PowerPoint presentation of January 31, 2008

Forward-Looking Statement

Statements presented in this overview that are not historical facts are

forward-looking statements that involve risks and uncertainties that could

cause actual results to differ materially from projected results.

Factors that could cause actual results to differ materially include

anticipated write-offs and losses and our expectation to return to

profitability, intellectual property risks specifically patent protection,

competition from generic products and otherwise, the risks and

uncertainties of clinical trials and regulatory review, market acceptance of

approved products, and the need to acquire new products. These and other

relevant risks are detailed in the Company’s Securities and Exchange

Commission filings.

Current Situation

•

Dramatic price erosion for COLAZAL

–

$125 million COLAZAL market now a $30-42 million

balsalazide market

•

Impact on price of future IBD products

–

Balsalazide tablet and granulated mesalamine

•

Substantial non-cash charge in 4Q07

•

Not profitable in 2008

–

Financial guidance to be provided March 3, 2008

Future Outlook

•

Based on current projections –

–

No need to raise money to execute business plan

–

Sufficient cash reserve to return to profitability

•

Expect to be cash flow positive in 2009

•

OSMOPREP and MOVIPREP well-positioned in a

growing market

–

TRx market growth of 18% in 2007*

–

Osmoprep/Moviprep TRx growth of 353% in 2007*

–

Expect products to be a $100 million franchise in approx. 3 years

•

Stable revenue from XIFAXAN and “Other Products”

* Wolters Kluwer Health PHAST

Future Outlook

•

3 NDA approvals anticipated in 2008

–

Balsalazide tab, granulated mesalamine, and metoclopramide-ZYDIS

•

Focus 2008 R&D spend on largest potential indications

•

Rifaximin Irritable Bowel Syndrome (IBS) program

–

Mid-2008: Initiate Phase III trials

–

2008: Publication/presentation of Phase IIb data

–

Mid-2010: Anticipate NDA submission

•

Rifaximin Hepatic Encephalopathy (HE) program

–

Orphan Drug Designation

–

4Q08/1Q09 NDA submission

–

Potential 6 month review

•

Numerous products with patent coverage

Mission Statement

Salix Pharmaceuticals is committed to being the leading

U.S. specialty pharmaceutical company licensing,

developing and marketing innovative products to

health care professionals to prevent or

treat gastrointestinal disorders.

•

In-license selective late-stage/marketed product

candidates

–

U.S. gastroenterology focus

–

Reduce risk and capital commitment

•

Complete development and secure FDA approval

•

Sell products through specialty sales force

–

Establish franchise with U.S. gastroenterologists

–

Sell products that serve unmet needs

Strategy

An Overall Compelling

Market Opportunity

•

An influential and demanding target

audience (13,400 specialty physicians)

–

30.5 million patient visits annually

–

40 million prescriptions annually

–

$6 billion Rx sales annually

Source: Verispan PDDA and Wolters Kluwer Health (1/08)

History of Success

Product

Launches

NDA

Approvals

Metoclopramide-

ZYDIS

Vapreotide

acetate

Granulated

Mesalamine

Acquisitions

2007

2006

2005

2004

2003

2002

2001

2000

Anticipated Approvals

•

INFLAMMATORY BOWEL DISEASE

–

Balsalazide tablet (1100 mg)

2Q08

–

Granulated mesalamine (1.5 gm)

4Q08

•

METOCLOPRAMIDE-ZYDIS

4Q08

•

RIFAXIMIN

–

Hepatic Encephalopathy (550 mg)

3Q09

–

Irritable Bowel Syndrome (550 mg)

Mid-2011

Xifaxan

•

Unique, Gastrointestinal-Specific Antibiotic

–

Broad spectrum

–

Reduced risks

–

No stable resistance

•

2004 FDA approval for treatment of travelers’

diarrhea

•

Patent coverage: May 24, 2024*

–

Orange Book listed

*Patent expiration dates listed herein are for US patents and

assume there are no patent term adjustments, extensions or

other events that could affect the term or scope of a patent.

RIFAXIMIN Intellectual Property

Q2 2011

Q1 2009

Q3 2009

Q2 2010

2014

2016

3-28-11

anticipated

filing

7 year orphan

exclusivity

anticipated

approval

9-28-08

7-25-08

8-14-08

5-26-08

First possible

ANDA filing

(includes

paragraph 4

certification)

IBS

anticipated

approval

IBS

anticipated

filing

3 year

exclusivity

Patent

expiration

Patent

issued

Salix has 45 days to

respond and file

lawsuit

(entitled

to 30 month stay;

average is 28.5

months according to

Paragraph 4

database)

FDA has

60 days

to accept

the ANDA

ANDA

filer

(20 days to

inform

Salix)

30 month stay

expiration

RIFAXIMIN 550mg (HE)

5-26-06

5-22-24

RIFAXIMIN 550mg (IBS)

XIFAXAN 200mg (TD)

Polymorphous forms of RIFAXIMAN, processes for their production and use thereof in medicinal preparations

Improved Preps for Colonoscopy

•

OsmoPrep

Proprietary tablet formulation

Launched June 2006

Patent coverage: May 2013*

•

MoviPrep

Proprietary, state-of-the-art 2 liter liquid PEG with ascorbic acid

Launched October 2006

Patent coverage: September 2024*

•

Bowel Prep TRx Market Growth in 2007

Total market 18%

OsmoPrep/MoviPrep 353%

*Patent expiration dates listed herein are for US patents and

assume there are no patent term adjustments, extensions or

other events that could affect the term or scope of a patent.

Next Generation IBD Products

•

Balsalazide Tablet (1100mg)

PDUFA* action date –

May 16, 2008

Patent coverage: March 2018**

Expected launch July 2008

•

Granulated Mesalamine (375mg capsule)

PDUFA

action

date

–

4Q08

(estimate)

Patent coverage: April 2018**

Expected launch Jan/Feb 2009

*Prescription Drug User Fee Act

**Patent expiration dates listed herein are for US patents and

assume there are no patent term adjustments, extensions or other

events that could affect the term or scope of a patent.

Products in Development

•

Metoclopramide-ZYDIS

Gastroparesis/Gastroesophageal reflux

Expected approval 4Q08

Expected launch Jan/Feb 2009

Patent coverage: July 2017*

•

Vapreotide acetate

Treatment of acute esophageal variceal bleeding

Serious complication of late-stage liver cirrhosis

–

Ongoing confirmatory Phase III trial

Orphan Drug Designation

*Patent expiration dates listed herein are for US patents and

assume there are no patent term adjustments, extensions or other

events that could affect the term or scope of a patent.

Capitalization –

9/30/07 (in millions)

48.6

Fully

diluted

common

(Treasury

method)

47.2

Common shares outstanding

$15.0

Long term debt

$70.2

Cash, cash equivalents & investments

Actual

Current Run Rates for

Base Business

~ $28

Other Products

~$5**

Colazal

~ $60

MoviPrep

OsmoPrep

Visicol

~ $64

Xifaxan

(rifaximin)

Revenue Run Rate

(in millions)*

*Run rate based on current Rx data

**Estimate for 2008

2008 Anticipated Milestones

Q2 2008

Q1 2008

•

Complete Rifaximin HE

Phase III enrollment

•

Balsalazide tablet

PDUFA action date

•

Digestive Disease

Week –

Rifaximin

IBS Phase IIb data

and balsalazide

tablet data

(abstracts

submitted)

•

Initiate Rifaximin

IBS Phase III trials

(Mid-2008)

Q3 2008

•

Launch balsalazide

tablet

•

American College

Gastroenterology –

Rifaximin IBS

Phase IIb data and

granulated

mesalamine data

(abstracts to be

submitted)

Q4 2008

•

Granulated mesalamine

PDUFA action date

(estimated)

•

Metoclopramide-ZYDIS

PDUFA action date

(estimated)

•

File Rifaximin HE NDA

(4Q08/1Q09)

2009 Anticipated Milestones

•

File Rifaximin HE NDA (4Q08/1Q09)

•

Launch granulated mesalamine

•

Launch metoclopramide-ZYDIS

•

Compete Rifaximin IBS Phase III enrollment

•

Expect to be cash flow positive