Biovail Realigns U.S. Commercial Organization

Biovail Realigns U.S. Commercial Organization

    Business Editors/Health/Medical Writers

    TORONTO--(BUSINESS WIRE)--May 3, 2005--Biovail Corporation (NYSE:BVF)(TSX:BVF):

--	Biovail Enters into Supply Agreement with Kos Pharmaceuticals, Inc. for Cardizem(R) LA
--	Biovail to Divest Teveten(R) Product Lines to Kos
--	Companies Agree to Research Collaboration for Several Cardiovascular Products
--	Kos to Offer Employment to Biovail Personnel

    Biovail Corporation (NYSE:BVF)(TSX:BVF) announced today that it is implementing a new Strategic Plan whereby the Company has decided to restructure its approach to selling and marketing products in the primary-care market of the United States. In conjunction with this change, which is more fully described below, Biovail has entered into a number of Agreements with Kos Pharmaceuticals, Inc. (Kos), with respect to certain products being promoted to the U.S. primary-care market.
    Biovail has agreed to divest the Teveten(R) and Teveten(R) HCT products, and enter into a supply agreement for the distribution of Cardizem(R) LA in the U.S. and Puerto Rico with Kos. Upon closing of the transaction, Kos will pay Biovail $104 million related to these items and other elements of the transaction.
    The multi-faceted transaction with Kos includes collaboration on the development of a number of cardiovascular products, and an arrangement whereby Kos will offer employment to approximately 200 members of Biovail's U.S. commercial group. As a result of Biovail's decision to realign its commercial approach to the U.S. primary-care market, Biovail will be reducing its global headcount of 2,200 by approximately 23%, including those employees that may be offered employment by Kos. Transitional support will be offered to Biovail employees who are not transferring to Kos and who are affected by these decisions.
    Under the terms of the Agreements, Biovail will manufacture, supply and sell Cardizem(R) LA to Kos for distribution at contractually determined prices, which will exceed 30% of Kos's net selling price. Biovail chose to retain a significant ongoing financial interest in Cardizem(R) LA through its supply price to participate in the future growth of the product.
    Biovail has also divested all of its rights to Teveten(R) and Teveten(R) HCT to Kos, and therefore no longer has any ongoing financial interest in this product line. Given the competitive market dynamics of the angiotensin-II receptor blocker (ARB) market, the Teveten(R) product line has been unprofitable for Biovail.
    "Through the strategic-planning process, we concluded that, despite considerable market-share gains for Cardizem(R) LA and the Teveten(R) product lines achieved through the efforts of our primary-care sales organization, these products alone could not justify the financial investment we were making -- both in terms of infrastructure and in terms of advertising and promotion," said Dr. Douglas Squires, Chief Executive Officer of Biovail Corporation.
    "To be successful in the primary-care market, we believe multiple products are required to successfully leverage a primary-care sales force. Selling the Teveten(R) product lines and partnering Cardizem(R) LA with Kos will complement their primary-care products Niaspan(R), Advicor(R) and Azmacort(R), while at the same time, offering Biovail an ongoing stake in Cardizem(R) LA's success."
    Adrian Adams, President and Chief Executive Officer of Kos, said "this partnership is extremely valuable to Kos on many fronts and is aligned with our strategic goal to expand our product line and accelerate sales growth. Cardizem(R) LA, Teveten(R) and Teveten(R) HCT are excellent products that will allow Kos to further leverage and expand its primary-care sales force while entering into the fast-growing hypertension and angina markets with proven products. These products complement our existing product lines and, through the product-development arrangement with Biovail, we have the opportunity to further expand our presence in this important therapeutic category while also further leveraging our excellent sales force.
    "In addition, the R&D products that Kos is accessing have the potential to enrich our existing pipeline which is already highly focused on cardiovascular and metabolic disease areas."
    Biovail and Kos have agreed to collaborate on the research and development of up to three of Biovail's cardiovascular pipeline products, including a fixed-dose combination product comprised of Cardizem(R) LA and enalapril (Vasotec(R)), thereby potentially broadening the lifecycle of Cardizem(R) LA. This combination product may provide physicians with a single-tablet option incorporating two separate classes of very effective anti-hypertensive drugs, which target separate pathways important in the regulation of blood pressure.
    Kos will pay Biovail certain milestone payments related to the development of the combination product, and Kos has a right of first negotiation for two other cardiovascular pipeline products. Upon receipt of regulatory approval, Biovail will have an ongoing financial interest in these products through an exclusive manufacturing and supply agreement.
    Biovail expects to update its previously issued 2005 financial guidance as part of its first quarter 2005 earnings call, scheduled for Thursday, May 5, 2005, at 8:30 a.m. EDT.

    New Strategic Plan for Biovail

    After joining Biovail as Chief Executive Officer in November 2004, Dr. Douglas Squires and Biovail's senior management team initiated the development of a new Strategic Plan for Biovail, with the goal of establishing immediate profitability in the Company's U.S. operations through the development of a new U.S. commercial business model. The process also involved external advisors who provided insight on current market dynamics and attractive specialty markets.
    The assessment further confirmed that Biovail should maintain a U.S. market presence that can be leveraged in attractive specialty markets that align well with its maturing pipeline. The results of the new strategic-planning process announced today by Biovail achieves both immediate profitability of its U.S. commercial business, and provides the Company with a commercial platform upon which to establish mid-term and long-term growth opportunities.
    Following today's announcement, Biovail's commercial presence in the U.S. will include a specialty sales organization of approximately 85 sales representatives who call on dermatologists, obstetricians and gynecologists, as well as high-prescribing primary-care physicians. This group is currently generating sales in excess of $1 million per sales representative, detailing Zovirax(R) Ointment and Zovirax(R) Cream. Biovail is evaluating opportunities to promote additional products through this sales organization.
    Maintaining a commercial presence in the U.S. enables Biovail to preserve important relationships with key distributors, managed-care accounts, trade accounts, and key opinion leaders, among other important stakeholders. Biovail intends to leverage these relationships -- and its presence in the U.S. market -- by strategically entering selective specialty markets, where required infrastructure costs are lower, and targeted sales forces can be scaled quickly. In Canada -- where the relative market size makes a primary-care presence more feasible within the Company's current infrastructure -- Biovail will not be making changes to its highly successful commercial organization. Biovail Pharmaceuticals Canada will continue to focus on creating an understanding of the features and benefits of Biovail's products to both specialists and primary-care physicians.
    Biovail's new Strategic Plan confirmed that the Company's core competency is applying drug-delivery technologies to existing in-market compounds to create clinically meaningful enhancements. Accordingly, Biovail intends to remain at the forefront of the industry by strengthening its technological and intellectual capabilities in this regard. Additionally, Biovail is exploring opportunities it has identified to further extend exclusivity and/or patent-protection periods for products it may develop in the future.

    Product-Development Activities

    It is important to note that Biovail's product-development activities will continue to focus on large markets and address unmet primary-care patient needs. Biovail intends to enter into supply and distribution agreements for its pipeline products that target primary-care market needs with pharmaceutical partners, while directly leveraging these product assets in specialty markets in the U.S., and in both primary-care and specialty markets in Canada. This model provides Biovail with considerable flexibility -- both in terms of selecting new specialty markets, and the size and scope of the organization required to target each one. Biovail's current product-development pipeline aligns well with this strategy as a number of the Company's developmental products target the neurology, central nervous system and pain markets.
    Biovail plans to provide additional visibility into its pipeline as part of a complete review of its business at an Investor Event that will be held in conjunction with Biovail's Annual and Special Meeting of Shareholders on Tuesday, June 28 at the Toronto Stock Exchange Conference Centre.
    Biovail's business-development efforts are aligned with the Company's strategy in terms of pursuing opportunities to both leverage its realigned sales organization in specialty markets, and to enter into alliances for pipeline products with strategic partners who have a strong market presence in, and are committed to, the applicable therapeutic area.

    About Biovail Corporation

    Biovail Corporation is an international full-service pharmaceutical company, engaged in the formulation, clinical testing, registration, manufacture, sale and promotion of pharmaceutical products utilizing advanced drug-delivery technologies. For more information about Biovail, visit the company's Web site at www.biovail.com.
    For further information, please contact Ken Howling at 905-286-3000 or send inquiries to ir@biovail.com.

    About Kos Pharmaceuticals, Inc.

    Kos Pharmaceuticals, Inc. is a fully integrated specialty pharmaceutical company engaged in developing, commercializing, manufacturing and marketing proprietary prescription products for the treatment of chronic diseases. The Company's principal product-development strategy is to reformulate existing pharmaceutical products with large market potential to improve safety, efficacy, or patient compliance. The Company currently markets Niaspan(R) and Advicor(R) for the treatment of cholesterol disorders, and Azmacort(R) for the treatment of asthma. Kos is developing additional products, has proprietary drug-delivery technologies in solid-dose and aerosol metered-dose inhalation administration and is pursuing certain strategic business development and licensing opportunities. For more information about Kos, visit the Company's Web site at www.kospharm.com.

    "Safe Harbor" Statement Under the Private Securities Litigation Reform Act of 1995

    To the extent any statements made in this release contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections about future events. Our actual results could differ materially from those discussed in, or implied by, these forward-looking statements. Forward-looking statements are identified by words such as "believe," "anticipate," "expect," "intend," "plan," "will," "may" and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Forward-looking statements include, but are not necessarily limited to, risks and uncertainties, including the difficulty of predicting U.S. Food and Drug Administration and Canadian Therapeutic Products Directorate approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, new product development and launch, reliance on key strategic alliances, availability of raw materials and finished products, the regulatory environment, tax rate assumptions, the outcome of legal proceedings, fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission and the Ontario Securities Commission. Biovail undertakes no obligation to update or revise any forward-looking statement.

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CONTACT: Biovail Corporation Kenneth G. Howling, 905-286-3000

KEYWORD: NEW YORK INTERNATIONAL CANADA INDUSTRY KEYWORD: MEDICAL PHARMACEUTICAL BIOTECHNOLOGY SOURCE: Biovail Corporation

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