Annual Report 2008 Dear Fellow Shareholders: The strategic investments we have made over the past several years have paid significant returns and driven our Company to the strongest financial position in our history. We have accumulated cash reserves of almost $100 million, net of our financing, and we are well positioned to continue our planned investment in research and development across our generic and brand divisions – critical investments that will drive future growth. During 2008, we completed the financial audits for 2004 through 2007 and re-registered our stock with the SEC. Trading in our common stock resumed on the NASDAQ in March 2009. We appreciate the patience and support of our employees, our customers, our investors and all of our stakeholders throughout this long ordeal. Over this long process, your management remained focused and successfully grew our business by continuing to execute our strategy of applying our formulation expertise and drug-delivery technology to the development of controlled-release and specialty generics as well as the development of brand products. Global Pharmaceuticals, our generics division, generated $210 million of revenue in 2008. We continued to make significant progress in 2008, with six new products approved and launched. We also submitted a total of nine ANDAs to the FDA. We share first-to-file status with a number of companies on two of these ANDAs and have the potential of being a sole first-to-file on at least one other product. Our pipeline remains strong, with 24 products pending at the FDA and 40 under development, of which more than half have the potential to be first-to- file or first-to-market. Looking forward into 2009 and beyond, we recently strengthened Global’s leadership team with the addition of a Divisional President to run our generics division. Mr. Chris Mengler brings extensive industry and business development experience and is well prepared to lead our team to achieve further growth in revenues and profits from our new products as well as the potential for external growth through complimentary business development activities. For 2009, we are targeting eight to ten ANDAs with a continuing focus on controlled-release products and a further objective of being first-to-file on at least three of these new products. Our strategic business development initiatives for the generics division also include evaluation of our potential to expand beyond solid oral dosage forms as well as into foreign markets. Impax Pharmaceuticals, our specialty brand products division, remains focused on developing improved versions of approved Central Nervous System (CNS) products, and new products with new uses or indications for existing products. This brand strategy allows us to leverage our significant technical expertise and create new products at a fraction of the cost of other development strategies. We significantly strengthened the brand division’s management and product development team with the addition of a Divisional President, Michael Nestor, a Divisional Chief Scientific Officer, Suneel Gupta, and several additional experienced research and development personnel. We believe we now possess a world-class brand team with the collective experience of 17 approved NDAs to their credit. In 2008 our specialty brand products division reached a significant development milestone when they completed the first Phase III study on IPX056, a controlled-release baclofen for the indication of spasticity, which showed positive top-line results. We also filed an IND application for IPX066, a controlled-release carbidopa/levodopa for the indication of Parkinson’s disease and initiated a small PK-PD study in experienced Parkinson’s disease patients. We will continue the development of our two lead candidates IPX056 and IPX066 and continue our work on four additional exploratory products. Additionally, our business development efforts will continue to be a high priority for 2009. We are targeting additional co-promotion, in-license, and co-development and outright product/technology/business acquisitions, all within the CNS therapeutic category that could result in meaningful, long-term, profitable growth in addition to our internal development activities. On a sad note, in 2008 we mourned the passing of our co-founder and chairman, Charlie Hsiao, Ph.D. His creative approaches and intellectual curiosities have been instilled in a team of talented scientists at the Company who continue to excel in formulation and drug delivery technology. As we face unprecedented volatility in economic conditions, we are fortunate to have significant cash on hand, a modest debt level and operations with positive cash flows to fund our internal business objectives for 2009 and beyond. Your management has set business objectives for 2009 that position us to continue to face competition effectively in the future and should provide the basis for above-average returns for our shareholders. Sincerely, Larry Hsu, Ph.D. President and Chief Executive Officer UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ¥ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2008 OR n TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 000-27354 IMPAX LABORATORIES, INC. (Exact name of registrant as specified in its charter) Delaware 65-0403311 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 30831 Huntwood Avenue, Hayward, CA 94544 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (510) 476-2000 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $0.01 per share (Title of class) Series A Junior Participating Preferred Stock Purchase Rights (Title of class) Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes n No ¥ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes n No ¥ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ¥ No n Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation of S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¥ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer n Accelerated filer n Non-accelerated filer ¥ Smaller reporting company n (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes n No ¥ The registrant was not a public company as of the last business day of its most recently completed second fiscal quarter and, therefore, cannot calculate the aggregate market value of its common equity held by non-affiliates as of such date. As of March 10, 2009, there were 60,225,538 shares of the registrant’s common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE Certain portions of the definitive proxy statement for the registrant’s Annual Meeting of Stockholders to be held on May 19, 2009 have been incorporated by reference into Part III of this Report. TABLE OF CONTENTS Forward-Looking Statements .......................................................... 1 PARTI.......................................................................... 2 Item 1. Business ............................................................ 2 Item 1A. Risk Factors ......................................................... 14 Item 1B. Unresolved Staff Comments .............................................. 29 Item 2. Properties ........................................................... 29 Item 3. Legal Proceedings ..................................................... 30 Item 4. Submission of Matters to a Vote of Security Holders............................ 34 PARTII......................................................................... 34 Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ............................................ 34 Item 6. Selected Financial Data ................................................. 36 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ........................................................... 36 Item 7A. Quantitative and Qualitative Disclosures about Market Risk ...................... 52 Item 8. Financial Statements and Supplementary Data ................................ 52 Item 9. Changes in and Disagreements with Accountants