Inc. (Shire) and an insurance payment of $0.5 million from a business interruption insurance claim related to an extended shutdown period in 2005. The impact of these items on operating income and earnings per share are included in the Schedule of Supplemental Information below.

Impact of Foreign Exchange on Comparison of Quarterly Results

The majority of the costs of the Canadian operations are denominated in Canadian dollars. As the level of revenues denominated in U.S. dollars and other foreign currencies increases relative to the underlying cost structure, the Company's overall gross profit margins and selling, general and administration expenses are affected. Since the Company reports in $U.S., all income statement line items are translated at the appropriate exchange rate into $U.S for the quarterly reports. As at March 31, 2007, the Canadian dollar traded at $1.1546 Canadian per $1 U.S. By contrast, as at March 31, 2008, the Canadian dollar traded at $1.0265 Canadian per $1 U.S. The impact of the strong Canadian dollar in the first quarter of 2008 relative to its levels in the first quarter of 2007 materially impacts all line by line comparisons between the first quarter results of 2008 and 2007 resulting in an increase in all revenues and expense line items for 2008 relative to 2007. Accordingly, all explanations of variances between first quarter of 2008 results with the first quarter of 2007 exclude the impact of foreign exchange on financial reporting.

Segment Highlights from Management's Discussion and Analysis

Contract Manufacturing

- Revenues of $12.6 million for the first quarter of 2008 represented a

decrease of $1.6 million or 11% compared to the first quarter of

2007. The decrease was due to lower revenues of Hectorol(R) for

Genzyme in the first quarter of 2008 relative to 2007, which more

than offset growth from new product introductions. The Company

expects stronger Hectorol(R) demand/volumes over the remainder of

2008 compared to 2007. The Company also expects product transfer

activities related to the Johnson & Johnson Consumer contract to

increase from the first quarter of 2008 levels as well.

- For the first quarter of 2008, sterile products represented

approximately 65% of manufacturing revenues compared to 78% for the

first quarter of 2007. The mix was adversely affected by the lower

Hectorol(R) volumes.

- Product gross margin percentage decreased in the first quarter of

2008 compared to the same quarter of 2007 from 27% to 14%. The

decrease was driven by lower Hectorol(R) volumes shipped in the

quarter coupled with investment in product introduction and the

impact of a stronger Canadian dollar relative to 2007, which

negatively impacted margins. Product gross margin for the first

quarter of 2007 benefited from a non-recurring payment of

$0.5 million in insurance proceeds during that quarter.

- Operating loss for the first quarter of 2008 was $0.9 million

compared with operating income of $1.7 million for the same period of

2007. The lower operating earnings reflects the lower Hectorol(R)

revenue for the first quarter of 2008, the inclusion of $0.5 million

of insurance proceeds in 2007 results and the collection of

previously uncollectible receivables also included in the 2007

results.

Radiopharmaceuticals

- Product sales of $6.1 million for the first quarter of 2008 represent

a 6% increase over the first quarter of 2007, primarily as a result

of the inclusion in revenues of a chargeback for freight services

beginning on April 1, 2007. Revenue growth was hindered by the

suspension of production (beginning in the second half of 2007) of a

private label radioactive product for one customer that historically

contributed $350,000 in quarterly product sales. Shortly after the

end of the first quarter of 2008, DRAXIMAGE initiated direct sales to

U.S. customers of its own formulation of the radioactive product.

- Product gross margins for the first quarter of 2008 decreased to 49%

from 62% compared with the same period in 2007 due to the dramatic

strengthening of the Canadian dollar from the first quarter of 2007,

the inclusion of freight charges in both revenues and cost of goods

sold beginning on April 1, 2007, a change in product mix and

increased raw material costs.

- Operating income of $0.5 million for the first quarter of 2008

decreased $0.8 million compared to the same period of 2007 driven by

decreased margins related to the strengthening Canadian dollar, the

decrease of the private label product volumes, and higher selling,

general and administrative expenses.

- DRAXIMAGE is continuing to obtain registrations in European markets

for existing products that are currently approved and sold in Canada

or the U.S. In February 2005, DRAXIMAGE received approval from the

Dutch regulatory authority for its Kit for the Preparation of

Technetium Tc-99m Albumin Aggregated Injection ("MAA Kit"). This MAA

Kit has since also been approved in Germany, the United Kingdom,

Belgium, Austria, Luxembourg and Spain. DRAXIMAGE MDP, a product used

for bone imaging, has been approved in the Netherlands, the United

Kingdom, Ireland, the Czech Republic, Denmark and Germany. Sodium

Iodide I-131 therapeutic capsules for the treatment of thyroid cancer

have been approved in Denmark.

Guidance for Future Years

The Company continues to expect progressively improving financial results during 2008 compared to 2007 as a result of increased demand through new business opportunities, product introductions and additional contracts. This is expected to result in continuing year-over-year growth in revenues, operating income, and cash flows going forward, starting from a base in 2008. Net earnings per share for 2008 are expected to increase significantly over 2007. However, the extent to which the Company can reasonably predict the financial performance for 2008 is limited due to variables outside of the control of the Company. Accordingly, the Company does not plan to provide specific quantitative guidance given the anticipated period of expansion and significant growth that is expected to be accompanied by periods of increased forecast variability due to several factors, including the following:

- The timing and ramping-up of commercial production of non-sterile

products under the new contract with Johnson & Johnson Consumer will

be influenced by both the product transfer process and the receipt of

manufacturing site transfer approvals from appropriate regulatory

agencies.

- We do expect revenue growth associated with product transfer

activities for 2008 but, while such activities will generate positive

margins, the margin percentage is expected to be dilutive to overall

margins as we hire and train new personnel in anticipation of the

commercial phase of the contract.

- Several potential new business opportunities have been identified as

a result of increased marketing and outreach activities initiated

during 2007. However, the rate of conversion of such opportunities to

new business contracts over the next several quarters has introduced

increased forecasting variability.

- The timing and extent of radiopharmaceutical product introductions to

European markets is highly dependent on receiving timely regulatory

approvals, although additional approvals are expected during 2008 in

several different countries. The Company is actively working to

establish one or more appropriate marketing and distribution

partnerships, which will influence the rate at which product sales

will grow in the European Union markets.

- Revenue and earnings from the potential introduction of DRAXIMAGE(R)

Sestamibi will depend on several factors including regulatory

approvals, competitive activity, manufacturing execution, marketing

and distribution partnerships and market acceptance following product

launch. This is expected to be a significant product for the Company

and the variability around its introduction alone is expected to

impact the accuracy of future forecasts for 2008 and 2009.

- The potential introduction of the MOLY-FILL(TM) Technetium

Generator is expected to be a significant event given the limited

product offerings currently available, and the forecast variability

associated with this product is highly dependent on somewhat

unpredictable factors including regulatory approvals, marketing

and/or distribution agreements, pricing strategies and market

penetration rates.

Schedule of Supplemental Information

-------------------------------------------------------------------------

Reconciliation from reported operating (loss) income and diluted EPS to

adjusted operating (loss) income and diluted EPS

(in thousands of U.S. dollars except share related data and in accordance

with U.S. GAAP)

For the Three Month Periods

Ended March 31,

---------------------------

2008 2007 % Change

Operating (Loss) Income -

Reported
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SOURCE DRAXIS Health Inc.
Copyright©2008 PR Newswire.
All rights reserved

Related medicine news :

1. Draxis Health selected by Johnson and Johnson Consumer Companies, Inc. for major contract manufacturing relationship
2. DRAXIS to Present at the 2007 UBS Global Life Sciences Conference
3. DRAXIS Health Inc. Announces Retirement of Dr. Martin Barkin as President and Chief Executive Officer
4. DRAXIS Names GE Healthcare as Exclusive Distributor of DRAXIMAGE(R) Sestamibi in USA
5. DRAXIS Announces Application for Normal Course Issuer Bid
6. DRAXIS Share Buyback Approved by TSX
7. DRAXIS to Report Fourth Quarter and Year End 2007 Results on February 7th
8. DRAXIS Health Reports Fourth Quarter and Year End Results
9. DRAXIS Responds to Trading
10. Jubilant to acquire Draxis Health
11. DRAXIS Obtains Interim Order for Proposed Arrangement
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