CUSTOMER AND SUPPLIER CONCENTRATION

6 Months Ended

Jun. 30, 2011

CUSTOMER AND SUPPLIER CONCENTRATION

CUSTOMER AND SUPPLIER CONCENTRATION

NOTE M - CUSTOMER AND SUPPLIER CONCENTRATION

AmerisourceBergen Health Corporation (“Amerisource”), Cardinal Health, Inc. (“Cardinal”) and McKesson Drug Company (“McKesson”) are all distributors of the Company's products, as well as suppliers of a broad range of health care products. These three customers accounted for 64% and 67% of the Company's gross revenues and 61% and 46% of net revenues for the three months ended June 30, 2011 and 2010, respectively.  These three customers accounted for approximately 64% and 65% of the Company's gross revenues and 60% and 47% of net revenues for the six months ended June 30, 2011 and 2010, respectively.  They also accounted for approximately 66% and 68% of the Company's gross accounts receivable balance as of June 30, 2011 and December 31, 2010, respectively. No other customers accounted for more than 10% of gross sales, net revenues or gross trade receivables for the indicated dates and periods.

If sales to any of Amerisource, Cardinal or McKesson were to diminish or cease, the Company believes that the end users of its products would find little difficulty obtaining the Company's products either directly from the Company or from another distributor.

For the three months ended June 30, 2011 and 2010, no supplier accounted for 10% or more of the Company's purchases.  For the six months ended June 30, 2011, purchases of packaging materials from Intrapac Corporation accounted for 11% of the Company's purchases.  For the six months ended June 30, 2010, purchases of Td vaccine from MBL accounted for 27% of the Company's purchases.  The Company ceased distributing Td vaccines in March 2010 in conjunction with the termination of the MBL Distribution Agreement.

The Company requires a supply of quality raw materials and components to manufacture and package pharmaceutical products for its own use and for third parties with which it has contracted. The principal components of the Company's products are active and inactive pharmaceutical ingredients and certain packaging materials. Certain of these ingredients and components are available from only a single source and, in the case of certain of the Company's ANDAs and New Drug Applications, only one supplier of raw materials has been identified. Because FDA approval of drugs requires manufacturers to specify their proposed suppliers of active ingredients and certain packaging materials in their applications, FDA approval of any new supplier would be required if active ingredients or such packaging materials were no longer available from the specified supplier. The qualification of a new supplier could delay the Company's development and marketing efforts. If for any reason the Company is unable to obtain sufficient quantities of any of the raw materials or components required to produce and package its products, it may not be able to manufacture its products as planned, which could have a material adverse effect on the Company's business, financial condition and results of operations.