ViroPharma Incorporated Reports Fourth Quarter and Full Year 2007 Financi...(r share basic and $1.21 per share dilute...),Health

The primary drivers of the change in net income for the fourth quarter were the effects of decreased operating income discussed above, partially offset by increased interest income and a lower effective tax rate. Net income for the twelve month period increased primarily due to higher net sales and higher interest income, partially offset by increased operating expenses.

Operating Highlights

During the three and twelve months ended December 31, 2007, net sales of Vancocin increased 24.0 percent and 22.3 percent, respectively, compared to the same periods in 2006. The three and twelve month increases resulted from an increase of units sold, the impact of a price increase during 2007 and wholesaler inventory levels which were stable in 2007 compared to decreased levels in 2006.

The cost of sales for Vancocin for the three months ended December 31, 2007 remained consistent from the three months ended December 31, 2006 at $2.0 million. For the twelve months ended December 31, 2007, the cost of sales decreased $10.1 million to $8.9 million from $19.0 million in the same period in 2006. This decrease primarily results from the sale of units during the first half of 2007, which were manufactured by NPI Pharmaceuticals (formerly OSG Norwich) and carried a lower inventory cost than the units sold during the first half of 2006 that were manufactured by Eli Lilly & Co.

The total remaining costs and expenses associated with operating income were $26.6 million and $11.5 million, for the fourth quarter of 2007 and 2006, respectively, and $79.0 million and $49.4 million, for the twelve months of 2007 and 2006, respectively. These increases are primarily due to research and development costs, increased medical education and legal costs as well as an increase in stock compensation expense.