Timothy J. Barberich
Chairman of the Board
and Chief Executive Officer		   Adrian Adams
President and Chief Operating Officer

 

  
 

XOPENEX franchise revenues grew to $596 million in 2006, an increase of 35 percent over 2005. XOPENEX Inhalation Solution revenues were $555 million for the year, and XOPENEX HFA contributed an additional $41 million. In 2006, the first full fiscal year that LUNESTA was on the market, LUNESTA revenues were $567 million. These strong revenues from our proprietary products were supplemented by royalty revenues from partnered products that contributed $34 million to overall revenues for the year. Over the past five years, we have created significant momentum in total revenue growth with a compounded annual growth rate of nearly 50 percent. This growth in sales has enabled us to reach profitability and will hopefully provide significant operating leverage going forward, resulting in future profit growth.

Our cash position at the end of 2006 remained strong at more than a billion dollars in cash and short- and longterm investments.

In February 2007, we improved our debt position with the repayment of $440 million of our total outstanding debt. Following this repayment, we had approximately $721 million of convertible debt outstanding as of March 2007.

To Our Shareholders:
Today Sepracor is a fully integrated pharmaceutical company addressing unmet needs, principally in the therapeutic categories of respiratory and central nervous system (CNS) disorders.

We are one of very few companies, other than the large multinational pharmaceutical companies, with a significant sales presence in primary care as well as the capability to discover innovative therapies, develop them through to commercialization, and create major new brands.We now have approximately 2,500 employees, with approximately 1,850 in sales and marketing and more than 200 involved in research and development.

We have three products in the early part of their life cycles: XOPENEX HFA® brand levalbuterol tartrate Inhalation Aerosol, LUNESTA® brand eszopiclone and BROVANA™ brand arformoterol tartrate Inhalation Solution. XOPENEX® brand levalbuterol HCl Inhalation Solution, our first commercialized product, remains a significant contributor.We continue to receive royalties on U.S. sales of CLARINEX® brand desloratadine and on sales of ALLEGRA® brand fexofenadine HCl and XYZAL® brand levocetirizine outside the U.S.We expect to receive royalties on U.S. sales of levocetirizine, contingent on approval, hopefully later in 2007.

In 2006, we delivered our first full year of operating profit, finishing the year with approximately $1.197 billion in revenue, net income of $184.6 million and earnings per diluted share of $1.60. Our two major product franchises provided the majority of our revenues for 2006.