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Dec 6 2006, 7:30 AM EST

Biovail Provides Strategy Update

News source: Business Wire

Biovail Corporation (NYSE:BVF)(TSX:BVF) today announced that it will no longer maintain a U.S.-based sales organization, and that it intends to enter into supply-and-distribution agreements with strategic partners to target physicians groups in the United States. As a result of this decision, the Company has enhanced the operational efficiency of its business model. In addition, the Company announced that it would drive business growth through a targeted focus on a number of core research-and-development programs. These strategic initiatives are expected to reduce operating costs and improve operating efficiencies. Biovail is effecting these changes following a comprehensive review of all aspects of the Company's business. This news release contains forward-looking statements that are based on the Company's current views; however, actual results may differ materially from those expressed in such forward-looking statements. For more information, see the note on forward-looking information below.

As part of the strategic review process, Biovail has decided that it will leverage strategic partners to promote its products to specialist physicians in the U.S., which is consistent with the Company's current approach to commercializing products in the U.S. primary-care market. As a result, the Biovail Pharmaceuticals, Inc. (BPI) specialty sales force and related support functions will be eliminated.

Given these changes, BPI will cease co-promotional efforts for Ultram(R) ER. With respect to Zovirax(R), Biovail is in active discussions with multiple potential partners to maintain promotional support for the product line. The Company anticipates an announcement with respect to these discussions in the near term.

In addition, after a comprehensive analysis of each of Biovail's corporate and functional areas, overhead and infrastructure costs will be reduced to improve operating efficiencies, without sacrificing effectiveness.

"The changes to our business model will improve our operating efficiencies and margins, and will allow us to further focus on our core competency - the development and large-scale manufacture of novel medicines employing our drug-delivery technologies," said Biovail Chief Executive Officer Dr. Douglas Squires. "While restructuring initiatives are never easy, Biovail strongly believes that this 'back-to-basics' approach is consistent with its heritage and commitment to maximize shareholder value."

In Canada, Biovail will maintain its direct-selling commercial presence through Biovail Pharmaceuticals Canada (BPC), which has an enviable track record of success in promoting products to health-care practitioners across the country. The relative size of the Canadian market makes a direct-selling presence more feasible within the Company's current infrastructure. The 100-member BPC sales force currently promotes Tiazac(R) XC, Wellbutrin(R) XL, Glumetza(TM) and the Lescol(R) franchise to Canadian physicians. Business development efforts to identify new products for BPC will continue.

The cost-cutting measures are expected to result in restructuring charges (primarily related to severance costs), the majority of which will be booked in the fourth quarter of 2006. See the separate news release issued December 6, 2006, Biovail Provides Financial Update, 2007 Guidance.

Focus on Research and Development

Biovail intends to materially increase its investment in research and development over the next several years. The Company will focus its efforts on three core segments: (1) enhanced formulations of existing products, (2) combination products incorporating different classes of drugs, and (3) difficult-to-manufacture generic pharmaceuticals.

"Beginning with the launch of Tiazac(R) 10 years ago, Biovail's growth has been driven by the s

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