10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 _________________________________________

FORM 10-Q

 _________________________________________

S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2013

OR

£ 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: 000-54283

________________________________________ 

PATHEON INC.

(Exact name of registrant as specified in its charter)

 _________________________________________

Canada	Not Applicable
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
c/o Patheon Pharmaceuticals Services Inc. 4721 Emperor Boulevard, Suite 200 Durham, NC	27703
(Address of principal executive offices)	(Zip Code)

919-226-3200

(Registrant's telephone number, including area code)

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  S    No  £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  S    No  £

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	£		Accelerated filer	S
Non-accelerated filer	£	(Do not check if a smaller reporting company)	Smaller reporting company	£

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes  ¨    No  S

As of March 5, 2013, the registrant had 139,806,375 restricted voting shares outstanding.

Patheon Inc.

TABLE OF CONTENTS

PART I -	Financial Information
Item 1.	Financial Statements
	Unaudited Consolidated Balance Sheets as of January 31, 2013 and October 31, 2012	1
	Unaudited Consolidated Statements of Operations for the Three Months Ended January 31, 2013 and 2012	2
	Unaudited Consolidated Statements of Comprehensive Loss for the Three Months Ended January 31, 2013 and 2012.	2
	Unaudited Consolidated Statement of Changes in Shareholders' Equity for the Three Months Ended January 31, 2013	4
	Unaudited Consolidated Statements of Cash Flows for the Three Months Ended January 31, 2013 and 2012	5
	Notes to Unaudited Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
PART II -	Other Information	40
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 6.	Exhibits	40
	Signatures	41
	Exhibit Index	42

Item 1.        Financial Statements

Patheon Inc.

CONSOLIDATED BALANCE SHEETS

(unaudited)

	As of January 31, 2013		As of October 31, 2012
(in millions of U.S. dollars)	$		$
Assets
Current
Cash and cash equivalents	55.4		39.4
Accounts receivable	168.7		161.7
Inventories	141.7		82.3
Income taxes receivable	6.3		0.4
Prepaid expenses and other	11.4		11.9
Deferred tax assets - short-term	6.3		4.3
Total current assets	389.8		300.0
Capital assets	502.4		416.4
Intangible assets	74.4		—
Deferred financing costs	21.7		4.9
Deferred tax assets	1.3		—
Goodwill	43.9		3.5
Investments	7.2		6.3
Other long-term assets	12.2		11.8
Total assets	1,052.9		742.9
Liabilities and shareholders' equity
Current
Short-term borrowings	0.6		2.4
Accounts payable and accrued liabilities	193.1		186.2
Income taxes payable	7.4		5.7
Deferred revenues - short-term	17.6		13.9
Deferred tax liabilities - short-term	1.6		—
Current portion of long-term debt	5.8		—
Total current liabilities	226.1		208.2
Long-term debt	583.2		310.7
Deferred revenues	24.9		28.9
Deferred tax liabilities	55.6		23.0
Other long-term liabilities	47.5		47.8
Total liabilities	937.3		618.6
Shareholders' equity
Restricted voting shares	606.0		572.5
Contributed surplus	15.8		16.5
Accumulated deficit	(530.0	)	(478.6	)
Accumulated other comprehensive income	23.8		13.9
Total shareholders' equity	115.6		124.3
Total liabilities and shareholders' equity	1,052.9		742.9

see accompanying notes

1

Patheon Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three months ended January 31,
	2013			2012
(in millions of U.S. dollars, except per share information)	$			$
Revenues	213.5			153.9
Cost of goods sold	171.1			139.5
Gross profit	42.4			14.4
Selling, general and administrative expenses	35.2			34.5
Research and development	1.3			—
Repositioning expenses	4.0			0.8
Acquisition-related costs	4.4			—
Impairment charge	10.1			—
Gain on sale of capital assets	(0.3		)	—
Operating loss	(12.3		)	(20.9		)
Interest expense, net	9.8			6.5
Foreign exchange loss (gain), net	0.8			(0.3		)
Refinancing expenses	29.1			—
Other income, net	(0.4		)	(0.1		)
Loss from continuing operations before income taxes	(51.6		)	(27.0		)
Benefit from income taxes	(0.2		)	(7.7		)
Loss from continuing operations	(51.4		)	(19.3		)
Loss from discontinued operations	—			(0.1		)
Net loss attributable to restricted voting shareholders	(51.4		)	(19.4		)
Basic and diluted loss per share
From continuing operations		($0.384	)		($0.149	)
From discontinued operations	—				($0.001	)
Net loss per share, basic and diluted		($0.384	)		($0.150	)
Weighted-average number of shares outstanding (in thousands)
Basic	133,849			129,639
Diluted	133,849			129,639

see accompanying notes

2

Patheon Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(unaudited)

	Three months ended January 31,
(in millions of U.S. dollars)	2013		2012
	$		$
Net loss attributable to restricted voting shareholders	(51.4	)	(19.4	)
Other comprehensive income (losses), net of income taxes
Change in foreign currency gains (losses) on investments in subsidiaries, net of hedging activities	9.6		(12.4	)
Change in value of derivatives designated as foreign currency cash flow hedges	0.4		(0.1	)
(Losses) gains on foreign currency cash flow hedges reclassified to consolidated statements of loss	(0.4	)	0.2
Net change in pension liability	0.3		(0.1	)
Comprehensive loss attributable to restricted voting shareholders	(41.5	)	(31.8	)

see accompanying notes

3

Patheon Inc.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

(unaudited)

(in millions of U.S. dollars)	Restricted Voting Shares		Contributed Surplus			Accumulated Deficit			Accumulated Other Comprehensive Income			Total Shareholders' Equity
Balance at October 31, 2012	$	572.5	$	16.5		$	(478.6	)	$	13.9		$	124.3
Proceeds from equity offering, net	29.1		—			—			—			29.1
Stock options exercised	4.4		(1.5		)	—			—			2.9
Stock-based compensation	—		0.8			—			—			0.8
Comprehensive income (loss):
Net loss attributable to restricted voting shareholders	—		—			(51.4		)	—			(51.4		)
Change in foreign currency translation on investments in subsidiaries, net of hedging activities	—		—			—			9.6			9.6
Change in value of derivatives designated as foreign currency cash flow hedges	—		—			—			0.4			0.4
Losses on foreign currency hedges reclassified to consolidated statement of operations	—		—			—			(0.4		)	(0.4		)
Net change in pension liability	—		—			—			0.3			0.3
Subtotal	—		—			(51.4		)	9.9			(41.5		)
Balance at January 31, 2013	$	606.0	$	15.8		$	(530.0	)	$	23.8		$	115.6

see accompanying notes

4

Patheon Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

	Three months ended January 31,
	2013		2012
(in millions of U.S. dollars)	$		$
Operating activities
Loss from continuing operations	(51.4	)	(19.3	)
Adjustments to reconcile loss from continuing operations to cash (used in) provided by operating activities
Depreciation and amortization	11.0		10.6
Impairment charge	10.1		—
Foreign exchange loss on debt	0.1		—
Other non-cash interest	4.9		0.3
Change in other long-term assets and liabilities	(1.6	)	(0.5	)
Deferred income taxes	(1.0	)	(0.9	)
Amortization of deferred revenues	(4.2	)	(2.4	)
Gain on sale of capital assets	(0.3	)	—
Stock-based compensation expense	0.8		1.0
	(31.6	)	(11.2	)
Net change in non-cash working capital balances related to continuing operations	19.7		16.1
Increase in deferred revenues	5.6		5.3
Cash (used in) provided by operating activities of continuing operations	(6.3	)	10.2
Cash used in operating activities of discontinued operations	—		(0.3	)
Cash (used in) provided by operating activities	(6.3	)	9.9
Investing activities
Additions to capital assets	(8.4	)	(6.5	)
Proceeds on sale of capital assets	0.4		—
Acquisitions, net of cash acquired	(258.9	)	—
Cash used in investing activities	(266.9	)	(6.5	)
Financing activities
Decrease in short-term borrowings	—		(1.3	)
Proceeds from long-term borrowings	592.1		—
Increase in deferred financing costs	(21.7	)	—
Repayment of debt, net of penalty payment	(315.8	)	(1.6	)
Share issuance costs	(0.9	)	—
Proceeds on issuance of restricted voting shares	32.9		—
Cash provided by (used in) financing activities	286.6		(2.9	)
Effect of exchange rate changes on cash and cash equivalents	2.6		(1.4	)
Net increase (decrease) in cash and cash equivalents during the period	16.0		(0.9	)
Cash and cash equivalents, beginning of period	39.4		33.4
Cash and cash equivalents, end of period	55.4		32.5

see accompanying notes

5

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

1.    BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared by Patheon Inc. (the "Company" or "Patheon") in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Operating results for the three months ended January 31, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 2013 ("fiscal 2013"). These consolidated financial statements do not include all the information and footnotes required by U.S. GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and notes for the fiscal year ended October 31, 2012 ("fiscal 2012") contained in the Company's Annual Report on Form 10-K for the year then ended.

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect: the reported amounts of assets and liabilities; the disclosure of contingent assets and liabilities at the date of the consolidated financial statements; and the reported amounts of revenue and expenses in the reporting period. Management believes that the estimates and assumptions used in preparing its consolidated financial statements are reasonable and prudent, however, actual results could differ from those estimates.

Changes in significant accounting policies

In connection with the Banner Acquisition (described in Note 2), the following accounting policies became more significant to the Company:

Revenue recognition on product sales

The Company now manufactures and sells proprietary products. With respect to the sales of these products, the Company recognizes revenue when title has transferred to the customer and the customer has assumed the risks and rewards of ownership. The Company also has agreements with various distributors that allow the Company to share in product profits. The Company recognizes these profits once the distributor ships the product and title passes to the distributor's customer. The Company does not offer return policies to their distributors except for through their warranty provision for defective products.

Goodwill

As a result of the Banner Acquisition, the Company recorded goodwill representing the excess of the purchase price over the fair value of the assets acquired and the liabilities assumed. The Company tests goodwill for impairment at least annually in the fiscal fourth quarter, or when indications of potential impairment exist. The Company monitors for the existence of potential impairment indicators throughout the fiscal year. Testing is performed with respect to each of the Company's reporting units that have been allocated goodwill, which the Company has determined are the sites within its CMO segment.

If our qualitative assessment reveals that goodwill impairment is more likely than not, we perform the two-step impairment test. Alternatively, we may bypass the qualitative test and initiate goodwill impairment testing with the first step of the two-step goodwill impairment test.

During the first step of the goodwill impairment test, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, then we conclude that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, the Company performs the second step of the goodwill impairment test to measure possible goodwill impairment loss. During the second step, the Company hypothetically values the reporting unit's tangible and intangible assets and liabilities as if the reporting unit had been acquired in a business combination. The Company then compares the implied fair value of the reporting unit's goodwill to the carrying value of its goodwill. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of the goodwill, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the carrying value of the reporting unit's goodwill. Once an impairment loss is recognized, the adjusted carrying value of the goodwill becomes the new accounting basis of the goodwill for the reporting unit.

Intangible Assets

As a result of the Banner Acquisition, the Company has recorded various intangible assets, including technology, in process research and development, customer relationships and trade name. The Company will test for definite lived intangible assets whenever events or changes in circumstances indicate that the carrying amount will not be recoverable. If such indicators are present, the Company assesses the recoverability of the intangible assets by determining whether the carrying

6

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

value of such assets can be recovered through undiscounted future cash flows. If the sum of the undiscounted cash flows is less than the carrying amount, the excess of the carrying amount over the estimated fair value, based on the discounted cash flows, is recorded as a charge to earnings.

Research and development expenses

The Company now has research and development costs that are expensed as incurred. These expenses relate to proprietary research and development efforts and consist of salaries and benefits, supplies and other costs.

Recently adopted accounting pronouncements

Effective November 1, 2012, the Company adopted Accounting Standards Update ("ASU") 2011-08, "Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment" ("ASU 2011-08"), which amends U.S. GAAP Accounting Standards Codification ("ASC") 350, "Intangible Assets-Goodwill and Other." Under ASU 2011-08, an entity may elect the option to assess qualitative factors to determine whether it is necessary to perform the first step in the two-step impairment testing process. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial statements.

Effective November 1, 2012, the Company adopted ASU 2012-02, "Testing Indefinite-Lived Intangible Assets for Impairment" ("ASU 2012-02"). ASU 2012-02, was promulgated to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. ASU 2012-02 is intended to simplify indefinite-lived intangible impairment testing by allowing an entity to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of an asset is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. This guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial statements.

Effective November 1, 2012, the Company adopted ASU 2011-05, "Comprehensive Income (Topic 220): Presentation of Comprehensive Income in U.S. GAAP" ("ASU 2011-05"). ASU 2011-05 requires that comprehensive income and the related components of net income and of other comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 also requires reclassification adjustments from other comprehensive income to net income be presented on the face of the financial statements. The amendments are effective for annual reporting periods beginning on or after December 15, 2011, and interim periods within those annual periods. However, in December 2011, the Financial Accounting Standards Board ("FASB") issued ASU 2011-12, "Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05" to defer the requirement to present reclassification adjustments from other comprehensive income on the face of the financial statements and allow entities to continue to report reclassifications out of accumulated other comprehensive income consistent with the requirements in effect before ASU 2011-05. Other than a change in presentation, the the adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

Recently issued accounting pronouncements

In December 2011, the FASB issued ASU 2011-11, "Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities," which requires enhanced disclosures about financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either Section 210-20-45 or Section 815-10-45. The amendments are effective for annual reporting periods beginning on or after January 1, 2013 and interim periods within those annual periods. The amendments should be applied retrospectively for all prior periods presented. The Company does not expect adoption of this guidance will have a material impact on its consolidated financial statements.

2.    BANNER ACQUISITION

7

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

Background

On December 14, 2012, the Company completed the acquisition of all of the issued and outstanding shares of capital stock of Sobel USA Inc., a Delaware corporation, and Banner Pharmacaps Europe B.V., a private limited company organized under the laws of The Netherlands (collectively "Banner") from Sobel Best N.V. and VION Holding, N.V., each corporations organized under the laws of The Netherlands, for an aggregate purchase price of approximately $271.6 million (the "Banner Acquisition"). Banner is a pharmaceutical business focused on delivering proprietary softgel formulations, with four manufacturing facilities and a number of proprietary technologies and products.

Purchase price allocation

The Banner Acquisition is accounted for using the acquisition method of accounting in accordance with ASC Subtopic 805-10, "Business Combinations," and the fair value concepts set forth in ASC Subtopic 820-10, "Fair Value Measurements and Disclosures". Under ASC 805-10, the total purchase price for Banner was allocated to the assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The allocation of the purchase price is based on estimates and assumptions that are subject to change within the measurement period. The excess of the purchase price over the fair values of the assets acquired and liabilities assumed was recorded as goodwill. Goodwill largely consists of geographic expansion of product sales, manufacturing and other synergies of the combined companies, and the value of the assembled workforce.

The initial purchase price allocation for the Banner Acquisition is as follows:

	$
Cash and cash equivalents	12.7
Accounts receivable	55.1
Inventories	54.2
Income taxes receivable	4.3
Prepaid expenses and other	3.6
Deferred tax assets-short-term	1.7
Capital assets	90.7
Intangible assets	75.1
Goodwill	40.5
Deferred tax assets - long-term	0.1
Other long-term assets	0.3
Accounts payable and accrued liabilities	(32.6	)
Deferred tax liabilities - short-term	(0.4	)
Other long-term liabilities	(1.4	)
Deferred tax liabilities-long-term	(32.3	)
Total purchase price	271.6

The Company recorded all of the $40.5 million of goodwill to its CMO segment. In addition, the Company does not expect any of the goodwill to be tax deductible.

Valuations of intangible assets acquired

The weighted-average life of the acquired intangible assets is approximately 11.0 years. The following table sets forth the components of the acquired intangible assets by type:

8

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

	Estimated Fair Value	Estimated Useful Life (in years)
	$
Trade names	0.8	5-6
Technology	46.4	10-12
Customer relationships	11.1	7-12
In-process research and development(1)	16.8	Indefinite
Total	75.1

⁽¹⁾ In process research and development is currently classified as indefinite-lived intangible assets and will either begin to be amortized upon product approvals or written-off if not approved.

Purchase price allocation and pre-acquisition adjustments

The Company continues to evaluate pre-acquisition contingencies, working capital and tax balances including deferred tax assets and liabilities relating to Banner that existed as of the acquisition date. If the Company makes changes to the amounts recorded or identifies additional pre-acquisition contingencies during the remainder of the measurement period, such amounts recorded will be included as an adjustment to the purchase price allocation during the measurement period.

Financial results of the acquired business

The revenues and net loss of Banner for the period from December 15, 2012 through January 31, 2013 included in the consolidated statement of operations are as follows:

Revenues	$	23.3		$	—
Loss from continuing operations	(2.4		)	—

Unaudited pro forma financial information

The following table presents pro forma results of operations and gives effect to the Banner Acquisition as if the transaction had been consummated on November 1, 2011. These unaudited pro forma combined financial statements are provided for informational purposes only and are not necessarily indicative of what the actual results of operations and financial position would have been had the transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the combined companies.

	Three months ended January 31,
	2013		2012
	$		$
Revenues	247.1		228.5
Loss from continuing operations	(29.7	)	(18.4	)
Loss per share from continuing operations, basic and diluted	(0.22	)	(0.14	)

The unaudited pro forma consolidated results were prepared using the acquisition method of accounting and are based on the historical financial information of the Company and Banner, reflecting the Company's and Banner's combined results of operations for the three month periods ended January 31, 2013 and 2012. The historical financial information has been adjusted to give effect to the pro forma events that are (i) directly attributable to the Banner Acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results of the Company and Banner. The unaudited pro forma consolidated results reflect primarily the following pro forma adjustments:

• additional interest expense and related refinancing costs related to the long-term debt used to fund the acquisition;

• additional amortization expense related to the fair-value of identifiable intangible assets acquired;

• additional cost of goods sold resulting from an increase in the fair value of acquired inventory and an increase in depreciation expense relating to the fair values of acquired property and equipment; and

• removal of acquisition-related costs.

9

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

3.    DISCONTINUED OPERATIONS, PLANT CONSOLIDATIONS, SALES AND ASSET IMPAIRMENTS

Puerto Rico

The Company announced on December 10, 2009 its plan to consolidate its Puerto Rico operations into its manufacturing site located in Manati and ultimately sell its plant in Caguas. As a result of additional time required to transition manufacturing operations from Caguas to Manati due to longer than expected customer regulatory time lines and increased product demand, the transition will continue into fiscal 2013. The Company now estimates the total project repositioning expenses to be $13.7 million, of which an additional $0.3 million was recorded in the three months ended January 31, 2013.The consolidation resulted in additional accelerated depreciation of Caguas assets of approximately $12.0 million through the middle of fiscal 2013. Because the business in the Caguas facility is being transferred within the existing site network, its results of operations are included in continuing operations in the consolidated financial statements.

The results of discontinued operations for the Company's Carolina facility (which the Company closed effective January 31, 2009) for the three months ended January 31, 2013 and 2012 are as follows:

	Three months ended January 31,
	2013	2012
	$	$
Revenues	—	—
Cost of goods sold	—	—
Gross loss	—	—
Selling, general and administrative expenses	—	0.1
Gain on sale of capital assets	—	—
Operating loss	—	(0.1	)
Loss before income taxes	—	(0.1	)
Net loss for the period	—	(0.1	)

On February 17, 2012, the Company finalized the sale of its Carolina, Puerto Rico facility for a nominal amount.

Canada

Subsequent to the closing of the Banner Acquisition, the Company performed a review of Banner's facilities and decided to close the Olds, Canada facility by October 31, 2013. As a result of this decision, the Company conducted an impairment analysis on the long-term assets at this facility. Based on this analysis, which is discussed more fully below, the Company concluded that a non-cash impairment charge of $10.0 million was required to reduce the carrying value of the long-term assets to their fair value and that a non-cash impairment charge of 0.1 million was required to reduce the carrying value of the goodwill allocated to the Olds, Canada reporting unit to its fair value. The impairment charges reduced assets in the CMO segment by a total of $10.1 million. The carrying value of this property was reduced to its estimated fair value of $4.9 million, which represents the salvage value of the building and land, less costs to sell, that was determined based upon an appraisal value (Level 2 valuation inputs). These facility assets will remain as held and used until a plan of sale has been initiated and the site is in a condition for immediate sale.

To determine whether any impairment charge was required with respect to the long-term assets at the Olds, Canada Facility, the Company performed a cash flow analysis over the remaining useful life of these assets, which following the decision to close the facility was nine months. Because the expected operating cash flows were less than the carrying value of the assets, an impairment analysis was completed to calculate the amount of the impairment loss. Following this analysis, the Company reduced the book value of the site's long-term assets to the fair value of the facility, the book value of any assets that will be transferred to other sites and a minimal amount of value for residual equipment to be sold on the used equipment market.

Following the completion of the impairment analysis for the long-term assets at the Olds, Canada facility, the Company evaluated whether the goodwill allocated to the Olds, Canada reporting unit was impaired. The Company bypassed the qualitative assessment of whether it was more likely than not that goodwill was impaired, and performed the two-step impairment test. Because the reporting unit's carrying value is being reduced to net working capital plus the salvage value of the property, plant and equipment, the Company determined that there was no remaining value for the goodwill and thus it was fully impaired. The net amount required to be booked for the impairment of goodwill in the first quarter of fiscal 2013 was

$0.1 million.

10

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

4.    SUPPLEMENTAL BALANCE SHEET INFORMATION

Inventories

Inventories consisted of the following as of January 31, 2013 and October 31, 2012:

	January 31, 2013	October 31, 2012
	$	$
Raw materials, packaging components and spare parts	67.9	47.9
Work-in-process	38.5	34.4
Finished goods	35.3	—
Balance, end of period	141.7	82.3

Accounts payable and accrued liabilities

The following is the breakdown of accounts payable and accrued liabilities:

	January 31, 2013	October 31, 2012
	$	$
Trade payables	106.6	101.2
Interest payable	1.9	1.0
Accrued salaries and related expenses	47.5	51.4
Customer deposits	17.6	16.4
Other accruals	19.5	16.2
Balance, end of period	193.1	186.2

Intangible assets

As part of the Banner Acquisition, the Company obtained intangible assets. The gross carrying amounts and accumulated amortization related to the Company's identifiable intangible assets are as follows:

	Gross carrying value	Accumulated amortization		Net carrying value
January 31, 2013
Trade names	0.8	(0.1	)	0.7
Technology	46.4	(0.5	)	45.9
Customer relationships	11.1	(0.1	)	11.0
In-process research and development	16.8	—		16.8
Balance, end of period	75.1	(0.7	)	74.4

Banner's in process research and development are currently classified as indefinite-lived intangible assets and will either begin to be amortized upon product approvals or written-off if not approved.

Goodwill

The following table summarizes the changes between October 31, 2012 and January 31, 2013 in the carrying amount of goodwill in total and by reporting segment:

11

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

	Commercial		PDS	Corp. & Other	Total
Balance at October 31, 2012	3.5		—	—	3.5
Additions	40.5		—	—	40.5
Impairments	(0.1	)	—	—	(0.1	)
Balance at January 31, 2013	43.9		—	—	43.9

5.    PREFERRED SHARES AND RESTRICTED VOTING SHARES

The following table summarizes information regarding the Company's outstanding preferred shares, restricted voting shares and restricted voting share stock options as of January 31, 2013:

	Outstanding	Exercisable
Class I preferred shares series D	150,000	N/A
Restricted voting shares	139,806,375	N/A
Restricted voting share stock options	11,529,777	2,447,075

On December 3, 2012, the Company mailed the holders of record of its restricted voting shares as of November 27, 2012 offering materials related to a $30.0 million offering of transferable subscription rights, with every 13.75 rights entitling the holder thereof to subscribe for one whole restricted voting share at a price of, at such holder's choice, either US$3.19 per whole share or CAD$3.19 per whole share (the "Rights Offering").

On December 31, 2012, the Company completed the Rights Offering, which expired on December 28, 2012. The Rights Offering was fully subscribed for with gross proceeds totaling approximately $30.0 million. Patheon issued 9,403,483 restricted voting shares as a result of the Rights Offering. This issuance represents approximately 7.2% of the Company's restricted voting shares issued and outstanding prior to the Rights Offering.  Upon the issuance of these new restricted voting shares, the Company had 139,701,375 restricted voting shares outstanding. The Company used the proceeds from the Rights Offering to partially finance the Banner Acquisition.

An affiliate of JLL Partners Fund V, L.P., a related party of the Company ("JLL Partners Fund V"), exercised its subscription rights in full, including its over-subscription privilege, up to the full amount of the Rights Offering. All excess subscription payments received from over-subscribing rights holders, including JLL Partners Fund V, were returned, without interest or penalty.  As a result of the rights offering, JLL Partners Fund V received 5,786,805 restricted voting shares (524,392 of which were received pursuant to the exercise of its over-subscription privilege), and as a result, JLL Partners Fund V's ownership of restricted voting shares, together with its affiliates, is approximately 55.9% of the Company's issued and outstanding restricted voting shares.

The Rights Offering contained a subscription price that was less than the fair value of the Company's restricted voting shares on the last day the rights could be exercised, which created a bonus element similar to a stock dividend. Because of this bonus element, the Company adjusted both the weighted-average basic and diluted shares outstanding immediately prior to the completion of the Rights Offering by multiplying those weighted-average shares by an adjustment factor that represented the fair value per restricted voting share immediately prior to the exercise of the basic and over-subscription privileges under the Rights Offering divided by the theoretical ex-rights fair value per restricted voting share immediately prior to the exercise of the basic and over-subscription privileges under the Rights Offering. Weighted-average basic and diluted shares outstanding and net loss per weighted-average basic and diluted share for the three months ended January 31, 2012 as originally reported and as adjusted for this bonus element were as follows:

	As originally reported			As adjusted		Effect of change
Three months ended January 31, 2012:
Weighted-average basic and diluted shares outstanding	129,168			129,639		471
Net loss per basic and diluted share	$	(0.15	)	$	—	$	(0.15	)

12

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

6.    SEGMENTED INFORMATION

The Company is organized and managed in two business segments: CMO and PDS. These segments are organized around the service activities provided to the Company's customers.

	As of and for the three months ended January 31, 2013
	Commercial	PDS	Corp. & Other		Total
	$	$	$		$
Revenues	180.1	33.4	—		213.5
Adjusted EBITDA	22.5	6.4	(9.1	)	19.8
Total assets	720.6	68.3	264.0		1,052.9
Depreciation	9.1	1.0	0.9		11.0
Goodwill	43.9	—	—		43.9
Impairment charge	10.1	—	—		10.1
Capital expenditures	7.9	0.5	—		8.4

	As of and for the three months ended January 31, 2012
	Commercial	PDS	Corp. & Other		Total
	$	$	$		$
Revenues	122.8	31.1	—		153.9
Adjusted EBITDA	1.4	4.1	(7.4	)	(1.9	)
Total assets	611.5	72.2	100.4		784.1
Depreciation	9.1	1.3	0.2		10.6
Goodwill	3.4	—	—		3.4
Capital expenditures	5.3	1.1	0.1		6.5

Cash and cash equivalents as well as deferred tax assets are considered to be part of "Corp. & Other" in the breakout of total assets shown above. In the first quarter of fiscal 2013, the Company announced the closure of its Olds, Canada facility and recorded impairment charges of $10.1 million.

The Company evaluates the performance of its segments based on segment Adjusted EBITDA. Commencing with the first quarter of fiscal 2013, the Company revised its calculation of Adjusted EBITDA to exclude stock-based compensation expense, consulting costs related to the Company's operational initiatives and purchase accounting adjustments. The Company's chief operating decision-maker determined that excluding these items from Adjusted EBITDA better reflected the underlying performance of the Company's segments. Based on the revisions to the Company's segment performance measure, the Company has recast the presentation of its segment results for the prior period to be consistent with the current period presentation. Following the change in the segment performance measure, the Company's definition of Adjusted EBITDA is now income (loss) from continuing operations before repositioning expenses, interest expense, foreign exchange losses reclassified from other comprehensive income (loss), refinancing expenses, acquisition-related costs, gains and losses on sale of capital assets, income taxes, asset impairment charges, depreciation and amortization, stock-based compensation expense, consulting costs related to the Company's operational initiatives, purchase accounting adjustments and other income and expenses. The Company's presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies it is not equivalent to "Consolidated EBITDA" as defined in the Credit Agreement (as discussed in Note 12).

Below is a reconciliation of Adjusted EBITDA to its closest U.S. GAAP measure.

13

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

	Three months ended January 31,
	2013		2012
	$		$
Total Adjusted EBITDA	19.8		(1.9	)
Depreciation and amortization	(11.0	)	(10.6	)
Repositioning expenses	(4.0	)	(0.8	)
Acquisition-related costs	(4.4	)	—
Interest expense, net	(9.8	)	(6.5	)
Impairment charge	(10.1	)	—
Gain on sale of capital assets	0.3		—
Benefit from income taxes	0.2		7.7
Refinancing expenses	(29.1	)	—
Operational initiatives related consulting costs	(0.1	)	(6.3	)
Stock-based compensation expense	(0.8	)	(1.0	)
Purchase accounting adjustments	(2.9	)	—
Other	0.5		0.1
Loss from continuing operations	(51.4	)	(19.3	)

As illustrated in the table below, revenues are attributed to countries based on the location of the customer's billing address, capital assets are attributed to the country in which they are located and goodwill is attributed to the country in which the entity to which the goodwill pertains is located:

	As of and for the three months ended January 31, 2013
	Canada*** $	US* $	Europe** $	Other $	Total $
Revenues	4.7	133.9	61.9	13.0	213.5
Capital assets	118.6	208.7	173.6	1.5	502.4
Goodwill	3.5	30.0	7.2	3.2	43.9

* Includes Puerto Rico

** European assets reflect the fiscal 2012 impairment of Swindon assets.

***Canada assets reflect the fiscal 2013 impairment of Olds, Canada assets.

	As of and for the three months ended January 31, 2012
	Canada	US*	Europe	Other	Total
	$	$	$	$	$
Revenues	2.3	89.4	54.4	7.8	153.9
Capital assets	114.3	133.4	209.4	1.5	458.6
Goodwill	3.4	—	—	—	3.4

* Includes Puerto Rico

7.    STOCK-BASED COMPENSATION

The Company has an incentive stock option plan in which directors, officers and key employees of the Company and its subsidiaries, as well as other persons engaged to provide ongoing management or consulting services to Patheon, are eligible to participate. On March 10, 2011, the Company's shareholders approved an amendment to the stock option plan, which, among other things, provides that the maximum number of shares that may be issued under the plan is 15,500,151, which currently represents 11% of the issued and outstanding restricted voting shares. As of January 31, 2013 and 2012, the total number of restricted voting shares issuable under the plan was 15,500,151 shares, respectively, of which there were stock options outstanding to purchase 11,529,777 shares and 10,755,509 shares, respectively, under the plan. Before the March 2011 amendments, the plan provided that the exercise prices of options were determined at the time of grant and could not be less than the weighted-average market price of the restricted voting shares of Patheon on the Toronto Stock Exchange ( the "TSX")

14

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

during the two trading days immediately preceding the grant date. Following the March 2011 amendments, the exercise prices of the options may not be less than the closing price of the restricted voting shares on the TSX (or on such other stock exchange in Canada or the United States on which restricted voting shares may be then listed and posted) on the date of the grant. Options generally expire in no more than 10 years after the grant date and are subject to early expiry in the event of death, resignation, dismissal or retirement of an optionee. Options generally have vesting periods of either three years or five years, with either one-third or one-fifth vesting on each anniversary of the grant date, respectively.

On June 18, 2012 the Company granted 1,291,750 options to its executive committee members with a vesting based upon the parameters that all granted options will have cliff performance vesting which will vest at the earlier of the achievement of an adjusted EBITDA target or five years after date of grant.

For the purposes of calculating the stock-based compensation expense in connection with the Company's incentive stock option plan, the fair value of stock options is estimated at the date of the grant using the Black-Scholes option pricing model and the cost is amortized over the vesting period.

Stock-based compensation expense recorded in the three months ended January 31, 2013 was $0.8 million. Stock-based compensation expense recorded in the three months ended January 31, 2012 was $1.0 million.

A summary of the plan activity during the three months ended January 31, 2013 is as follows:

	January 31, 2013
(Dollar amounts in Canadian dollars)	Number of shares		Weighted- average exercise price	Weighted-average contractual term	Aggregate intrinsic value
			$		$
Outstanding as of October 31, 2012	12,479,677		2.54		15,585,209
Granted	450,000		3.30		—
Exercised	(1,105,000	)	2.58		756,500
Forfeited	(294,900	)	3.63		97,076
Outstanding as of January 31, 2013	11,529,777		2.54	7.76	13,583,736
Exercisable as of January 31, 2013	2,447,075		2.94	5.04	2,192,768

The total fair value of shares that vested during the three months ended January 31, 2013 and 2012 was less than $0.1 million and less than $0.1 million, respectively. As of January 31, 2013, the total unrecognized compensation cost related to the nonvested stock options was $5.2 million, which is expected to be recognized through the fiscal year ending October 31, 2017, with a weighted-average remaining vesting period of 2.37 years.

8.    PENSION AND POST-RETIREMENT BENEFITS

Employee future benefits

The components of net periodic benefit cost for the defined benefit plans and other benefit plans for the three months ended January 31, 2013 and 2012 were as follows:

	Three months ended January 31,
	2013			2012
	Defined benefit pension plans		Other benefit plans	Defined benefit pension plans		Other benefit plans
	$		$	$		$
Service cost	0.5		—	1.1		—
Interest cost	1.3		0.1	1.4		0.1
Expected return on plan assets	(1.4	)	—	(1.3	)	—
Amortization of actuarial loss	0.3		—	0.3		—
Net periodic benefit costs	0.7		0.1	1.5		0.1

15

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

Amounts for fiscal 2013 include the defined benefit pension plans for Mexico and The Netherlands under which the Company became obligated in connection with the Banner Acquisition.

Based on current information available from actuarial estimates, the Company anticipates that contributions required under its defined benefit pension plans and other benefit plans for fiscal 2013 will be approximately $6.6 million compared to contributions of $5.8 million that were made in fiscal 2012. Required contributions to defined benefit pension plans in future years may vary and will be dependent upon a number of variables, including the long-term rate of return on plan assets.

The defined benefit and other benefit plans estimates above do not include the unfunded termination indemnities related to the employees of the Company's Italian subsidiary. In accordance with Italian severance pay statutes, an employee benefit is accrued for service to date and is payable when the employee's employment with the Company ceases. The termination indemnity liability is calculated in accordance with local civil and labor laws based on each employee's length of service, employment category and remuneration. The termination liability is adjusted annually by a cost-of-living index provided by the Italian government. Although there is no vesting period, the Italian government has established private accounts for these benefits and has required the Company to contribute $3.8 million and $3.2 million in fiscal 2013 and 2012, respectively, to these accounts, with additional contributions in the future. The liability recorded in the consolidated balance sheets is the amount to which the employees would be entitled if their employment with the Company ceased. The related expenses for the three months ended January 31, 2013 and 2012 was $0.8 million and $0.7 million, respectively.

The defined benefit and other benefit plans estimates above also do not include the unfunded termination indemnities related to the employees of the Company's Mexican subsidiary, which the Company acquired as part of the Banner Acquisition. According to the Mexican labor law, a termination indemnity is payable when a company terminates an employment relationship without justified cause (as defined in the labor law) and is equal to three months of salary and benefits, plus 20 days of salary and benefits per each credited service year. The termination indemnity liability is unfunded; therefore the liability is recognized through a reserve calculated by the actuaries. The related expected expense for fiscal 2013 is less than $0.1 million, and the reserve is recorded on the consolidated balance sheet as of January 31, 2013.

The employee future benefit expense in connection with defined benefit pension plans, other post retirement benefit plans and the unfunded termination indemnities for the three months ended January 31, 2013 and 2012 was $1.6 million and $2.3 million, respectively.

9.    REPOSITIONING EXPENSE

During the three months ended January 31, 2013, the Company incurred $4.0 million, in repositioning expenses, which related to Banner synergy initiatives; the plan of termination the Company announced on May 9, 2012 (the "Plan of Termination"), which is discussed below; and the shutdown of the Caguas facility. During the three months ended January 31, 2012, the Company incurred $0.8 million in repositioning expenses, all of which related to the shutdown of the Caguas facility.

On May 9, 2012, the Company announced the Plan of Termination to reduce the Company's workforce by approximately 91 employees across the Company's global PDS and CMO segments. In connection with the Plan of Termination, the Company recorded approximately $4.4 million of estimated expenses associated with employee termination benefits during fiscal 2012. The Company anticipates that it may further adjust the size of the workforce at the Swindon or other facilities as it continues its transformation process.

The following is a summary of these expenses and other charges associated with operational improvements (collectively "repositioning expenses") as of and for the three months ended January 31, 2013 and 2012:

16

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

	As of and for the three months ended January 31, 2013
	Commercial $	PDS $	Corporate $	Total $
Total repositioning liabilities at October 31, 2012				5.5
Employee-related expenses	0.4	0.5	2.9	3.8
Consulting, professional and project management costs	0.2	—	—	0.2
Total expenses	0.6	0.5	2.9	4.0
Repositioning expenses paid				(1.6	)
Repositioning expenses to be reimbursed				3.1
Total repositioning liabilities at January 31, 2013				11.0

	As of and for the three months ended January 31, 2012
	Commercial	PDS	Corporate	Total
	$	$	$	$
Total repositioning liabilities at October 31, 2011				6.7
Employee-related expenses	0.1	—	—	0.1
Consulting, professional and project management costs	0.7	—	—	0.7
Total expenses	0.8	—	—	0.8
Repositioning expenses paid				(2.1	)
Total repositioning liabilities at January 31, 2012				5.4

10.OTHER INFORMATION

Foreign exchange

During the three months ended January 31, 2013, the Company recorded foreign exchange losses of $0.8 million. These losses were primarily from operating exposures, partially offset by hedging gains. During the three months ended January 31, 2012, the Company recorded foreign exchange gains of $0.3 million. These gains were primarily due to operating exposures, partially offset by hedge losses.

Contingencies

A putative class action and two individual plaintiff actions are pending in the United States against one of the Company's customers in connection with the recall of certain lots of allegedly defective products manufactured by the Company for the customer. The Company has also been named in the putative class action and in one of the individual plaintiff actions. The customer has given the Company notice of its intent to seek indemnification from the Company for all damages, costs and expenses, pursuant to the manufacturing services agreement between the customer and the Company. As these cases are at an early stage, the Company is unable to estimate the number of potential claimants or the amount of potential damages for which the Company may be directly or indirectly liable in the above actions.

11.    FINANCIAL INSTRUMENTS, FAIR VALUE AND RISK MANAGEMENT

The Company has determined the estimated fair values of its financial instruments based on appropriate valuation methodologies; however, considerable judgment is required to develop these estimates. The fair values of the Company's financial instruments are not materially different from their carrying values.

As of October 31, 2012, the carrying amount of the financial assets that the Company has pledged as collateral for its long-term debt facilities was $131.2 million. The Company's Credit Agreement (as discussed in Note 12) is not collateralized by accounts receivable and inventory.

Fair value measurements

17

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

The fair value is principally applied to financial assets and liabilities such as derivative instruments consisting of foreign exchange forward contracts and collars. The following table provides a summary of the financial assets and liabilities that are measured at fair value as of January 31, 2013 and October 31, 2012:

Assets measured at fair value
	Fair value measurement at January 31, 2013 using:				Fair value measurement at October 31, 2012 using:
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	$	$	$	$	$	$	$	$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	—	1.9	—	1.9	—	2.1	—	2.1
Total assets	—	1.9	—	1.9	—	2.1	—	2.1
Contingent consideration receivable	—	—	0.3	0.3	—	—	0.3	0.3
Total assets	—	—	0.3	0.3	—	—	0.3	0.3

Liabilities measured at fair value
	Fair value measurement at January 31, 2013 using:				Fair value measurement at October 31, 2012 using:
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	$	$	$	$	$	$	$	$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	—	0.1	—	0.1	—	—	—	—
Foreign exchange collars	—	0.4	—	0.4	—	0.7	—	0.7
Total liabilities	—	0.5	—	0.5	—	0.7	—	0.7

Level 1 - Based on quoted market prices in active markets.

Level 2 - Inputs, other than quoted prices in active markets, that are observable, either directly or indirectly.

Level 3 - Unobservable inputs that are not corroborated by market data.

The following table presents the fair value of the Company's derivative financial instruments and their classifications on the consolidated balance sheets as of January 31, 2013 and October 31, 2012:

Fair values of derivative instruments

	Asset derivatives as of January 31, 2013		Asset derivatives as of October 31, 2012
	Balance sheet location	Fair value	Balance sheet location	Fair value
		$		$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Prepaid expenses and other	1.9	Prepaid expenses and other	1.8
Foreign exchange forward contracts	Other long-term assets	—	Other long-term assets	0.3
Total designated derivatives		1.9		2.1
Contingent consideration receivable	Other long-term assets	0.3	Other long-term assets	0.3
Total non-designated derivatives		0.3		0.3

18

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

	Liability derivatives as of January 31, 2013		Liability derivatives as of October 31, 2012
	Balance sheet location	Fair value	Balance sheet location	Fair value
		$		$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Other long-term liabilities	0.1	Other long-term liabilities	—
Foreign exchange collars	Accounts payable and accrued liabilities	0.2	Accounts payable and accrued liabilities	0.3
Foreign exchange collars	Other long-term liabilities	0.2	Other long-term liabilities	0.4
Total designated derivatives		0.5		0.7

On August 31, 2012, the Company completed the sale of its global secondary clinical packaging and clinical distribution services business to Bellwyck Packaging Solutions. The total consideration for the sale of this business was approximately $2.7 million, of which $1.35 million was paid in cash at closing (subject to the retention of certain amounts in escrow) and $1.35 million will be paid in 24 months from the closing date if certain revenue targets are met by the new owner.

The $1.35 million that will be paid 24 months following closing is treated as a contingent consideration receivable for accounting purposes. The contingent consideration receivable was valued at $0.3 million on the closing date at fair value based upon the present value of the agreed-upon revenue targets. The fair value of the contingent consideration receivable will be marked to market on a quarterly basis with an adjustment to the related receivable and the gain/loss on sale of assets.

The following table presents a roll-forward of the Company's Level 3 financial instrument as of January 31, 2013:

	Contingent consideration
	$
Opening balance	0.3
Purchases	—
Issues	—
Total gains (losses)
In net loss	—
In other comprehensive income	—
Settlements	—
Transfers out of Level 3	—
Closing balance (January 31, 2013)	0.3

Foreign exchange forward contracts and other hedging arrangements

The Company utilizes financial instruments to manage the risk associated with fluctuations in foreign exchange and interest rates. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions.

As of January 31, 2013, the Company's Canadian operations had entered into foreign exchange forward contracts to sell an aggregate amount of US$57.8 million. These contracts hedge the Canadian operations' expected exposure to U.S. dollar denominated receivables and mature at the latest on April 2, 2014, at an average exchange rate of $1.0377 Canadian. The mark-to-market value of these financial instruments as of January 31, 2013 was an unrealized gain of $2.1 million, which has been recorded in accumulated other comprehensive income in shareholders' equity, net of associated income tax.

As of January 31, 2013, the Company's Canadian operations had entered into foreign exchange forward contracts to sell an aggregate amount of €4.0 million. These contracts hedge the Canadian operations' expected exposure to Euro denominated receivables and mature at the latest on October 8, 2013, at an average exchange rate of $1.2800 Canadian. The mark-to-market value of these financial instruments as of January 31, 2013 was an unrealized loss of $0.3 million, which has been recorded in accumulated other comprehensive income in shareholders' equity, net of associated income tax.

19

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

As of January 31, 2013, the Company's Canadian operations had entered into foreign exchange collars to sell an aggregate amount of US$48.1 million. These contracts hedge the Canadian operations' expected exposure to U.S. dollar denominated receivables and mature at the latest on July 2, 2014, at an average exchange rate of $0.9975 Canadian. The mark-to-market value of these financial instruments as of January 31, 2013 was an unrealized loss of $0.4 million, which has been recorded in accumulated other comprehensive income in shareholders' equity, net of associated income tax.

Risks arising from financial instruments and risk management

The Company's activities expose it to a variety of financial risks: market risk (including foreign exchange and interest rate), credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance. The Company uses derivative financial instruments to hedge certain risk exposures. The Company does not purchase any derivative financial instruments for speculative purposes.

Risk management is the responsibility of the Company's corporate finance team. The corporate finance team works with the Company's operational personnel to identify, evaluate and, where appropriate, hedge financial risks. The Company's corporate finance team also monitors material risks and discusses them with the Audit Committee of the Board of Directors.

Foreign exchange risk

As of January 31, 2013, the Company operated in Canada, the United States, Italy, France, the United Kingdom, The Netherlands, Mexico and Japan. Foreign exchange risk arises because the value of the local currency receivable or payable for transactions denominated in foreign currencies may vary due to changes in exchange rates ("transaction exposures") and because the non-U.S. dollar denominated financial statements of the Company may vary on consolidation into the reporting currency of U.S. dollars ("translation exposures").

The Company's most significant transaction exposures arise in its Canadian operations. Approximately 90% of the revenues of the Canadian operations and approximately 10% of its operating expenses are transacted in U.S. dollars. As a result, the Company may experience transaction exposures because of volatility in the exchange rate between the Canadian and U.S. dollar. Based on the Company's current U.S. denominated net inflows, as of January 31, 2013, fluctuations of +/-10% would, everything else being equal, have an annual effect on (loss) income from continuing operations before income taxes of approximately +/- $4.6 million, prior to hedging activities.

The objective of the Company's foreign exchange risk management activities is to minimize transaction exposures and the resulting volatility of the Company's earnings. The Company manages this risk by entering into foreign exchange contracts. As of January 31, 2013, the Company has entered into foreign exchange contracts to cover approximately 80% of its Canadian-U.S. dollar cash flow exposures for fiscal 2013. The Company does not currently hedge any translation exposures.

Translation gains and losses related to certain foreign currency denominated intercompany loans are included as part of the net investment in certain foreign subsidiaries, and are included in accumulated other comprehensive income (loss) in shareholders' equity.

Credit risk

Credit risk arises from cash and cash equivalents held with banks and financial institutions, derivative financial instruments (foreign exchange contracts with positive fair values), and credit exposure to customers, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets.

The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company regularly assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors. Management also regularly monitors the utilization of credit limits. In cases where the credit quality of a customer does not meet the Company's requirements, a cash deposit is received before any services are provided. As of January 31, 2013 and October 31, 2012, the Company held deposits of $17.6 million and $16.4 million, respectively.

Liquidity risk

Liquidity risk arises when financial obligations exceed financial assets available at a particular point in time. The Company's objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet its liquidity requirements at all times. The Company mitigates liquidity risk by maintaining cash and cash equivalents on-hand and through the availability of funding from credit facilities. As of January 31, 2013, the Company was holding cash and cash equivalents of $55.4 million and had undrawn lines of credit available to it of $72.7 million.

20

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

12.    LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS

Long-term debt in the accompanying consolidated balance sheets at January 31, 2013 and October 31, 2012 consists of the following:

	As of January 31, 2013		As of October 31, 2012
	$		$
7.25% secured term loan due December 14, 2018 (the "Secured Term Loan")	573.5		—
8.625% senior secured notes due April 15, 2017 (the "Notes")	—		280.0
$85 million secured revolving credit facility maturing December 14, 2017, bearing interest ranging from 5.8% to 7.75% (the "Secured Revolving Facility")	32.5		—
$75 million senior secured revolving loan facility maturing April 23, 2014, bearing interest ranging from 4.03% to 5.75% based upon floating LIBOR, US, or CAD prime, or federal funds effective rates, plus applicable margins	—		30.7
Total long-term debt outstanding	606.0		310.7
Less original issue discount, net of accumulated amortization of $0.3 million	(17.0	)	—
Less current portion	(5.8	)	—
Balance, end of the period	583.2		310.7

On December 14, 2012, the Company completed the refinancing of its existing debt (the "Refinancing"), pursuant to which it entered into a credit agreement (the "Credit Agreement") for a secured term loan in the amount of $575.0 million (the "Secured Term Loan") and a secured revolving credit facility of up to $85.0 million (the "Secured Revolving Facility" and, together with the Secured Term Loan, the "Credit Facility"). Up to $30.0 million of the Secured Revolving Facility is available for letters of credit. The Secured Term Loan matures on December 14, 2018, and the Secured Revolving Facility matures on December 14, 2017. The Secured Term Loan bears interest at a rate per annum equal to, at the option of the Company, LIBOR plus 6.00%, with a LIBOR "floor" of 1.25%, or an alternate base rate plus 5.00%, with an alternate base rate "floor" of 2.25%. Borrowings under the Secured Revolving Facility bear interest for eurodollar loans at Libor plus 5.50% and base rate loans at base rate plus 4.50%. The Company will also pay a commitment fee of 0.50% per annum on the unused portion of the Secured Revolving Facility with a step down to 0.375% when the First Lien Leverage Ratio (as defined in the Credit Agreement) is less than or equal to 3.00 to 1.00.

First Lien Leverage Ratio is generally defined in the Credit Agreement as the ratio of (i) the sum of the aggregate principal amount of the Company's and its restricted subsidiaries' indebtedness for borrowed money, principal amount of capital lease obligations and debt obligations evidenced by promissory notes or similar instruments plus the unrestricted cash of the Company and its restricted subsidiaries, in each case as set forth in the Credit Agreement, to (ii) Consolidated EBITDA. Consolidated EBITDA is generally defined in the Credit Agreement as income (loss) from continuing operations before repositioning expenses, interest expense, foreign exchange losses reclassified from other comprehensive income (loss), refinancing expenses, acquisition-related costs, gains and losses on sale of capital assets, income taxes, asset impairment charges, depreciation and amortization, stock-based compensation expense, consulting costs related to the Company's operational initiatives, purchase accounting adjustments, other income and expenses, non-cash charges, expenses related to the Banner Acquisition, pro forma cost savings from operational excellence initiatives and plant consolidations, pro forma synergies from the Banner Acquisition, and proceeds from business interruption insurance, among other adjustments. Consolidated EBITDA is not equivalent to Adjusted EBITDA, which, as discussed in Note 6, is the Company's measure of segment performance.

The Company is required to make the following mandatory prepayments in respect of the Secured Term Loan: (i) 50% of Excess Cash Flow (as defined in the Credit Agreement) when the Company maintains a First Lien Leverage Ratio of greater than 3.50 to 1.00, with step downs to (a) 25% when the Company maintains a First Lien Leverage Ratio of less than or equal to 3.50 to 1.00 but greater than 3.00 to 1.00 and (b) 0% when the Company maintains a First Lien Leverage Ratio of less than or equal to 3.00 to 1.00; (ii) 100% of the net cash proceeds of certain asset sales (including insurance and condemnation proceeds), subject to thresholds, reinvestment rights and certain other exceptions; and (iii) 100% of the net cash proceeds of issuances of debt obligations, subject to certain exceptions and thresholds. Excess Cash Flow is generally defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) plus, without duplication, (i) decreases in working capital, (ii) extraordinary or nonrecurring income or gains and (iii) certain other adjustments, minus, without duplication, (a)

21

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

interest, (b) taxes, (c) increases in working capital, (d) capital expenditures paid in cash and (e) certain other adjustments, in each case as set forth in the Credit Agreement. In the event the Secured Term Loan is prepaid, refinanced, substituted or replaced (including by way of amendment) in whole or in part prior to December 14, 2013 concurrently with the incurrence of indebtedness similar to the Secured Term Loan with a lower all-in yield than that of the Secured Term Loan, any amounts so prepaid, refinanced, substituted or replaced will be subject to a prepayment fee of 1.00%

Under the Credit Agreement, the Company is required to maintain a First Lien Leverage Ratio below a certain amount for each of the Testing Periods as set forth in the Credit Agreement. For purposes of the Credit Agreement, a Testing Period means a single period consisting of the most recent four consecutive fiscal quarters ending on the covenant determination date. The following table discloses the maximum permitted First Lien Leverage Ratios permitted under the Credit Agreement:

Testing Period Ending	Maximum Ratio
April 30, 2013 through July 31, 2014	5.50 to 1.00
October 31, 2014 through July 31, 2015	5.00 to 1.00
October 31, 2015 through April 30, 2016	4.75 to 1.00
July 31, 2016 through October 31, 2016	4.50 to 1.00
January 31, 2017 and thereafter	4.25 to 1.00

The Credit Agreement also provides for (i) certain representations, warranties and affirmative covenants, (ii) certain negative covenants in addition to the requirement to maintain the First Lien Leverage Ratio levels described above, including limitations on incurring indebtedness, liens, fundamental changes, asset sales, investments, dividends and repayment of certain indebtedness, and transactions with affiliates, in each case with baskets, thresholds and exceptions, and (iii) certain events of default, including for non-payment of principal and interest, breach of affirmative or negative covenants, certain cross defaults, change in control, bankruptcy events, certain ERISA events, certain unsatisfied judgments and actual or asserted invalidity of guarantees or security documents.

The Company's failure to maintain the required First Lien Leverage Ratio or its breach of the other covenants and requirements contained in the Credit Agreement could result in an event of default, which may allow the Company's lenders to accelerate the Company's debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. As of January 31, 2013, the Company was in compliance with the covenants and other requirements in the Credit Agreement.

Provided that the Company is in compliance with the First Lien Leverage Ratio test and no default under the Credit Agreement is continuing or would result therefrom, the covenant in the Credit Agreement that limits the Company's ability to pay dividends or make other distributions to its shareholders generally permits (with certain exceptions and qualifications) the Company to pay dividends or make such distributions in an aggregate amount, when taken together with the aggregate amount of any prepayment, repurchase, redemption or defeasance of subordinated indebtedness, not to exceed (i) $15.0 million plus (ii) (a) $7.5 million plus (b) the aggregate amount of Excess Cash Flows for all fiscal years beginning with fiscal 2013 (net of required prepayments) and proceeds from equity issuances. The Company historically has not paid dividends on its restricted voting shares.

The Credit Facility is guaranteed by certain wholly owned subsidiaries of the Company and secured by a first priority pledge on substantially all of the assets of the Company and the subsidiary guarantors, in each case subject to certain exceptions.

As part of the Refinancing, effective December 14, 2012, the Company terminated all commitments and repaid all amounts owed under its $75.0 million asset-based revolving credit facility. In addition, on November 26, 2012, the Company commenced a cash tender offer for the Notes. As of 12:00 midnight, New York City time, on December 13, 2012, $279.4 million principal amount of the Notes had been tendered and not validly withdrawn, representing approximately 99.80% of the aggregate outstanding principal amount of the Notes. On December 14, 2012, the Company paid an aggregate of approximately $307.2 million in order to purchase the Notes tendered prior to December 14, 2012. In addition, the Company deposited with the trustee in respect of the Notes sufficient funds to redeem the remaining outstanding Notes on January 23, 2013 and pay accrued and unpaid interest thereon. As a result, the Company has been released from its obligations under the Notes and the indenture governing the Notes pursuant to the satisfaction and discharge provisions of such indenture.

During the three months ended January 31, 2013, the Company incurred $29.1 million of refinancing expense comprised of a $23.8 million early redemption penalty related to the repayment of the Notes, and $5.3 million related to the write-off of

22

Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

deferred financing costs on the Notes and the ABL and other related charges. In addition, new creditor and third party fees of $21.7 million were capitalized in long term assets and an original issue discount of $17.3 million was capitalized and netted against the carrying value of the related debt. Both the new fees and the original issue discount will be amortized to interest expense over the term of the Credit Agreement.

13.    RELATED PARTY TRANSACTIONS

Revenues for contract manufacturing from a company controlled by Joaquin B. Viso (the "Viso Affiliate"), a director and significant shareholder of the Company, were nil for the three months ended January 31, 2013, and were less than $0.1 million for the three months ended January 31, 2012. These transactions were conducted in the normal course of business and are recorded at the exchanged amounts. Accounts receivable at January 31, 2013 and October 31, 2012 were nil, respectively, resulting from these transactions. In addition, Patheon manufactures a product for a third party for which the product's intellectual property is owned by the Viso Affiliate. The manufacturing agreement was originally contracted between the third party and the Viso Affiliate, but has been administered directly between Patheon and the third party on normal commercial terms since 2003.

As of January 31, 2013 and October 31, 2012, the Company had an investment of $4.7 million and $4.0 million, respectively, representing an 18% interest in two Italian companies (collectively referred to as "BSP Pharmaceuticals") whose largest investor was previously an officer of the Company until December 31, 2009. These companies specialize in the manufacture of cytotoxic pharmaceutical products. As a result of the shareholders' agreement with the other investors in BSP Pharmaceuticals that provides the Company with significant influence over BSP Pharmaceuticals' operations, the Company accounts for its investment in BSP Pharmaceuticals using the equity method. Accordingly, for the three months ended January 31, 2013 and 2012, the Company recorded investment income of approximately $0.5 million and $0.1 million, respectively.

In connection with its investment in BSP Pharmaceuticals, the Company has a management services agreement with BSP Pharmaceuticals that provides on-going sales and marketing services, and provided engineering and operational services during the construction of the BSP facility which was completed in 2008. There were no management fees recorded under this agreement for the three months ended January 31, 2013 and 2012, respectively. There was no accounts receivable balance at January 31, 2013 and October 31, 2012 in connection with the management services agreement, respectively. These services were conducted in the normal course of business and are recorded at the exchanged amounts.

In connection with certain of BSP Pharmaceuticals' bank financing, the Company had made commitments that it would not dispose of its interest in BSP Pharmaceuticals prior to January 1, 2011, and if needed, on an ongoing basis irrevocably inject equity (pro-rata) in order to ensure BSP complies with certain specific bank covenants. The Company has not made any injections since fiscal 2010.

14.    INCOME TAXES

The Company accounts for income taxes under FASB ASC 740, Income Taxes ("ASC 740"). The Company calculates its quarterly tax provision consistent with the guidance provided by ASC 740-270, whereby the Company forecasts its estimated annual effective tax rate then applies that rate to its year-to-date pre-tax book (loss) income. The effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective rate, including factors such as the valuation allowances against deferred tax assets, the recognition or de-recognition of tax benefits related to uncertain tax positions, or changes in or the interpretation of tax laws in jurisdictions where the Company conducts business. There is no tax benefit recognized on certain of the net operating losses incurred in foreign jurisdictions due to insufficient evidence supporting the Company's ability to use these losses in the future.

The Company has decided to release $0.5 million of the valuation allowance against the U.S. deferred tax assets and recognize a tax benefit, due to the creation of deferred tax liabilities from the Banner acquisition.

For the three months ended January 31, 2013 and 2012, the Company recorded a tax benefit of $0.2 million, and $7.7 million, respectively.

There were no material changes in uncertain tax positions for the three months ended January 31, 2013 and 2012. The Company does not reasonably expect any change to the amount of uncertain tax positions within the next 12 months.

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Notes to Unaudited Consolidated Financial Statements for the Three Months Ended January 31, 2013

(Dollar information in tabular form is expressed in millions of U.S. dollars, except per share information)

15.    BASIC AND DILUTED INCOME (LOSS) PER SHARE

Shares used in basic earnings per share are computed using the weighted-average number of common shares outstanding during each period. Shares used in diluted earnings per share include the dilutive effect of unvested restricted voting share stock options under the incentive stock option plan using the treasury stock method. For the three months ended January 31, 2013, 2,167,067 weighted-average restricted voting shares options had a grant price that was less than the average market price. The computation of net income per share did not include 11,529,777 and 10,755,509 outstanding options in the three months ended January 31, 2013 and 2012, respectively, because such options were anti-dilutive in nature.

The components of basic and diluted earnings per share for the three months ended January 31, 2013 and 2012 are as follows:

	Three months ended January 31,
	2013			2012
Numerator:
Income (loss) from continuing operations	$	(51.4	)	$	(19.3	)
Income (loss) from discontinued operations	—			(0.1		)
Net income (loss)	$	(51.4	)	$	(19.4	)
Denominator:(in thousands of shares)
Weighted-average number of shares outstanding - Basic	133,849			129,639
Dilutive effect of restricted voting shares options	—			—
Weighted-average number of shares outstanding - Diluted	133,849			129,639

The weighted-average number of shares outstanding have been adjusted to reflect the impact of the rights offering (as described in Note 5).

16.    SUBSEQUENT EVENTS

On March 7, 2013, the Company informed affected employees of the planned shutdown of the Olds, Canada facility by October 31, 2013. The Company expects to incur approximately $3.7 million in severance and retention expenses along with $1.5 million in closing costs. The Company expects this closure will save approximately $8.0 million on an annual basis. These costs are in addition to the non-cash impairment charge booked in the first quarter of fiscal 2013 of $10.1 million.

On February 28, 2013, the Company entered into a sale-leaseback agreement for the Caguas facility for $7.0 million. The agreement has a lease termination date of December 31, 2013.

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is designed to provide a better understanding of our consolidated financial statements, including a brief discussion of our business, key factors that impact our performance and a summary of our operating results. You should read the following discussion and analysis of financial condition and results of operations together with our unaudited consolidated financial statements and the related notes beginning on page 1 of this quarterly report on Form 10-Q and our audited financial statements and related notes beginning on page F-1 of our annual report on Form 10-K filed December 18, 2012 (our "2012 Form 10-K"), which have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from those anticipated by the forward-looking statements due to important factors including, but not limited to, those set forth under "Item 1A. Risk Factors" of our 2012 Form 10-K. See "Forward Looking Statements."

Executive Overview

Our Company

We are a leading provider of contract manufacturing and development services to the global pharmaceutical industry, offering a wide range of services from developing drug candidates at the pre-formulation stage through the launch, commercialization and production of approved drugs. We have established our position as a market leader by leveraging our scale, global reach, specialized capabilities, broad service offerings, scientific expertise and track record of product quality and regulatory compliance to provide cost-effective solutions to our customers.

We have two reportable segments, CMO and PDS. Our CMO business manufactures prescription products in sterile dosage forms as well as solid and liquid conventional dosage forms, and we differentiate ourselves by offering specialized manufacturing capabilities relating to high potency, controlled substance and sustained release products. Our PDS business provides a broad range of development services, including a wide variety of solid and sterile dosage forms. Additionally, our PDS business serves as a pipeline for future commercial manufacturing opportunities.

With the acquisition of Banner on December 14, 2012, we have now expanded our service offering to include proprietary products and technology that includes softgel formulations.  Banner is a leading provider of softgel formulations with research labs and manufacturing facilities in the US, Canada, Netherlands, and Mexico.

Selected Financial Results

The following is a summary of certain key financial results for the three months ended January 31, 2013 (a more detailed discussion is contained in "Results of Operations" below):

• Revenues for the three months ended January 31, 2013 increased $59.6 million, or 38.7%, to $213.5 million, from $153.9 million for the three months ended January 31, 2012.

• Gross profit for the three months ended January 31, 2013 increased $28.0 million, or 194.4%, to $42.4 million from $14.4 million for the three months ended January 31, 2012.

• Loss from continuing operations for the three months ended January 31, 2013 was $51.4 million, compared to $19.3 million for the three months ended January 31, 2012.

• Adjusted EBITDA for the three months ended January 31, 2013 increased $21.7 million to $19.8 million, from $(1.9) million for the three months ended January 31, 2012.

Strategic Initiatives

During the fiscal year ending October 31, 2013 ("fiscal 2013"), we have continued to advance our strategic transformation plan. The following are certain key activities related to the plan that we have undertaken in fiscal 2013.

• On March 7, 2013, we informed affected employees of the planned shutdown of the Olds, Canada facility by October 31, 2013. We expect to incur approximately $3.7 million in severance and retention expenses along with $1.5 million in closing costs. We expect this closure will save approximately $8.0 million on an annual basis. These costs are in addition to the non-cash impairment charge relating to the Olds, Canada facility of $10.1 million booked in the first

25

quarter of fiscal 2013, which resulted from a review of all facilities that formed part of the Banner Acquisition (defined below).

• On February 28, 2013, we entered into a sale-leaseback agreement for the Caguas facility for $7.0 million. The agreement has a lease termination date of December 31, 2013.

• On December 14, 2012, we completed our acquisition of Sobel USA Inc., and Banner Pharmacaps Europe B.V. We refer to these entities collectively as "Banner" and the acquisition of Banner as the "Banner Acquisition". We acquired Banner for an aggregate purchase price of approximately $271.6 million. Banner is the world's second largest pharmaceutical business focused on delivering proprietary softgel formulations, with four manufacturing facilities, significant proprietary technologies and products, and leading positions in some of the industry's fastest-growing product categories. Banner currently has research labs and manufacturing facilities in the United States, The Netherlands, Canada and Mexico.

• On December 14, 2012, in connection with the closing of the Banner Acquisition, we entered into a new credit facility (the "Credit Facility"), which is comprised of (i) the Secured Term Loan of $575.0 million and (ii) the Secured Revolving Facility of up to $85.0 million (collectively, the "Refinancing"). Up to $30.0 million of the Secured Revolving Facility is available for letters of credit. We used the Credit Facility to finance the Banner Acquisition, repurchase our $280.0 million of 8.625% senior secured notes (the "Notes"), repay all borrowings outstanding under our then-existing asset-based revolving credit facility and pay fees and expenses associated with the transactions. Going forward, the Secured Revolving Facility will be available for general corporate purposes.

• On December 31, 2012, we completed our subscription rights offering, which expired on December 28, 2012 (the "Rights Offering"). The Rights Offering was fully subscribed for with gross proceeds totaling approximately $30.0 million.

Changes in Our Management and Board

The following is a summary of certain key changes in our management since the beginning of fiscal 2013:

• On January 9, 2013, Aqeel Fatmi, Ph.D., was appointed as Executive Vice President, Global Research & Development over our Banner subsidiaries and Chief Scientific Officer for our company.

• On December 17, 2012, in connection with the completion of the Banner Acquisition, Geoffrey Glass was appointed President of Product and Technology Commercialization.

• On November 1, 2012, Michael Lehmann joined our company as President of Global PDS.

Opportunities and Trends

Our target markets include the highly fragmented global market for the manufacture of finished pharmaceutical dosage forms and for pharmaceutical development services. According to PharmSource, a provider of pharmaceutical outsourcing business information, the CMO market totaled $13.7 billion in 2011, and may experience marginal growth of 5% to 7% annually through 2016.  PharmSource also estimates that the outsourced PDS market (which tends to be more volatile) totaled approximately $1.4 billion in 2011, with growth projections approaching 8 to 10% annually through 2016.

The acquisition provides us with immediate access to new markets, including the nutritional supplement and over-the-counter pharmaceutical markets. The nutritional supplement market totaled approximately $90 billion worldwide in 2011 according to the Nutrition Business Journal. The over-the-counter pharmaceutical market generated over $100 billion in 2011 according to Nicholas Hall. The Banner acquisition also provides us with a portfolio of proprietary prescription compounds. According to IMS Health, the prescription pharmaceuticals market generated $956 billion globally in 2011.

Plant Consolidations

Subsequent to the closing of the Banner Acquisition, we performed a review of Banner's facilities and decided to close our Olds, Canada facility by October 31, 2013. In connection with this decision, we recorded total impairment charges of $10.1 million, of which $10.0 million related to the long-term assets at the facility and $0.1 million related to the goodwill allocated to the Olds, Canada reporting unit. The impairment charges reduce assets in the CMO segment by $10.1 million. These facility assets will remain as held and used until a plan of sale has been initiated and the site is in a condition for immediate sale.

26

We closed our Carolina facility in Puerto Rico effective January 31, 2009. We completed the sale of this property on February 17, 2012 for a nominal amount. The results of the Carolina operations have been reported in discontinued operations for the three months ended January 31, 2012.

In December 2009, we announced our plan to consolidate our Puerto Rico operations into our manufacturing site located in Manati and ultimately close or sell our plant in Caguas. As a result of additional time required to transition manufacturing operations from Caguas to Manati due to longer than expected customer regulatory time lines and increased product demand, the transition will continue into calendar year 2013. We now estimate the total project repositioning expenses to be $13.7 million, of which $12.8 million has been incurred as of January 31, 2013. The consolidation also resulted in accelerated depreciation of Caguas assets of approximately $12.0 million. Because the business in the Caguas facility is being transferred within the existing site network, its results of operations are included in continuing operations.

Results of Operations

Three Months Ended January 31, 2013 Compared to Three Months Ended January 31, 2012.

	Three months ended January 31,
	2013		2012		$		%
(in millions of U.S. dollars, except per share information)	$		$		Change		Change
Revenues	213.5		153.9		59.6		38.7
Cost of goods sold	171.1		139.5		31.6		22.7
Gross profit	42.4		14.4		28.0		194.4
Selling, general and administrative expenses	35.2		34.5		0.7		2.0
Research and development	1.3		—		1.3		—
Repositioning expenses	4.0		0.8		3.2		400.0
Acquisition-related costs	4.4		—		4.4		—
Impairment charge	10.1		—		10.1		—
Gain on sale of capital assets	(0.3	)	—		0.3		—
Operating loss	(12.3	)	(20.9	)	8.6		—
Interest expense, net	9.8		6.5		3.3		50.8
Foreign exchange loss (gain), net	0.8		(0.3	)	(1.1	)	(366.7	)
Refinancing expenses	29.1		—		(29.1	)	—
Other income, net	(0.4	)	(0.1	)	0.3		300.0
Loss from continuing operations before income taxes	(51.6	)	(27.0	)	(24.6	)	(91.1	)
Benefit from income taxes	(0.2	)	(7.7	)	(7.5	)	(97.4	)
Loss from continuing operations	(51.4	)	(19.3	)	(32.1	)	—
Loss from discontinued operations	—		(0.1	)	0.1		—
Net loss attributable to restricted voting shareholders	(51.4	)	(19.4	)	(32.0	)	—
Basic and diluted loss per share
From continuing operations	$(0.384)		$(0.149)
From discontinued operations	—		$(0.001)
	$(0.384)		$(0.150)
Weighted-average number of shares outstanding during period—basic and diluted (in thousands)	133,849		129,639

Operating (Loss) Income Summary

Revenues for the three months ended January 31, 2013 increased $59.6 million, or 38.7%, to $213.5 million, from $153.9 million for the three months ended January 31, 2012. The impact of foreign currency fluctuation for the three months ended January 31, 2013 over the three months ended January 31, 2012 was minimal. CMO revenues for the three months ended January 31, 2013 increased $57.3 million, or 46.7%, to $180.1 million, from $122.8 million for the three months ended January 31, 2012. The increase was across most Patheon legacy sites, with the exception of Whitby and Bourgoin, and $23.3 million of the increase was due to the Banner Acquisition. PDS revenues for the three months ended January 31, 2013 increased $2.3 million, or 7.4%, to $33.4 million, from $31.1 million for the three months ended January 31, 2012 primarily

27

due to stronger results in our North American, Milton Park, and Bourgoin operations, partially offset by weakness in Swindon and Ferentino.

Gross profit for the three months ended January 31, 2013 increased $28.0 million, or 194.4%, to $42.4 million, from $14.4 million for the three months ended January 31, 2012. The increase in gross profit was primarily due to higher volume and an increase in gross profit margin to 19.9% for the three months ended January 31, 2013 from 9.4% for the three months ended January 31, 2012. The increase in gross profit margin was driven by higher volumes, savings from our operational excellence initiatives and favorable material mix. Approximately $6.0 million of the gross margin increase over the comparable prior year period was due to the Banner Acquisition. Foreign exchange rates had a negative impact of $1.2 million on gross profit in the three months ended January 31, 2013 versus the same period in the prior year.

Selling, general and administrative expenses for the three months ended January 31, 2013 increased $0.7 million, or 2.0%, to $35.2 million, from $34.5 million for the three months ended January 31, 2012. Selling, general and administrative expenses were higher as a result of Banner's selling, general and administrative costs of $4.5 million, higher compensation expenses of $0.9 million and promotion costs of $0.5 million, partially offset by lower consulting costs. Consulting costs relating to our strategic and operational review of $6.3 million was incurred for the three months ended January 31, 2012. Foreign exchange rates had an unfavorable impact of $0.2 million on selling, general and administrative expenses in the three months ended January 31, 2013 versus the same period in the prior year.

Research and development expenses for the three months ended January 31, 2013 were $1.3 million as a result of the Banner Acquisition. These expenses related to proprietary research and development efforts and consist of salaries and benefits, supplies and other costs.

Repositioning expenses for the three months ended January 31, 2013 increased $3.2 million, to $4.0 million, from $0.8 million for the same period of the prior year. The expenses for the three months ended January 31, 2013 were associated primarily with the changes to the organizational alignment within our business as a result of the Banner Acquisition, as compared to the expenses related to the Caguas closure and consolidation for the three months ended January 31, 2012.

Acquisition-related costs for the three months ended January 31, 2013 were $4.4 million. These expenses are associated with the Banner Acquisition and integration efforts. In connection with closing the acquisition on December 14, 2012, we incurred, and expect to incur, additional acquisition-related costs, primarily on consultants. These costs will be recognized as operating expenses as incurred. In addition, we expect to incur integration costs during fiscal 2013 related to system and customer conversions, employee-related severance costs and other integration-related costs.

An impairment charge of $10.1 million was incurred for the three months ended January 31, 2013 related to the planned closure of our recently acquired Olds Canada facility by the end of fiscal 2013.

Operating loss for the three months ended January 31, 2013 decreased $8.6 million to $12.3 million (-5.8% of revenues), from a loss of $20.9 million (-13.6% of revenues) for the three months ended January 31, 2012 as a result of the factors discussed above.

Foreign Exchange Losses (Gains)

Foreign exchange loss for the three months ended January 31, 2013 was $0.8 million, compared to a gain of $0.3 million for the same period of the prior year. The foreign exchange loss for the three months ended January 31, 2013 was primarily due to operating exposures offset by hedge gains. The foreign exchange gain for the three months ended January 31, 2012 was from operating gains, partially offset by hedging losses. The hedging contracts resulted in gains of less than $0.5 million for the three months ended January 31, 2013 compared to losses of $0.2 million for the three months ended January 31, 2012.

Refinancing expenses

During the three months ended January 31, 2013, we incurred expenses of $29.1 million in connection with our refinancing activities related to the acquisition of Banner.  These costs primarily included the early redemption penalty related to the repayment of our Notes and the write-off of deferred financing costs on the Notes and our ABL (each as defined and described more fully below in "-Liquidity and Capital Resources").

Loss from Continuing Operations Before Income Taxes

We reported loss from continuing operations before income taxes of $51.6 million for the three months ended January 31, 2013, compared to a loss of $27.0 million for the three months ended January 31, 2012. The operating items discussed above were the primary drivers of the year over year variance.

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Income Taxes

Income taxes were a benefit of $0.2 million for the three months ended January 31, 2013, compared to a benefit of $7.7 million for the three months ended January 31, 2012. The decrease in tax benefit was primarily driven by the mix of income and loss from our operating units and pre-tax losses in some entities for which no tax benefits were recognized.

Loss from Continuing Operations and Loss Per Share from Continuing Operations

We recorded loss from continuing operations for the three months ended January 31, 2013 of $51.4 million, compared to $19.3 million for the three months ended January 31, 2012. The basic and diluted loss per share from continuing operations for the three months ended January 31, 2013 was 38.4¢ compared to 14.9¢ for the three months ended January 31, 2012.

Loss and Loss Per Share from Discontinued Operations

Discontinued operations for the three months ended January 31, 2012 include the results of the Carolina, Puerto Rico operations. Financial details of the operating activities of the Carolina operations are disclosed in "Note 3—Discontinued Operations, Plant Consolidations, Sales and Asset Impairments." The loss from discontinued operations for the three months ended January 31, 2012 was $0.1 million, or 0.1¢ per share. These costs relate to the final wind down of the Carolina facility.

Net Loss Attributable to Restricted Voting Shareholders and Loss Per Share

Net loss attributable to restricted voting shares for the three months ended January 31, 2013 was $51.4 million, or 38.4¢ per share for both basic and diluted, compared to a loss of $19.4 million, or 15.0¢ per share, for the three months ended January 31, 2012.

The computation of net income per share did not include 11,529,777 and 10,755,509 outstanding options in the three months ended January 31, 2013 and 2012, respectively, because such options were anti-dilutive in nature.

Revenues and Adjusted EBITDA by Business Segment

We evaluate the performance of our segments based on segment Adjusted EBITDA. Commencing with the first quarter of fiscal 2013, we revised our calculation of Adjusted EBITDA to exclude stock-based compensation expense, consulting costs related to our operational initiatives and purchase accounting adjustments. We determined that excluding these items from Adjusted EBITDA better reflected our segments' underlying performance. Based on the revisions to the definition of Adjusted EBITDA, we have recast the presentation of Adjusted EBITDA for the three months ended January 31, 2012 to be consistent with the current period presentation. Our Adjusted EBITDA (as revised) is now income (loss) from continuing operations before repositioning expenses, interest expense, foreign exchange losses reclassified from other comprehensive income (loss), refinancing expenses, acquisition-related costs, gains and losses on sale of capital assets, income taxes, asset impairment charges, depreciation and amortization, stock-based compensation expense, consulting costs related to our operational initiatives, purchase accounting adjustments and other income and expenses. "Adjusted EBITDA margin" is Adjusted EBITDA as a percentage of revenues.

Since Adjusted EBITDA is a non-GAAP measure that does not have a standardized meaning, it may not be comparable to similar measures presented by other issuers. In addition, Adjusted EBITDA is not equivalent to "Consolidated EBITDA" as defined in the Credit Agreement (as discussed in "-Liquidity and Capital Resources"). Readers are cautioned that Adjusted EBITDA should not be construed as an alternative to net income (loss) determined in accordance with U.S. GAAP as an indicator of performance. Adjusted EBITDA is used by management as an internal measure of profitability. We have included Adjusted EBITDA because we believe that this measure is used by certain investors to assess our financial performance before non-cash charges and certain costs that we do not believe are reflective of our underlying business.

A reconciliation of Adjusted EBITDA to loss from continuing operations is set forth below:

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	Three months ended January 31,
	2013		2012
(in millions of U.S. dollars)	$		$
Adjusted EBITDA	19.8		(1.9	)
Depreciation and amortization	(11.0	)	(10.6	)
Repositioning expenses	(4.0	)	(0.8	)
Acquisition-related costs	(4.4	)	—
Interest expense, net	(9.8	)	(6.5	)
Impairment charge	(10.1	)	—
Gain on sale of capital assets	0.3		—
Benefit from income taxes	0.2		7.7
Refinancing expenses	(29.1	)	—
Operational initiatives related consulting costs	(0.1	)	(6.3	)
Stock-based compensation expense	(0.8	)	(1.0	)
Purchase accounting adjustments	(2.9	)	—
Other	0.5		0.1
Loss from continuing operations	(51.4	)	(19.3	)

The following provides certain information regarding our business segments for the three months ended January 31, 2013 and 2012:  

	Three months ended January 31,
	2013		2012		$	%
(in millions of U.S. dollars)	$		$		Change	Change
Revenues
Commercial Manufacturing
North America	106.7		71.5		35.2	49.2
Europe	73.4		51.3		22.1	43.1
Total Commercial Manufacturing	180.1		122.8		57.3	46.7
Pharmaceutical Development Services	33.4		31.1		2.3	7.4
Total Revenues	213.5		153.9		59.6	38.7
Adjusted EBITDA
Commercial Manufacturing
North America	15.2		5.2		10.0	192.3
Europe	7.3		(3.8	)	11.1	(292.1	)
Total Commercial Manufacturing	22.5		1.4		21.1	1,507.1
Pharmaceutical Development Services	6.4		4.1		2.3	56.1
Corporate Costs	(9.1	)	(7.4	)	1.7	23.0
Total Adjusted EBITDA	19.8		(1.9	)	21.7	(1,142.1	)

Commercial Manufacturing

Total CMO revenues for the three months ended January 31, 2013 increased $57.3 million, or 46.7%, to $180.1 million, from $122.8 million for the three months ended January 31, 2012. Had local currency exchange rates remained constant to the rates of the three months ended January 31, 2012, CMO revenues for the Patheon legacy entities for the three months ended January 31, 2013 would have been approximately 27.8% higher than the same period of the prior year. Approximately $23.3 million of the year over year CMO growth resulted from the Banner Acquisition.

North American CMO revenues for the three months ended January 31, 2013 increased $35.2 million, or 49.2%, to $106.7 million, from $71.5 million for the three months ended January 31, 2012. The increase was due to an increase in customer demand across all North American sites with the exception of Whitby, with $19.6 million of the increase resulting from the Banner Acquisition.

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European CMO revenues for the three months ended January 31, 2013 increased $22.1 million, or 43.1%, to $73.4 million, from $51.3 million for the three months ended January 31, 2012. Had European currency exchange rates remained constant to the rates of the three months ended January 31, 2012, European CMO revenues for the Patheon legacy entities for the three months ended January 31, 2013 would have been approximately 37.0% higher than the same period of the prior year. The increase was primarily due to increases in our Italian operations, partially offset by weakness in Bourgoin. Approximately $3.7 million of the year over year European CMO growth resulted from the Banner Acquisition.

Total CMO Adjusted EBITDA for the three months ended January 31, 2013 increased $21.1 million to $22.5 million, from $1.4 million for the three months ended January 31, 2012. This represents an Adjusted EBITDA margin of 12.5% for the three months ended January 31, 2013 compared to 1.1% for the three months ended January 31, 2012. Had local currency exchange rates and foreign exchange gains and losses remained constant to those of the three months ended January 31, 2012, CMO Adjusted EBITDA for the three months ended January 31, 2013 would have been approximately $2.6 million higher. The increase was driven by higher volumes, improved margins driven by our operational excellence initiatives and favorable material mix, and $3.1 million in lower consulting fees, partially offset by higher foreign exchange losses of $1.2 million. Approximately $1.6 million of the year over year growth resulted from the Banner Acquisition.

North American Adjusted EBITDA for the three months ended January 31, 2013 increased $10.0 million, to $15.2 million, from $5.2 million for the three months ended January 31, 2012. The increase was primarily driven by higher volumes, favorable material mix and margins as a result of our operational excellence initiatives, and $1.0 million in lower consulting fees from the operational initiatives during the three month ended January 31, 2012, partially offset by higher employee related expenditures. North American CMO recorded $10.1 million of impairment charges related to the closure of the Banner facility in Canada in the three months ended January 31, 2013 that were not included in Adjusted EBITDA. Approximately $1.5 million of the year over year growth resulted from the Banner Acquisition.

European Adjusted EBITDA for the three months ended January 31, 2013 increased $11.1 million, to $7.3 million, from $(3.8) million for the three months ended January 31, 2012. Had European currency exchange rates remained constant to those of the three months ended January 31, 2012, European CMO Adjusted EBITDA for the three months ended January 31, 2013 would have been approximately $0.4 million higher. The increase was primarily driven by higher volumes, favorable material mix and margins as a result of our operational excellence initiatives, and $2.0 million lower consulting fees from our operational initiatives during the three months ended January 31, 2012, partially offset by foreign exchange loss of $1.1 million and higher employee related expenditures. Approximately $0.1 million of the year over year growth resulted from the Banner Acquisition.

Pharmaceutical Development Services

Total PDS revenues for the three months ended January 31, 2013 increased by $2.3 million, or 7.4%, to $33.4 million, from $31.1 million for the three months ended January 31, 2012. Had the local currency exchange rates remained constant to the three months ended January 31, 2012, PDS revenues for the three months ended January 31, 2013 would have been 7.4% higher than the same period of the prior year. Higher development activities from new contracts across most sites contributed to the improved performance.

Total PDS Adjusted EBITDA for the three months ended January 31, 2013 increased $2.3 million, or 56.1%, to $6.4 million, from $4.1 million for the three months ended January 31, 2012. Had local currency exchange rates remained constant to those of the three months ended January 31, 2012, PDS Adjusted EBITDA for the three months ended January 31, 2013 would have been approximately $0.3 million higher than reported. Positive impact from our operational excellence initiatives and lower consulting costs of $0.2 million contributing to the year over year growth.

Corporate Costs

Corporate costs for the three months ended January 31, 2013 increased $1.7 million, or 23.0%, to $9.1 million, from $7.4 million for the three months ended January 31, 2012. Lower consulting costs primarily from the operational initiatives for the three months ended January 31, 2012 were more than offset by higher convention and promotional costs, travel and $0.5 million in Banner general and administrative costs. Refinancing costs of $29.1 million, repositioning costs of $2.9 million, and acquisition related costs of $4.4 million in the three months ended January 31, 2013 were not included in Adjusted EBITDA.

Liquidity and Capital Resources

Overview

Cash and cash equivalents totaled $55.4 million at January 31, 2013 and $39.4 million at October 31, 2012. Our total debt was $589.6 million at January 31, 2013 and $313.1 million at October 31, 2012.

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Our primary source of liquidity is cash flow from operations and borrowings under our credit arrangements. Our principal uses of cash have been for operating expenditures, capital expenditures, repositioning expenditures, debt servicing requirements, and employee benefit obligations. We expect cash flow from operations, cash on hand and borrowing under our current revolver to be sufficient to fund our existing level of operating expenses, capital expenditures, and interest expense for at least the next 12 months.

From time to time, we evaluate strategic opportunities, including potential acquisitions, divestitures or investments in complementary businesses, and we anticipate continuing to make such evaluations. We may also access capital markets through the issuance of debt or equity securities in connection with the acquisition of complementary businesses or other significant assets or for other strategic opportunities.

If our cash flow is not sufficient to service our debt and adequately fund our business, we may be required to seek further additional financing or refinancing or dispose of assets. We may not be able to effect any of these alternatives on satisfactory terms or at all. In addition, our financial leverage could adversely affect our ability to raise additional capital to fund our operations, could impair our ability to respond to operational challenges, changing business and economic conditions and new business opportunities and may make us vulnerable in the event of a downturn in our business.

Summary of Cash Flows

The following table summarizes our cash flows for the periods indicated:

	Three months ended January 31,
	2013		2012
(in millions of U.S. dollars)	$		$
Cash (used in) provided by operating activities of continuing operations	(6.3	)	10.2
Cash used in operating activities of discontinued operations	—		(0.3	)
Cash (used in) provided by operating activities	(6.3	)	9.9
Cash used in investing activities	(266.9	)	(6.5	)
Cash provided by (used in) financing activities	286.6		(2.9	)
Other	2.6		(1.4	)
Net increase (decrease) in cash and cash equivalents during the period	16.0		(0.9	)

Cash (Used in) Provided by Operating Activities

Cash used in operating activities from continuing operations for the three months ended January 31, 2013 increased $16.5 million, to a usage of $6.3 million, from a source of cash of $10.2 million for the three months ended January 31, 2012. In the current year, improved operating and working capital performance was more than offset by refinancing expenses and acquisition-related costs. Prior year cash from operations was primarily driven by favorable working capital.

Cash Used in Investing Activities

The following table summarizes the cash used in investing activities for the periods indicated:

	Three months ended January 31,
	2013		2012
(in millions of U.S. dollars)	$		$
Cash used in investing activities	(266.9	)	(6.5	)

Cash used in investing activities from continuing operations for the three months ended January 31, 2013 increased $260.4 million, to $266.9 million, from $6.5 million for the three months ended January 31, 2012 due to the Banner Acquisition.

Our principal ongoing investment activities are project-related and sustaining capital programs at our network of sites. The majority of our capital allocation is normally invested in project-related programs, which are defined as outlays that will generate growth in capacity and revenues, while sustaining expenditures related to the preservation of existing assets and capacity.

Cash Provided by (Used in) Financing Activities

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The following table summarizes the cash used in financing activities for the periods indicated:

	Three months ended January 31,
	2013		2012
(in millions of U.S. dollars)	$		$
Decrease in short-term borrowings	—		(1.3	)
Proceeds from long-term borrowings	592.1		—
Increase in deferred financing costs	(21.7	)	—
Repayment of debt, net of penalty payment	(315.8	)	(1.6	)
Share issuance cost	(0.9	)	—
Proceeds on issuance of restricted voting shares	32.9		—
Cash provided by (used in) financing activities	286.6		(2.9	)

Cash provided by financing activities for the three months ended January 31, 2013 was $286.6 million compared to cash used of $2.9 million for the three months ended January 31, 2012. This increase of cash inflow is due to the refinancing activities during the three months ended January 31, 2013.

Financing Arrangements

Current Credit Arrangements - $660 Million Credit Facility

On December 14, 2012, in connection with the Banner Acquisition, we entered into a credit agreement that provides for the Credit Facility, which is comprised of Secured Term Loan in the amount of $575.0 million and the Secured Revolving Facility of up to $85.0 million (the "Credit Agreement"). Up to $30.0 million of the Secured Revolving Facility is available for letters of credit. The Secured Term Loan matures on December 14, 2018, and the Secured Revolving Facility matures on December 14, 2017. The Secured Term Loan bears interest at a rate per annum equal to, at our option, LIBOR plus 6.00%, with a LIBOR "floor" of 1.25%, or an alternate base rate plus 5.00%, with an alternate base rate "floor" of 2.25%. Borrowings under the Secured Revolving Facility bear interest for eurodollar loans at Libor plus 5.50% and base rate loans at base rate plus 4.50%. We will also pay a commitment fee of 0.50% per annum on the unused portion of the Secured Revolving Facility with a step down to 0.375% when the First Lien Leverage Ratio (as defined in the Credit Agreement) is less than or equal to 3.00 to 1.00.

First Lien Leverage Ratio is generally defined in the Credit Agreement as the ratio of (i) the sum of the aggregate principal amount of the Company's and its restricted subsidiaries' indebtedness for borrowed money, principal amount of capital lease obligations and debt obligations evidenced by promissory notes or similar instruments plus the unrestricted cash of the Company and its restricted subsidiaries, in each case as set forth in the Credit Agreement, to (ii) Consolidated EBITDA. Consolidated EBITDA is generally defined in the Credit Agreement as income (loss) from continuing operations before repositioning expenses, interest expense, foreign exchange losses reclassified from other comprehensive income (loss), refinancing expenses, acquisition-related costs, gains and losses on sale of capital assets, income taxes, asset impairment charges, depreciation and amortization, stock-based compensation expense, consulting costs related to the Company's operational initiatives, purchase accounting adjustments, other income and expenses, non-cash charges, expenses related to the Banner Acquisition, pro forma cost savings from operational excellence initiatives and plant consolidations, pro forma synergies from the Banner Acquisition, and proceeds from business interruption insurance, among other adjustments. Consolidated EBITDA is not equivalent to Adjusted EBITDA disclosed elsewhere in this quarterly report on Form 10-Q.

We are required to make the following mandatory prepayments in respect of the Secured Term Loan: (i) 50% of Excess Cash Flow (as defined in the Credit Agreement) when we maintain a First Lien Leverage Ratio of greater than 3.50 to 1.00, with step downs to (a) 25% when we maintain a First Lien Leverage Ratio of less than or equal to 3.50 to 1.00 but greater than 3.00 to 1.00 and (b) 0% when we maintain a First Lien Leverage Ratio of less than or equal to 3.00 to 1.00; (ii) 100% of the net cash proceeds of certain asset sales (including insurance and condemnation proceeds), subject to thresholds, reinvestment rights and certain other exceptions; and (iii) 100% of the net cash proceeds of issuances of debt obligations, subject to certain exceptions and thresholds. In the event the Secured Term Loan is prepaid, refinanced, substituted or replaced (including by way of amendment) in whole or in part prior to December 14, 2013 concurrently with the incurrence of indebtedness similar to the Secured Term Loan with a lower all-in yield than that of the Secured Term Loan, any amounts so prepaid, refinanced, substituted or replaced will be subject to a prepayment fee of 1.00%. Excess Cash Flow is generally defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) plus, without duplication, (i) decreases in working capital, (ii) extraordinary or nonrecurring income or gains and (iii) certain other adjustments, minus,

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without duplication, (a) interest, (b) taxes, (c) increases in working capital, (d) capital expenditures paid in cash and (e) certain other adjustments, in each case as set forth in the Credit Agreement.

Under the Credit Agreement, we are required to maintain a First Lien Leverage Ratio below a certain amount for each Testing Period, defined as a single period consisting of the most recent four consecutive fiscal quarters ending on the covenant determination date. The following table discloses the maximum permitted First Lien Leverage Ratios permitted under the Credit Agreement:

Testing Period Ending	Maximum Ratio
April 30, 2013 through July 31, 2014	5.50 to 1.00
October 31, 2014 through July 31, 2015	5.00 to 1.00
October 31, 2015 through April 30, 2016	4.75 to 1.00
July 31, 2016 through October 31, 2016	4.50 to 1.00
January 31, 2017 and thereafter	4.25 to 1.00

The Credit Agreement also (i) required us to make a number of representations and warranties, including representations and warranties regarding our legal status and our business and (ii) subjects us to a number of affirmative covenants, including requirements to deliver certain information to the lenders, maintain insurance and comply with laws, in each case subject to certain exceptions as set forth in the Credit Agreement.

The Credit Agreement also subjects us to a number of negative covenants that restrict our ability and the ability of our subsidiaries to, among other things:

• incur additional indebtedness;

• issue additional equity;

• pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments;

• enter into agreements that restrict distributions from subsidiaries or restrict our ability to incur liens on certain of our assets;

• make capital expenditures;

• sell or otherwise dispose of assets, including capital stock of subsidiaries;

• enter into transactions with affiliates;

• change our line of business

• create or incur liens;

• change our fiscal year; and

• merge or consolidate.

The Credit Agreement contains a number of events of default, including, among others:

• failure to make payments when due;

• breaches of representations and warranties;

• breaches of covenants;

• defaults under other indebtedness (cross-defaults);

• invalidity of security documents;

• judgments in excess of a specified amount;

• bankruptcy or insolvency;

• ERISA events and similar events under non-U.S. plans; and

• a change of control.

Our failure to maintain the required First Lien Leverage Ratio or our breach of the other covenants and requirements contained in the Credit Agreement could result in an event of default, which may allow our lenders to accelerate our debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. As of January 31, 2013, we were in compliance with the covenants and other requirements in the Credit Agreement.

The Credit Facility is guaranteed by certain of our wholly-owned subsidiaries and secured by a first priority pledge on substantially all of our assets and the subsidiary guarantors, in each case subject to certain exceptions.

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Consolidated EBITDA is based on the definition in the Credit Agreement, is not defined under U.S. GAAP and is subject to important limitations. We have included the calculation of Consolidated EBITDA for the period presented below as Consolidated EBITDA is a component of certain covenants under the Credit Agreement. Because not all companies use identical calculations, our presentation of Consolidated EBITDA may not be comparable to other similarly titled measures of other companies.

Our Consolidated EBITDA for the last four fiscal quarters ended January 31, 2013 based on the definition in our Credit Agreement is calculated as follows:

	Last twelve months ended January 31,
	2013
	(in millions of USD)
	$
Consolidated EBITDA per credit facility	167.2
Less:
Acquired EBITDA of Banner	(14.0	)
Pro forma cost savings	(40.1	)
Other	(4.0	)
Adjusted EBITDA	109.1
(Deduct) add:
Depreciation and amortization	(41.2	)
Repositioning expenses	(9.3	)
Acquisition-related costs	(7.6	)
Interest expense, net	(29.8	)
Asset Impairment charges	(68.0	)
Provision for income taxes	(50.9	)
Refinancing expenses	(29.1	)
Operational initiatives related consulting costs	(7.1	)
Stock-based compensation expense	(2.9	)
Purchase accounting adjustments	(2.9	)
Other	1.2
Loss from continuing operations	(138.5	)
Add (deduct):
Depreciation and amortization	41.2
Impairment charge	68.0
Stock-based compensation	2.9
Net change in non-cash working capital	(3.2	)
Net change in deferred revenues	10.6
Non-cash interest	5.8
Other, primarily changes in long-term assets and liabilities	30.0
Cash flows from operations	16.8
Cash flows from investing activities	(312.3	)
Cash flows from financing activities	315.8

Included in our pro forma cost savings are the estimated impact of our operational excellence initiatives, plant consolidation savings, and other synergies related to the Banner Acquisition, assuming such activities were completed as of February 1, 2012.

Our net debt calculation for our credit facility as of January 31, 2013, is as follows:

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(in millions of U.S. dollars)	$
7.25% secured term loan	589.0
Less: cash and cash equivalents	(35.0	)
Net debt	554.0

As part of the credit agreement, we are required to maintain a leverage ratio, which is calculated by taking our total net debt of $554.0 million and dividing by our Consolidated EBITDA for the last twelve months of $167.2 million, for a leverage ratio of 3.31. Effective for the twelve month period ending April 30, 2014, we are required to keep our coverage ratio below 5.50.

Historical Credit Arrangements-$280.0 Million Senior Secured Notes and $75.0 Million Amended ABL

In April 2010, we issued the Notes in an aggregate principal amount of $280.0 million. We used the net proceeds of the offering to repay all of the outstanding indebtedness under our then-existing senior secured term loan and $75.0 million asset-based revolving credit facility, to repay certain other indebtedness and to pay related fees and expenses. We used the remaining proceeds for general corporate purposes.

We also amended and restated our then-existing $75.0 million ABL in connection with the Notes offering to, among other things, extend the maturity date of this facility to April 23, 2014.

The Notes and the ABL were secured by substantially all of our assets and were guaranteed by, and secured by substantially all of the assets of, our subsidiaries in the United States (including Puerto Rico), Canada, the United Kingdom (except Patheon UK Pension Trustees Limited) and The Netherlands. The Notes and the ABL were guaranteed on a limited basis by, and secured by certain assets of, our subsidiaries in France, Italy and Switzerland.

As part of the Refinancing, effective December 14, 2012, we terminated all commitments and repaid all amounts owed under the ABL. On December 14, 2012, as part of the previously announced tender offer for our Notes, we paid or deposited with an escrow agent an aggregate of approximately $307.2 million in order to purchase all outstanding Notes. As a result, we were released from our obligations under the Notes and the indenture governing the Notes pursuant to the satisfaction and discharge provisions of such indenture.

Financing Ratios

Total interest-bearing debt at January 31, 2013 was $589.6 million, $276.5 million higher than at October 31, 2012. At January 31, 2013, our consolidated ratio of interest-bearing debt to shareholders' equity was 510.0%, compared to 251.9% at October 31, 2012.

Off-Balance Sheet Arrangements

We do not use off-balance sheet arrangements to structure any of our financial arrangements. We do not have any interests in unconsolidated special-purpose or structured finance entities.

Tabular Disclosure of Contractual Obligations

The following reflects the impact of our term loan on our contractual obligations:

	Long-term debt obligation as of January 31, 2013
(in millions of U.S. dollars)	Total	Year 1	2-3 Years	4-5 Years	After 5 Years
	$	$	$	$	$
Long-term debt	606.0	5.8	11.5	43.9	544.8
Interest on long-term debt (2)	246.2	43.3	85.3	83.4	34.2
Total long-term debt obligations(1)	852.2	49.1	96.8	127.3	579.0

⁽¹⁾ The amounts displayed in the chart relate only to our long-term debt. For information relating to all of our outstanding contractual obligations, please see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations-Tabular Disclosure of Contractual Obligations." contained in our 2012 Form 10-K.

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⁽²⁾ Represents interest payments under our Credit Facility based on the applicable interest rates in effect on January 31, 2013.

Recent Accounting Pronouncements

See "Note 1—Accounting policies—Recently issued accounting pronouncements" to our unaudited consolidated financial statements contained in this quarterly report on Form 10-Q for a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements.

Critical Accounting Estimates

For information regarding our critical accounting policies and estimates, please refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates" contained in our 2012 Form 10-K. There have been no material changes to the critical accounting policies previously disclosed in that report, except as discussed below.

Goodwill

As a result of the Banner Acquisition, we recorded goodwill representing the excess of the purchase price over the fair value of the assets acquired and liabilities assumed. We test goodwill for impairment at least annually in the fiscal fourth quarter, or when indications of potential impairment exist. We monitor for the existence of potential impairment indicators throughout the fiscal year. Testing is performed with respect to each of our reporting units that have been allocated goodwill, which we have determined are the sites within our CMO segment.

We may initiate goodwill impairment testing by considering qualitative factors to determine whether it is more likely than not that a reporting unit's carrying value is greater than its fair value. Such factors may include the following, among others: a significant decline in the reporting unit's expected future cash flows; a sustained, significant decline in our stock price and market capitalization; a significant adverse change in legal factors or in the business climate, unanticipated competition; and slower growth rates; and changes in management, key personnel, strategy or customers. If our qualitative assessment reveals that goodwill impairment is more likely than not, we perform the two-step impairment test. Alternatively, we may bypass the qualitative test and initiate goodwill impairment testing with the first step of the two-step goodwill impairment test.

During the first step of the goodwill impairment test, we compare the fair value of the reporting unit to its carrying value, including goodwill. Determining the fair value of the reporting unit entails significant estimates and assumptions including, but not limited to, developing appropriate discount rates and estimating future cash flows from the reporting units products or services. If the fair value of a reporting unit exceeds its carrying value, then we conclude that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, we perform the second step of the goodwill impairment test to measure possible goodwill impairment loss. During the second step, we hypothetically value the reporting unit's tangible and intangible assets and liabilities as if the reporting unit had been acquired in a business combination. We then compare the implied fair value of the reporting unit's goodwill to the carrying value of its goodwill. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of the goodwill, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value of the reporting unit's goodwill. Once an impairment loss is recognized, the adjusted carrying value of the goodwill becomes the new accounting basis of the goodwill for the segment. Due to uncertain market conditions and potential changes in our strategy, product and service portfolio or reporting units, it is possible that the forecasts we use to support goodwill could change in the future, which could result in goodwill impairment charges that would adversely affect our results of operations.

Intangible Assets

As a result of the Banner Acquisition, we recorded various intangible assets, including technology, in process research and development, customer relationships and trade name. We will test for definite lived intangible assets whenever events or changes in circumstances indicate that the carrying amount will not be recoverable. If such indicators are present, we assesses the recoverability of the intangible assets by determining whether the carrying value of such assets can be recovered through undiscounted future cash flows. If the sum of the undiscounted cash flows is less than the carrying amount, the excess of the carrying amount over the estimated fair value, based on the discounted cash flows, is recorded as a charge to earnings.

Seasonality

Seasonality influences our revenues as some of our CMO and PDS operations have traditionally been lower in our first fiscal quarter. We attribute this trend to several factors, including (i) the reassessment by many customers of their need for additional product in the last quarter of the calendar year in order to use existing inventories of products; (ii) the lower

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production of seasonal cough and cold remedies in the first fiscal quarter; (iii) limited project activity towards the end of the calendar year by many small pharmaceutical and biotechnology customers involved in PDS projects in order to reassess progress on their projects and manage cash resources; and (iv) the Patheon-wide facility shutdown during a portion of the traditional holiday period in December and January.

Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which reflect our expectations regarding our future growth, results of operations, performance (both operational and financial) and business prospects and opportunities. All statements, other than statements of historical fact, are forward-looking statements. Wherever possible, words such as "plans," "expects," or "does not expect," "forecasts," "anticipates" or "does not anticipate," "believes," "intends" and similar expressions or statements that certain actions, events or results "may," "could," "should," "would," "might" or "will" be taken, occur or be achieved have been used to identify these forward-looking statements. Although the forward-looking statements contained in this quarterly report on Form 10-Q reflect our current assumptions based upon information currently available to us and based upon what we believe to be reasonable assumptions, we cannot be certain that actual results will be consistent with these forward-looking statements. Our current material assumptions include assumptions related to customer volumes, regulatory compliance, foreign exchange rates, employee severance costs associated with termination and projected integration savings related to our acquisition of Banner. Forward-looking statements necessarily involve significant known and unknown risks, assumptions and uncertainties that may cause our actual results, performance, prospects and opportunities in future periods to differ materially from those expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, risks related to international operations and foreign currency fluctuations; customer demand for our services; regulatory matters affecting manufacturing and pharmaceutical development services; impacts of acquisitions, divestitures and restructurings, including our ability to achieve our intended objectives with respect to such transactions and integrate businesses that we may acquire; implementation of our new corporate strategy; our ability to effectively transfer business between facilities; the global economic environment; our exposure to complex production issues; our substantial financial leverage; interest rate risks; potential environmental, health and safety liabilities; credit and customer concentration; competition; rapid technological change; product liability claims; intellectual property; the existence of a significant shareholder; supply arrangements; pension plans; derivative financial instruments; and our dependence upon key management, scientific and technical personnel. These and other risks are described in greater detail in "Part 1—Item 1A. Risk Factors" of our Annual Report 0n Form 10-K for fiscal year ended October 31, 2012 and our subsequent filings with the U.S. Securities and Exchange Commission and with the Canadian Securities Administrators. Although we have attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors and risks that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. These forward-looking statements are made as of the date of this quarterly report on Form 10-Q, and except as required by law, we assume no obligation to update or revise them to reflect new events or circumstances.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Risk

Our business is conducted in several currencies—Canadian dollars and U.S. dollars for our Canadian operations, U.S. dollars for our U.S. operations, Euros, U. S. dollars and British Sterling for our European operations and the Mexican Peso for our Mexican operations. We are subject to foreign currency transaction risk because a significant portion of our revenues and operating expenses from our operations in certain countries are denominated in different currencies. Our material foreign currency transaction risk arises from our Canadian operations. Our Canadian operations negotiate sales contracts for payment in both U.S. and Canadian dollars, and materials and equipment are purchased in both U.S. and Canadian dollars. The majority of the non-material costs (including payroll, facilities' costs and costs of locally sourced supplies and inventory) of our Canadian operations are denominated in Canadian dollars. In the three months ended January 31, 2013, approximately 90% of the revenues and 10% of the operating expenses of our Canadian operations were transacted in U.S. dollars. As a result, if we do not effectively hedge such foreign currency exposure, our results of operations will be adversely affected by an increase in the value of the Canadian dollar relative to such foreign currency. In addition, we may experience hedging and transactional gains or losses because of volatility in the exchange rate between the Canadian dollar and the U.S. dollar. Based on our current U.S. denominated net inflows, for each 10% change in the Canadian-U.S. dollar exchange rate, the annual impact on pre-tax income, excluding any hedging activities, would be approximately $4.6 million.

To mitigate exchange-rate risk, we utilize foreign exchange forward contracts and collars in certain circumstances to lock in exchange rates with the objective that the gain or loss on the forward contracts and collars will approximately offset the loss

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or gain that results from the transaction or transactions being hedged. As of January 31, 2013, we had entered into 81 foreign exchange forward contracts and collars covering approximately 80% of our Canadian-U.S. dollar cash flow exposures for fiscal 2013 and had two forward exchange forward contract covering our Euro-U.S. dollar cash flow. See "Note 11—Financial instruments and risk management" to our unaudited consolidated financial statements. We do not hedge any of our other foreign exchange exposures. Our foreign exchange forward contracts and collars mature at various dates through July 2014 and have an aggregate fair value of $111.1 million. As of January 31, 2013, an adverse exchange rate movement of 10% against our foreign exchange forward contracts and collars would result in a pre-tax loss of approximately $11.1 million.

Interest Rate Risk

As of January 31, 2013, our long-term debt consisted of the the Secured Term Loan and our Secured Revolving Facility, both of which bear interest at a variable rate. As of January 31, 2013, we had borrowed $32.5 million under our Secured Revolving Facility. Assuming a 100 basis point increase in applicable interest rates, annual interest expense on our Secured Revolving Facility would (assuming a fully drawn facility) increase by approximately $0.85 million and annual interest expense on our Secured Term Loan would increase by approximately $5.75 million

Item 4.    Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report on Form 10-Q. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report on Form 10-Q, our disclosure controls and procedures are effective in that they provide reasonable assurances that the information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods required by the SEC's rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

On December 14, 2012, the Company completed the Banner Acquisition for a purchase price of $271.6 million, of which $115.6 million represented goodwill and identifiable intangible assets. Banner's operations contributed approximately $23.3 million in revenues to our consolidated financial results for the three months ended January 31, 2013. We continue to evaluate the internal control over financial reporting of the acquired business. As permitted by SEC Staff interpretive guidance for newly acquired businesses, the internal control over financial reporting of Banner was excluded from a formal evaluation of the effectiveness of our disclosure controls and procedures as of January 31, 2013.

There were no changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the first quarter of fiscal 2013 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We will continue to evaluate the effectiveness of our disclosure controls and procedures and internal control over financial reporting on an ongoing basis and will take action as appropriate.

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PART II – OTHER INFORMATION

Item 1.    Legal Proceedings

We are not involved in any material pending legal proceedings. Additionally, no such proceedings are known to be contemplated by governmental authorities.

Item 1A.    Risk Factors

There have been no material changes in the risk factors described in Item 1A of our 2012 Form 10-K.

Item 5. Other Information

On March 7, 2013, we and JLL Patheon Holdings, LLC (“JLL Patheon Holdings”), the beneficial owner of a majority of our outstanding restricted voting shares, entered into an amendment agreement (the “Amendment Agreement”) to the investor agreement dated April 27, 2007 (the “Investor Agreement”) governing certain rights of JLL Patheon Holdings relating to securities of our company held by JLL Patheon Holdings. The Amendment Agreement modifies the Investor Agreement by, among other things:

• including all controlled affiliates of JLL Patheon Holdings, including JLL Patheon Holdings III, LLC, a Delaware limited liability company, and JLL Patheon Holdings Coöperatief U.A., a Dutch cooperatief (each such entity, together with JLL Patheon Holdings, the “JLL Purchaser Entities”), in the definition of “Purchaser” under the Investor Agreement, thus causing the rights and obligations under the Investor Agreement to apply to each of the JLL Purchaser Entities;

• revising the definition of “Registrable Securities” to include any of our securities acquired by the JLL Purchaser Entities after April 27, 2007 and any of our securities issued as a distribution made in respect thereof or issued in exchange for or in replacement thereof;

• providing that the JLL Purchaser Entities' demand registration rights in the United States will apply so long as we are eligible to file a registration statement on Form S-3 or other applicable form; and

• expanding the JLL Purchaser Entities' piggyback registration rights to apply with respect to registration statements we file under the Securities Act of 1933, as amended.

The foregoing description of the Amendment Agreement is qualified in its entirety by reference to the full text of the Amendment Agreement, which is filed as Exhibit 10.8 to this quarterly report on Form 10-Q, and the Investor Agreement, which is filed as Exhibit 10.3 to our registration statement on Form 10 filed with the SEC on February 25, 2011.

JLL Patheon Holdings, together with its affiliates, is the beneficial owner of approximately 55.9% of our outstanding restricted voting shares, and JLL Patheon Holdings also owns 100% of our series D preferred shares, which entitle it to elect up to three of our directors. In addition, as described in the proxy statement for our 2013 annual and special meeting of shareholders, which was filed with the Securities and Exchange Commission on February 26, 2013, we have previously entered into a series of transactions and agreements with JLL Patheon Holdings and/or its affiliates.

Item 6.    Exhibits

The exhibits listed in the accompanying exhibit index are filed as part of this quarterly report on Form 10-Q, and such exhibit index is incorporated by reference herein.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: March 8, 2013

		PATHEON INC.
By:	/s/ JAMES C. MULLEN	By:	/s/ STUART GRANT
	James C. Mullen		Stuart Grant
	Chief Executive Officer		Executive Vice President, Chief Financial Officer

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EXHIBIT INDEX

		Incorporated by Reference
Exhibit Number	Description of Document	Form	Filing Date	Number	Filed Herewith
4.1	Form of Subscription Rights Certificate.	8-K	11/19/2012	4.1
10.1	Credit Agreement dated December 14, 2012 among Patheon Inc., Patheon Pharmaceuticals Inc., Patheon UK Limited and Patheon Puerto Rico, Inc., the lenders from time to time party thereto, Morgan Stanley Senior Funding, Inc., as the administrative agent and swing line lender, Morgan Stanley Bank, N.A., as the letter of credit issuer, and the other parties thereto.	8-K	12/17/2012	10.1
10.2	The Patheon Global Bonus Plan effective December 13, 2012.	10-K	12/18/2012	10.25
10.3	Employment Agreement between Patheon Pharmaceuticals Services Inc. and Aqeel Fatmi dated January 8, 2013.				X
10.4	Employment Agreement between Patheon Pharmaceuticals Services Inc. and Harry R. Gill, III dated May 10, 2010.				X
10.5	Amendment, dated January 29, 2013, to Employment Agreement between Patheon Pharmaceuticals Services Inc. and Geoffrey M. Glass dated March 17, 2009.	8-K	2/4/2013	10.1
10.6	Severance and Release of Claims Agreement between Patheon Pharmaceuticals Services Inc. and Mark J. Kontny, Ph.D. executed January 8, 2013.				X
10.7	Employment Agreement between Patheon Pharmaceuticals Services Inc. and Michael Lehmann dated November 1, 2012.				X
10.8	Amendment Agreement, dated March 7, 2013, between Patheon Inc. and JLL Patheon Holdings, LLC, amending Investor Agreement, dated April 27, 2007.				X
31.1	Certification by Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
31.2	Certification by Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.				X
32.1	Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
32.2	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.				X
101*	The following materials from Patheon Inc.'s Quarterly Report on Form 10-Q for the quarter ended January 31, 2013, formatted in XBRL (Extensible Business Reporting Language): (i) the Unaudited Consolidated Balance Sheets, (ii) the Unaudited Consolidated Statements of Operations, (iii) Unaudited Consolidated Statements of Comprehensive Loss; (iv) the Unaudited Consolidated Statement of Changes in Shareholders' Equity; (v) the Unaudited Consolidated Statements of Cash Flows and (v) the Notes to Unaudited Consolidated Financial Statements.				X

* Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files in Exhibit 101 hereto are deemed not filed or part of a

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registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

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EX-10.3

Exhibit 10.3

Patheon Pharmaceuticals Services Inc

4721 Emperor Blvd., Suite 200

Durham, North Carolina 27703

January 8, 2013

PRIVATE AND CONFIDENTIAL

Aqeel Fatmi

4125 Premier Drive

High Point, NC 27265

Dear Aqeel:

RE: Employment Agreement

This employment agreement represents your contractual arrangements with Patheon Pharmaceuticals Services Inc. and supersedes any arrangements, understandings and verbal commitments to you during our discussions. Please sign and return the employment agreement. Upon receiving the signed employment agreement from you, we will execute it and return a copy of the fully executed document to you for your files.

Sincerely,

Patheon Pharmaceuticals Services Inc.

/s/ James Mullen

James Mullen

Chief Executive Officer

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EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made as of January 8, 2013 (the “Effective Date”), between Patheon Pharmaceuticals Services Inc. (the “Company”) and Aqeel Fatmi (the “Executive”).

A.The Company is a subsidiary of Patheon Inc. (“Patheon”). Patheon is in the business of providing its customers with pharmaceutical development services, clinical trial manufacturing and packaging, and commercial manufacturing and packaging. The Company serves as the corporate shared services entity for Patheon and other members of the Patheon Group. As used herein, “Patheon Group” means Patheon and any entity controlled by Patheon, including without limitation Banner Pharmacaps, Inc. (“Banner”).

B.Executive and Banner entered an Employment Agreement, dated January 1, 2007, as amended, which is hereby terminated and superseded by this Agreement.

C. Executive and Banner entered a Change of Control Agreement, dated August 6, 2012 as amended (the “C-o-C Agreement”). The parties hereto agree that for purposes of the C-o-C Agreement, Executive shall be considered to be employed by the “Company” (as defined therein) so long as the Executive remains an employee of any member of the Patheon Group.

D.The Company and the Executive wish to enter into this Agreement to set forth the rights and obligations of each of them with respect to the employment of the Executive.

C.The Company wishes to employ the Executive pursuant to the terms and subject to the conditions set forth in this Agreement.

D.The Executive wishes to be employed by the Company pursuant to the terms and subject to the conditions set forth in this Agreement.

E.The Company and the Executive agree that the terms, provisions and mutual covenants of this Agreement suffice as adequate consideration for their mutual promises made in this Agreement.

NOW, THEREFORE, the parties agree as follows:

ARTICLE 1

INTERPRETATION

1.1    Governing Law. This Agreement shall be construed and interpreted in accordance with the substantive laws of the State of North Carolina, without giving effect to any choice or conflict of law provision or rule (whether of the State of North Carolina or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of North Carolina. The state and federal courts located in North Carolina shall be the exclusive forum for the adjudication of all disputes between the parties arising out of or relating to this Agreement. Each of the parties hereby irrevocably consents to the personal jurisdiction of the federal and state courts in the State of North

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Carolina with respect to any matters arising out of this Agreement and waives any and all objections and defenses to such personal jurisdiction regardless of whether such objection or defense is based upon the venue, North Carolina's long-arm statute, residence and/or contacts with North Carolina, the convenience of the witnesses and/or parties, the inconvenience of the forum, or otherwis

1.2    Definitions. In this Agreement, including Schedule A and B hereto, unless the context otherwise requires, the following terms shall have the following meanings, respectively:

(a) “Board of Directors” means the Board of Directors of Patheon.

(b) “Cause” means the determination, in good faith, by the Company, after notice to the Executive that one or more of the following events has occurred: (i) the Executive has failed to perform his material duties, and, if curable, such failure has not been cured after a period of thirty (30) days' notice from the Company; (ii) any reckless or grossly negligent act by the Executive having the effect of injuring the interests, business, or reputation of any member of the Patheon Group in any material respect; (iii) the Executive's commission of any felony (including entry of a nolo contendere plea); (iv) any misappropriation or embezzlement of the property of any member of the Patheon Group; or (v) a breach of any material provision of this Agreement by the Executive, which breach, if curable, remains uncured for a period of thirty (30) days after receipt by the Executive of notice from the Company of such breach.

(c) “Change in Control” means any of the following events:

(i) Any "Person" (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than JLL Partners or its affiliates, becomes a Beneficial Owner (within the meaning of Exchange Act Rule 13d-3) of more than fifty percent (50%) of the voting power of the then outstanding voting securities of Patheon entitled to vote generally in the election of directors;

(ii) There is consummated a merger or consolidation of Patheon or any direct or indirect subsidiary of Patheon with any other company, other than a merger or consolidation that would result in the voting securities of Patheon outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least fifty percent (50%) of the combined voting power of the securities of Patheon or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or

(iii) The shareholders of Patheon approve a plan of complete liquidation or dissolution of the company or there is consummated an agreement for the sale or disposition by Patheon of all or substantially all of its assets.

However, in no event shall a “Change in Control” be deemed to have occurred for purposes of this Agreement solely because Patheon (or any member of the Patheon Group) engages in an internal reorganization, which may include a transfer of assets to, or a merger or consolidation with, one or more affiliates.

(d) “Code” means the Internal Revenue Code of 1986, as amended.

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(e) “Good Reason” means the occurrence of any of the following events without the consent of the Executive: (i) a material reduction of the Executive's duties or responsibilities or the assignment to the Executive of duties or responsibilities materially inconsistent with the Executive's position; or (ii) a material breach by the Company of this Agreement, which breach remains uncured for a period of thirty (30) days after receipt by the Company of written notice from Executive.  A termination of the Executive's employment by Executive shall not be deemed to be for Good Reason unless (i) the Executive gives notice to the Company of the existence of the event or condition constituting Good Reason within thirty (30) days after such event or condition initially occurs or exists, (ii) the Company fails to cure such event or condition within thirty (30) days after receiving such notice, and (iii) the Executive's “separation from service” within the meaning of Section 409A of the Code occurs not later than ninety (90) days after such event or condition initially occurs or exists.

ARTICLE 2

EFFECTIVE DATE; TERMS OF EMPLOYMENT

2.1    Term

The Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company pursuant to the terms and subject to the conditions of this Agreement (including, without limitation, Article 6 and Schedules A and B), commencing on the Effective Date. The Executive's employment with the Company will be “at will,” meaning that either the Executive or the Company will be entitled to terminate the Executive's employment at any time and for any reason, with or without cause. Any contrary representations which may have been made to the Executive are superseded by this Agreement. This is the full and complete agreement between the Executive and the Company on this term. Although the Executive's job duties, title, compensation and benefits, as well as the Company's personnel policies and procedures, may change from time to time, the “at will” nature of the Executive's employment may only be changed in an express written agreement signed by the Executive and a duly authorized officer of the Company.

2.2 Position and Duties

The Executive shall be employed by the Company and shall serve as Executive Vice President, Global Research & Development of Banner and Chief Scientific Officer for the Patheon Group, with such authority, duties and responsibilities as are commensurate with such position, reporting to the President, Product and Technology Commercialization in Executive's capacity as Executive Vice President, Global Research & Development and to the Chief Executive Officer in Executive's capacity as Chief Scientific Officer. In addition, the Executive will be a member of the Patheon Group's Executive Committee and will become an officer of Patheon and of any members of the Patheon Group, each as may be requested.

The Executive shall also be responsible for the functions and responsibilities set out in the Position Description attached hereto as Schedule A.

2.3Standards of Performance and Time Commitments

The Executive will, at all times, faithfully, industriously, and to the best of his ability, experience and talents, perform all of the duties required of and from him pursuant to the terms of this Agreement. During the Executive's employment, the Executive shall devote substantially all

4

of his working time and attention to his duties with the Patheon Group and shall render no material business services to any other person or company; provided, however, it shall not be a violation of this Agreement for the Executive, subject to the requirements of Article 6, to (a) to spend reasonable amounts of time to manage his personal, financial and legal affairs; (b) to fulfill speaking engagements; and (c) with the Company's consent, which will not be unreasonably withheld, to serve on civic, charitable, not-for-profit, industry or other for profit corporate boards, so long as such activities do not materially interfere with the performance of the Executive's duties or responsibilities under this Agreement.

ARTICLE 3

COMPENSATION AND BENEFITS

3.1Base Salary

The Company shall pay the Executive an annualized base salary ("Annual Base Salary") at a rate of U.S. $345,000, payable pursuant to the Company's regular payroll practices for its executives in effect at the time. For fiscal year 2013, the Executive's Annual Base Salary will be prorated from the Effective Date. The Annual Base Salary shall be reviewed by the Chief Executive Officer at such time as the salaries of other senior executives of Patheon are reviewed generally.

3.2    Executive Performance Bonus

The Executive shall be eligible to participate in an annual performance incentive plan and the Executive's target bonus thereunder shall be forty percent (40%) of his Annual Base Salary. The Executive's payment under the annual performance incentive plan shall be based on meeting predetermined personal objectives and Patheon's financial performance. The personal objectives will be set by the Chief Executive Officer, and the financial performance measures will be set by the Chief Executive Officer. The annual performance bonus, if earned, will be paid to the Executive by the Company in the same manner and payment period generally applicable under the annual performance incentive plan and state law, but in no event later than two and a half months after the later of (i) the end of the applicable performance period, or (ii) the end of the calendar year in which the performance period ends. Nothing contained in this Section 3.2 will guarantee the Executive any specific amount of incentive compensation (or any incentive compensation), or prevent the Chief Executive Officer from establishing performance goals and compensation targets applicable only to the Executive.

3.3    Stock Options

(a) The Executive shall be eligible to participate in Patheon's 2011 Amended and Restated Incentive Stock Option Plan (the “Stock Option Plan”) and shall be eligible to be awarded options to acquire Patheon's restricted voting shares from time to time in accordance with the terms of such Plan and related stock option award agreement (together, with the Stock Option Plan, the "Stock Option Related Documents").

(b) Subject to approval of the Board of Directors at a meeting following the Effective Date, the Executive will be granted optionsto acquire ninety thousand (90,000) of the restricted voting shares of Patheon, which options shall be granted subject to the Stock Option Related Documents. Except as otherwise provided in the Stock Option Related Documents, the options will vest in five (5) equal installments on each of the first five (5) anniversaries of the Effective Date, subject to the Executive's continued employment with the Patheon Group until the relevant vesting dates. The subscription

5

price for the shares under option will be the market price (as defined in the Stock Option Plan) on the date of grant. All options granted to the Executive will expire ten (10) years from the date of grant.

(c) During the Executive's employment, at the discretion of the Board or its delegate, the Executive also will be eligible to receive additional options and other long-term incentives under the Stock Option Plan or any similar plan adopted by Patheon from time to time in the course of its periodic review of executive compensation arrangements, including without limitation, an additional grant of one hundred thousand (100,000) restricted voting shares upon December 14, 2013.

(d) Upon the occurrence of a Change in Control, any options to purchase restricted voting shares of Patheon then held by the Executive shall, to the extent provided in the applicable Stock Option Related Documents, become immediately vested and exercisable and remain exercisable for the remaining term of such option (which remaining term shall be determined without regard to the Executive's termination of employment).

(e) The Executive will be required to comply with the Stock Option Related Documents and the terms of any share ownership guidelines of Patheon generally, as amended from time to time.

3.4    Employee Benefits

The Executive will be entitled to participate in all employee healthcare and welfare benefits programs of the Company, in accordance with the then applicable terms, conditions and eligibility requirements of such programs that are offered from time to time to U.S. resident-based employees at the Executive's level, including medical, dental, life insurance, 401-K retirement plans and other health benefit programs.

In addition, the Executive will be entitled to four (4) weeks of vacation time, subject to the Company's vacation policy, as may be in effect from time to time, which will be pro-rated based on the Effective Date. Further, the Executive will be entitled to four (4) floating holidays annually and twenty-four (24) hours for emergency time off annually, each in accordance with the Company's policies, as may be in effect from time to time.

3.5    Car Allowance

Executive will be entitled to an allowance of $1080.00 per month for car-related expenses, subject to the normal statutory and withholding deductions.

3.6    Reimbursement of Business Expenses

The Executive shall be reimbursed for all reasonable travel and other out-of-pocket expenses actually and properly incurred by the Executive during the Executive's employment in connection with carrying out his duties hereunder in accordance with the Company's policies, as may be in effect from time to time.

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3.7Sarbanes-Oxley Act Loan Prohibition

To the extent that any Company or Patheon Group benefit, program, practice, arrangement or this Agreement would or might otherwise result in the Executive's receipt of an illegal loan (the “Loan”), the Company shall use commercially reasonable efforts to provide the Executive with a substitute for the Loan that is lawful and of at least equal value to the Executive. If this cannot be done, or if doing so would be significantly more expensive to the Company than making the Loan, the Company need not make the Loan to the Executive or provide him a substitute for it.

ARTICLE 4

TERMINATION OF EMPLOYMENT

4.1Death or Incapacity

(a) The Executive's employment shall be immediately terminated without notice by the Company upon the death of the Executive.

(b) If the Company determines in good faith that the Incapacity (as defined below) of the Executive has occurred during the Executive's employment, it may give to the Executive written notice in accordance with Section 7.4 of this Agreement of its intention to terminate the Executive's employment; provided that such notice is provided no later than one hundred fifty (150) days following the Executive's first day of Incapacity. In such event, the Executive's employment shall terminate effective on the thirtieth (30^th) day after receipt of such notice by the Executive (the "Incapacity Effective Date"), provided that, within such thirty (30) day period after such receipt, the Executive has not returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Incapacity" shall mean the failure of the Executive to perform his duties under this Agreement for at least ninety (90) consecutive business days as a result of any medically determinable physical or mental impairment. The determination of Incapacity shall be made by a physician selected by the Company or its insurers and reasonably acceptable to the Executive or the Executive's legal representative.

4.2Cause

The Executive's employment with the Company may be terminated with or without Cause.

4.3Good Reason

The Executive's employment with the Company may be terminated by the Executive with or without Good Reason.

4.4Notice of Termination

Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party in accordance with Section 7.4. For purposes of this Agreement, a "Notice of Termination" means a written notice which (a) indicates the specific termination provision in this Agreement relied upon, (b) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (c) if the Date of Termination (as defined below) is other than the date of receipt of such notice,

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specifies the termination date (which date shall be not more than thirty (30) days after the giving of such notice). The failure by the Company or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive, respectively, hereunder or preclude the Company or the Executive, respectively, from asserting such fact or circumstance in enforcing the Company's or the Executive's rights hereunder.

4.5Date of Termination

"Date of Termination" means (a) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (b) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (c) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. The Company and the Executive shall take all steps necessary (including with regard to any post-termination services by the Executive) to ensure that any termination described in this Section 4.5 constitutes a “separation from service” within the meaning of Section 409A of the Code, and the date on which such separation from service takes place shall be the “Date of Termination.”

4.6Resignation from All Positions

Notwithstanding any other provision of this Agreement, upon the termination of the Executive's employment for any reason, unless otherwise requested by the Board of Directors, the Executive shall immediately resign as of the Date of Termination from all positions that he holds or has ever held with the Patheon Group (and with any other entities with respect to which the Patheon Group has requested the Executive to perform services). The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation.

ARTICLE 5

OBLIGATIONS OF THE COMPANY UPON TERMINATION

5.1Good Reason; Other than for Cause

If the Company shall terminate the Executive's employment other than for Cause, or if the Executive shall terminate the Executive's employment for Good Reason:

(a) The Company shall pay, or cause to be paid, to the Executive in a lump sum in cash the sum of: (i) that portion of the Executive's Annual Base Salary earned but not previously paid through the Date of Termination; (ii) reimbursement of expenses incurred on or before the Date of Termination in accordance with Section 3.7, above; and (iii) any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (i), (ii), and (iii) shall be hereinafter referred to as the "Accrued Obligations"). The Accrued Obligations shall be paid on the regular payday following the Date of Termination.

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(b) Subject to Executive's compliance with Section 5.3, Article 6 and Schedule B, the Company shall pay, or cause to be paid, to the Executive an amount equal to the Executive's Annual Base Salary. Such amount shall generally be paid in cash in twelve (12) equal monthly installments beginning within sixty (60) days after the Date of Termination or such later date set forth in Section 7.8. Notwithstanding the foregoing, if the severance benefit described in this Section 5.1(b) exceeds two (2) times the lesser of (i) the Executive's annual compensation or (ii) the compensation limit in effect under Section 401(a)(17) of the Code for the calendar year including the Date of Termination, any amounts not yet paid as of the “short-term deferral date” shall be paid in a lump sum on the “short-term deferral date.” The “short-term deferral date” is the date that is two and one-half months after the end of the later of (i) the calendar year containing the Date of Termination or (ii) the Company's fiscal year containing the Date of Termination.

(c) To the extent not theretofore paid or provided, Company (or Patheon, as the case may be) shall pay or provide, or cause to be paid or provided, to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Patheon Group (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"), in accordance with the terms and normal procedures of each such plan, program, policy or practice or contract or agreement, based on earned, accrued or vested benefits through the Date of Termination.

If the Executive receives payments and benefits pursuant to this Section 5.1, then the Executive shall not be entitled to any other severance pay or benefits under any severance plan, program or policy of any member of the Patheon Group, unless otherwise specifically provided therein in a specific reference to this Agreement; provided, however, in the event any payment is made, or required to be made, under any such severance plan, program or policy, then the amounts payable under this Section 5.1 shall be reduced by such amount.

5.2Death or Incapacity; Cause; Other than for Good Reason

If the Executive's employment is terminated due to death or Incapacity or for Cause, or if the Executive voluntarily terminates his employment without Good Reason, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive his Accrued Obligations through the Date of Termination and the Other Benefits earned, accrued, or vested through the Date of Termination, in each case to the extent not theretofore paid or provided. All Accrued Obligations shall be paid to the Executive in accordance with Section 5.1(a) and the Other Benefits shall be paid to the Executive in accordance with Section 5.1(c). The Company (and the Patheon Group) will have no further obligation to pay any compensation of any kind (including, without limitation, any bonus or portion of a bonus that otherwise may have become due and payable to the Executive with respect to the year in which such Date of Termination occurs), or severance payment of any kind, nor will the Company (or the Patheon Group) have any obligation to make any payment in lieu of notice.

5.3Release

Notwithstanding anything contained herein to the contrary, the Company shall only be obligated to make the payments under Section 5.1(b) if, in addition to the other contingencies under Section 5.1(b): (a) within the 50-day period after the Date of Termination, the Executive

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executes a general release, in a form provided by the Company, of all current or future claims, known or unknown, against the Patheon Group, its officers, directors, shareholders, employees and agents arising on or before the date of the release, including but not limited to all claims arising out of the Executive's employment with the Patheon Group or the termination of such employment, and (b) the Executive does not revoke the release during the seven-day revocation period prescribed by the Age Discrimination in Employment Act of 1967, as amended, or any similar revocation period, if applicable. The Company shall be obligated to provide such release to the Executive promptly following the Date of Termination.

ARTICLE 6

RESTRICTIVE COVENANTS

6.1In General

(a) The Executive acknowledges and agrees that the Patheon Group is a business engaged in the sale of commercial pharmaceutical manufacturing capabilities and/or pharmaceutical development services, and during the Executive's employment, the Patheon Group's business may expand or change (“the Patheon Group's Business”). Any such expansions and changes shall expand or change the Executive's obligations under this Agreement accordingly. The Patheon Group's Business is international in scope and without geographical limitation and the Patheon Group has valuable business relationships within its industry throughout the world.

(b) By virtue of the Executive's employment by and position with the Company: (i) the Executive has or will have access to confidential and proprietary information of the Patheon Group, including valuable information about its business operations and methods and the persons with whom it does business in various locations throughout the world that is not generally known to, or readily ascertainable by, the Patheon Group's competitors, and the Executive understands that the continued success of the Patheon Group depends upon the use and protection of a large body of confidential and proprietary information, and (ii) the Executive has specialized knowledge of, and has received or will receive specialized training in, the Patheon Group's Business.

(c) The Executive authorizes the Company to disclose this Agreement to Executive's future or prospective employers along with notification of the Company's intent to exercise all rights it has to seek enforcement of its terms.

6.2Confidentiality Undertaking

The Executive confirms that he is bound by the provisions of the Confidentiality Undertaking covenant set out in Schedule B hereto.

6.3Non-Compete,Non-Solicitation

(a) During the Executive's employment with the Company and for one (1) year thereafter (the "Non-compete Period"), the Executive shall not engage in any of the following activities (except in connection with his/her duties for the Company):

(i) engage in any business activity that competes with the Patheon Group's Business within the geographical areas set forth in Section 6.3(b);

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(ii) within the geographical areas set forth in Section 6.3(b), solicit or do business which is the same, similar to or otherwise in competition with the business engaged in by the Patheon Group, from or with persons or entities: (a) who are customers of the Patheon Group; (b) whom Executive or someone for whom Executive was responsible solicited, negotiated, contracted, serviced or had contact with on the Patheon Group's behalf; (c) who were customers of the Patheon Group at any time during the last year of the Executive's employment with the Patheon Group; or (d) to whom the Patheon Group had made proposals to do business at any time during the last year of the Executive's employment with the Company; or

(iii) offer employment to or otherwise solicit for employment any employee or other person who had been employed by the Patheon Group during the last year of the Executive's employment with the Company;

(iv) within the geographical areas set forth in Section 6.3(b), be employed (or otherwise engaged) in (i) a management capacity, (ii) other capacity providing the same or similar services which the Executive provided to the Patheon Group, or (iii) any capacity connected with competitive business activities, by any person or entity that engages in the same, similar or otherwise competitive business as the Patheon Group;

(v) directly or indirectly take any action which is materially detrimental or otherwise intended to be adverse to the Patheon Group's goodwill, name, business relations, prospects and operations.

(b) The restrictions set forth in this Section 6.3 apply to the following geographical areas: (i) the Research Triangle Park, North Carolina metropolitan area; (ii) the Cincinnati, Ohio metropolitan area; (iii) any city, metropolitan area, county (or similar political subdivisions in foreign countries) in which the Patheon Group is located or does or, during the Executive's employment with the Company, did business; (iv) any city, metropolitan area, county (or similar political subdivisions in foreign countries) in which the Executive's services were provided, or for which the Executive had responsibility, or in which the Executive worked on Patheon Group projects, while employed by the Company.

(c) If, at the time of enforcement of this Section 6.3, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the Executive agrees that they be “blue-penciled” or rewritten by the court to the extent necessary to render them enforceable. In addition, the one (1) year time period specified in this Section 6.3 shall be tolled and shall not run during any time the Executive is in violation of Section 6.3 or period(s) of time required for legal action to enforce the provisions of this Section 6.3.

6.4Remedies

Because the Executive has access to Confidential Information (as defined in Schedule B), the Executive understands and agrees the Patheon Group would suffer irreparable harm from a breach of this Agreement and that money damages would not be an adequate remedy for any such breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement (including Schedules A and B), the Patheon Group and its

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successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security) as well as court costs and reasonable attorney's fees.

6.5Acknowledgements

The Executive agrees and acknowledges that the promises and obligations made by the Company in this Agreement (specifically including, but not limited to, the payments and benefits provided for under Section 5.1(b) and (d) hereof) constitute sufficient consideration for the covenants contained in this Article 6 and Schedule B. The Executive further acknowledges that it is not the Patheon Group's intention to interfere in any way with his employment opportunities, except in such situations where the same conflict with the legitimate business interests of the Patheon Group. The Executive agrees that he will notify the Company in writing if he has, or reasonably should have, any questions regarding the applicability of this Article 6 and Schedule B.

6.6Survival

Subject to any limits on applicability contained therein, this Article 6 and Schedule B shall survive and continue in full force in accordance with their respective terms notwithstanding any expiration or termination of this Agreement.

ARTICLE 7

GENERAL PROVISIONS

7.1Entire Agreement

This Agreement, together with Schedules A and B attached hereto and incorporated herein by reference, when executed by both parties shall constitute the entire agreement pertaining to the Executive's employment and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral, pertaining to the Executive's employment, and there are no representations, undertakings or agreements of any kind between the parties respecting the subject matter hereof except those contained herein. The recitals set forth above are incorporated herein by this reference with the same force and effect as if set forth herein as agreements of the parties.

7.2Severability

If any provision of this Agreement is declared void or unenforceable, such provision shall be deemed severed from this Agreement to the extent of the particular circumstances giving rise to such declaration and such provision as it applies to other persons and circumstances and the remaining terms and conditions of this Agreement shall remain in full force and effect.

7.3Representations

The Executive represents and warrants that (a) he is not a party to any contract, understanding, agreement or policy, whether or not written, with his current employer (or any previous employer) or otherwise, that would be breached by the Executive's entering into, or performing services under, this Agreement and (b) will not knowingly use any trade secret, confidential information, or other intellectual property right of any other party in the

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performance of his duties hereunder. The Executive will indemnify, defend, and hold each member of the Patheon Group harmless, from any and all suits and claims arising out of any breach of such restrictive contracts, understandings, agreements or policies.

7.4 Notices

All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

Aqeel Fatmi

4125 Premier Drive

High Point, NC 27265

If to the Company:

Patheon Pharmaceuticals Services Inc.

4721 Emperor Blvd., Suite 200

Durham, NC 27703

Attention: Senior Human Resources Executive

with a copy to:

Patheon Pharmaceuticals Services Inc.

4721 Emperor Blvd., Suite 200

Durham, NC 27703

Attention: Legal Department

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

7.5Withholding

The Company may withhold from any compensation and benefits payable under this Agreement all federal, state, city and other taxes or amounts as shall be determined by the Company to be required to be withheld pursuant to applicable laws, or governmental regulations or rulings. The Executive shall be solely responsible for the satisfaction of any taxes (including employment taxes) imposed on employees and penalty taxes on nonqualified deferred compensation.

7.6Waiver

The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

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7.7Successors

(a) This Agreement is personal to the Executive is not assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company, the other members of the Patheon Group, and their respective successors and assigns.

(b) The Company, at its discretion, may assign this Agreement, and will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Patheon or the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

7.8Compliance with Section 409A of the Code

(a) Although the payments and benefits provided under this Agreement are intended to be exempt from the application of, or otherwise comply with, the requirements of Section 409A of the Code (“Section 409A”), the tax treatment of the payments and benefits provided under this Agreement is not warranted or guaranteed. Specifically, any taxable benefits or payments provided under this Agreement are intended to be separate payments that qualify for the “short-term deferral” exception to Section 409A to the maximum extent possible, and to the extent they do not so qualify, are intended to qualify for the involuntary separation pay exceptions to Section 409A to the maximum extent possible. This Agreement shall be construed, administered, and governed in a manner that effects such intent, and the Company shall not take any action that would be inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under this Agreement may not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under Section 409A upon the Executive.

(b) If neither the “short-term deferral” nor the involuntary separation pay exceptions to Section 409A described above applies to a benefit, payment or reimbursement under this Agreement, then notwithstanding any provision herein to the contrary, the remaining provisions of this Section 7.8(b) shall apply.

(i) If the Executive is a "specified employee," as determined under the Company's policy for identifying specified employees on the Date of Termination, then to the extent required in order to comply with Section 409A, all payments and benefits provided under this Agreement that constitute a "deferral of compensation" within the meaning of Section 409A, that are provided as a result of a "separation from service" within the meaning of Section 409A and that would otherwise be paid or provided during the first six months following such Date of Termination shall be accumulated through and paid or provided (together with interest on the delayed amount at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the Date of Termination) within thirty (30) days after the first business day following the sixth (6^th) month anniversary of such Date of Termination (or, if the Executive dies during such six-(6-)month period, then within thirty (30) days after the Executive's death).

(ii) To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement that will not be excluded from Executive's

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income when received is subject to the following requirements: (i) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year can not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (ii) any reimbursement of an eligible expense shall be made on or before the last day of the calendar year following the calendar year in which the expense was incurred; and (iii) the right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

(c) Although the Company will endeavor to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither the Patheon Group nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Executive or other taxpayer as a result of the Agreement. Any reference in this Agreement to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.

[Signature page follows.]

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NOW THEREFORE, the parties below have entered into this Agreement as of the date first written above.

PATHEON PHARMACEUTICALS SERVICES INC.

By: /s/James Mullen

Name: James Mullen

Title: CEO

with respect solely to Recitals A and B:

BANNER PHARMACAPS, INC.

By: /s/ Jason Conner

Name: Jason Conner

Title: Corporate Secretary

EXECUTIVE

SIGNED, SEALED AND DELIVERED)

in the presence of)

)

/s/ Kelly C. Potter     ) /s/ Aqeel Fatmi        

Name of Witness:Aqeel Fatmi

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SCHEDULE A

TO

EMPLOYMENT AGREEMENT WITH

Aqeel Fatmi

POSITION DESCRIPTION

17

SCHEDULE B

TO

EMPLOYMENT AGREEMENT WITH

Aqeel Fatmi

CONFIDENTIALITY, INVENTIONS ASSIGNMENT AND RETURN OF PROPERTY

UNDERTAKING

In consideration of Aqeel Fatmi (the "Executive") accepting an employment agreement with Patheon Pharmaceuticals Services Inc. (the “Company”), dated January 8, 2013 (the "Agreement"), to which this Confidentiality, Inventions Assignment and Return of Property Undertaking (“Confidentiality Undertaking”) is attached as Schedule B, the Executive undertakes and covenants with the Patheon Group (as defined in the Agreement) as follows:

1. CONFIDENTIAL INFORMATION

Executive acknowledges that all Confidential Information (defined below) is the sole and exclusive property of the Patheon Group (or a third party providing such information to the Patheon Group). At all times during Executive's employment and thereafter, Executive will hold in strictest confidence and will not use, disclose, copy or remove from the Patheon Group premises any Confidential Information, nor aid third parties in obtaining or using any Confidential Information, nor access or attempt to access any Patheon Group computer systems, networks or any resources or data that resides thereon, except as such use, disclosure, copying, removal or access may be required in connection with Executive's employment and only then in accordance with applicable Patheon Group policies and procedures and solely for the Patheon Group's benefit. Executive further acknowledges that the applicable Patheon Group policies and procedures referenced in the preceding sentence include but are not limited to the following and apply regardless of whether or not the information is Confidential Information:(i) no forwarding of electronic files, data, emails or other information to home, personal or external email accounts even for the purpose of working remotely; (ii) no use of thumb drives, flash drives or other portable devices or copying methods without the express written consent of the Company; (iii) no copying of hard copy documents for removal from the worksite even for the purpose of working remotely; (iv) emails, voicemails or other communications, whether written, verbal, electronic or otherwise, sent to Executive are for his/her eyes/ears only and are not to be shared with any other employee or person, except with the express consent of the sender; and (v) violation of policies and procedures regarding Patheon Group information is grounds for immediate termination for Cause. Additionally, Executive will notify the Patheon Group of any known or suspected unauthorized use, disclosure, copying or removal of Confidential Information by others.

As used in this Agreement, “Confidential Information” means any and all facts, data or information of the Patheon Group (or of third parties providing such information to the Patheon Group) that is not known by, or generally available to the public at large, that concerns the business of the Patheon Group (or third parties providing such information to the Patheon Group) whether now existing or to be developed in the future, and whether embodied in tangible or intangible form or merely remembered, including but not limited to trade secrets or other intellectual property; products,

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product plans, designs, ideas, concepts, costs, methods or policies; prices or price formulas; processes; procedures; raw materials; research, development or know-how; customer lists and information, information relating to customers, prospective partners, partners, parents, subsidiaries, affiliates and other entities; financial information; computer software (including design, programming techniques, flow charts, source code, object code, and related information and documentation); products and services; inventory lists; market and/or product research and development data; business strategies and methodologies, strategic or business plans, training manuals and methodologies; employee phone and address lists, personnel data, incentive packages, compensation data and employee performance data; and all other information of any kind or character relating to the development, improvement, manufacture, sale, or delivery of products or services by the Patheon Group.

If Executive is required to disclose Confidential Information pursuant to a court order or such disclosure is necessary to comply with applicable law or defend against claims, Executive shall: (i) notify the Patheon promptly before any such disclosure is made; (ii) at Patheon's request and expense take all reasonably necessary steps to defend against such disclosure, including defending against the enforcement of the court order, other government process or claims; and (iii) permit the Patheon Group to participate with counsel of its choice in any related proceeding.

2.INVENTIONS

a. Inventions. Subject to paragraph 2 b., Executive agrees that all right, title, and interest in and to (i) all discoveries, designs, ideas, works of authorship, and inventions created, conceived, reduced to practice, or otherwise developed, in whole or in part, by Executive, whether jointly or individually, during Executive's employment or within three years following termination of employment for any reason whatsoever; (ii) all improvements, modifications, and derivative works to and of any of the foregoing in (i); and (iii) all patent, copyright, trademark, trade secret and other intellectual property rights in any of the foregoing in (i) and (ii) (all the foregoing in (i)-(iii), collectively, the "Inventions") will be owned solely and exclusively by the Company. Without limiting the foregoing, all copyrightable subject matter included in the Inventions shall constitute “work made for hire” under applicable copyright law. Executive will:

(i) promptly and fully disclose and describe, in detail satisfactory to the Company, all such Inventions in writing to the Company;

(ii) irrevocably and unconditionally assign, and Executive does hereby irrevocably and unconditionally assign, to the Company, without further compensation or other consideration, any and all of Executive's rights, title and interest in and to the Inventions, including without limitation (1) all rights to collect royalties for any use, and pursue remedies for any infringement, misappropriation, or other violation, thereof and (2) all applications for letters of patent, copyright registrations, trademark, service mark, and trade dress registrations, and industrial design or other forms of protection granted for the Inventions throughout the world;

(iii) deliver promptly to the Company, upon request and in the form and manner prescribed by the Company (without charge to the Company but at the Company's expense), including without limitation Executive's notarized signature in execution of, the written instruments described in paragraph b. and perform all other acts deemed necessary by the Company to obtain and

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maintain the instruments and to transfer all rights and title thereto to the Company in accordance with this Agreement; and

(iv) promptly render all assistance that may be required by the Company to enable it to protect or exploit the Inventions in any country of the world.

In addition, Executive does hereby waive and agree never to assert any rights in the Inventions, and any part or parts thereof, that are not susceptible of assignment by Executive under applicable law, including, but not limited to, any moral rights or the right to the integrity or attribution of the Inventions, or any other right to be associated with the Inventions as its author, inventor, or user by name or under a pseudonym or the right to remain anonymous.

b. Excluded Inventions. The provisions of paragraph 2 a. will not apply to Inventions which fulfill all of the following criteria:

(i) Inventions for which no equipment, supplies, facility or Confidential Information belonging to the Company were used; and

(ii) Inventions that do not relate to the business of the Company or to the Company's actual or demonstrably anticipated processes, research or development; and

(iii) Inventions that do not result from any work performed by Executive for the Company.

3.RETURN OF COMPANY PROPERTY

Upon the Company's request and, in any event, upon the cessation of Executive's employment with the Company, Executive will return to the Company all Confidential Information in Executive's possession or control, along with all Company property, including but not limited to keys, pass cards, identification cards, computer hardware and software, manuals, passwords, customer lists, sales records, business plans, any data concerning customers of the Company, brochures of the Company and of any competitor, all corporate records, policy handbooks, receipts, documents, records, files and other documents in whatever form they exist, whether electronic, hard copy or otherwise, and all copies, notes or summaries thereof. Any and all such documents contained on Executive's personal computer or devices shall be printed, delivered to the Company and thereafter deleted from the personal computer/device. These documents and items must be returned whether in Executive's possession, work area, home, vehicle or in the wrongful possession of any third party with Executive's knowledge or acquiescence, and whether prepared by the Company or any other person or entity.

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I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS.

/s/ Aqeel A. Fatmi (SEAL) Executive's Signature AQEEL A. FATMI Print Executive Name The signature above was witnessed by: /s/ Kelly C. Potter Witness' Signature Kelly C. Potter Witness' Name 8 January 2013 Date: 1-8-2013 Date:

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EX-10.4

Exhibit 10.4

Patheon Pharmaceutical Services Inc

4721 Emperor Blvd., Suite 200

Durham, North Carolina 27703

April 26, 2010

Revised May 7, 2010

PERSONAL AND CONFIDENTIAL

Mr. Harry Gill

839 Clubridge Court

Chester VA 23836

Dear Harry:

It gives me great pleasure to confirm the offer made to you, Harry Gill, (the “Vice President”), with Patheon Pharmaceutical Services, Inc., ( “Patheon”). This letter will detail the terms and conditions of your employment.

1. Assumption of Duties: Your start date is anticipated to be June 16, 2010. You will assume the position of Vice President, Business Management, North America, reporting to Peter Bigelow, President North America Operations. The Vice President's principal office will be at the US Headquarters location in Durham, North Carolina. The Vice President will be required to relocate to Raleigh/Durham area as a condition employment. During your employment, you shall devote substantially all business time, energies and talents to serving as the Vice President, Business Management, North America and perform duties conscientiously and faithfully subject to the reasonable and lawful directions of the President North America Operations, and in accordance with each of the corporate governance and ethics guidelines, conflict of interests policies and code of conduct applicable to all employees.

2. Direct Reports and Functional Responsibility:

The Vice President shall serve as the Vice President, Business Management, North America, with such authority, duties and responsibilities as are commensurate with such position, reporting to the President North America Operations.

The Vice President's primary purpose is to develop and maintain senior level contact on a North American basis with assigned major pharmaceutical clients of Patheon. The position functions as a team leader within the Patheon organization to organize all activity for the assigned clients.

3. Compensation and Benefits:

Base Salary:Your initial base salary will be U.S. $230,000 annually, payable to you on a semi-monthly basis. Increases to Base Salary, if any, are at the sole discretion of Patheon. Merit Increases typically occur in January, and are based on performance. Employees hired after July 31 are not eligible for a merit increase for the current fiscal year. Patheon will deduct from your Base Salary any applicable taxes and source deductions that Patheon is required or authorized to withhold or make.

Sign-on Bonus: The Corporation will pay the Vice President in a lump sum, within 30 business days of the Effective Date, a sign-on bonus of $50,000 U.S. If the Vice President voluntarily terminates employment with the Corporation within one year after the Effective Date, the Vice President shall reimburse the Corporation this $50,000 payment within 30 days of termination. If the Vice President fails to make this reimbursement payment within 30 days of termination, the Corporation shall withhold the unpaid amount from any amounts otherwise owed to the Vice President (but only to the extent those amounts are not considered deferred compensation under Section 409(A).

Retirement: You will be provided with retirement benefits as set forth in the attached Schedule A.

Health and Welfare:You will be provided health care and welfare benefits, which you will be eligible to join immediately as outlined in the attached Schedule B. More detailed plan provisions are available through the Human Resources group.

Vacation: You will be eligible for four (4) weeks vacation under Patheon's vacation policy for salaried associates. During your first calendar year of employment, however, the amount of vacation will be prorated based on your hire date. Vacation is accrued on a daily basis. Additionally, you will be eligible for 4 floating holidays and 24 hours of Emergency Time Off. These are also prorated based on your hire date. Your annual vacation entitlement will be based on your completed years of service with Patheon. Up to five days of vacation time may be carried over from one calendar year to the next. If you terminate from employment, your vacation entitlement for the calendar year in which the termination occurs will be pro-rated based on the number of months of service in that year.

Bonus: You will be eligible for a target bonus incentive, the amount of which could be up to 35% of your base salary.  The terms of this incentive bonus will be communicated in more detail by the President North America Operations. The Bonus Incentive Plan runs for 12 months and is calculated at the end of each fiscal year, and paid out in the following calendar year. Those hired after August 1, 2010 are not eligible for payout based on 2010 fiscal year results.

The annual performance bonus, if earned, will be paid to the Vice President by Patheon in the same manner and payment period generally applicable under the annual incentive plan, but in no event later than two and a half months after the later of (i) the end of the applicable performance period, or (ii) the end of the calendar year in which the performance period ends. Nothing contained in this section will guarantee the Vice President any specific amount of incentive compensation, or prevent the President North America Operations from establishing performance goals and compensation targets applicable only to the Vice President.

The payment of any bonus incentive is at the sole discretion of Patheon.

Equity Compensation

(a) Subject to the approval of the Board of Directors, the Vice President shall be granted a stock option to purchase 30,000 shares of common stock of Patheon at an exercise price per share equal to the market value of the common stock on the date of the grant (the "Option"). Except as otherwise provided in the Amended and Restated Incentive Stock Option Plan (the "ISOP") or stock option award agreement (the "Stock Related Documents"), the Option will (i) vest as to 1/3 of the shares subject to the Option on each of the first three anniversaries of the date of grant, subject to the Vice President's continued employment with the Affiliated Group until the relevant vesting dates, and (ii) have a seven year term. The Option will be subject to the terms, definitions and provisions of the applicable Stock Related Documents.

(b) During the Vice President's employment, at the discretion of the Board of Directors or its delegate, the Vice President also shall be eligible to receive additional stock options and other long-term incentives under the ISOP or any similar plan adopted by Patheon from time to time.

(c) Upon the occurrence of a Change in Control, any stock options to purchase shares of the common stock of Patheon then held by the Vice President shall, to the extent not otherwise provided in the applicable Stock Related Documents, become immediately vested and exercisable and shall remain exercisable for the remaining term of such stock option (which remaining term shall be determined without regard to the Vice President's termination of employment).

(d) The Vice President will be required to comply with the terms of any share ownership guidelines applicable to senior executives of Patheon generally, as amended from time to time.

Other Benefit Plans:

The Vice President's principal office will be at the US Headquarters location in Durham, North Carolina. The Vice President will be required to relocate to Raleigh/Durham area as a condition employment. The Vice President will be eligible for relocation assistance in accordance with the attached North American Tier 1 program. The move must be completed within twelve (12) months of Vice President's employment.

The Company will assist with relocating the personal and household goods from the Vice President's temporary housing in either Puerto Rico or Chester,VA. The Company further agrees that support for the sale of the Vice President's permanent residence will be limited to the residence located at 839 Clubridge Court, Chester, VA 23836. If the Vice President is involuntarily terminated for reasons other than for cause, he will not be subject to the repayment provisions under the Company's Tier One relocation plan.

Patheon shall also pay the Vice President, in regular semi-monthly installments, an allowance of

$ 1,000.00 US per month for car related expenses subject to the normal payroll source deductions.

Changes to Benefits and Plans

Patheon and its subsidiaries, each have the right to amend, vary, modify, reduce or eliminate any or all of the Bonus Incentive Plan, the retirement Plan or the Employee Benefits Plan from time to time upon reasonable written notice.

Termination

If the Corporation shall terminate the Vice President's employment other than for Cause; the Corporation shall pay, or cause to be paid, to the Vice President in a lump sum in cash the sum of: (i) the Vice President's Annual Base Salary through the Date of Termination, and (ii) any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (i) and (ii) shall be hereinafter referred to as the "Accrued Obligations"). The Accrued Obligations shall be paid within 30 days after the Date of Termination.

• “Cause” means the determination, in good faith, by the President North America Operations, after notice to the Vice President and, if curable, a reasonable opportunity to cure, that one or more of the following events has occurred: (i) the Vice President has failed to perform his material duties, and such failure has not been cured after a period of 30 days notice from the Corporation; (ii) any reckless or grossly negligent act by the Vice President having the effect of injuring the interests, business or reputation of any member of the Affiliated Group in any material respect; (iii) the Vice President's commission of any felony (including entry of a nolo contendere plea); (iv) any misappropriation or embezzlement of the property of any member of the Affiliated Group; or (v) a breach of any material provision of this Agreement by the Vice President.

• The Corporation shall pay, or cause to be paid, to the Vice President an amount equal to the Vice President's Annual Base Salary plus an amount determined by the President North America Operations in his sole discretion to reflect the annual incentive the Vice President would have otherwise earned during the year in which the Date of Termination occurs. Such amount shall generally be paid in cash in twelve (12) equal monthly installments beginning within 60 days after the Date of Termination. Notwithstanding the foregoing, if the severance benefit described in this Section 5.1(b) exceeds two times the lesser of (i) the Vice President's annual compensation or (ii) the compensation limit in effect under Section 401(a)(17) of the Code for the calendar year including the Date of Termination, any amounts not yet paid as of the “short-term

deferral date” shall be paid in a lump sum on the “short-term deferral date.” The “short-term deferral date” is the date that is two and one-half months after the end of the later of (i) the calendar year containing the Date of Termination or (ii) the Company's fiscal year containing the Date of Termination. Such payment shall be paid to Vice President within 30 days after the Date of Termination.

• If the Vice President elects COBRA continuation coverage for any of the group health benefits in which he was enrolled on the Date of Termination, the Corporation will pay for a portion of such coverage. For the coverage in effect during the first twelve months after the Date of Termination, the Corporation shall contribute the amounts necessary so that the Vice President's cost for such group health plan coverage is the same as it would have been had he remained employed. Such payments shall be made to the medical coverage carrier on the later of (i) the due date for the applicable payment, as determined by the medical coverage carrier or (ii) the Release Deadline. The Corporation shall not pay for any portion of the COBRA continuation coverage that is in effect more than twelve months after the Date of Termination.

• To the extent not theretofore paid or provided, the Affiliated Group shall pay or provide, or cause to be paid or provided, to the Vice President any other amounts or benefits required to be paid or provided or which the Vice President is eligible to receive under any plan, program, policy or practice or contract or agreement of the Affiliated Group (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"), in accordance with the terms and normal procedures of each such plan, program, policy or practice or contract or agreement, based on accrued and vested benefits through the Date of Termination.

If the Vice President receives payments and benefits pursuant to this Section, then the Vice President shall not be entitled to any other severance pay or benefits under any severance plan, program or policy of any member of the Affiliated Group, unless otherwise specifically provided therein in a specific reference to this Agreement.

Release

Notwithstanding anything contained herein to the contrary, the Corporation shall only be obligated to make the payments under Section Termination if: (a) within the 50-day period after the Date of Termination, the Vice President executes a general release, in a form provided by the Corporation, of all current or future claims, known or unknown, against the Affiliated Group, its officers, directors, shareholders, employees and agents arising on or before the date of the release, including but not limited to all claims arising out of the Vice President's employment with the Affiliated Group or the termination of such employment, and (b) the Vice President does not revoke the release during the seven-day revocation period prescribed by the Age Discrimination in Employment Act of 1967, as amended, or any similar revocation period, if applicable. The Corporation shall be obligated to provide such release to the Vice President promptly following the Date of Termination.

4. Confidentiality/Non-Competition agreement:

You will be required to sign a confidentiality/non-competition agreement which we require all Patheon associates to sign. A copy of this agreement is attached as Schedule C.

This letter reflects the entire agreement regarding the terms and conditions of your employment. Accordingly, it supersedes and completely replaces any prior oral or written communication on this subject. This letter is not an employment contract and should not be construed or interpreted as containing any guarantee of continued employment. The employment relationship at Patheon is by mutual consent ("Employment-At-Will"). This means that associates have the right to terminate their employment at any time and for any reason. Likewise, Patheon reserves the right to discontinue your employment with or without cause at any time and for any reason.

By acceptance of this offer, you agree that (1) no trade secret or proprietary information belonging to any previous employer will be disclosed or used by you at Patheon and that no such information, whether in the form of documents, memoranda, software, etc., will be retained by you or brought with you to Patheon, and (2) you have brought to Patheon's attention and provided it with a copy of any agreement which may impact your future employment at Patheon , including non-disclosure, non-competition, invention/patent assignment agreements or agreements containing future work restrictions.

5. Deferred Compensation Plan: You are eligible to participate in the Deferred Compensation Plan as set forth in the attached Schedule D.

6. General Provisions:

Your offer of employment is contingent on the following additional conditions:

• Satisfactory drug screen/physical results. Once you have accepted our offer, please call us to make arrangements. The results of both the physical examination and the drug screen must be available in advance of your start date with Patheon; normal turnaround is at least 72 hours for results.

• That you present documents on your first day of work that establish your identity and authority to work in the United States. All individuals hired are required by the Immigration Reform and Control Act of 1986 to provide verification documents (see attached).

• A satisfactory background and reference check.

We look forward to you joining Patheon and wish you a prosperous career here. Please indicate your acceptance of this offer by signing below and returning the signed original to me no later than May 14, 2010. Please keep a copy of the signed letter for your personal records.

Sincerely,

/s/ Toni T. Sweeney

Toni T. Sweeney

Vice President Human Resources, NA

Patheon Pharmaceuticals Inc.

I accept the offer as stated above and will start my employment on July 6th. I understand and acknowledge that this offer does not guarantee me employment for any period of time and that the employment relationship between Patheon and me will be “at will,” which means that either Patheon or I may terminate the relationship at any time and for any reason. I also understand and acknowledge that Patheon may change the terms and conditions of my employment at any time.

/s/ Harry Gill May 10, 2010

Harry GillDate

Schedule A - Retirement Summary

PATHEON PHARMACEUTICAL SERVICES INC. - RETIREMENT SAVINGS PLAN

Patheon Pharmaceutical Services Inc. Retirement Savings Plan

401(k) Match

Eligibility - first of the month following 90-Days

Vesting - 5 Year Graded Vesting, 20% per year

Match - 100% of the first 4%

Patheon Pharmaceutical Services Inc. may at any time in its discretion alter, amend, discontinue, or terminate the Patheon Pharmaceutical Services Inc. Retirement Savings Plan, and any of its provisions. While Patheon anticipates giving notice to its associates prior to any such change, it may do so without prior notice to its associates.

Schedule B - Health and Welfare Summary

PATHEON PHARMACEUTICALS SERVICES INC. - RTP - HEALTH & WELFARE BENEFIT PLANS

BUSINESS TRAVEL ACCIDENT INSURANCE

Travel and Accident insurance that covers employees for death, dismemberment and/or loss for self, spouse and/or dependent children while on business travel.

DENTAL PLAN

Patheon offers a Preferred Dentist Program (PDP) plan for dental services with a percentage of dental costs paid by the insurance provider based on the type of dental services provided. In summary, preventive care is covered at 100%, basic services at 80%, major at 50% and orthodontia at 50%. Orthodontia is available for both children and adults. There are maximum limits, but no deductibles. Most dental offices submit claims directly to the Insurance Provider.

DISABILITY PLANS

Short-term Disability:

Provided that eligibility and documentation requirements are met, STD provides income protection during the first 180 days of a disability. Salary continuation is as follows:

• 100% for the first 60 days

• 80 % for next 30 days

• 60% for next 90 days

EAP

Patheon provides an Employee Assistance Program for all employees through our medical insurance provider. Qualified counselors provide up to 6 counseling visits per occurrence at company expense. If referred for continued care, employee responsible for costs incurred not covered by medical insurance.

FLEXIBLE SPENDING ACCOUNTS

FSA's allow employees to contribute pre-tax dollars for reimbursement of health care or dependent care expenses. The health care account can cover eligible health expenses that are not covered under the medical plan. Dependent care reimburses the expenses of eligible caregivers for a dependent who lives with the employee and cannot provide self care, such as a dependent child, a child with disabilities or an elderly parent.

LIFE AND AD&D

Patheon provides employee life insurance at an amount of 1.5 times annual base salary to a maximum of $800,000 as a company-paid benefit.

Employees may purchase optional life insurance at group rates. Options for insurance:

• Supplemental employee life at 1,2,3, or 4 times base salary up to a maximum of $900,000.

• Spouse life: $10,000, $30,000 and $50,000.

• Child life: $5,000 and $10,000.

LONG TERM CARE

Employees may purchase Long Term Care (LTC) insurance for self, spouse, parents and parents-in-law of employees, grandparents and grandparents-in-law of employees, retirees, spouses of retirees and adult children. LTC refers to regular assistance with daily functions such as bathing, eating and or dressing. LTC insurance helps pay for care at home, in an adult day care center, assisted living facility, nursing home or hospice.

LONG TERM DISABILITY

The company pays for coverage at 60% monthly income to a maximum of $10,000 per month. An employee can purchase a “buy up” which increases the coverage to 70%. There is a 12-month exclusion period for disabilities resulting from pre-existing conditions. Employees must submit timely and correct documentation to the Health Services Unit and/or the insurance provider.

MEDICAL COVERAGE

Employees select from a Preferred Provider Option (PPO) or a high deductible plan referred to as a High Deductible Health Plan, abbreviated as HDHP. Employees who elect the HDHP option may also elect to open a Health Savings Account. PPO's provide options for in- network and out of network services using a system of deductibles and percentages of payment. The HDHP operates as a catastrophic insurance once high deductibles are met. Both plans provide three-tier prescription coverage.

For more detail on coverage and cost, please refer to the Current Guide to Patheon Benefits available through Human Resources.

MERASTAR/UNITRIN DIRECT

Employee may purchase auto, home or boat insurance through Merastar at Patheon group rates.

TUITION REIMBURSEMENT

Employees may obtain prior approval for tuition reimbursement of courses that are part of a job-related degree up to an annual cap of $7500.

VISION CARE

Patheon offers a vision program that offers reimbursement for an eye exam and lenses once every calendar year and frames once every two years. The Plan defines specific providers and allowable expenses.

The previous paragraphs provide a convenient summary of Patheon benefits. In the event of a discrepancy with a Patheon benefit plan or certificate, the plan or certificate governs. The Company may at any time and at its discretion change carriers, or self-insure, any and all of these health and welfare benefits. Moreover, the Company may at any time at its discretion alter, modify, discontinue, or terminate any and all of its health and welfare benefits, plans or programs, including those described above. While the Company anticipates notifying employees of changes in these benefits, plans or programs, it may do so without prior notice to employees.

Schedule C - Confidentiality, Non-Competition and Non-Solicitation

PATHEON PHARMACEUTICAL SERVICES INC.

CONFIDENTIALITY, NON-COMPETITION AND NON-SOLICITATION UNDERTAKING

In consideration of Harry Gill accepting the offer of employment of Patheon Pharmaceuticals Services Inc. ("Patheon") in accordance with the letter to which this Confidentiality, Non-Competition and Non-Solicitation Undertaking (the “Undertaking”) is attached, the Employee undertakes and covenants with Patheon as follows:

1. CONFIDENTIAL INFORMATION

1.1 Confidential Information

The Employee acknowledges that all information and facts relating to the business and affairs of Patheon and its customers, including, without limitation, trade secrets, data, notes, marketing plans, sales patterns, and private corporate and financial information (the "Confidential Information") is confidential and proprietary to Patheon and is a valuable trade secret of Patheon, disclosure of which could severely damage the economic interests of Patheon. Confidential Information includes, without limitation, any document, work, instrument or other medium assembled or composed by the Employee which contains Confidential Information.

1.2Non-Disclosure of Confidential Information

The Employee will not, either during his or her employment or at any time thereafter, use or disclose, directly or indirectly, any Confidential Information to any person outside Patheon, except where the disclosure is necessary for the proper and bona fide execution of the Employee's duties hereunder, without the prior written consent of Patheon. The Employee's obligation not to use or disclose Confidential Information without prior written consent will continue to apply after the Employee has ceased to be an employee of Patheon until the time the Confidential Information becomes public knowledge through no fault of the Employee. Patheon will have full right, title and authority to deal in and with the proprietary rights and the Confidential Information. The Employee acknowledges and agrees that the restrictions contained in this Article 1 are reasonable in the circumstances in order to protect the business of Patheon.

1.3Return of Confidential Information

Confidential Information and the documents, works, instruments or other medium containing Confidential Information will remain the property of Patheon and will be returned to Patheon upon request or immediately following Employee's termination of employment for any reason. Employee agrees that he will not retain any copies, duplications, reproductions or excerpts from any of the foregoing materials.

2.INVENTIONS

2.1Inventions

Subject to Section 2.2, the Employee agrees that all discoveries, improvements, designs, ideas or inventions made or conceived, in whole or in part, by the Employee during his or her employment or within three years following termination of employment for any reason whatsoever (the "Inventions") will be the sole property of Patheon. The Employee will:

(a) promptly disclose and describe all such Inventions in writing to Patheon;

(b) assign, and the Employee does hereby assign, to Patheon, without further compensation, all of the Employee's rights, title and interest in and to the Inventions and to all applications for letters of patent,

copyrights, industrial design or other forms of protection granted for the Inventions throughout the world;

(c) deliver promptly to Patheon, upon request and in the form and manner prescribed by Patheon (without charge to Patheon but at Patheon's expense) the written instruments described in paragraph (b) and perform acts deemed necessary by Patheon to obtain and maintain the instruments and to transfer all rights and title thereto to Patheon; and

(d) give all assistance that may be required by Patheon to enable it to protect or exploit the Inventions in any country of the world.

The Employee does hereby waive any rights that the Employee may have in each of the Inventions and any part or parts thereof, including, but not limited to, the right to the integrity of the Inventions, the right to be associated with the Inventions as its author by name or under a pseudonym and the right to remain anonymous.

2.2Excluded Inventions

The provisions of Section 2.1 will not apply to Inventions which fulfill all of the following criteria:

(a) Inventions for which no equipment, supplies, facility or Confidential Information belonging to Patheon were used; and

(b) Inventions that do not relate to the business of Patheon or to Patheon's actual or demonstrably anticipated processes, research or development which the Employee had access to or knowledge of; and

(c) Inventions that do not result from any work performed by the Employee for Patheon.

3.NON-SOLICITATION/NO-HIRE

3.1Non-Solicitation/No-Hire of Employees.

The Employee will not, during his or her employment and for 12 months after the termination of employment with Patheon for any reason whatsoever, hire or solicit the employment of employees of Patheon in any manner whatsoever that would have the effect of causing them to leave the employment of Patheon.

3.2Non-Solicitation of Customers.

The Employee will not, for 12 months after the termination of his/her employment with Patheon, directly or indirectly solicit, divert, or attempt to divert from Patheon any customer of Patheon with whom Employee had contact during employment with Patheon.

4. NON-COMPETITION

Employee agrees that during his or her employment with Patheon and for 12 months after the termination of employment with Patheon, Employee will not directly or indirectly, perform any duties or services similar to those performed for Patheon (whether advisory, consulting, employment or otherwise) for any person, firm, corporation, partnership, or other entity or venture which engages in a Competitive Business (as defined in this Undertaking) in the United States, in any territory of the United States, or in any foreign country in which Patheon conducts business. “Competitive Business” means a business engaged in the sale of commercial pharmaceutical manufacturing capabilities and/or pharmaceutical development services. This non-compete does not restrict the Employee from future employment in the pharmaceutical industry.

5.EMPLOYMENT-AT-WILL

Nothing in this Undertaking alters the Employment-At-Will nature of Employee's employment relationship with Patheon.

6.GOVERNING LAW

This Undertaking will be governed and construed in accordance with the laws of the State of Ohio. The resolution of any claims or disputes arising from this Undertaking will be subject to the exclusive jurisdiction of the State or Federal Courts located in Hamilton County, Ohio.

7. SEVERABILITY

The provisions of this Undertaking are severable. If any provision of this Undertaking is determined to be invalid or unenforceable by a court of competent jurisdiction, the other provisions of this Undertaking will continue in full force and effect and the voided provision will be amended, if permissible, to the extent necessary to render it valid and enforceable in the court's jurisdiction.

IN WITNESS WHEREOF this Undertaking has been executed this day of , 2010.

EMPLOYEE:WITNESS:

___________________ _____ _______________________________

Harry Gill (Print) Name (Print)

_______________________ _______________________________

Harry Gill (Signature) Signature

_________________________________ _______________________________

Date Date

Schedule D - Deferred Compensation Summary

PATHEON PHARMACEUTICAL SERVICES INC. - DEFERRED COMPENSATION PLAN

As a key member of the Patheon management team, you are eligible to participate in the Patheon US Deferred Compensation Plan. As an eligible employee you can contribute up to 25% of your annual base salary, and as agreed to by the Company, up to 100% of your annual bonus to your account on a tax-deferred basis.

The Company will make contributions for you if you receive a reduced benefit under the Company's 401(k) plan as a result of your deferral elections under the Plan, the 401(k) plan contribution limits and the 401(k) plan nondiscrimination rules. Your deferrals are fully vested at all times.

Amounts credited to your account generally will commence to be paid in the year following your termination of employment. You can elect to receive distributions in a lump sum or in annual installments over not more than ten years. To the extent permitted by law, you will have limited opportunities to (i) receive payment of your account prior to termination of employment and (ii) change the form of payment of your account. The amounts contributed to your account will be credited with earnings, gains and losses based on the performance of the funds offered under the Company's 401(k) plan.

Benefits under the Plan are paid out of the Company's general assets, which remain available to the Company for any corporate purpose and are subject to the claims of the Company's general creditors. The Company may decide to segregate the Plan assets in a trust (the assets of which remain subject to the claims of the Company's general creditors). The Company generally has the ability to terminate the Plan at any time and distribute your account either (i) in accordance with the form of distribution elected by you (commencing at the time elected by you) or (ii) in a lump sum as soon as practicable after the termination of the Plan.

The Company may at any time in its discretion alter, amend, discontinue, or terminate its Deferred Compensation Plan and any of its provisions. While the Company would anticipate providing notice to its employees prior to any such changes, it may do so without prior notice to its employees.

EX-10.6

Exhibit 10.6

State of North Carolina

County of Wake

SEVERANCE AND RELEASE OF CLAIMS AGREEMENT

This Severance and Release of Claims Agreement (the “Release”), dated this the 21st day of December, 2012, is made by and between Mark J.Kontny, Ph.D.,, an individual resident of Wake County, North Carolina (the “Executive”), and Patheon Pharmaceuticals Services Inc., a company duly organized and existing in accordance with the laws of the State of Delaware, with offices located at 4721 Emperor Boulevard, Suite # 200, Durham, Durham County, North Carolina 27703 (the “Company”) (collectively the “Parties”).

WHEREAS, on March 19, 2010, Executive entered into a letter of employment with the Company (the “Agreement”), a copy of which is attached hereto as Exhibit "A" and incorporated herein by reference;

WHEREAS, on August 13, 2012(the “Separation Date”), Executive's employment with the Company terminated and the Company has agreed, subject to the terms and conditions of this Release, to make those payments described herein; and

WHEREAS, the Executive has agreed to sign this Release in order to receive the payments described herein;

In consideration of the promises set forth herein, including without limitation the payments described in Section 1(c) hereof, the Parties agree as follows:

1. Payments to Executive.

(a)The Company shall pay, or cause to be paid, to Executive in a lump sum: (i) that portion of your Annual Base Salary earned but not previously paid through the Separation Date; (ii) reimbursement of unreimbursed expenses incurred on or before the Separation Date for which you have submitted standard documentation according to Company policy; and (iii) any accrued but unused vacation pay (hereinafter referred to as the "Accrued Obligations"). The Accrued Obligations shall be paid on the next regular pay date following the Separation Date consistent with the Company's established payroll practices.

(b)To the extent not yet paid or provided, the Company (or Patheon Inc., as the case may be) shall pay or provide, or cause to be paid or provided, to Executive any other amounts or benefits required to be paid or provided or that Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Patheon Group (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"), in accordance with the terms and normal procedures of each such plan, program, policy or practice or contract or agreement, based on earned, accrued or vested benefits through the Separation Date. The Separation Date will also serve as Executive's COBRA qualifying event.

(c)In consideration for Executive's execution, non-revocation of, and compliance with this Release, including the waiver and release of claims in Section 2 below, the Company shall pay the Executive an amount of Five Hundred and Twenty Thousand Dollars ($520,000.00), less standard

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payroll deductions, which is an amount equal to the amounts set forth in Paragraph 12 of the Agreement (the “Separation Benefit”). The Separation Benefit shall be paid in the form of twenty-six (26) equal bi-weekly payments in the amount of Twenty-Thousand Dollars ($20,000) each, less standard payroll deductions, commencing on Friday, January 11, 2013, and continuing on a bi-weekly basis on the next twenty-five (25) alternate Fridays thereafter, through and including Friday, December 27, 2013, provided that the Executive has not revoked the Release and that the Revocation Period prescribed below has expired. Further provided, that all such bi-weekly payments shall be made in the form of direct deposits to such bank account of Executive as the Executive shall direct, and that the Company will regularly and promptly inform the Executive as and when each such payment has been made and of all deductions that have been made from each such payment.

(d)Executive is responsible for all tax obligations that are payable by him as a result of his former employment by the Company that may arise because of the Separation Benefit.

(e)Executive acknowledges the receipt and sufficiency of good and valuable consideration in exchange for the promises he makes in this Release. Executive further acknowledges that he is not entitled to any payments other than those set forth in this Release.

2. Release by Executive.

(a)For and in consideration of the Company entering the Agreement, including without limitation the Separation Benefit, which is being provided in exchange for Executive's execution of this Release and would not be provided absent Executive's execution of this Release, Executive, for himself and his heirs, executors, administrators, assigns, successors and agents (collectively, the “Executive's Affiliates”) hereby fully and without limitation releases and forever discharges the Company and all other members of the Patheon Group and each of their respective agents, representatives, shareholders, owners, officers, directors, employees, consultants, attorneys, auditors, accountants, investigators, affiliates, successors and assigns (collectively, the “Patheon Releasees”), both individually and collectively, from any and all waivable rights, claims, demands, liabilities, actions, causes of action, damages, losses, costs, expenses and compensation, of whatever nature whatsoever, known or unknown, fixed or contingent, that Executive or any of Executive's Affiliates has or may have or may claim to have against any of the Patheon Releasees by reason of any matter, cause, or thing whatsoever, from the beginning of time to the date Executive signs this Release (“Claims”), arising out of, based upon, or relating to his employment or the termination of his employment with the Company and/or his service as an officer of any of the Patheon Releasees, and/or his service as an independent contractor under the terms of the Agreement, and/or any agreement or compensation arrangement between Executive and any of the Patheon Releasees, to the maximum extent permitted by law. “Patheon Group” means Patheon Inc. and any entity that controls, is controlled by or is under common control with Patheon Inc. For purposes of this definition only, “control” means (a) to possess, directly or indirectly, the power to direct the management or policies of a Person, whether through ownership of voting securities or by contract relating to voting rights or corporate governance, or (b) to own, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities or other ownership interest of such Person. “Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, incorporated association, joint venture or similar entity or organization, including a government or political subdivision, department or agency of a government.

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(b)The Claims released by Executive include, but are not limited to, any Claims arising out of or based on: Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Civil Rights Act of 1991, the Family Medical Leave Act, Sections 1981 through 1988 of Title 42 of the United States Code, the Employee Retirement Income Security Act of 1974 (“ERISA”) (except for any vested benefits under any tax qualified benefit plan), the Immigration Reform and Control Act, the Worker Adjustment and Retraining Notification Act, the Occupational Safety and Health Act, the Fair Credit Reporting Act, and the Sarbanes-Oxley Act of 2002 (in each case as the same may be amended from time to time); fraud, misrepresentation, retaliation, negligence, defamation, infliction of emotional distress or other tort, common law, breach of contract (whether express or implied, written or oral) or covenant, violation of public policy or wrongful termination; state or federal wage and hour laws; or any other state or federal law, rule, or regulation dealing with the employment relationship, except those claims which may not be released herein as a matter of law. The released Claims also include any Claims by Executive for compensation, wages, back pay, reinstatement or re-employment, bonuses, or benefits of any kind or any nature arising out of, based upon, or relating to his employment or the termination of his employment with the Company and/or his service as an officer of any of the Patheon Releasees, and/or any agreement or compensation arrangement between Executive and any of the Patheon Releasees. For purposes of clarity, the forgoing is not intended to waive or discharge any vested rights that Executive may have pursuant to any stock option plan that has been issued by or on behalf of the Company, which rights shall survive the execution of this Release.

(c)Older Workers Benefits Protection Act

A special federal law applies to the release of a claim for age discrimination. For Executive to relinquish a claim for age discrimination, certain requirements must be met. By signing this Agreement, Executive acknowledges and agrees that the following requirements have been met:

(i)    The Agreement is written in language which is readily understandable.

(ii)Executive understands that he is relinquishing any claim for age discrimination which he might assert as of the date of the Agreement.

(iii)Executive is informed that he should consult an attorney regarding the Agreement if that is his wish, and has been given an ample opportunity to do so.

(iv)This Agreement will not be effective until seven (7) days after Employee has signed it (the "Revocation Period"). Executive may revoke it at any time during the Revocation Periodby providing written notice to Jason Conner, Vice President and Assistant General Counsel, Patheon Pharmaceuticals Services Inc., 4721 Emperor Blvd., Suite 200, Durham, NC 27703, with a copy to: jason.conner@patheon.com.

(v)The Company shared this Release with Executive on November 30, 2012.

(vi)Executive has been allowed at least twenty-one (21) days, until 5:00 p.m. EST on December 21, 2012, to consider it before he signs and returns it to the Company to assure that he has had ample time to consider it, although he may do so in less time.

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(vii)This Release is the product of negotiations and any agreed-upon changes do not re-start the 21-day consideration period.

(d)Nothing contained in this Section 2 or any other provision of this Release shall release or waive any right that Executive has to (i) the payments prescribed by this Release, (ii) any employee benefit Executive is entitled to receive from the Company pursuant to any Company employee benefit plan or program, including any health claim or (iii) indemnification and/or reimbursement of expenses by the Company with respect to which Executive may be eligible as provided by law, the Company's or any member of the Patheon Group's Certificates of Incorporation, Bylaws and any applicable directors and officers, errors & omissions, umbrella or general liability insurance policies, or any indemnification agreements, including the Agreement. Further, nothing contained in this Release shall restrict or inhibit any communications by Executive with the Equal Employment Opportunity Commission (“EEOC”) or any other government or law enforcement agency.

3.Waiver of Applicable Release Laws.

(a)Executive understands and agrees that the release provided herein extends to all Claims released above whether known or unknown, suspected or unsuspected, which may be released as a matter of law. Executive expressly waives and relinquishes any and all rights he may have under state law that prohibits the general release of unknown claims.

(b)It is the intention of each party through this Release to fully, finally and forever settle and release the Claims as set forth above. In furtherance of such intention, the release herein given shall be and remain in effect as a full and complete release of such matters notwithstanding the discovery of any additional Claims or facts relating thereto.

4.No Filings. Executive represents that he has not filed any waivable lawsuits, claims, charges or complaints, which are pending as of the date hereof, against any of the Patheon Releasees with any local, state or federal agency or court from the beginning of time to the date of execution of this Release, and he agrees not to sue the Company other than as may be required to enforce this Release and that he shall not accept any other award, damages, recovery or settlement from any proceeding brought by him or on his behalf relating to his employment or the termination of his employment with the Company and/or his service as an officer of any of the Patheon Releasees or otherwise.

5. Release by Company. The Company hereby releases and discharges the Executive and his heirs, executors, administrators and assigns from and of any and all claims, claims for relief, demands, damages, liability, charges, actions and causes of action of every kind at law or in equity of which the Company has actual knowledge as of the date of this Agreement, including but not limited to those arising from his employment by the Company and the cessation of that employment, the terms and conditions of that employment, his acts and omissions and all losses, liabilities, claims, claims for relief, charges, demands and causes of action.

6.Executive's Confidentiality Undertaking.

(a)Executive understands and acknowledges that during the course of employment by the Company, he has had access to and learned about confidential, secret and proprietary documents, materials and other Confidential Information, in tangible and intangible form, of and relating to the

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Patheon Group and its businesses and existing and prospective customers, suppliers, and other associated third parties. The Executive understands and acknowledges that this Confidential Information and the Company's ability to reserve it for the exclusive knowledge and use of the Patheon Group is of great competitive importance and commercial value to the Company, and that improper use or disclosure of the Confidential Information by Executive might cause the Company to incur financial costs, loss of business advantage, liability under confidentiality agreements with third parties, civil damages and criminal penalties. Executive understands and agrees that Confidential Information developed by him in the course of his employment by the Company shall be subject to the terms and conditions hereof as if the Company furnished the same Confidential Information to Executive in the first instance. Confidential Information shall not include information that is generally available to and known by the public at the time of disclosure to Executive, provided that such disclosure is through no direct or indirect fault of Executive or person(s) acting on the Company's behalf.

(b)Executive agrees and covenants: (i) to treat all Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish, communicate or make available Confidential Information, or allow it to be disclosed, published, communicated or made available, in whole or part, to any entity or person whatsoever (including other employees of the Patheon Group); and (iii) not to access or use any Confidential Information, and not to copy any documents, records, files, media or other resources containing any Confidential Information, or remove any such documents, records, files, media or other resources from the premises or control of the Patheon Group, except with the prior written consent of an authorized officer acting on behalf of the Patheon Group. Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation or order. Executive shall promptly provide written notice of any such order to an authorized officer of the Patheon Group.

(c)Executive has not and will not voluntarily disclose matters relating to the existence or the contents of this Release, including the amount of the monetary payment, to anyone other than (i) Executive's spouse; and (ii) Executive's attorneys, accountants, financial advisors or healthcare providers for professional counseling. Executive also will take reasonable precautions to ensure that each of these persons maintain the confidentiality of the matters relating to the existence, terms and conditions of this Release, including advising the person of the confidentiality provisions before Executive makes any permitted disclosure.

(d)Executive understands and acknowledges that his obligations hereunder with regard to any particular Confidential Information shall commence immediately and shall continue during and after his employment by the Company until such time as such Confidential Information has become public knowledge other than as a result of Executive's breach of this Release or breach by those acting in concert with Executive or on Executive's behalf.

(e)“Confidential Information” means any and all facts, data or information of the Patheon Group (or of third parties providing such information to the Patheon Group) that is not known by, or generally available to the public at large, that concerns the business of the Patheon Group (or third parties providing such information to the Patheon Group) whether now existing or to be developed in the future, and whether embodied in tangible or intangible form or merely remembered, including but not limited to trade secrets or other intellectual property; products, product plans, designs, ideas, concepts, costs, methods or policies; prices or price formulas; processes; procedures; raw materials; research, development or know-how; customer lists and information, information relating to customers, prospective partners, partners, parents, subsidiaries, affiliates and other entities; financial information; computer

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software (including design, programming techniques, flow charts, source code, object code, and related information and documentation); products and services; inventory lists; market and/or product research and development data; business strategies and methodologies, strategic or business plans, training manuals and methodologies; employee phone and address lists, personnel data, incentive packages, compensation data and employee performance data; and all other information of any kind or character relating to the development, improvement, manufacture, sale, or delivery of products or services by the Patheon Group.

7.Return of Patheon Group Property. Upon the Company's request and, in any event, upon the cessation of Executive's employment with the Company, Executive will return to the Company all Confidential Information in Executive's possession or control, along with all Patheon Group property, including but not limited to keys, pass cards, identification cards, computer hardware and software, manuals, passwords, customer lists, sales records, business plans, any data concerning customers of the Patheon Group, brochures of the Patheon Group, all corporate records, policy handbooks, receipts, documents, records, files and other documents in whatever form they exist, whether electronic, hard copy or otherwise, and all copies, notes or summaries thereof. Any and all such documents contained on Executive's personal computer or devices shall be printed, delivered to the Company and thereafter deleted from the personal computer/device. These documents and items must be returned whether in Executive's possession, work area, home, vehicle or in the wrongful possession of any third party with Executive's knowledge or acquiescence, and whether prepared by the Company or any other person or entity.

8.Non-Disparagement. The Executive agrees and covenants that he will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments or statements concerning the Patheon Group or its businesses, or any of its employees, officers, and existing and prospective customers, suppliers, investors and other associated third parties, now or in the future. This Section 8 does not, in any way, restrict or impede the Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation or order. The Executive shall promptly provide written notice of any such order to the General Counsel of Patheon Inc., at the address set forth in Section 2(b)iv or as otherwise directed by the Company in writing. The Company, further, agrees and covenants that it will not at any time make, publish or communicate to any person or entity, or in any public forum, any defamatory or disparaging remarks, comments or statements concerning the Executive or his performance as an employee of the Company, whether now or in the future.

9.Cooperation Clause. To facilitate the orderly conduct of the Patheon Group, Executive agrees to cooperate, with the Company's reasonable requests for information or assistance related to (i) the time of his employment, (ii) any investigations (including internal investigations) and audits of any member of the Patheon Group's management's current and past conduct and business and accounting practices and (iii) any member of the Patheon Group's defense of, or other participation in, any administrative, judicial, or other proceeding arising from any charge, complaint or other action which has been or may be filed relating to the period during which Executive was employed by the Company. The Company will promptly reimburse Executive for his reasonable, customary and documented out-of-pocket business expenses in connection with the performance of his duties under this Section 9, and shall

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promptly compensate the Executive as an independent contractor at the rate of One Hundred and Ninety-Two Dollars ($192.00) per hour that he is required to devote to such cooperation in accordance with this section.

10.Remedies. In the event of a breach or threatened breach of this Release, the Patheon Group and its successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to seek specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security). In the event of a breach or threatened breach of this Release, the Executive, in addition to other rights and remedies that he may have, shall be entitled to seek specific performance and/or injunctive or other equitable relief from a court of competent jurisdiction in order to enforce or prevent any violations of this Release (without posting a bond or other security).

11.Non-Admission of Liability. The parties understand and agree that neither the furnishing of the consideration hereof nor the execution of this Release by the parties will constitute or be construed as an admission of any wrongdoing or liability whatsoever by any party.

12.Severability. If any one or more of the provisions contained herein (or parts thereof), or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity and enforceability of any such provision in every other respect and of the remaining provisions hereof will not be in any way impaired or affected, it being intended that all of the rights and privileges shall be enforceable to the fullest extent permitted by law.

13.Entire Agreement. This Release, together with the Agreement, represents the sole and entire agreement among the parties and, except as expressly stated herein, supersedes all prior agreements, negotiations and discussions among the parties with respect to the subject matters contained herein. No provision of this Release may be amended or modified unless such amendment or modification is agreed to in writing.

14.Waiver. No waiver by either party hereto at any time of any breach of, or compliance with, any condition or provision of this Release to be performed by any other party hereto may be deemed a waiver of similar or dissimilar provisions or conditions at the same time or at any prior or subsequent time, nor shall the failure of or delay by either of the parties in exercising any right, power or privilege hereunder operate as a waiver thereof to preclude any other or further exercise thereof or the exercise of any other such right, power or privilege.

15.Successors and Assigns. To the extent permitted by applicable law, the Company may assign this Release to any subsidiary or corporate affiliate in the Patheon Group or otherwise, or to any successor or assign (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company. This Agreement shall inure to the benefit of the Patheon Group and permitted successors and assigns. Provided, that no such assignment shall be construed to release the Company from its obligation to comply with this Release.

16.Governing Law and Venue. This Release, and the Agreement, for all purposes, shall be construed in accordance with the laws of the State of North Carolina without regard to conflicts-of-law principles. Any action or proceeding by either of the parties to enforce this Release shall be brought only in any state or federal court located in the State of North Carolina. The parties hereby irrevocably submit

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to the exclusive jurisdiction of such courts and waive the defense of inconvenient forum to the maintenance of any such action or proceeding in such venue.

17.Counterparts. This Release may be executed in counterparts, each of which will be deemed to be an original as against any party that has signed it, but both of which together will constitute one and the same instrument.

18.Miscellaneous Provisions.

(a)The parties represent that they have read this Release and fully understand all of its terms; that they have conferred with their attorneys, or have knowingly and voluntarily chosen not to confer with their attorneys about this Release; that they have executed this Release without coercion or duress of any kind; and that they understand any rights that they have or may have, and they are signing this Release with full knowledge of any such rights.

(b)Both parties have participated in the drafting of this Release with the assistance of counsel to the extent they desired. The language in all parts of this Release must be in all cases construed simply according to its fair meaning and not strictly for or against any party. Whenever the context requires, all words used in the singular must be construed to have been used in the plural, and vice versa, and each gender must include any other gender. The captions of the Sections of this Release are for convenience only and must not affect the construction or interpretation of any of the provision herein.

(c)Each provision of this Release to be performed by a party hereto is both a covenant and condition, and is a material consideration for the other party's performance hereunder, and any breach thereof by the party will be a material default hereunder. All rights, remedies, undertakings, obligations, options, covenants, conditions and agreements contained in this Release are cumulative and no one of them is exclusive of any other. Time is of the essence in the performance of this Release.

(d)Each party acknowledges that no representation, statement or promise made by any other party, or by the agent or attorney of any other party, except for those in this Release, has been relied on by him or it in entering into this Release.

(e)Unless expressly set forth otherwise, all references herein to a “day” are deemed to be a reference to a calendar day. Unless expressly stated otherwise, cross-references herein refer to provisions within this Release and are not references to any other document.

(f)Each party to this Release will cooperate fully in the execution of any and all other documents and in the completion of any additional actions that may be necessary or appropriate to give full force and effect to the terms and intent of this Release.

19.Acknowledgments.

(a)As an accord and satisfaction, Executive acknowledges that he will have been paid for all time worked and all unused vacation.

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(b) Executive has returned to the Company all property, documents including all documentary files, company issued credit cards and equipment and other information of the Patheon Group and all copies thereof, whether in tangible or electronic form.

IN WITNESS WHEREOF, the parties have executed this Release as of the dates indicated below.

“Executive”

/s/ Mark J. Kontny

Mark J. Kontny, Ph.D.

Date: December 21, 2012

[Rest of page intentionally blank.]

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“Company”

Patheon Pharmaceuticals Services Inc.:

By: /s/ Rebecca M. Holland New

Title: CHRO

Date: 1.8.2013

ND: 4823-7793-4610, v. 1

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Exhibit A

Employment Letter

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EX-10.7

Exhibit 10.7

Patheon Pharmaceutical Services Inc

4721 Emperor Blvd., Suite 200

Durham, North Carolina 27703

September 24, 2012

PRIVATE AND CONFIDENTIAL

Michael Lehmann

W218N5353 Taylors Woods Dr.

Menomonee Falls WI, 53051

Dear Michael:

RE: Employment Agreement: President, Global Pharmaceutical Development Services

This employment agreement represents your contractual arrangements with Patheon Pharmaceutical Services Inc. and supersedes any arrangements, understandings and verbal commitments to you during our discussions. Please sign and return the employment agreement. Upon receiving the signed employment agreement from you, we will execute it and return a copy of the fully executed document to you for your files.

Sincerely,

Patheon Pharmaceutical Services Inc.

James Mullen

Chief Executive Officer

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EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made as of November 1, 2012 (the “Effective Date”), between Patheon Pharmaceutical Services Inc. (the “Company”) and Michael Lehmann (the “Executive”).

A.The Company is a subsidiary of Patheon Inc. (“Patheon”). Patheon is in the business of providing its customers with pharmaceutical development services, clinical trial manufacturing and packaging, and commercial manufacturing and packaging. The Company serves as the corporate shared services entity for Patheon and other members of the Patheon Group. As used herein, “Patheon Group” means Patheon and any entity controlled by Patheon.

B.The Company and the Executive wish to enter into this Agreement to set forth the rights and obligations of each of them with respect to the employment of the Executive.

C.The Company wishes to employ the Executive pursuant to the terms and subject to the conditions set forth in this Agreement.

D.The Executive wishes to be employed by the Company pursuant to the terms and subject to the conditions set forth in this Agreement.

E.The Company and the Executive agree that the terms, provisions and mutual covenants of this Agreement suffice as adequate consideration for their mutual promises made in this Agreement.

NOW, THEREFORE, the parties agree as follows:

ARTICLE 1

INTERPRETATION

1. Governing Law. This Agreement shall be construed and interpreted in accordance with the substantive laws of the State of North Carolina, without giving effect to any choice or conflict of law provision or rule (whether of the State of North Carolina or any other jurisdiction) that would cause the application of laws of any jurisdiction other than those of the State of North Carolina. The state and federal courts located in North Carolina shall be the exclusive forum for the adjudication of all disputes between the parties arising out of or relating to this Agreement. Each of the parties hereby irrevocably consents to the personal jurisdiction of the federal and state courts in the State of North Carolina with respect to any matters arising out of this Agreement and waives any and all objections and defenses to such personal jurisdiction regardless of whether such objection or defense is based upon the venue, North Carolina's long-arm statute, residence and/or contacts with North Carolina, the convenience of the witnesses and/or parties, the inconvenience of the forum, or otherwise.

2. Definitions. In this Agreement, including Schedule A and B hereto, unless the context otherwise requires, the following terms shall have the following meanings, respectively:

(a) “Board of Directors” means the Board of Directors of Patheon.

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(b) “Cause” means the determination, in good faith, by the Company, after notice to the Executive that one or more of the following events has occurred: (i) the Executive has failed to perform his material duties, and, if curable, such failure has not been cured after a period of thirty (30) days' notice from the Company; (ii) any reckless or grossly negligent act by the Executive having the effect of injuring the interests, business, or reputation of any member of the Patheon Group in any material respect; (iii) the Executive's commission of any felony (including entry of a nolo contendere plea); (iv) any misappropriation or embezzlement of the property of any member of the Patheon Group; or (v) a breach of any material provision of this Agreement by the Executive, which breach, if curable, remains uncured for a period of thirty (30) days after receipt by the Executive of notice from the Company of such breach.

(c) “Change in Control” means any of the following events:

(i) Any "Person" (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than JLL Partners or its affiliates, becomes a Beneficial Owner (within the meaning of Exchange Act Rule 13d-3) of more than fifty percent (50%) of the voting power of the then outstanding voting securities of Patheon entitled to vote generally in the election of directors;

(ii) There is consummated a merger or consolidation of Patheon or any direct or indirect subsidiary of Patheon with any other company, other than a merger or consolidation that would result in the voting securities of Patheon outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least fifty percent (50%) of the combined voting power of the securities of Patheon or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or

(iii) The shareholders of Patheon approve a plan of complete liquidation or dissolution of the company or there is consummated an agreement for the sale or disposition by Patheon of all or substantially all of its assets.

However, in no event shall a “Change in Control” be deemed to have occurred for purposes of this Agreement solely because Patheon (or any member of the Patheon Group) engages in an internal reorganization, which may include a transfer of assets to, or a merger or consolidation with, one or more affiliates.

(d) “Code” means the Internal Revenue Code of 1986, as amended.

(e) “Good Reason” means the occurrence of any of the following events without the consent of the Executive: (i) a material reduction of the Executive's duties or responsibilities or the assignment to the Executive of duties or responsibilities materially inconsistent with the Executive's position; or (ii) a material breach by the Company of this Agreement, which breach remains uncured for a period of thirty (30) days after receipt by the Company of written notice from Executive.  A termination of the Executive's employment by Executive shall not be deemed to be for Good Reason unless (i) the Executive gives notice to the Company of the existence of the event or condition constituting Good Reason within thirty (30) days after such event or condition initially occurs or exists, (ii) the Company fails to cure such event or condition within thirty (30) days after receiving such notice, and (iii) the Executive's “separation

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from service” within the meaning of Section 409A of the Code occurs not later than ninety (90) days after such event or condition initially occurs or exists.

ARTICLE 2

EFFECTIVE DATE; TERMS OF EMPLOYMENT

2.1    Term

The Company hereby agrees to employ the Executive, and the Executive hereby agrees to be employed by the Company pursuant to the terms and subject to the conditions of this Agreement (including, without limitation, Article 6 and Schedules A and B), commencing on the Effective Date. The Executive's employment with the Company will be “at will,” meaning that either the Executive or the Company will be entitled to terminate the Executive's employment at any time and for any reason, with or without cause. Any contrary representations which may have been made to the Executive are superseded by this Agreement. This is the full and complete agreement between the Executive and the Company on this term. Although the Executive's job duties, title, compensation and benefits, as well as the Company's personnel policies and procedures, may change from time to time, the “at will” nature of the Executive's employment may only be changed in an express written agreement signed by the Executive and a duly authorized officer of the Company.

2.2 Position and Duties

The Executive be employed by the Company and shall serve as President, Global Pharmaceutical Development Services of the Company, with such authority, duties and responsibilities as are commensurate with such position, reporting to the Chief Executive Officer. In addition, the Executive will be a member of the Patheon Group's Executive Committee and will become an officer of Patheon and of any members of the Patheon Group, each as may be requested.

The Executive shall also be responsible for the functions and responsibilities set out in the Position Description attached hereto as Schedule A.

The location of the Executive's employment will be the Company's Raleigh/Durham offices, located at 4721 Emperor Boulevard, Suite 200, Durham, North Carolina 27703, USA], or such other location where the principal executive offices may be relocated from time to time by the Company. The Executive will be required to relocate to the Raleigh/Durham area as a condition of employment. The Executive will be eligible for relocation assistance in accordance with the attached North American Tier 1 program. The move must be completed prior to the ninth (9^th) month anniversary of the Effective Date (the “Relocation Date”). The Executive will be permitted to commute to the Company's Raleigh/Durham offices from his primary residence in Menomonee Falls, WI, until the Relocation Date. The Executive will be expected to be at the Company's Raleigh/Durham offices or any other offices of the Company or otherwise engaged in theperformance of his duties at least five days per week, subject to required business travel, vacation and holidays. For the initial six (6) months of the Executive's employment term, (i) Executive will be entitled to areasonable housing allowance from the Company for the cost of housing arrangements in the Raleigh/Durham area and (ii) the Company will pay for or reimburse travel expenses related to Executive's weekly commute between Menomonee Falls, WI and the Raleigh/Durham area; provided that the foregoing amounts may be treated as taxable income.

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2.3Standards of Performance and Time Commitments

The Executive will, at all times, faithfully, industriously, and to the best of his ability, experience and talents, perform all of the duties required of and from him pursuant to the terms of this Agreement. During the Executive's employment, the Executive shall devote substantially all of his working time and attention to his duties with the Patheon Group and shall render no material business services to any other person or company; provided, however, it shall not be a violation of this Agreement for the Executive, subject to the requirements of Article 6, to (a) to spend reasonable amounts of time to manage his personal, financial and legal affairs; (b) to fulfill speaking engagements; and (c) with the Company's consent, which will not be unreasonably withheld, to serve on civic, charitable, not-for-profit, industry or other for profit corporate boards, so long as such activities do not materially interfere with the performance of the Executive's duties or responsibilities under this Agreement.

ARTICLE 3

COMPENSATION AND BENEFITS

3.1Base Salary

The Company shall pay the Executive an annualized base salary ("Annual Base Salary") at a rate of U.S. $390,000, payable pursuant to the Company's regular payroll practices for its executives in effect at the time. For fiscal year 2012, the Executive's Annual Base Salary will be prorated from the Effective Date. The Annual Base Salary shall be reviewed by the Chief Executive Officer at such time as the salaries of other senior executives of Patheon are reviewed generally.

3.2    Executive Performance Bonus

The Executive shall be eligible to participate in an annual performance incentive plan and the Executive's target bonus thereunder shall be 45 percent (45%) of his Annual Base Salary. The Executive's payment under the annual performance incentive plan shall be based on meeting predetermined personal objectives and Patheon's financial performance. The personal objectives will be set by the Chief Executive Officer, and the financial performance measures will be set by the Chief Executive Officer. For fiscal year 2012, the annual performance bonus will be prorated from the Effective Date. The annual performance bonus, if earned, will be paid to the Executive by the Company in the same manner and payment period generally applicable under the annual performance incentive plan and state law, but in no event later than two and a half months after the later of (i) the end of the applicable performance period, or (ii) the end of the calendar year in which the performance period ends. Nothing contained in this Section 3.2 will guarantee the Executive any specific amount of incentive compensation (or any incentive compensation), or prevent the Chief Executive Officer from establishing performance goals and compensation targets applicable only to the Executive.

3.3    Stock Options

(a) The Executive shall be eligible to participate in Patheon's 2011 Amended and Restated Incentive Stock Option Plan (the “Stock Option Plan”) and shall be eligible to be awarded options to acquire Patheon's restricted voting shares from time to time in accordance with the terms of such Plan and related stock option award agreement (together, with the Stock Option Plan, the "Stock Option Related Documents").

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(b) Subject to approval of the Board of Directors at a meeting following the Effective Date, the Executive will be granted optionsto acquire three hundred thousand (300,000) of the restricted voting shares of Patheon, which options shall be granted subject to the Stock Option Related Documents. Except as otherwise provided in the Stock Option Related Documents, the options will vest in five (5) equal installments on each of the first five (5) anniversaries of the Effective Date, subject to the Executive's continued employment with the Patheon Group until the relevant vesting dates. The subscription price for the shares under option will be the market price (as defined in the Stock Option Plan) on the date of grant. All options granted to the Executive will expire ten (10) years from the date of grant.

(c) During the Executive's employment, at the discretion of the Board or its delegate, the Executive also will be eligible to receive additional options and other long-term incentives under the Stock Option Plan or any similar plan adopted by Patheon from time to time in the course of its periodic review of executive compensation arrangements.

(d) Upon the occurrence of a Change in Control, any options to purchase restricted voting shares of Patheon then held by the Executive shall, to the extent provided in the applicable Stock Option Related Documents, become immediately vested and exercisable and remain exercisable for the remaining term of such option (which remaining term shall be determined without regard to the Executive's termination of employment).

(e) The Executive will be required to comply with the Stock Option Related Documents and the terms of any share ownership guidelines of Patheon generally, as amended from time to time.

3.4    Employee Benefits

The Executive will be entitled to participate in all employee healthcare and welfare benefits programs of the Company, in accordance with the then applicable terms, conditions and eligibility requirements of such programs that are offered from time to time to U.S. resident-based employees at the Executive's level, including medical, dental, life insurance, 401-K retirement plans and other health benefit programs.

In addition, the Executive will be entitled to four (4) weeks of vacation time, subject to the Company's vacation policy, as may be in effect from time to time, which will be pro-rated based on the Effective Date. Further, the Executive will be entitled to four (4) floating holidays annually (one (1) of which, for 2012, has been designated as December 31) and twenty-four (24) hours for emergency time off annually, each in accordance with the Company's policies, as may be in effect from time to time, and pro-rated for 2012 based on the Effective Date.

3.5    Reimbursement of Business Expenses

The Executive shall be reimbursed for all reasonable travel and other out-of-pocket expenses actually and properly incurred by the Executive during the Executive's employment in connection with carrying out [his/her] duties hereunder in accordance with the Company's policies, as may be in effect from time to time.

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3.8Sarbanes-Oxley Act Loan Prohibition

To the extent that any Company or Patheon Group benefit, program, practice, arrangement or this Agreement would or might otherwise result in the Executive's receipt of an illegal loan (the “Loan”), the Company shall use commercially reasonable efforts to provide the Executive with a substitute for the Loan that is lawful and of at least equal value to the Executive. If this cannot be done, or if doing so would be significantly more expensive to the Company than making the Loan, the Company need not make the Loan to the Executive or provide him a substitute for it.

ARTICLE 4

TERMINATION OF EMPLOYMENT

4.1Death or Incapacity

(a) The Executive's employment shall be immediately terminated without notice by the Company upon the death of the Executive.

(b) If the Company determines in good faith that the Incapacity (as defined below) of the Executive has occurred during the Executive's employment, it may give to the Executive written notice in accordance with Section 7.4 of this Agreement of its intention to terminate the Executive's employment; provided that such notice is provided no later than one hundred fifty (150) days following the Executive's first day of Incapacity. In such event, the Executive's employment shall terminate effective on the thirtieth (30^th) day after receipt of such notice by the Executive (the "Incapacity Effective Date"), provided that, within such thirty (30) day period after such receipt, the Executive has not returned to full-time performance of the Executive's duties. For purposes of this Agreement, "Incapacity" shall mean the failure of the Executive to perform his duties under this Agreement for at least ninety (90) consecutive business days as a result of any medically determinable physical or mental impairment. The determination of Incapacity shall be made by a physician selected by the Company or its insurers and reasonably acceptable to the Executive or the Executive's legal representative.

4.2Cause

The Executive's employment with the Company may be terminated with or without Cause.

4.3Good Reason

The Executive's employment with the Company may be terminated by the Executive with or without Good Reason.

4.4Notice of Termination

Any termination by the Company for Cause, or by the Executive for Good Reason, shall be communicated by Notice of Termination to the other party in accordance with Section 7.4. For purposes of this Agreement, a "Notice of Termination" means a written notice which (a) indicates the specific termination provision in this Agreement relied upon, (b) to the extent applicable, sets forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated and (c) if the Date of Termination (as defined below) is other than the date of receipt of such notice, specifies the termination date (which date shall be not more than thirty (30) days after the giving of such notice). The failure by the Company

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or the Executive to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of Cause or Good Reason shall not waive any right of the Company or the Executive, respectively, hereunder or preclude the Company or the Executive, respectively, from asserting such fact or circumstance in enforcing the Company's or the Executive's rights hereunder.

4.5Date of Termination

"Date of Termination" means (a) if the Executive's employment is terminated by the Company for Cause, or by the Executive for Good Reason, the date of receipt of the Notice of Termination or any later date specified therein, as the case may be, (b) if the Executive's employment is terminated by the Company other than for Cause or Disability, the Date of Termination shall be the date on which the Company notifies the Executive of such termination and (c) if the Executive's employment is terminated by reason of death or Disability, the Date of Termination shall be the date of death of the Executive or the Disability Effective Date, as the case may be. The Company and the Executive shall take all steps necessary (including with regard to any post-termination services by the Executive) to ensure that any termination described in this Section 4.5 constitutes a “separation from service” within the meaning of Section 409A of the Code, and the date on which such separation from service takes place shall be the “Date of Termination.”

4.6Resignation from All Positions

Notwithstanding any other provision of this Agreement, upon the termination of the Executive's employment for any reason, unless otherwise requested by the Board of Directors, the Executive shall immediately resign as of the Date of Termination from all positions that he holds or has ever held with the Patheon Group (and with any other entities with respect to which the Patheon Group has requested the Executive to perform services). The Executive hereby agrees to execute any and all documentation to effectuate such resignations upon request by the Company, but he shall be treated for all purposes as having so resigned upon termination of his employment, regardless of when or whether he executes any such documentation.

ARTICLE 5

OBLIGATIONS OF THE COMPANY UPON TERMINATION

5.1Good Reason; Other than for Cause

If the Company shall terminate the Executive's employment other than for Cause, or if the Executive shall terminate the Executive's employment for Good Reason:

(a) The Company shall pay, or cause to be paid, to the Executive in a lump sum in cash the sum of: (i) that portion of the Executive's Annual Base Salary earned but not previously paid through the Date of Termination; (ii) reimbursement of expenses incurred on or before the Date of Termination in accordance with Section 3.7, above; and (iii) any accrued vacation pay, in each case to the extent not theretofore paid (the sum of the amounts described in clauses (i), (ii), and (iii) shall be hereinafter referred to as the "Accrued Obligations"). The Accrued Obligations shall be paid on the regular payday following the Date of Termination.

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(b) Subject to Executive's compliance with Section 5.3, Article 6 and Schedule B, the Company shall pay, or cause to be paid, to the Executive an amount equal to the Executive's Annual Base Salary. Such amount shall generally be paid in cash in twelve (12) equal monthly installments beginning within sixty (60) days after the Date of Termination or such later date set forth in Section 7.8. Notwithstanding the foregoing, if the severance benefit described in this Section 5.1(b) exceeds two (2) times the lesser of (i) the Executive's annual compensation or (ii) the compensation limit in effect under Section 401(a)(17) of the Code for the calendar year including the Date of Termination, any amounts not yet paid as of the “short-term deferral date” shall be paid in a lump sum on the “short-term deferral date.” The “short-term deferral date” is the date that is two and one-half months after the end of the later of (i) the calendar year containing the Date of Termination or (ii) the Company's fiscal year containing the Date of Termination.

(c) To the extent not theretofore paid or provided, Company (or Patheon, as the case may be) shall pay or provide, or cause to be paid or provided, to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Patheon Group (such other amounts and benefits shall be hereinafter referred to as the "Other Benefits"), in accordance with the terms and normal procedures of each such plan, program, policy or practice or contract or agreement, based on earned, accrued or vested benefits through the Date of Termination.

If the Executive receives payments and benefits pursuant to this Section 5.1, then the Executive shall not be entitled to any other severance pay or benefits under any severance plan, program or policy of any member of the Patheon Group, unless otherwise specifically provided therein in a specific reference to this Agreement; provided, however, in the event any payment is made, or required to be made, under any such severance plan, program or policy, then the amounts payable under this Section 5.1 shall be reduced by such amount.

5.2Death or Incapacity; Cause; Other than for Good Reason

If the Executive's employment is terminated due to death or Incapacity or for Cause, or if the Executive voluntarily terminates his employment without Good Reason, this Agreement shall terminate without further obligations to the Executive other than the obligation to pay to the Executive his Accrued Obligations through the Date of Termination and the Other Benefits earned, accrued, or vested through the Date of Termination, in each case to the extent not theretofore paid or provided. All Accrued Obligations shall be paid to the Executive in accordance with Section 5.1(a) and the Other Benefits shall be paid to the Executive in accordance with Section 5.1(c). The Company (and the Patheon Group) will have no further obligation to pay any compensation of any kind (including, without limitation, any bonus or portion of a bonus that otherwise may have become due and payable to the Executive with respect to the year in which such Date of Termination occurs), or severance payment of any kind, nor will the Company (or the Patheon Group) have any obligation to make any payment in lieu of notice.

5.3Release

Notwithstanding anything contained herein to the contrary, the Company shall only be obligated to make the payments under Section 5.1(b) if, in addition to the other contingencies under Section 5.1(b): (a) within the 50-day period after the Date of Termination, the Executive executes a general

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release, in a form provided by the Company, of all current or future claims, known or unknown, against the Patheon Group, its officers, directors, shareholders, employees and agents arising on or before the date of the release, including but not limited to all claims arising out of the Executive's employment with the Patheon Group or the termination of such employment, and (b) the Executive does not revoke the release during the seven-day revocation period prescribed by the Age Discrimination in Employment Act of 1967, as amended, or any similar revocation period, if applicable. The Company shall be obligated to provide such release to the Executive promptly following the Date of Termination.

ARTICLE 6

RESTRICTIVE COVENANTS

6.1In General

(a) The Executive acknowledges and agrees that the Patheon Group is a business engaged in the sale of commercial pharmaceutical manufacturing capabilities and/or pharmaceutical development services, and during the Executive's employment, the Patheon Group's business may expand or change (“the Patheon Group's Business”). Any such expansions and changes shall expand or change the Executive's obligations under this Agreement accordingly. The Patheon Group's Business is international in scope and without geographical limitation and the Patheon Group has valuable business relationships within its industry throughout the world.

(b) By virtue of the Executive's employment by and position with the Company: (i) the Executive has or will have access to confidential and proprietary information of the Patheon Group, including valuable information about its business operations and methods and the persons with whom it does business in various locations throughout the world that is not generally known to, or readily ascertainable by, the Patheon Group's competitors, and the Executive understands that the continued success of the Patheon Group depends upon the use and protection of a large body of confidential and proprietary information, and (ii) the Executive has specialized knowledge of, and has received or will receive specialized training in, the Patheon Group's Business.

(c) The Executive authorizes the Company to disclose this Agreement to Executive's future or prospective employers along with notification of the Company's intent to exercise all rights it has to seek enforcement of its terms.

6.2Confidentiality Undertaking

The Executive confirms that he is bound by the provisions of the Confidentiality Undertaking covenant set out in Schedule B hereto.

6.3Non-Compete,Non-Solicitation

(a) During the Executive's employment with the Company and for one (1) year thereafter (the "Non-compete Period"), the Executive shall not engage in any of the following activities (except in connection with his/her duties for the Company):

(i) engage in any business activity that competes with the Patheon Group's Business within the geographical areas set forth in Section 6.3(b);

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(ii) within the geographical areas set forth in Section 6.3(b), solicit or do business which is the same, similar to or otherwise in competition with the business engaged in by the Patheon Group, from or with persons or entities: (a) who are customers of the Patheon Group; (b) whom Executive or someone for whom Executive was responsible solicited, negotiated, contracted, serviced or had contact with on the Patheon Group's behalf; (c) who were customers of the Patheon Group at any time during the last year of the Executive's employment with the Patheon Group; or (d) to whom the Patheon Group had made proposals to do business at any time during the last year of the Executive's employment with the Company; or

(iii) offer employment to or otherwise solicit for employment any employee or other person who had been employed by the Patheon Group during the last year of the Executive's employment with the Company;

(iv) within the geographical areas set forth in Section 6.3(b), be employed (or otherwise engaged) in (i) a management capacity, (ii) other capacity providing the same or similar services which the Executive provided to the Patheon Group, or (iii) any capacity connected with competitive business activities, by any person or entity that engages in the same, similar or otherwise competitive business as the Patheon Group;

(v) directly or indirectly take any action which is materially detrimental or otherwise intended to be adverse to the Patheon Group's goodwill, name, business relations, prospects and operations.

(b) The restrictions set forth in this Section 6.3 apply to the following geographical areas: (i) the Research Triangle Park, North Carolina metropolitan area; (ii) the Cincinnati, Ohio metropolitan area; (iii) any city, metropolitan area, county (or similar political subdivisions in foreign countries) in which the Patheon Group is located or does or, during the Executive's employment with the Company, did business; (iv) any city, metropolitan area, county (or similar political subdivisions in foreign countries) in which the Executive's services were provided, or for which the Executive had responsibility, or in which the Executive worked on Patheon Group projects, while employed by the Company.

(c) If, at the time of enforcement of this Section 6.3, a court holds that the restrictions stated herein are unreasonable under circumstances then existing, the Executive agrees that they be “blue-penciled” or rewritten by the court to the extent necessary to render them enforceable. In addition, the one (1) year time period specified in this Section 6.3 shall be tolled and shall not run during any time the Executive is in violation of Section 6.3 or period(s) of time required for legal action to enforce the provisions of this Section 6.3.

6.4Remedies

Because the Executive has access to Confidential Information (as defined in Schedule B), the Executive understands and agrees the Patheon Group would suffer irreparable harm from a breach of this Agreement and that money damages would not be an adequate remedy for any such breach of this Agreement. Therefore, in the event of a breach or threatened breach of this Agreement (including Schedules A and B), the Patheon Group and its successors or assigns, in addition to other rights and remedies existing in their favor, shall be entitled to specific performance and/or injunctive

Page 11

or other equitable relief from a court of competent jurisdiction in order to enforce, or prevent any violations of, the provisions hereof (without posting a bond or other security) as well as court costs and reasonable attorney's fees.

6.5Acknowledgements

The Executive agrees and acknowledges that the promises and obligations made by the Company in this Agreement (specifically including, but not limited to, the payments and benefits provided for under Section 5.1(b) and (d) hereof) constitute sufficient consideration for the covenants contained in this Article 6 and Schedule B. The Executive further acknowledges that it is not the Patheon Group's intention to interfere in any way with his employment opportunities, except in such situations where the same conflict with the legitimate business interests of the Patheon Group. The Executive agrees that he will notify the Company in writing if he has, or reasonably should have, any questions regarding the applicability of this Article 6 and Schedule B.

6.6Survival

Subject to any limits on applicability contained therein, this Article 6 and Schedule B shall survive and continue in full force in accordance with their respective terms notwithstanding any expiration or termination of this Agreement.

ARTICLE 7

GENERAL PROVISIONS

7.1Entire Agreement

This Agreement, together with Schedules A and B attached hereto and incorporated herein by reference, when executed by both parties shall constitute the entire agreement pertaining to the Executive's employment and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral, pertaining to the Executive's employment, and there are no representations, undertakings or agreements of any kind between the parties respecting the subject matter hereof except those contained herein. The recitals set forth above are incorporated herein by this reference with the same force and effect as if set forth herein as agreements of the parties..

7.2Severability

If any provision of this Agreement is declared void or unenforceable, such provision shall be deemed severed from this Agreement to the extent of the particular circumstances giving rise to such declaration and such provision as it applies to other persons and circumstances and the remaining terms and conditions of this Agreement shall remain in full force and effect.

7.3Representations

The Executive represents and warrants that (a) he is not a party to any contract, understanding, agreement or policy, whether or not written, with his current employer (or any previous employer) or otherwise, that would be breached by the Executive's entering into, or performing services under, this Agreement and (b) will not knowingly use any trade secret, confidential information, or other intellectual property right of any other party in the performance of his duties hereunder. The Executive will indemnify, defend, and hold each member of the Patheon Group harmless, from any and all suits

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and claims arising out of any breach of such restrictive contracts, understandings, agreements or policies.

7.4 Notices

All notices and other communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

If to the Executive:

Michael Lehmann

W218N5353 Taylors Woods Dr.

Menomonee Falls WI, 53051

If to the Company:

Patheon Pharmaceutical Services Inc.

4721 Emperor Blvd., Suite 200

Durham, NC 27703

Attention: Senior Human Resources Executive

with a copy to:

Patheon Pharmaceutical Services Inc.

4721 Emperor Blvd., Suite 200

Durham, NC 27703

Attention: Legal Department

or to such other address as either party shall have furnished to the other in writing in accordance herewith. Notice and communications shall be effective when actually received by the addressee.

7.5Withholding

The Company may withhold from any compensation and benefits payable under this Agreement all federal, state, city and other taxes or amounts as shall be determined by the Company to be required to be withheld pursuant to applicable laws, or governmental regulations or rulings. The Executive shall be solely responsible for the satisfaction of any taxes (including employment taxes) imposed on employees and penalty taxes on nonqualified deferred compensation.

7.6Waiver

The Executive's or the Company's failure to insist upon strict compliance with any provision of this Agreement or the failure to assert any right the Executive or the Company may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

7.7Successors

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(a) This Agreement is personal to the Executive is not assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive's legal representatives. This Agreement shall inure to the benefit of and be binding upon the Company, the other members of the Patheon Group, and their respective successors and assigns.

(b) The Company, at its discretion, may assign this Agreement, and will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Patheon or the Company to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

7.8Compliance with Section 409A of the Code

(a) Although the payments and benefits provided under this Agreement are intended to be exempt from the application of, or otherwise comply with, the requirements of Section 409A of the Code (“Section 409A”), the tax treatment of the payments and benefits provided under this Agreement is not warranted or guaranteed. Specifically, any taxable benefits or payments provided under this Agreement are intended to be separate payments that qualify for the “short-term deferral” exception to Section 409A to the maximum extent possible, and to the extent they do not so qualify, are intended to qualify for the involuntary separation pay exceptions to Section 409A to the maximum extent possible. This Agreement shall be construed, administered, and governed in a manner that effects such intent, and the Company shall not take any action that would be inconsistent with such intent. Without limiting the foregoing, the payments and benefits provided under this Agreement may not be deferred, accelerated, extended, paid out or modified in a manner that would result in the imposition of an additional tax under Section 409A upon the Executive.

(b) If neither the “short-term deferral” nor the involuntary separation pay exceptions to Section 409A described above applies to a benefit, payment or reimbursement under this Agreement, then notwithstanding any provision herein to the contrary, the remaining provisions of this Section 7.8(b) shall apply.

(i) If the Executive is a "specified employee," as determined under the Company's policy for identifying specified employees on the Date of Termination, then to the extent required in order to comply with Section 409A, all payments and benefits provided under this Agreement that constitute a "deferral of compensation" within the meaning of Section 409A, that are provided as a result of a "separation from service" within the meaning of Section 409A and that would otherwise be paid or provided during the first six months following such Date of Termination shall be accumulated through and paid or provided (together with interest on the delayed amount at the applicable federal rate under Section 7872(f)(2)(A) of the Code in effect on the Date of Termination) within thirty (30) days after the first business day following the sixth (6^th) month anniversary of such Date of Termination (or, if the Executive dies during such six-(6-)month period, then within thirty (30) days after the Executive's death).

(ii) To the extent required by Section 409A, each reimbursement or in-kind benefit provided under this Agreement that will not be excluded from Executive's income when received is subject to the following requirements: (i) the amount of expenses

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eligible for reimbursement, or in-kind benefits provided, during each calendar year can not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (ii) any reimbursement of an eligible expense shall be made on or before the last day of the calendar year following the calendar year in which the expense was incurred; and (iii) the right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

(c) Although the Company will endeavor to avoid the imposition of taxation, interest and penalties under Section 409A of the Code, the tax treatment of the benefits provided under this Agreement is not warranted or guaranteed. Neither the Patheon Group nor its directors, officers, employees or advisers shall be held liable for any taxes, interest, penalties or other monetary amounts owed by the Executive or other taxpayer as a result of the Agreement. Any reference in this Agreement to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section 409A by the U.S. Department of Treasury or the Internal Revenue Service.

NOW THEREFORE, the parties below have entered into this Agreement as of the date first written above.

PATHEON PHARMACEUTICAL SERVICES INC.

By: /s/ James C. Mullen

Name: James C. Mullen

Title: CEO

EXECUTIVE

SIGNED, SEALED AND DELIVERED)

in the presence of)

)

/s/ Sheri Lehmann) /s/ Michael Lehmann

Name of Witness:Michael Lehmann

Sheri Lehmann

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SCHEDULE A

TO

EMPLOYMENT AGREEMENT WITH

Michael Lehmann

POSITION DESCRIPTION

President Global Pharmaceutical Development Services

Reporting to the CEO, the President of Global PDS will lead the business' strategic initiatives and manage the business on a day-to-day basis. The primary objective will be to drive profitable growth through increased market share globally. Growth will be driven by quickly recognizing the expanding opportunities available to the Company through long-term and deep integrated strategic relationships that have become the cornerstone of the services industry within the biopharmaceuticals industry.

The President of Global PDS will be a strategically adept, operationally astute, customer focused and growth oriented leader. He/She will have a strong commitment to product innovation and development, and quality and regulatory compliance. The ideal candidate will have senior operating experience of comparable complexity and size within the pharmaceutical industry. This individual will have a demonstrated ability to drive substantive profitable growth, maintain solid customer relationships, motivate employees and develop talent.

Key Relationships

Reports to:

• Chief Executive Officer

Dedicated/shared reports:

• EVP, Global PDS Operations

• VP, Science & Technology

• VP, Global Clinical Operations

• Total organization of approximately 700 employees

Other key relationships: The Executive Committee, including the President, Global Commercial Operations and Chief Manufacturing Officer; EVP Global Sales and Marketing; SVP Global Quality; SVP Human Resources; CFO; EVP, Corporate Development and Strategy; and General Counsel.

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Major Responsibilities

• As the leader of the Pharmaceutical Development Services organization, provide the key market insights and advice to the Executive Committee that allows for the appropriate formulation of the overall corporate strategy and the attainment operational objectives. Key responsibilities include:

• Lead the formulation and execution of the strategy for the PDS business with the objective of driving substantial revenue growth while increasing margins; this strategy will tie into PDS' contract manufacturing business. This will be evident through an obvious understanding of the evolution of the market we serve and the corresponding implications and the introduction of successful new strategies to gain market share.

• Closely align and coordinate with the commercial organization to ensure that customer relationships and services are optimized. This will be evident through the introduction of new offerings and developing new philosophies and value-added approaches with regard to customer relationship building.

• Bring a sophisticated and contemporary approach to the operations of this complex operation. This will be evident through the introduction of new technologies and services, building efficiencies around existing products/services, ensuring operating excellence and the attainment of annual sales and earnings targets.

• Manage and develop key leaders to maximize their productivity and success. Set clear expectations; give appropriate autonomy and develop/measure/guide members of the team. Retain, recruit, and develop world-class talent in each critical function. Identify potentials and plan for succession.

• Ensure quality and regulatory efforts are a priority and the appropriate systems are in place to ensure a high standard of compliance.

• Enhance the visibility of the business, company, and industry through personal involvement with key industry constituents and active participation in appropriate meetings and conferences. Develop and maintain deep relationships with all stakeholders including partner companies and industry groups.

This position description is not intended as a complete list of all responsibilities and responsibilities may change.

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SCHEDULE B

TO

EMPLOYMENT AGREEMENT WITH

Michael Lehmann

CONFIDENTIALITY, INVENTIONS ASSIGNMENT AND RETURN OF PROPERTY UNDERTAKING

In consideration of Michael Lehmann (the "Executive") accepting an employment agreement with Patheon Pharmaceutical Services Inc. (the “Company”), dated September 24, 2012 (the "Agreement"), to which this Confidentiality, Inventions Assignment and Return of Property Undertaking (“Confidentiality Undertaking”) is attached as Schedule B, the Executive undertakes and covenants with the Patheon Group (as defined in the Agreement) as follows:

1. CONFIDENTIAL INFORMATION

Executive acknowledges that all Confidential Information (defined below) is the sole and exclusive property of the Patheon Group (or a third party providing such information to the Patheon Group). At all times during Executive's employment and thereafter, Executive will hold in strictest confidence and will not use, disclose, copy or remove from the Patheon Group premises any Confidential Information, nor aid third parties in obtaining or using any Confidential Information, nor access or attempt to access any Patheon Group computer systems, networks or any resources or data that resides thereon, except as such use, disclosure, copying, removal or access may be required in connection with Executive's employment and only then in accordance with applicable Patheon Group policies and procedures and solely for the Patheon Group's benefit. Executive further acknowledges that the applicable Patheon Group policies and procedures referenced in the preceding sentence include but are not limited to the following and apply regardless of whether or not the information is Confidential Information:(i) no forwarding of electronic files, data, emails or other information to home, personal or external email accounts even for the purpose of working remotely; (ii) no use of thumb drives, flash drives or other portable devices or copying methods without the express written consent of the Company; (iii) no copying of hard copy documents for removal from the worksite even for the purpose of working remotely; (iv) emails, voicemails or other communications, whether written, verbal, electronic or otherwise, sent to Executive are for his/her eyes/ears only and are not to be shared with any other employee or person, except with the express consent of the sender; and (v) violation of policies and procedures regarding Patheon Group information is grounds for immediate termination for Cause. Additionally, Executive will notify the Patheon Group of any known or suspected unauthorized use, disclosure, copying or removal of Confidential Information by others.

As used in this Agreement, “Confidential Information” means any and all facts, data or information of the Patheon Group (or of third parties providing such information to the Patheon Group) that is not known by, or generally available to the public at large, that concerns the business of the Patheon Group (or third parties providing such information to the Patheon Group) whether now existing or to be developed in the future, and whether embodied in tangible or intangible form or merely remembered, including but not limited to trade secrets or other intellectual property; products, product plans, designs, ideas, concepts, costs, methods or policies; prices or price formulas; processes; procedures; raw materials; research, development or know-how; customer lists and information, information relating to customers, prospective partners,

Page 18

partners, parents, subsidiaries, affiliates and other entities; financial information; computer software (including design, programming techniques, flow charts, source code, object code, and related information and documentation); products and services; inventory lists; market and/or product research and development data; business strategies and methodologies, strategic or business plans, training manuals and methodologies; employee phone and address lists, personnel data, incentive packages, compensation data and employee performance data; and all other information of any kind or character relating to the development, improvement, manufacture, sale, or delivery of products or services by the Patheon Group.

If Executive is required to disclose Confidential Information pursuant to a court order or such disclosure is necessary to comply with applicable law or defend against claims, Executive shall: (i) notify the Patheon promptly before any such disclosure is made; (ii) at Patheon's request and expense take all reasonably necessary steps to defend against such disclosure, including defending against the enforcement of the court order, other government process or claims; and (iii) permit the Patheon Group to participate with counsel of its choice in any related proceeding.

2.INVENTIONS

a. Inventions. Subject to paragraph 2 b., Executive agrees that all right, title, and interest in and to (i) all discoveries, designs, ideas, works of authorship, and inventions created, conceived, reduced to practice, or otherwise developed, in whole or in part, by Executive, whether jointly or individually, during Executive's employment or within three years following termination of employment for any reason whatsoever; (ii) all improvements, modifications, and derivative works to and of any of the foregoing in (i); and (iii) all patent, copyright, trademark, trade secret and other intellectual property rights in any of the foregoing in (i) and (ii) (all the foregoing in (i)-(iii), collectively, the "Inventions") will be owned solely and exclusively by the Company. Without limiting the foregoing, all copyrightable subject matter included in the Inventions shall constitute “work made for hire” under applicable copyright law. Executive will:

(i) promptly and fully disclose and describe, in detail satisfactory to the Company, all such Inventions in writing to the Company;

(ii) irrevocably and unconditionally assign, and Executive does hereby irrevocably and unconditionally assign, to the Company, without further compensation or other consideration, any and all of Executive's rights, title and interest in and to the Inventions, including without limitation (1) all rights to collect royalties for any use, and pursue remedies for any infringement, misappropriation, or other violation, thereof and (2) all applications for letters of patent, copyright registrations, trademark, service mark, and trade dress registrations, and industrial design or other forms of protection granted for the Inventions throughout the world;

(iii) deliver promptly to the Company, upon request and in the form and manner prescribed by the Company (without charge to the Company but at the Company's expense), including without limitation Executive's notarized signature in execution of, the written instruments described in paragraph b. and perform all other acts deemed necessary by the Company to obtain and maintain the instruments and to transfer all rights and title thereto to the Company in accordance with this Agreement; and

Page 19

(iv) promptly render all assistance that may be required by the Company to enable it to protect or exploit the Inventions in any country of the world.

In addition, Executive does hereby waive and agree never to assert any rights in the Inventions, and any part or parts thereof, that are not susceptible of assignment by Executive under applicable law, including, but not limited to, any moral rights or the right to the integrity or attribution of the Inventions, or any other right to be associated with the Inventions as its author, inventor, or user by name or under a pseudonym or the right to remain anonymous.

b. Excluded Inventions. The provisions of paragraph 2 a. will not apply to Inventions which fulfill all of the following criteria:

(i) Inventions for which no equipment, supplies, facility or Confidential Information belonging to the Company were used; and

(ii) Inventions that do not relate to the business of the Company or to the Company's actual or demonstrably anticipated processes, research or development; and

(iii) Inventions that do not result from any work performed by Executive for the Company.

3.RETURN OF COMPANY PROPERTY

Upon the Company's request and, in any event, upon the cessation of Executive's employment with the Company, Executive will return to the Company all Confidential Information in Executive's possession or control, along with all Company property, including but not limited to keys, pass cards, identification cards, computer hardware and software, manuals, passwords, customer lists, sales records, business plans, any data concerning customers of the Company, brochures of the Company and of any competitor, all corporate records, policy handbooks, receipts, documents, records, files and other documents in whatever form they exist, whether electronic, hard copy or otherwise, and all copies, notes or summaries thereof. Any and all such documents contained on Executive's personal computer or devices shall be printed, delivered to the Company and thereafter deleted from the personal computer/device. These documents and items must be returned whether in Executive's possession, work area, home, vehicle or in the wrongful possession of any third party with Executive's knowledge or acquiescence, and whether prepared by the Company or any other person or entity.

Page 20

I HAVE READ THIS AGREEMENT CAREFULLY AND UNDERSTAND ITS TERMS.

/s/ Michael J. Lehmann (SEAL) Executive's Signature Michael J. Lehmann Print Executive Name The signature above was witnessed by: /s/ Sheri Lehmann Witness' Signature Sheri Lehmann Witness' Name 09/25/2012 Date: 09/25/2012 Date:

Page 21

EX-10.8

Exhibit 10.8

AMENDMENT AGREEMENT

THISAMENDMENT AGREEMENT made as of the 7^th day of March, 2013,

B E T W E E N:

PATHEON INC.,

a corporation existing under the laws of Canada,

(hereinafter called the “Company”),

- and -

JLL PATHEON HOLDINGS, LLC,

a limited liability company existing under the laws of the State of Delaware,

(hereinafter called the “Purchaser”),

WHEREAS, the Company and the Purchaser are parties to the investor agreement dated as of April 27, 2007 (the “Investor Agreement”) governing certain rights of the Purchaser relating to securities of the Company held by the Purchaser; and

WHEREAS, the Company and the Purchaser wish to amend the Investor Agreement on the terms and conditions set out herein; and

WHEREAS, capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Investor Agreement.

NOW THEREFORE THIS AMENDMENT AGREEMENT WITNESSES THAT in consideration of the respective covenants, agreements, representations, warranties and indemnities of the parties hereinafter contained and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each party), and intending to be legally bound, the parties covenant and agree as follows:

1. Amendment to Preamble

The phrase in parentheses after the name of “JLL PATHEON HOLDINGS, LLC, a limited liability company existing under the laws of the State of Delaware” is hereby amended to read: “(hereinafter, along with all controlled affiliates, including JLL Patheon Holdings III, LLC, a Delaware limited liability company, and JLL Patheon Holdings Coöperatief U.A., a Dutch cooperatief, the “Purchaser”).

2. Amendment to Section 1.1

The definition of the term “Registrable Securities” is hereby amended to read as follows:

-2-

“Registrable Securities” means:

(a)the Convertible Preferred Shares;

(b) any Restricted Voting Shares issued or issuable upon the conversion of the Convertible Preferred Shares;

(c) any securities of the Company acquired by the Purchaser after April 27, 2007;

(d) any securities of the Company issued as a distribution made in respect of the securities referred to in clause (a), (b) or (c) above;

(e) any securities of the Company issued in exchange for or in replacement of the securities referred to in clause (a), (b), (c) or (d) above;

3. Amendment to Section 4.1

The first sentence of Section 4.1 is hereby amended to read as follows: “Subject to Article 6, at any time, the Purchaser may request the Company to effect a Registration (such Registration being hereinafter referred to as a “Demand Registration”).”

4. Amendment to Section 5.1

The first sentence of Section 5.1 is hereby amended to read as follows: “Each time the Company elects to proceed with the preparation and filing of a prospectus or registration statement, as applicable, under any Canadian Securities Act or the 1933 Act in connection with a proposed distribution of any of its securities for cash, whether by the Company or any of its security holders, the Company shall give written notice thereof to the Purchaser as soon as practicable.”

5. Amendment to Section 6.1(a)

The second sentence of Section 6.1(a) is hereby amended to add the following phrase at the end of the sentence: “(or until such registration statement is filed with the SEC, if applicable).”

6. Amendment to Section 8.1(i)

The first sentence of Section 8.1(i) is hereby amended to add the following phrase after the term “in any applicable Canadian provinces”: “or states in the United States.”

7. Form F-10

All references to “Form F-10” are hereby amended to read “Form S-3, or other applicable form,”.

-3-

8. Entire Agreement, Assignment and Governing Law

(a)This Amendment Agreement, the Investor Agreement and theConfidentiality and Standstill Agreement (together with all other documents and instruments referred to herein) constitute the entire agreement and supersede all other prior agreements and undertakings, both written and oral, among the parties with respect to the subject matter hereof and thereof. Notwithstanding the foregoing, in the event of any inconsistency between the terms and provisions of this Amendment Agreement and those contained in the Investor Agreement or the Confidentiality and Standstill Agreement, the terms and provisions of this Amendment Agreement shall prevail.

(b)This Amendment Agreement: (i) shall not be assigned by operation of law or otherwise; and (ii) shall be governed in all respects, including validity, interpretation and effect, by the laws of the Province of Ontario and the laws of Canada applicable therein, without giving effect to the principles of conflict of laws thereof. Each party hereto irrevocably attorns to the non-exclusive jurisdiction of the courts of such province.

IN WITNESS WHEREOF, the parties have executed and delivered this Amendment Agreement as of the date first written above.

PATHEON INC.
by	/s/ Michael Lytton
	Michael Lytton
	Executive Vice President, Corporate Development and Strategy and General Counsel
JLL PATHEON HOLDINGS, LLC
by	/s/ Daniel Agroskin
	Daniel Agroskin
	Sole Manager

EX-31.1

Exhibit 31.1

Certification by the Principal Executive Officer

pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as

adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, James C. Mullen, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Patheon Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 8, 2013

/s/ James C. Mullen

James C. Mullen

Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

Certification by the PrincipalFinancial Officer

pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as

adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stuart Grant, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Patheon Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 8, 2013

/s/ Stuart Grant

Stuart Grant

Executive Vice President, Chief Financial Officer

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification by the Principal Executive Officer

pursuant to 18 U.S.C. Section 1350, as adopted

pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Patheon Inc. (the “Company”) for the period ended January 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James C. Mullen, Chief Executive Officer of the Company, hereby certifies, to the knowledge of the undersigned, pursuant to 18 U.S.C. Section 1350, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 8, 2013	/s/ James C. Mullen
	James C. Mullen
	Chief Executive Officer
	(Principal Executive Officer)

This Certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

Certification by the PrincipalFinancial Officer

pursuant to 18 U.S.C. Section 1350, as adopted

pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Patheon Inc. (the “Company”) for the period ended January 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Stuart Grant, Executive Vice President, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 8, 2013	/s/ Stuart Grant
	Stuart Grant
	Executive Vice President, Chief Financial Officer
	(Principal Financial Officer)

This Certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed “filed” by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report, irrespective of any general incorporation language contained in such filing.

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Discontinued Operations, Plant Consolidations, Sales and Asset Impairments (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Discontinued operations, income statment disclosures
Net loss for the period	$ 0	$ (0.1)
Goodwill impairment	0.1
Total asset impairment charges	10.1	0
Patheon Carolina Puerto Rico Facility [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Estimated repositioning expense	13.7
Repositioning expenses incurred in period	0.3
Additional accelerated depreciation	12.0
Discontinued operations, income statment disclosures
Revenues	0	0
Costs of goods sold	0	0
Gross loss	0	0
Selling, general and administrative expenses	0	0.1
Gain on sale of capital assets	0	0
Operating loss	0	(0.1)
Loss before income taxes	0	(0.1)
Net loss for the period	0	(0.1)
Olds, Canada Facility [Member]
Discontinued operations, income statment disclosures
Impairment of long-lived assets held for use	10.0
Goodwill impairment	0.1
Total asset impairment charges	10.1
CMO Segment [Member]
Discontinued operations, income statment disclosures
Goodwill impairment	0.1
Total asset impairment charges	10.1
CMO Segment [Member] | Olds, Canada Facility [Member]
Discontinued operations, income statment disclosures
Total asset impairment charges	10.1
Estimated fair value of property designated as held for use	$ 4.9

XML

Pension and Post-Retirement Benefits - Defined benefit pension plans and other benefit plans (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Defined Benefit Pension Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	$ 0.5	$ 1.1
Interest cost	1.3	1.4
Expected return on plan assets	(1.4)	(1.3)
Amortization of actuarial loss	0.3	0.3
Net periodic benefit costs	0.7	1.5
Other Benefit Plans [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	0	0
Interest cost	0.1	0.1
Expected return on plan assets	0	0
Amortization of actuarial loss	0	0
Net periodic benefit costs	$ 0.1	$ 0.1

XML

Segmented Information - Reporting by Segment (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012	Oct. 31, 2012
Segment Reporting, Other Significant Reconciling Item [Line Items]
Revenues	$ 213.5	$ 153.9
Adjusted EBITDA	19.8	(1.9)
Total assets	1,052.9	784.1	742.9
Depreciation and amortization	11.0	10.6
Goodwill	43.9	3.4	3.5
Impairment charge	10.1	0
Capital expenditures	8.4	6.5
Commercial [Member]
Segment Reporting, Other Significant Reconciling Item [Line Items]
Revenues	180.1	122.8
Adjusted EBITDA	22.5	1.4
Total assets	720.6	611.5
Depreciation and amortization	9.1	9.1
Goodwill	43.9	3.4	3.5
Impairment charge	10.1
Capital expenditures	7.9	5.3
PDS [Member]
Segment Reporting, Other Significant Reconciling Item [Line Items]
Revenues	33.4	31.1
Adjusted EBITDA	6.4	4.1
Total assets	68.3	72.2
Depreciation and amortization	1.0	1.3
Goodwill	0	0	0
Impairment charge	0
Capital expenditures	0.5	1.1
Corp. & Other [Member]
Segment Reporting, Other Significant Reconciling Item [Line Items]
Revenues	0	0
Adjusted EBITDA	(9.1)	(7.4)
Total assets	264.0	100.4
Depreciation and amortization	0.9	0.2
Goodwill	0	0	0
Impairment charge	0
Capital expenditures	$ 0	$ 0.1

XML

Basic and Diluted Income (Loss) per Share - Components of basic and diluted earnings per share (Details) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Numerator:
Income (loss) from continuing operations	$ (51.4)	$ (19.3)
Income (loss) from discontinued operations	0	(0.1)
Net loss attributable to restricted voting shareholders	$ (51.4)	$ (19.4)
Denominator: (in thousands of shares)
Weighted-average number of shares outstanding - Basic (in shares)	133,849	129,639
Dilutive effect of restricted voting shares options (in shares)	0	0
Weighted-average number of shares outstanding - Diluted (in shares)	133,849	129,639

XML

Pension and Post-Retirement Benefits - Italian pension plan (Details) (Italian Pension Plans, Defined Benefit [Member], USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Italian Pension Plans, Defined Benefit [Member]
Deferred Compensation Arrangement with Individual, Postretirement Benefits [Line Items]
Deferred compensation, employer contribution	$ 3.8	$ 3.2
Deferred compensation, compensation expense	$ 0.8	$ 0.7

XML

Preferred Shares and Restricted Voting Shares - Rights Offering, Weighted Average Shares Outstanding and Net Loss per Weighted Average Share as Affected by Bonus Element (Details) (Rights Offering [Member], USD $)	3 Months Ended
	Jan. 31, 2013
Class of Warrant or Right [Line Items]
Weighted-average basic and diluted shares outstanding (in shares)	129,639
Net loss per basic and diluted share (in dollars per share)	$ 0.00
As originally reported [Member]
Class of Warrant or Right [Line Items]
Weighted-average basic and diluted shares outstanding (in shares)	129,168
Net loss per basic and diluted share (in dollars per share)	$ (0.15)
Effect of change [Member]
Class of Warrant or Right [Line Items]
Weighted-average basic and diluted shares outstanding (in shares)	471
Net loss per basic and diluted share (in dollars per share)	$ (0.15)

XML

Long-Term Obligations and Other Short-Term Borrowings (Tables)

3 Months Ended

Jan. 31, 2013

Debt Disclosure [Abstract]

Schedule of Maximum Leverage Ratios

The following table discloses the maximum permitted First Lien Leverage Ratios permitted under the Credit Agreement:

Testing Period Ending	Maximum Ratio
April 30, 2013 through July 31, 2014	5.50 to 1.00
October 31, 2014 through July 31, 2015	5.00 to 1.00
October 31, 2015 through April 30, 2016	4.75 to 1.00
July 31, 2016 through October 31, 2016	4.50 to 1.00
January 31, 2017 and thereafter	4.25 to 1.00

Schedule of Long-term Debt

Long-term debt in the accompanying consolidated balance sheets at January 31, 2013 and October 31, 2012 consists of the following:

	As of January 31, 2013		As of October 31, 2012
	$		$
7.25% secured term loan due December 14, 2018 (the "Secured Term Loan")	573.5		—
8.625% senior secured notes due April 15, 2017 (the "Notes")	—		280.0
$85 million secured revolving credit facility maturing December 14, 2017, bearing interest ranging from 5.8% to 7.75% (the "Secured Revolving Facility")	32.5		—
$75 million senior secured revolving loan facility maturing April 23, 2014, bearing interest ranging from 4.03% to 5.75% based upon floating LIBOR, US, or CAD prime, or federal funds effective rates, plus applicable margins	—		30.7
Total long-term debt outstanding	606.0		310.7
Less original issue discount, net of accumulated amortization of $0.3 million	(17.0	)	—
Less current portion	(5.8	)	—
Balance, end of the period	583.2		310.7

XML

Repositioning Expense - Repositioning expenses and charges (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Restructuring Reserve [Roll Forward]
Total repositioning liabilities at beginning of period	$ 5.5	$ 6.7
Repositioning expenses	4.0	0.8
Repositioning expenses paid	(1.6)	(2.1)
Repositioning expenses to be reimbursed	3.1
Total repositioning liabilities at end of period	11.0	5.4
Commercial [Member]
Restructuring Reserve [Roll Forward]
Repositioning expenses	0.6	0.8
PDS [Member]
Restructuring Reserve [Roll Forward]
Repositioning expenses	0.5	0
Corporate [Member]
Restructuring Reserve [Roll Forward]
Repositioning expenses	2.9	0
Employee Severance [Member]
Restructuring Reserve [Roll Forward]
Repositioning expenses	3.8	0.1
Employee Severance [Member] | Commercial [Member]
Restructuring Reserve [Roll Forward]
Repositioning expenses	0.4	0.1
Employee Severance [Member] | PDS [Member]
Restructuring Reserve [Roll Forward]
Repositioning expenses	0.5	0
Employee Severance [Member] | Corporate [Member]
Restructuring Reserve [Roll Forward]
Repositioning expenses	2.9	0
Consulting, Professional, and Project Management Restructuring Costs [Member]
Restructuring Reserve [Roll Forward]
Repositioning expenses	0.2	0.7
Consulting, Professional, and Project Management Restructuring Costs [Member] | Commercial [Member]
Restructuring Reserve [Roll Forward]
Repositioning expenses	0.2	0.7
Consulting, Professional, and Project Management Restructuring Costs [Member] | PDS [Member]
Restructuring Reserve [Roll Forward]
Repositioning expenses	0	0
Consulting, Professional, and Project Management Restructuring Costs [Member] | Corporate [Member]
Restructuring Reserve [Roll Forward]
Repositioning expenses	$ 0	$ 0

XML

Subsequent Events - Narrative (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended			0 Months Ended		0 Months Ended
	Jan. 31, 2013	Jan. 31, 2012	Jan. 31, 2013 Olds, Canada Facility [Member]	Feb. 28, 2013 Subsequent Event [Member] Patheon Caguas Facility [Member]	Mar. 07, 2013 Subsequent Event [Member] Facility Closing [Member] Olds, Canada Facility [Member]	Mar. 07, 2013 Subsequent Event [Member] Employee Severance [Member] Olds, Canada Facility [Member]	Mar. 07, 2013 Subsequent Event [Member] Closing Costs [Member] Olds, Canada Facility [Member]
Subsequent Event [Line Items]
Expcted restructuring costs						$ 3.7	$ 1.5
Expected savings related to restructuring					8.0
Impairment charge	10.1	0	10.1
Sale leaseback transaction, gross				$ 7.0

XML

Discontinued Operations, Plant Consolidations, Sales and Asset Impairments (Tables)

3 Months Ended

Jan. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Schedule of Results of Discontinued Operations

The results of discontinued operations for the Company's Carolina facility (which the Company closed effective January 31, 2009) for the three months ended January 31, 2013 and 2012 are as follows:

	Three months ended January 31,
	2013	2012
	$	$
Revenues	—	—
Cost of goods sold	—	—
Gross loss	—	—
Selling, general and administrative expenses	—	0.1
Gain on sale of capital assets	—	—
Operating loss	—	(0.1	)
Loss before income taxes	—	(0.1	)
Net loss for the period	—	(0.1	)

XML

Segmented Information - Geographic Segment Reporting (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013		Jan. 31, 2012		Oct. 31, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	$ 213.5		$ 153.9
Capital assets	502.4		458.6		416.4
Goodwill	43.9		3.4		3.5
Canada [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	4.7	[1]	2.3
Capital assets	118.6	[1]	114.3
Goodwill	3.5	[1]	3.4
US [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	133.9	[2]	89.4	[2]
Capital assets	208.7	[2]	133.4	[2]
Goodwill	30.0	[2]	0	[2]
Europe [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	61.9	[3]	54.4
Capital assets	173.6	[3]	209.4
Goodwill	7.2	[3]	0
Other [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenues	13.0		7.8
Capital assets	1.5		1.5
Goodwill	$ 3.2		$ 0

[1] Canada assets reflect the fiscal 2013 impairment of Olds, Canada assets.

[2] Includes Puerto Rico

[3] European assets reflect the fiscal 2012 impairment of Swindon assets.

XML

Supplemental Balance Sheet Information - Intangible Assets (Details) (Banner Acquisition [Member], USD $) In Millions, unless otherwise specified	Jan. 31, 2013
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Gross carrying value	$ 75.1
Accumulated amortization	(0.7)
Net carrying value	74.4
In Process Research and Development [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Gross carrying value	16.8	[1]
Accumulated amortization	0
Net carrying value	16.8
Trade Names [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Gross carrying value	0.8
Accumulated amortization	(0.1)
Net carrying value	0.7
Technology [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Gross carrying value	46.4
Accumulated amortization	(0.5)
Net carrying value	45.9
Customer Relationships [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Gross carrying value	11.1
Accumulated amortization	(0.1)
Net carrying value	$ 11.0

[1] In process research and development is currently classified as indefinite-lived intangible assets and will either begin to be amortized upon product approvals or written-off if not approved.

XML

Banner Acquisition - Financial Results of the Acquired Business (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Business Acquisition [Line Items]
Revenues	$ 213.5	$ 153.9
Loss from continuing operations	(51.4)	(19.4)
Banner Acquisition [Member]
Business Acquisition [Line Items]
Revenues	23.3	0
Loss from continuing operations	$ (2.4)	$ 0

XML

Stock-Based Compensation - Stock Options Rollforward (Details) (CAD)	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Options, Outstanding [Roll Forward]
Outstanding, beginning of period (in shares)	12,479,677	10,755,509
Granted (in shares)	450,000
Exercised (in shares)	(1,105,000)
Forfeited (in shares)	(294,900)
Outstanding, end of period (in shares)	11,529,777	10,755,509
Exercisable, end of period (in shares)	2,447,075
Options, Outstanding, Weighted-Average Exercise Price [Roll Forward]
Outstanding at beginning of period, Weighted-Average Exercise Price	2.54
Granted, Weighted-Average Exercise Price	3.30
Exercised, Weighted-Average Exercise Price	2.58
Forfeited, Weighted-Average Exercise Price	3.63
Outstanding at end of period, Weighted-Average Exercise Price	2.54
Exercisable at end of period, Weighted-Average Exercise Price	2.94
Options, Additional Disclosures [Abstract]
Outstanding at end of period, Weighted Average Contractual Term	7 years 9 months 3 days
Exercisable at end of period, Weighted Average Contractual Term	5 years 0 months 14 days
Outstanding at beginning of period, Aggregate Intrinsic Value	15,585,209
Exercised during period, Aggregate Intrinsic Value	756,500
Forfeited during period, Aggregate Intrinsic Value	97,076
Outstanding at end of period, Aggregate Intrinsic Value	13,583,736
Exercisable at end of period, Aggregate Intrinsic Value	2,192,768

XML

Related Party Transactions (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012	Oct. 31, 2012
Viso Affiliate
Related Party Transaction [Line Items]
Revenue from related parties	$ 0
Accounts receivable from related parties	0		0
Maximum [Member] | Viso Affiliate
Related Party Transaction [Line Items]
Revenue from related parties		0.1
BSP Pharmaceuticals [Member] | Equity Method Investee [Member]
Related Party Transaction [Line Items]
Equity method investments	4.7		4.0
Equity method investment, ownership percentage	18.00%
Income from equity method Investments	$ 0.5	$ 0.1

XML

Financial Instruments, Fair Value and Risk Management - Fair Value Hierarchy (Details) (USD $) In Millions, unless otherwise specified	Jan. 31, 2013	Oct. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets measured at fair value	$ 0.3	$ 0.3
Contingent Consideration Receivable [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets measured at fair value	0	0
Total assets	0	0
Contingent Consideration Receivable [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets measured at fair value	0	0
Total assets	0	0
Contingent Consideration Receivable [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets measured at fair value	0.3	0.3
Total assets	0.3	0.3
Contingent Consideration Receivable [Member] | Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets measured at fair value	0.3	0.3
Total assets	0.3	0.3
Designated as Hedging Instrument [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets measured at fair value	1.9	2.1
Derivative liabilities measured at fair value	0.5	0.7
Designated as Hedging Instrument [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
Total liabilities	0	0
Designated as Hedging Instrument [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	1.9	2.1
Total liabilities	0.5	0.7
Designated as Hedging Instrument [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
Total liabilities	0	0
Designated as Hedging Instrument [Member] | Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	1.9	2.1
Total liabilities	0.5	0.7
Designated as Hedging Instrument [Member] | Foreign Exchange Forward Contracts [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets measured at fair value	0	0
Derivative liabilities measured at fair value	0	0
Designated as Hedging Instrument [Member] | Foreign Exchange Forward Contracts [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets measured at fair value	1.9	2.1
Derivative liabilities measured at fair value	0.1	0
Designated as Hedging Instrument [Member] | Foreign Exchange Forward Contracts [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets measured at fair value	0	0
Derivative liabilities measured at fair value	0	0
Designated as Hedging Instrument [Member] | Foreign Exchange Forward Contracts [Member] | Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative assets measured at fair value	1.9	2.1
Derivative liabilities measured at fair value	0.1	0
Designated as Hedging Instrument [Member] | Foreign Exchange Collars [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities measured at fair value	0	0
Designated as Hedging Instrument [Member] | Foreign Exchange Collars [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities measured at fair value	0.4	0.7
Designated as Hedging Instrument [Member] | Foreign Exchange Collars [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities measured at fair value	0	0
Designated as Hedging Instrument [Member] | Foreign Exchange Collars [Member] | Fair Value [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivative liabilities measured at fair value	$ 0.4	$ 0.7

XML

Segmented Information - Narratives (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013 segment	Jan. 31, 2012
Segment Reporting Information [Line Items]
Number of operating segments	2
Impairment charge	$ 10.1	$ 0
CMO Segment [Member]
Segment Reporting Information [Line Items]
Impairment charge	10.1
Olds, Canada Facility [Member]
Segment Reporting Information [Line Items]
Impairment charge	10.1
Olds, Canada Facility [Member] | CMO Segment [Member]
Segment Reporting Information [Line Items]
Impairment charge	$ 10.1

XML

Discontinued Operations, Plant Consolidations, Sales and Asset Impairments

3 Months Ended

Jan. 31, 2013

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations, Plant Consolidations, Sales and Asset Impairments

DISCONTINUED OPERATIONS, PLANT CONSOLIDATIONS, SALES AND ASSET IMPAIRMENTS

Puerto Rico

The Company announced on December 10, 2009 its plan to consolidate its Puerto Rico operations into its manufacturing site located in Manati and ultimately sell its plant in Caguas. As a result of additional time required to transition manufacturing operations from Caguas to Manati due to longer than expected customer regulatory time lines and increased product demand, the transition will continue into fiscal 2013. The Company now estimates the total project repositioning expenses to be $13.7 million, of which an additional $0.3 million was recorded in the three months ended January 31, 2013.The consolidation resulted in additional accelerated depreciation of Caguas assets of approximately $12.0 million through the middle of fiscal 2013. Because the business in the Caguas facility is being transferred within the existing site network, its results of operations are included in continuing operations in the consolidated financial statements.

The results of discontinued operations for the Company's Carolina facility (which the Company closed effective January 31, 2009) for the three months ended January 31, 2013 and 2012 are as follows:

	Three months ended January 31,
	2013	2012
	$	$
Revenues	—	—
Cost of goods sold	—	—
Gross loss	—	—
Selling, general and administrative expenses	—	0.1
Gain on sale of capital assets	—	—
Operating loss	—	(0.1	)
Loss before income taxes	—	(0.1	)
Net loss for the period	—	(0.1	)

On February 17, 2012, the Company finalized the sale of its Carolina, Puerto Rico facility for a nominal amount.

Canada

Subsequent to the closing of the Banner Acquisition, the Company performed a review of Banner's facilities and decided to close the Olds, Canada facility by October 31, 2013. As a result of this decision, the Company conducted an impairment analysis on the long-term assets at this facility. Based on this analysis, which is discussed more fully below, the Company concluded that a non-cash impairment charge of $10.0 million was required to reduce the carrying value of the long-term assets to their fair value and that a non-cash impairment charge of 0.1 million was required to reduce the carrying value of the goodwill allocated to the Olds, Canada reporting unit to its fair value. The impairment charges reduced assets in the CMO segment by a total of $10.1 million. The carrying value of this property was reduced to its estimated fair value of $4.9 million, which represents the salvage value of the building and land, less costs to sell, that was determined based upon an appraisal value (Level 2 valuation inputs). These facility assets will remain as held and used until a plan of sale has been initiated and the site is in a condition for immediate sale.

To determine whether any impairment charge was required with respect to the long-term assets at the Olds, Canada Facility, the Company performed a cash flow analysis over the remaining useful life of these assets, which following the decision to close the facility was nine months. Because the expected operating cash flows were less than the carrying value of the assets, an impairment analysis was completed to calculate the amount of the impairment loss. Following this analysis, the Company reduced the book value of the site's long-term assets to the fair value of the facility, the book value of any assets that will be transferred to other sites and a minimal amount of value for residual equipment to be sold on the used equipment market.

Following the completion of the impairment analysis for the long-term assets at the Olds, Canada facility, the Company evaluated whether the goodwill allocated to the Olds, Canada reporting unit was impaired. The Company bypassed the qualitative assessment of whether it was more likely than not that goodwill was impaired, and performed the two-step impairment test. Because the reporting unit's carrying value is being reduced to net working capital plus the salvage value of the property, plant and equipment, the Company determined that there was no remaining value for the goodwill and thus it was fully impaired. The net amount required to be booked for the impairment of goodwill in the first quarter of fiscal 2013 was

$0.1 million.

XML

Financial Instruments, Fair Value and Risk Management - Balance Sheet Location (Details) (USD $) In Millions, unless otherwise specified	Jan. 31, 2013	Oct. 31, 2012
Derivatives, Fair Value [Line Items]
Derivative assets measured at fair value	$ 0.3	$ 0.3
Other Long-term Assets [Member] | Contingent Consideration Receivable [Member]
Derivatives, Fair Value [Line Items]
Derivative assets measured at fair value	0.3	0.3
Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative assets measured at fair value	1.9	2.1
Derivative liabilities measured at fair value	0.5	0.7
Designated as Hedging Instrument [Member] | Prepaid Expenses and Other [Member] | Foreign Exchange Forward Contracts [Member]
Derivatives, Fair Value [Line Items]
Derivative assets measured at fair value	1.9	1.8
Designated as Hedging Instrument [Member] | Other Long-term Assets [Member] | Foreign Exchange Forward Contracts [Member]
Derivatives, Fair Value [Line Items]
Derivative assets measured at fair value	0	0.3
Designated as Hedging Instrument [Member] | Other Long-term Liabilities [Member] | Foreign Exchange Forward Contracts [Member]
Derivatives, Fair Value [Line Items]
Derivative liabilities measured at fair value	0.1	0
Designated as Hedging Instrument [Member] | Other Long-term Liabilities [Member] | Foreign Exchange Collars [Member]
Derivatives, Fair Value [Line Items]
Derivative liabilities measured at fair value	0.2	0.4
Designated as Hedging Instrument [Member] | Accounts Payable and Accrued Liabilities [Member] | Foreign Exchange Collars [Member]
Derivatives, Fair Value [Line Items]
Derivative liabilities measured at fair value	$ 0.2	$ 0.3

XML

Supplemental Balance Sheet Information - Goodwill (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Goodwill [Roll Forward]
Balance at beginning of period	$ 3.5	$ 3.4
Additions	40.5
Impairments	(0.1)
Balance at end of period	43.9	3.4
Commercial [Member]
Goodwill [Roll Forward]
Balance at beginning of period	3.5	3.4
Additions	40.5
Impairments	(0.1)
Balance at end of period	43.9	3.4
PDS [Member]
Goodwill [Roll Forward]
Balance at beginning of period	0	0
Additions	0
Impairments	0
Balance at end of period	0	0
Corp. & Other [Member]
Goodwill [Roll Forward]
Balance at beginning of period	0	0
Additions	0
Impairments	0
Balance at end of period	$ 0	$ 0

XML

Stock-Based Compensation (Tables)

3 Months Ended

Jan. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Option Activity

A summary of the plan activity during the three months ended January 31, 2013 is as follows:

	January 31, 2013
(Dollar amounts in Canadian dollars)	Number of shares		Weighted- average exercise price	Weighted-average contractual term	Aggregate intrinsic value
			$		$
Outstanding as of October 31, 2012	12,479,677		2.54		15,585,209
Granted	450,000		3.30		—
Exercised	(1,105,000	)	2.58		756,500
Forfeited	(294,900	)	3.63		97,076
Outstanding as of January 31, 2013	11,529,777		2.54	7.76	13,583,736
Exercisable as of January 31, 2013	2,447,075		2.94	5.04	2,192,768

XML

Segmented Information (Tables)

3 Months Ended

Jan. 31, 2013

Segment Reporting [Abstract]

Reconciliation of Other Significant Reconciling Items from Segments to Consolidated

	As of and for the three months ended January 31, 2013
	Commercial	PDS	Corp. & Other		Total
	$	$	$		$
Revenues	180.1	33.4	—		213.5
Adjusted EBITDA	22.5	6.4	(9.1	)	19.8
Total assets	720.6	68.3	264.0		1,052.9
Depreciation	9.1	1.0	0.9		11.0
Goodwill	43.9	—	—		43.9
Impairment charge	10.1	—	—		10.1
Capital expenditures	7.9	0.5	—		8.4

	As of and for the three months ended January 31, 2012
	Commercial	PDS	Corp. & Other		Total
	$	$	$		$
Revenues	122.8	31.1	—		153.9
Adjusted EBITDA	1.4	4.1	(7.4	)	(1.9	)
Total assets	611.5	72.2	100.4		784.1
Depreciation	9.1	1.3	0.2		10.6
Goodwill	3.4	—	—		3.4
Capital expenditures	5.3	1.1	0.1		6.5

Reconciliation of Operating Profit (Loss)

Below is a reconciliation of Adjusted EBITDA to its closest U.S. GAAP measure.

	Three months ended January 31,
	2013		2012
	$		$
Total Adjusted EBITDA	19.8		(1.9	)
Depreciation and amortization	(11.0	)	(10.6	)
Repositioning expenses	(4.0	)	(0.8	)
Acquisition-related costs	(4.4	)	—
Interest expense, net	(9.8	)	(6.5	)
Impairment charge	(10.1	)	—
Gain on sale of capital assets	0.3		—
Benefit from income taxes	0.2		7.7
Refinancing expenses	(29.1	)	—
Operational initiatives related consulting costs	(0.1	)	(6.3	)
Stock-based compensation expense	(0.8	)	(1.0	)
Purchase accounting adjustments	(2.9	)	—
Other	0.5		0.1
Loss from continuing operations	(51.4	)	(19.3	)

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas

As illustrated in the table below, revenues are attributed to countries based on the location of the customer's billing address, capital assets are attributed to the country in which they are located and goodwill is attributed to the country in which the entity to which the goodwill pertains is located:

	As of and for the three months ended January 31, 2013
	Canada*** $	US* $	Europe** $	Other $	Total $
Revenues	4.7	133.9	61.9	13.0	213.5
Capital assets	118.6	208.7	173.6	1.5	502.4
Goodwill	3.5	30.0	7.2	3.2	43.9

* Includes Puerto Rico

** European assets reflect the fiscal 2012 impairment of Swindon assets.

***Canada assets reflect the fiscal 2013 impairment of Olds, Canada assets.

	As of and for the three months ended January 31, 2012
	Canada	US*	Europe	Other	Total
	$	$	$	$	$
Revenues	2.3	89.4	54.4	7.8	153.9
Capital assets	114.3	133.4	209.4	1.5	458.6
Goodwill	3.4	—	—	—	3.4

* Includes Puerto Rico

XML

Repositioning Expense - Narrative (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended						0 Months Ended	12 Months Ended
	Jan. 31, 2013	Jan. 31, 2012	Jan. 31, 2013 Banner Synergy Initiatives, Plan of Termination, and Caguas Facility Closing [Member]	Jan. 31, 2012 Caguas Facility Closing [Member]	Jan. 31, 2013 Employee Severance [Member]	Jan. 31, 2012 Employee Severance [Member]	May 09, 2012 Employee Severance [Member] Plan of Termination [Member] positions	Oct. 31, 2012 Employee Severance [Member] Plan of Termination [Member]
Restructuring Cost and Reserve [Line Items]
Repositioning expenses	$ 4.0	$ 0.8	$ 4.0	$ 0.8	$ 3.8	$ 0.1		$ 4.4
Expected number of positions eliminated (in number of positions)							91

XML

Preferred Shares and Restricted Voting Shares - Narrative (Details) In Millions, except Share data, unless otherwise specified	0 Months Ended		1 Months Ended			1 Months Ended
	Dec. 03, 2012 USD ($) right	Dec. 03, 2012 CAD right	Dec. 28, 2012 USD ($)	Jan. 31, 2013	Dec. 31, 2012	Dec. 28, 2012 JLL Partners Fund V, L.P. [Member]
Class of Warrant or Right [Line Items]
Rights offering, amount of offering	$ 30.0
Rights offering, number of rights entitled per restricted voting share	13.75	13.75
Rights offering, number of shares open for subscription by entitled shareholders (in shares)	1	1
Rights offering, share price (in dollars per share)	$ 3.19	3.19
Rights offering, gross proceeds			$ 30.0
Rights offering, shares issued (in shares)			9,403,483			5,786,805
Rights offering, shares issued, percentage of restricted voting shares issued and outstanding prior to offering			7.20%
Restricted voting shares, outstanding (in shares)				139,806,375	139,701,375
Rights offering, shares issued, pursuant to exercise of over-subscription privilege (in shares)						524,392
Rights offering, percentage of restricted voting share ownership subsequent to offering						55.90%

XML

Pension and Post-Retirement Benefits (Tables)

3 Months Ended

Jan. 31, 2013

Postemployment Benefits [Abstract]

Schedule of Net Benefit Costs

The components of net periodic benefit cost for the defined benefit plans and other benefit plans for the three months ended January 31, 2013 and 2012 were as follows:

	Three months ended January 31,
	2013			2012
	Defined benefit pension plans		Other benefit plans	Defined benefit pension plans		Other benefit plans
	$		$	$		$
Service cost	0.5		—	1.1		—
Interest cost	1.3		0.1	1.4		0.1
Expected return on plan assets	(1.4	)	—	(1.3	)	—
Amortization of actuarial loss	0.3		—	0.3		—
Net periodic benefit costs	0.7		0.1	1.5		0.1

XML

Repositioning Expense (Tables)

3 Months Ended

Jan. 31, 2013

Restructuring and Related Activities [Abstract]

Schedule of Restructuring and Related Costs

The following is a summary of these expenses and other charges associated with operational improvements (collectively "repositioning expenses") as of and for the three months ended January 31, 2013 and 2012:

	As of and for the three months ended January 31, 2013
	Commercial $	PDS $	Corporate $	Total $
Total repositioning liabilities at October 31, 2012				5.5
Employee-related expenses	0.4	0.5	2.9	3.8
Consulting, professional and project management costs	0.2	—	—	0.2
Total expenses	0.6	0.5	2.9	4.0
Repositioning expenses paid				(1.6	)
Repositioning expenses to be reimbursed				3.1
Total repositioning liabilities at January 31, 2013				11.0

	As of and for the three months ended January 31, 2012
	Commercial	PDS	Corporate	Total
	$	$	$	$
Total repositioning liabilities at October 31, 2011				6.7
Employee-related expenses	0.1	—	—	0.1
Consulting, professional and project management costs	0.7	—	—	0.7
Total expenses	0.8	—	—	0.8
Repositioning expenses paid				(2.1	)
Total repositioning liabilities at January 31, 2012				5.4

XML

Banner Acquisition

3 Months Ended

Jan. 31, 2013

Business Combinations [Abstract]

Banner Acquisition

BANNER ACQUISITION

Background

On December 14, 2012, the Company completed the acquisition of all of the issued and outstanding shares of capital stock of Sobel USA Inc., a Delaware corporation, and Banner Pharmacaps Europe B.V., a private limited company organized under the laws of The Netherlands (collectively "Banner") from Sobel Best N.V. and VION Holding, N.V., each corporations organized under the laws of The Netherlands, for an aggregate purchase price of approximately $271.6 million (the "Banner Acquisition"). Banner is a pharmaceutical business focused on delivering proprietary softgel formulations, with four manufacturing facilities and a number of proprietary technologies and products.

Purchase price allocation

The Banner Acquisition is accounted for using the acquisition method of accounting in accordance with ASC Subtopic 805-10, "Business Combinations," and the fair value concepts set forth in ASC Subtopic 820-10, "Fair Value Measurements and Disclosures". Under ASC 805-10, the total purchase price for Banner was allocated to the assets acquired and liabilities assumed based on their respective fair values as of the acquisition date. The allocation of the purchase price is based on estimates and assumptions that are subject to change within the measurement period. The excess of the purchase price over the fair values of the assets acquired and liabilities assumed was recorded as goodwill. Goodwill largely consists of geographic expansion of product sales, manufacturing and other synergies of the combined companies, and the value of the assembled workforce.

The initial purchase price allocation for the Banner Acquisition is as follows:

	$
Cash and cash equivalents	12.7
Accounts receivable	55.1
Inventories	54.2
Income taxes receivable	4.3
Prepaid expenses and other	3.6
Deferred tax assets-short-term	1.7
Capital assets	90.7
Intangible assets	75.1
Goodwill	40.5
Deferred tax assets - long-term	0.1
Other long-term assets	0.3
Accounts payable and accrued liabilities	(32.6	)
Deferred tax liabilities - short-term	(0.4	)
Other long-term liabilities	(1.4	)
Deferred tax liabilities-long-term	(32.3	)
Total purchase price	271.6

The Company recorded all of the $40.5 million of goodwill to its CMO segment. In addition, the Company does not expect any of the goodwill to be tax deductible.

Valuations of intangible assets acquired

The weighted-average life of the acquired intangible assets is approximately 11.0 years. The following table sets forth the components of the acquired intangible assets by type:

	Estimated Fair Value	Estimated Useful Life (in years)
	$
Trade names	0.8	5-6
Technology	46.4	10-12
Customer relationships	11.1	7-12
In-process research and development(1)	16.8	Indefinite
Total	75.1

⁽¹⁾ In process research and development is currently classified as indefinite-lived intangible assets and will either begin to be amortized upon product approvals or written-off if not approved.

Purchase price allocation and pre-acquisition adjustments

The Company continues to evaluate pre-acquisition contingencies, working capital and tax balances including deferred tax assets and liabilities relating to Banner that existed as of the acquisition date. If the Company makes changes to the amounts recorded or identifies additional pre-acquisition contingencies during the remainder of the measurement period, such amounts recorded will be included as an adjustment to the purchase price allocation during the measurement period.

Financial results of the acquired business

The revenues and net loss of Banner for the period from December 15, 2012 through January 31, 2013 included in the consolidated statement of operations are as follows:

Revenues	$	23.3		$	—
Loss from continuing operations	(2.4		)	—

Unaudited pro forma financial information

The following table presents pro forma results of operations and gives effect to the Banner Acquisition as if the transaction had been consummated on November 1, 2011. These unaudited pro forma combined financial statements are provided for informational purposes only and are not necessarily indicative of what the actual results of operations and financial position would have been had the transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the combined companies.

	Three months ended January 31,
	2013		2012
	$		$
Revenues	247.1		228.5
Loss from continuing operations	(29.7	)	(18.4	)
Loss per share from continuing operations, basic and diluted	(0.22	)	(0.14	)

The unaudited pro forma consolidated results were prepared using the acquisition method of accounting and are based on the historical financial information of the Company and Banner, reflecting the Company's and Banner's combined results of operations for the three month periods ended January 31, 2013 and 2012. The historical financial information has been adjusted to give effect to the pro forma events that are (i) directly attributable to the Banner Acquisition, (ii) factually supportable and (iii) expected to have a continuing impact on the combined results of the Company and Banner. The unaudited pro forma consolidated results reflect primarily the following pro forma adjustments:

• additional interest expense and related refinancing costs related to the long-term debt used to fund the acquisition;

• additional amortization expense related to the fair-value of identifiable intangible assets acquired;

• additional cost of goods sold resulting from an increase in the fair value of acquired inventory and an increase in depreciation expense relating to the fair values of acquired property and equipment; and

• removal of acquisition-related costs.

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Financial Instruments, Fair Value and Risk Management (Tables)

3 Months Ended

Jan. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value Measurements, Recurring and Nonrecurring

The following table provides a summary of the financial assets and liabilities that are measured at fair value as of January 31, 2013 and October 31, 2012:

Assets measured at fair value
	Fair value measurement at January 31, 2013 using:				Fair value measurement at October 31, 2012 using:
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	$	$	$	$	$	$	$	$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	—	1.9	—	1.9	—	2.1	—	2.1
Total assets	—	1.9	—	1.9	—	2.1	—	2.1
Contingent consideration receivable	—	—	0.3	0.3	—	—	0.3	0.3
Total assets	—	—	0.3	0.3	—	—	0.3	0.3

Liabilities measured at fair value
	Fair value measurement at January 31, 2013 using:				Fair value measurement at October 31, 2012 using:
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	$	$	$	$	$	$	$	$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	—	0.1	—	0.1	—	—	—	—
Foreign exchange collars	—	0.4	—	0.4	—	0.7	—	0.7
Total liabilities	—	0.5	—	0.5	—	0.7	—	0.7

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value

The following table presents the fair value of the Company's derivative financial instruments and their classifications on the consolidated balance sheets as of January 31, 2013 and October 31, 2012:

Fair values of derivative instruments

	Asset derivatives as of January 31, 2013		Asset derivatives as of October 31, 2012
	Balance sheet location	Fair value	Balance sheet location	Fair value
		$		$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Prepaid expenses and other	1.9	Prepaid expenses and other	1.8
Foreign exchange forward contracts	Other long-term assets	—	Other long-term assets	0.3
Total designated derivatives		1.9		2.1
Contingent consideration receivable	Other long-term assets	0.3	Other long-term assets	0.3
Total non-designated derivatives		0.3		0.3

	Liability derivatives as of January 31, 2013		Liability derivatives as of October 31, 2012
	Balance sheet location	Fair value	Balance sheet location	Fair value
		$		$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Other long-term liabilities	0.1	Other long-term liabilities	—
Foreign exchange collars	Accounts payable and accrued liabilities	0.2	Accounts payable and accrued liabilities	0.3
Foreign exchange collars	Other long-term liabilities	0.2	Other long-term liabilities	0.4
Total designated derivatives		0.5		0.7

Roll-forward of Company's Level 3 Financial Instruments

The following table presents a roll-forward of the Company's Level 3 financial instrument as of January 31, 2013:

	Contingent consideration
	$
Opening balance	0.3
Purchases	—
Issues	—
Total gains (losses)
In net loss	—
In other comprehensive income	—
Settlements	—
Transfers out of Level 3	—
Closing balance (January 31, 2013)	0.3

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Supplemental Balance Sheet Information - Inventories (Details) (USD $) In Millions, unless otherwise specified	Jan. 31, 2013	Oct. 31, 2012
Supplemental balance sheet information [Abstract]
Raw materials, packaging components and spare parts	$ 67.9	$ 47.9
Work-in-process	38.5	34.4
Finished goods	35.3	0
Inventories, total	$ 141.7	$ 82.3

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Pension and Post-Retirement Benefits - Narrative (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		12 Months Ended
	Jan. 31, 2013	Jan. 31, 2012	Oct. 31, 2012
Compensation and Retirement Disclosure [Abstract]
Estimated future contributions in fiscal year	$ 6.6
Contributions by employer			5.8
Unfunded termination indemnity, unjustified dismissal, period of salary and benefits provided	3 months
Unfunded termination indemnity, unjustified dismissal, additional period of salary and benefits per credited service year provided	20 days
Unfunded termination indemnity, unjustified dismissal, expected expense, remainder of fiscal year (less than $0.1 million)	0.1
Defined benefit plan, employee future benefit expense	$ 1.6	$ 2.3

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Consolidated Balance Sheets (unaudited) (USD $) In Millions, unless otherwise specified	Jan. 31, 2013	Oct. 31, 2012
Current
Cash and cash equivalents	$ 55.4	$ 39.4
Accounts receivable	168.7	161.7
Inventories	141.7	82.3
Income taxes receivable	6.3	0.4
Prepaid expenses and other	11.4	11.9
Deferred tax assets - short-term	6.3	4.3
Total current assets	389.8	300.0
Capital assets	502.4	416.4
Intangible assets	74.4	0
Deferred financing costs	21.7	4.9
Deferred tax assets	1.3	0
Goodwill	43.9	3.5
Investments	7.2	6.3
Other long-term assets	12.2	11.8
Total assets	1,052.9	742.9
Current
Short-term borrowings	0.6	2.4
Accounts payable and accrued liabilities	193.1	186.2
Income taxes payable	7.4	5.7
Deferred revenues - short-term	17.6	13.9
Deferred tax liabilities - short-term	1.6	0
Current portion of long-term debt	5.8	0
Total current liabilities	226.1	208.2
Long-term debt	583.2	310.7
Deferred revenues	24.9	28.9
Deferred tax liabilities	55.6	23.0
Other long-term liabilities	47.5	47.8
Total liabilities	937.3	618.6
Shareholders' equity
Restricted voting shares	606.0	572.5
Contributed surplus	15.8	16.5
Accumulated deficit	(530.0)	(478.6)
Accumulated other comprehensive income	23.8	13.9
Total shareholders' equity	115.6	124.3
Total liabilities and shareholders' equity	$ 1,052.9	$ 742.9

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Preferred Shares and Restricted Voting Shares - Outstanding Shares (Details)	Jan. 31, 2013	Dec. 31, 2012	Oct. 31, 2012	Jan. 31, 2012
Class of Stock [Line Items]
Restricted voting shares, Outstanding (in shares)	139,806,375	139,701,375
Restricted voting share stock options, Outstanding (in shares)	11,529,777		12,479,677	10,755,509
Restricted voting share stock options, Exercisable (in shares)	2,447,075
Series D Preferred Stock [Member]
Class of Stock [Line Items]
Class I preferred shares series D, Outstanding (in shares)	150,000

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Consolidated Statements of Cash Flows (unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Operating activities
Loss from continuing operations	$ (51.4)	$ (19.3)
Adjustments to reconcile loss from continuing operations to cash (used in) provided by operating activities
Depreciation and amortization	11.0	10.6
Impairment charge	10.1	0
Foreign exchange loss on debt	0.1	0
Other non-cash interest	4.9	0.3
Change in other long-term assets and liabilities	(1.6)	(0.5)
Deferred income taxes	(1.0)	(0.9)
Amortization of deferred revenues	(4.2)	(2.4)
Gain on sale of capital assets	(0.3)	0
Stock-based compensation expense	0.8	1.0
Total of net income and non-cash charges	(31.6)	(11.2)
Net change in non-cash working capital balances related to continuing operations	19.7	16.1
Increase in deferred revenues	5.6	5.3
Cash (used in) provided by operating activities of continuing operations	(6.3)	10.2
Cash used in operating activities of discontinued operations	0	(0.3)
Cash (used in) provided by operating activities	(6.3)	9.9
Investing activities
Additions to capital assets	(8.4)	(6.5)
Proceeds on sale of capital assets	0.4	0
Acquisitions, net of cash acquired	(258.9)	0
Cash used in investing activities	(266.9)	(6.5)
Financing activities
Decrease in short-term borrowings	0	(1.3)
Proceeds from long-term borrowings	592.1	0
Increase in deferred financing costs	(21.7)	0
Repayment of debt, net of penalty payment	(315.8)	(1.6)
Share issuance costs	(0.9)	0
Proceeds on issuance of restricted voting shares	32.9	0
Cash provided by (used in) financing activities	286.6	(2.9)
Effect of exchange rate changes on cash and cash equivalents	2.6	(1.4)
Net increase (decrease) in cash and cash equivalents during the period	16.0	(0.9)
Cash and cash equivalents, beginning of period	39.4	33.4
Cash and cash equivalents, end of period	$ 55.4	$ 32.5

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Other Information - Contingencies (Details)	3 Months Ended
	Jan. 31, 2013 customer
Cases Against Patheon Customer [Member]
Loss Contingencies [Line Items]
Pending loss contingency, number of customers charged (in customers)	1
Damages from Product Defects, Class Action [Member] | Cases Against Patheon Customer [Member]
Loss Contingencies [Line Items]
Pending loss contingency claims (in number of claims)	1
Damages from Product Defects, Single Plantiff [Member] | Cases Against Patheon Customer [Member]
Loss Contingencies [Line Items]
Pending loss contingency claims (in number of claims)	2
Damages from Product Defects, Single Plantiff [Member] | Cases Where Patheon is Named [Member]
Loss Contingencies [Line Items]
Pending loss contingency claims (in number of claims)	1

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Banner Acquisition - Purchase Price Allocation (Details) (USD $) In Millions, unless otherwise specified	Jan. 31, 2013	Oct. 31, 2012	Jan. 31, 2012	Jan. 31, 2013 CMO Segment [Member]	Oct. 31, 2012 CMO Segment [Member]	Jan. 31, 2012 CMO Segment [Member]	Dec. 14, 2012 Banner Acquisition [Member]	Dec. 14, 2012 Banner Acquisition [Member] CMO Segment [Member]
Business Acquisition [Line Items]
Aggregate purchase price							$ 271.6
Cash and cash equivalents							12.7
Accounts receivable							55.1
Inventories							54.2
Income taxes receivable							4.3
Prepaid expenses and other							3.6
Deferred tax assets-short-term							1.7
Capital assets							90.7
Intangible assets							75.1
Goodwill	43.9	3.5	3.4	43.9	3.5	3.4	40.5	40.5
Deferred tax assets - long-term							0.1
Other long-term assets							0.3
Accounts payable and accrued liabilities							(32.6)
Deferred tax liabilities - short-term							(0.4)
Other long-term liabilities							(1.4)
Deferred tax liabilities-long-term							(32.3)
Total purchase price							$ 271.6

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Long-Term Obligations and Other Short-Term Borrowings - Schedule of Long-Term Debt (Details) (USD $) In Millions, unless otherwise specified	Jan. 31, 2013	Dec. 14, 2012	Oct. 31, 2012
Debt Instrument [Line Items]
Long-term debt outstanding	$ 606.0		$ 310.7
Less original issue discount, net of accumulated amortization of $0.3 million	(17.0)	(17.3)	0
Less current portion	(5.8)		0
Long-term debt	583.2		310.7
Accumulated amortization of debt discount	0.3
Term Loan [Member] | Secured Term Loan, December 14, 2018 [Member]
Debt Instrument [Line Items]
Long-term debt outstanding	573.5		0
Interest rate	7.25%
Senior Notes [Member] | Senior Secured Notes, April 15, 2017 [Member]
Debt Instrument [Line Items]
Long-term debt outstanding	0		280.0
Interest rate	8.625%
Line of Credit [Member] | Revolving Credit Facility [Member] | Secured Revolving Credit Facility, December 14, 2017 [Member]
Debt Instrument [Line Items]
Long-term debt outstanding	32.5		0
Credit facility, current borrowing capacity	85.0	85.0
Line of Credit [Member] | Revolving Credit Facility [Member] | Senior Secured Revolving Loan Facility, April 23, 2014 [Member]
Debt Instrument [Line Items]
Long-term debt outstanding	0		30.7
Credit facility, current borrowing capacity	$ 75.0
Minimum [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | Secured Revolving Credit Facility, December 14, 2017 [Member]
Debt Instrument [Line Items]
Interest rate	5.80%
Minimum [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | Senior Secured Revolving Loan Facility, April 23, 2014 [Member]
Debt Instrument [Line Items]
Interest rate	4.03%
Maximum [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | Secured Revolving Credit Facility, December 14, 2017 [Member]
Debt Instrument [Line Items]
Interest rate	7.75%
Maximum [Member] | Line of Credit [Member] | Revolving Credit Facility [Member] | Senior Secured Revolving Loan Facility, April 23, 2014 [Member]
Debt Instrument [Line Items]
Interest rate	5.75%

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Subsequent Events

3 Months Ended

Jan. 31, 2013

Subsequent Events [Abstract]

Subsequent Events

SUBSEQUENT EVENTS

On March 7, 2013, the Company informed affected employees of the planned shutdown of the Olds, Canada facility by October 31, 2013. The Company expects to incur approximately $3.7 million in severance and retention expenses along with $1.5 million in closing costs. The Company expects this closure will save approximately $8.0 million on an annual basis. These costs are in addition to the non-cash impairment charge booked in the first quarter of fiscal 2013 of $10.1 million.

On February 28, 2013, the Company entered into a sale-leaseback agreement for the Caguas facility for $7.0 million. The agreement has a lease termination date of December 31, 2013.

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Banner Acquisition - Intangible Assets Acquired (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Useful Life (in years)	11 years
Banner Acquisition [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Fair Value (in millions of U.S. dollars)	75.1
Banner Acquisition [Member] | In Process Research and Development [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Fair Value (in millions of U.S. dollars)	16.8	[1]
Banner Acquisition [Member] | Trade Names [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Fair Value (in millions of U.S. dollars)	0.8
Banner Acquisition [Member] | Technology [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Fair Value (in millions of U.S. dollars)	46.4
Banner Acquisition [Member] | Customer Relationships [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Fair Value (in millions of U.S. dollars)	11.1
Minimum [Member] | Banner Acquisition [Member] | Trade Names [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Useful Life (in years)	5 years
Minimum [Member] | Banner Acquisition [Member] | Technology [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Useful Life (in years)	10 years
Minimum [Member] | Banner Acquisition [Member] | Customer Relationships [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Useful Life (in years)	7 years
Maximum [Member] | Banner Acquisition [Member] | Trade Names [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Useful Life (in years)	6 years
Maximum [Member] | Banner Acquisition [Member] | Technology [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Useful Life (in years)	12 years
Maximum [Member] | Banner Acquisition [Member] | Customer Relationships [Member]
Acquired Finite and Indefinite-Lived Intangible Assets [Line Items]
Estimated Useful Life (in years)	12 years

[1] In process research and development is currently classified as indefinite-lived intangible assets and will either begin to be amortized upon product approvals or written-off if not approved.

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Banner Acquisition (Tables)

3 Months Ended

Jan. 31, 2013

Business Combinations [Abstract]

Schedule of Purchase Price Allocation

The initial purchase price allocation for the Banner Acquisition is as follows:

	$
Cash and cash equivalents	12.7
Accounts receivable	55.1
Inventories	54.2
Income taxes receivable	4.3
Prepaid expenses and other	3.6
Deferred tax assets-short-term	1.7
Capital assets	90.7
Intangible assets	75.1
Goodwill	40.5
Deferred tax assets - long-term	0.1
Other long-term assets	0.3
Accounts payable and accrued liabilities	(32.6	)
Deferred tax liabilities - short-term	(0.4	)
Other long-term liabilities	(1.4	)
Deferred tax liabilities-long-term	(32.3	)
Total purchase price	271.6

Schedule of Intangible Assets Acquired

The following table sets forth the components of the acquired intangible assets by type:

	Estimated Fair Value	Estimated Useful Life (in years)
	$
Trade names	0.8	5-6
Technology	46.4	10-12
Customer relationships	11.1	7-12
In-process research and development(1)	16.8	Indefinite
Total	75.1

As part of the Banner Acquisition, the Company obtained intangible assets. The gross carrying amounts and accumulated amortization related to the Company's identifiable intangible assets are as follows:

	Gross carrying value	Accumulated amortization		Net carrying value
January 31, 2013
Trade names	0.8	(0.1	)	0.7
Technology	46.4	(0.5	)	45.9
Customer relationships	11.1	(0.1	)	11.0
In-process research and development	16.8	—		16.8
Balance, end of period	75.1	(0.7	)	74.4

Schedule of Financial Results of the Acquired Business

The revenues and net loss of Banner for the period from December 15, 2012 through January 31, 2013 included in the consolidated statement of operations are as follows:

Revenues	$	23.3		$	—
Loss from continuing operations	(2.4		)	—

Schedule of Unaudited Pro Forma Financial Information

The following table presents pro forma results of operations and gives effect to the Banner Acquisition as if the transaction had been consummated on November 1, 2011. These unaudited pro forma combined financial statements are provided for informational purposes only and are not necessarily indicative of what the actual results of operations and financial position would have been had the transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the combined companies.

	Three months ended January 31,
	2013		2012
	$		$
Revenues	247.1		228.5
Loss from continuing operations	(29.7	)	(18.4	)
Loss per share from continuing operations, basic and diluted	(0.22	)	(0.14	)

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Income Taxes (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Income Tax Disclosure [Abstract]
Valuation allowance amount released against deferred tax assets due to the creation of deferred tax liabilities from the Banner acquisition	$ 0.5
Income tax expense (benefit)	$ (0.2)	$ (7.7)

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Basis of Presentation and Summary of Significant Accounting Policies

3 Months Ended

Jan. 31, 2013

Accounting Policies [Abstract]

Basis of Presentation and Summary of Significant Accounting Policies

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared by Patheon Inc. (the "Company" or "Patheon") in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Operating results for the three months ended January 31, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 2013 ("fiscal 2013"). These consolidated financial statements do not include all the information and footnotes required by U.S. GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and notes for the fiscal year ended October 31, 2012 ("fiscal 2012") contained in the Company's Annual Report on Form 10-K for the year then ended.

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect: the reported amounts of assets and liabilities; the disclosure of contingent assets and liabilities at the date of the consolidated financial statements; and the reported amounts of revenue and expenses in the reporting period. Management believes that the estimates and assumptions used in preparing its consolidated financial statements are reasonable and prudent, however, actual results could differ from those estimates.

Changes in significant accounting policies

In connection with the Banner Acquisition (described in Note 2), the following accounting policies became more significant to the Company:

Revenue recognition on product sales

The Company now manufactures and sells proprietary products. With respect to the sales of these products, the Company recognizes revenue when title has transferred to the customer and the customer has assumed the risks and rewards of ownership. The Company also has agreements with various distributors that allow the Company to share in product profits. The Company recognizes these profits once the distributor ships the product and title passes to the distributor's customer. The Company does not offer return policies to their distributors except for through their warranty provision for defective products.

Goodwill

As a result of the Banner Acquisition, the Company recorded goodwill representing the excess of the purchase price over the fair value of the assets acquired and the liabilities assumed. The Company tests goodwill for impairment at least annually in the fiscal fourth quarter, or when indications of potential impairment exist. The Company monitors for the existence of potential impairment indicators throughout the fiscal year. Testing is performed with respect to each of the Company's reporting units that have been allocated goodwill, which the Company has determined are the sites within its CMO segment.

If our qualitative assessment reveals that goodwill impairment is more likely than not, we perform the two-step impairment test. Alternatively, we may bypass the qualitative test and initiate goodwill impairment testing with the first step of the two-step goodwill impairment test.

During the first step of the goodwill impairment test, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, then we conclude that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, the Company performs the second step of the goodwill impairment test to measure possible goodwill impairment loss. During the second step, the Company hypothetically values the reporting unit's tangible and intangible assets and liabilities as if the reporting unit had been acquired in a business combination. The Company then compares the implied fair value of the reporting unit's goodwill to the carrying value of its goodwill. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of the goodwill, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the carrying value of the reporting unit's goodwill. Once an impairment loss is recognized, the adjusted carrying value of the goodwill becomes the new accounting basis of the goodwill for the reporting unit.

Intangible Assets

As a result of the Banner Acquisition, the Company has recorded various intangible assets, including technology, in process research and development, customer relationships and trade name. The Company will test for definite lived intangible assets whenever events or changes in circumstances indicate that the carrying amount will not be recoverable. If such indicators are present, the Company assesses the recoverability of the intangible assets by determining whether the carrying value of such assets can be recovered through undiscounted future cash flows. If the sum of the undiscounted cash flows is less than the carrying amount, the excess of the carrying amount over the estimated fair value, based on the discounted cash flows, is recorded as a charge to earnings.

Research and development expenses

The Company now has research and development costs that are expensed as incurred. These expenses relate to proprietary research and development efforts and consist of salaries and benefits, supplies and other costs.

Recently adopted accounting pronouncements

Effective November 1, 2012, the Company adopted Accounting Standards Update ("ASU") 2011-08, "Intangibles-Goodwill and Other (Topic 350): Testing Goodwill for Impairment" ("ASU 2011-08"), which amends U.S. GAAP Accounting Standards Codification ("ASC") 350, "Intangible Assets-Goodwill and Other." Under ASU 2011-08, an entity may elect the option to assess qualitative factors to determine whether it is necessary to perform the first step in the two-step impairment testing process. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial statements.

Effective November 1, 2012, the Company adopted ASU 2012-02, "Testing Indefinite-Lived Intangible Assets for Impairment" ("ASU 2012-02"). ASU 2012-02, was promulgated to reduce the cost and complexity of testing indefinite-lived intangible assets other than goodwill for impairment. ASU 2012-02 is intended to simplify indefinite-lived intangible impairment testing by allowing an entity to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of an asset is less than its carrying amount as a basis for determining whether it is necessary to perform a quantitative impairment test. The more-likely-than-not threshold is defined as having a likelihood of more than 50%. This guidance is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company's financial statements.

Effective November 1, 2012, the Company adopted ASU 2011-05, "Comprehensive Income (Topic 220): Presentation of Comprehensive Income in U.S. GAAP" ("ASU 2011-05"). ASU 2011-05 requires that comprehensive income and the related components of net income and of other comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 also requires reclassification adjustments from other comprehensive income to net income be presented on the face of the financial statements. The amendments are effective for annual reporting periods beginning on or after December 15, 2011, and interim periods within those annual periods. However, in December 2011, the Financial Accounting Standards Board ("FASB") issued ASU 2011-12, "Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05" to defer the requirement to present reclassification adjustments from other comprehensive income on the face of the financial statements and allow entities to continue to report reclassifications out of accumulated other comprehensive income consistent with the requirements in effect before ASU 2011-05. Other than a change in presentation, the the adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

Recently issued accounting pronouncements

In December 2011, the FASB issued ASU 2011-11, "Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities," which requires enhanced disclosures about financial instruments and derivative instruments that are either (1) offset in accordance with either Section 210-20-45 or 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either Section 210-20-45 or Section 815-10-45. The amendments are effective for annual reporting periods beginning on or after January 1, 2013 and interim periods within those annual periods. The amendments should be applied retrospectively for all prior periods presented. The Company does not expect adoption of this guidance will have a material impact on its consolidated financial statements.

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Consolidated Statements of Operations (unaudited) (USD $) In Millions, except Share data in Thousands, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Revenues	$ 213.5	$ 153.9
Cost of goods sold	171.1	139.5
Gross profit	42.4	14.4
Selling, general and administrative expenses	35.2	34.5
Research and development	1.3	0
Repositioning expenses	4.0	0.8
Acquisition-related costs	4.4	0
Impairment charge	10.1	0
Gain on sale of capital assets	(0.3)	0
Operating loss	(12.3)	(20.9)
Interest expense, net	9.8	6.5
Foreign exchange loss (gain), net	0.8	(0.3)
Refinancing expenses	29.1	0
Other income, net	(0.4)	(0.1)
Loss from continuing operations before income taxes	(51.6)	(27.0)
Benefit from income taxes	(0.2)	(7.7)
Loss from continuing operations	(51.4)	(19.3)
Loss from discontinued operations	0	(0.1)
Net loss attributable to restricted voting shareholders	$ (51.4)	$ (19.4)
Basic and diluted loss per share
From continuing operations (dollars per share)	$ (0.384)	$ (0.149)
From discontinued operations (dollars per share)	$ 0.000	$ (0.001)
Net loss per share, basic (dollars per share)	$ (0.384)	$ (0.150)
Weighted-average number of shares outstanding (in thousands)
Basic (in shares)	133,849	129,639
Diluted (in shares)	133,849	129,639

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Financial Instruments, Fair Value and Risk Management

3 Months Ended

Jan. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Instruments, Fair Value and Risk Management

FINANCIAL INSTRUMENTS, FAIR VALUE AND RISK MANAGEMENT

The Company has determined the estimated fair values of its financial instruments based on appropriate valuation methodologies; however, considerable judgment is required to develop these estimates. The fair values of the Company's financial instruments are not materially different from their carrying values.

As of October 31, 2012, the carrying amount of the financial assets that the Company has pledged as collateral for its long-term debt facilities was $131.2 million. The Company's Credit Agreement (as discussed in Note 12) is not collateralized by accounts receivable and inventory.

Fair value measurements

The fair value is principally applied to financial assets and liabilities such as derivative instruments consisting of foreign exchange forward contracts and collars. The following table provides a summary of the financial assets and liabilities that are measured at fair value as of January 31, 2013 and October 31, 2012:

Assets measured at fair value
	Fair value measurement at January 31, 2013 using:				Fair value measurement at October 31, 2012 using:
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	$	$	$	$	$	$	$	$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	—	1.9	—	1.9	—	2.1	—	2.1
Total assets	—	1.9	—	1.9	—	2.1	—	2.1
Contingent consideration receivable	—	—	0.3	0.3	—	—	0.3	0.3
Total assets	—	—	0.3	0.3	—	—	0.3	0.3

Liabilities measured at fair value
	Fair value measurement at January 31, 2013 using:				Fair value measurement at October 31, 2012 using:
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	$	$	$	$	$	$	$	$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	—	0.1	—	0.1	—	—	—	—
Foreign exchange collars	—	0.4	—	0.4	—	0.7	—	0.7
Total liabilities	—	0.5	—	0.5	—	0.7	—	0.7

Level 1 - Based on quoted market prices in active markets.

Level 2 - Inputs, other than quoted prices in active markets, that are observable, either directly or indirectly.

Level 3 - Unobservable inputs that are not corroborated by market data.

The following table presents the fair value of the Company's derivative financial instruments and their classifications on the consolidated balance sheets as of January 31, 2013 and October 31, 2012:

Fair values of derivative instruments

	Asset derivatives as of January 31, 2013		Asset derivatives as of October 31, 2012
	Balance sheet location	Fair value	Balance sheet location	Fair value
		$		$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Prepaid expenses and other	1.9	Prepaid expenses and other	1.8
Foreign exchange forward contracts	Other long-term assets	—	Other long-term assets	0.3
Total designated derivatives		1.9		2.1
Contingent consideration receivable	Other long-term assets	0.3	Other long-term assets	0.3
Total non-designated derivatives		0.3		0.3

	Liability derivatives as of January 31, 2013		Liability derivatives as of October 31, 2012
	Balance sheet location	Fair value	Balance sheet location	Fair value
		$		$
Derivatives designated as hedging instruments:
Foreign exchange forward contracts	Other long-term liabilities	0.1	Other long-term liabilities	—
Foreign exchange collars	Accounts payable and accrued liabilities	0.2	Accounts payable and accrued liabilities	0.3
Foreign exchange collars	Other long-term liabilities	0.2	Other long-term liabilities	0.4
Total designated derivatives		0.5		0.7

On August 31, 2012, the Company completed the sale of its global secondary clinical packaging and clinical distribution services business to Bellwyck Packaging Solutions. The total consideration for the sale of this business was approximately $2.7 million, of which $1.35 million was paid in cash at closing (subject to the retention of certain amounts in escrow) and $1.35 million will be paid in 24 months from the closing date if certain revenue targets are met by the new owner.

The $1.35 million that will be paid 24 months following closing is treated as a contingent consideration receivable for accounting purposes. The contingent consideration receivable was valued at $0.3 million on the closing date at fair value based upon the present value of the agreed-upon revenue targets. The fair value of the contingent consideration receivable will be marked to market on a quarterly basis with an adjustment to the related receivable and the gain/loss on sale of assets.

The following table presents a roll-forward of the Company's Level 3 financial instrument as of January 31, 2013:

	Contingent consideration
	$
Opening balance	0.3
Purchases	—
Issues	—
Total gains (losses)
In net loss	—
In other comprehensive income	—
Settlements	—
Transfers out of Level 3	—
Closing balance (January 31, 2013)	0.3

Foreign exchange forward contracts and other hedging arrangements

The Company utilizes financial instruments to manage the risk associated with fluctuations in foreign exchange and interest rates. The Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions.

As of January 31, 2013, the Company's Canadian operations had entered into foreign exchange forward contracts to sell an aggregate amount of US$57.8 million. These contracts hedge the Canadian operations' expected exposure to U.S. dollar denominated receivables and mature at the latest on April 2, 2014, at an average exchange rate of $1.0377 Canadian. The mark-to-market value of these financial instruments as of January 31, 2013 was an unrealized gain of $2.1 million, which has been recorded in accumulated other comprehensive income in shareholders' equity, net of associated income tax.

As of January 31, 2013, the Company's Canadian operations had entered into foreign exchange forward contracts to sell an aggregate amount of €4.0 million. These contracts hedge the Canadian operations' expected exposure to Euro denominated receivables and mature at the latest on October 8, 2013, at an average exchange rate of $1.2800 Canadian. The mark-to-market value of these financial instruments as of January 31, 2013 was an unrealized loss of $0.3 million, which has been recorded in accumulated other comprehensive income in shareholders' equity, net of associated income tax.

As of January 31, 2013, the Company's Canadian operations had entered into foreign exchange collars to sell an aggregate amount of US$48.1 million. These contracts hedge the Canadian operations' expected exposure to U.S. dollar denominated receivables and mature at the latest on July 2, 2014, at an average exchange rate of $0.9975 Canadian. The mark-to-market value of these financial instruments as of January 31, 2013 was an unrealized loss of $0.4 million, which has been recorded in accumulated other comprehensive income in shareholders' equity, net of associated income tax.

Risks arising from financial instruments and risk management

The Company's activities expose it to a variety of financial risks: market risk (including foreign exchange and interest rate), credit risk and liquidity risk. The Company's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company's financial performance. The Company uses derivative financial instruments to hedge certain risk exposures. The Company does not purchase any derivative financial instruments for speculative purposes.

Risk management is the responsibility of the Company's corporate finance team. The corporate finance team works with the Company's operational personnel to identify, evaluate and, where appropriate, hedge financial risks. The Company's corporate finance team also monitors material risks and discusses them with the Audit Committee of the Board of Directors.

Foreign exchange risk

As of January 31, 2013, the Company operated in Canada, the United States, Italy, France, the United Kingdom, The Netherlands, Mexico and Japan. Foreign exchange risk arises because the value of the local currency receivable or payable for transactions denominated in foreign currencies may vary due to changes in exchange rates ("transaction exposures") and because the non-U.S. dollar denominated financial statements of the Company may vary on consolidation into the reporting currency of U.S. dollars ("translation exposures").

The Company's most significant transaction exposures arise in its Canadian operations. Approximately 90% of the revenues of the Canadian operations and approximately 10% of its operating expenses are transacted in U.S. dollars. As a result, the Company may experience transaction exposures because of volatility in the exchange rate between the Canadian and U.S. dollar. Based on the Company's current U.S. denominated net inflows, as of January 31, 2013, fluctuations of +/-10% would, everything else being equal, have an annual effect on (loss) income from continuing operations before income taxes of approximately +/- $4.6 million, prior to hedging activities.

The objective of the Company's foreign exchange risk management activities is to minimize transaction exposures and the resulting volatility of the Company's earnings. The Company manages this risk by entering into foreign exchange contracts. As of January 31, 2013, the Company has entered into foreign exchange contracts to cover approximately 80% of its Canadian-U.S. dollar cash flow exposures for fiscal 2013. The Company does not currently hedge any translation exposures.

Translation gains and losses related to certain foreign currency denominated intercompany loans are included as part of the net investment in certain foreign subsidiaries, and are included in accumulated other comprehensive income (loss) in shareholders' equity.

Credit risk

Credit risk arises from cash and cash equivalents held with banks and financial institutions, derivative financial instruments (foreign exchange contracts with positive fair values), and credit exposure to customers, including outstanding accounts receivable. The maximum exposure to credit risk is equal to the carrying value of the financial assets.

The objective of managing counterparty credit risk is to prevent losses in financial assets. The Company regularly assesses the credit quality of the counterparties, taking into account their financial position, past experience and other factors. Management also regularly monitors the utilization of credit limits. In cases where the credit quality of a customer does not meet the Company's requirements, a cash deposit is received before any services are provided. As of January 31, 2013 and October 31, 2012, the Company held deposits of $17.6 million and $16.4 million, respectively.

Liquidity risk

Liquidity risk arises when financial obligations exceed financial assets available at a particular point in time. The Company's objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet its liquidity requirements at all times. The Company mitigates liquidity risk by maintaining cash and cash equivalents on-hand and through the availability of funding from credit facilities. As of January 31, 2013, the Company was holding cash and cash equivalents of $55.4 million and had undrawn lines of credit available to it of $72.7 million.

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Document and Entity Information	3 Months Ended
	Jan. 31, 2013	Mar. 05, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	PATHEON INC
Entity Central Index Key	0001400431
Current Fiscal Year End Date	--10-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Jan. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		139,806,375

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Long-Term Obligations and Other Short-Term Borrowings (Notes)

3 Months Ended

Jan. 31, 2013

Debt Disclosure [Abstract]

Long-Term Obligations and Other Short-Term Borrowings

LONG-TERM OBLIGATIONS AND OTHER SHORT-TERM BORROWINGS

Long-term debt in the accompanying consolidated balance sheets at January 31, 2013 and October 31, 2012 consists of the following:

	As of January 31, 2013		As of October 31, 2012
	$		$
7.25% secured term loan due December 14, 2018 (the "Secured Term Loan")	573.5		—
8.625% senior secured notes due April 15, 2017 (the "Notes")	—		280.0
$85 million secured revolving credit facility maturing December 14, 2017, bearing interest ranging from 5.8% to 7.75% (the "Secured Revolving Facility")	32.5		—
$75 million senior secured revolving loan facility maturing April 23, 2014, bearing interest ranging from 4.03% to 5.75% based upon floating LIBOR, US, or CAD prime, or federal funds effective rates, plus applicable margins	—		30.7
Total long-term debt outstanding	606.0		310.7
Less original issue discount, net of accumulated amortization of $0.3 million	(17.0	)	—
Less current portion	(5.8	)	—
Balance, end of the period	583.2		310.7

On December 14, 2012, the Company completed the refinancing of its existing debt (the "Refinancing"), pursuant to which it entered into a credit agreement (the "Credit Agreement") for a secured term loan in the amount of $575.0 million (the "Secured Term Loan") and a secured revolving credit facility of up to $85.0 million (the "Secured Revolving Facility" and, together with the Secured Term Loan, the "Credit Facility"). Up to $30.0 million of the Secured Revolving Facility is available for letters of credit. The Secured Term Loan matures on December 14, 2018, and the Secured Revolving Facility matures on December 14, 2017. The Secured Term Loan bears interest at a rate per annum equal to, at the option of the Company, LIBOR plus 6.00%, with a LIBOR "floor" of 1.25%, or an alternate base rate plus 5.00%, with an alternate base rate "floor" of 2.25%. Borrowings under the Secured Revolving Facility bear interest for eurodollar loans at Libor plus 5.50% and base rate loans at base rate plus 4.50%. The Company will also pay a commitment fee of 0.50% per annum on the unused portion of the Secured Revolving Facility with a step down to 0.375% when the First Lien Leverage Ratio (as defined in the Credit Agreement) is less than or equal to 3.00 to 1.00.

First Lien Leverage Ratio is generally defined in the Credit Agreement as the ratio of (i) the sum of the aggregate principal amount of the Company's and its restricted subsidiaries' indebtedness for borrowed money, principal amount of capital lease obligations and debt obligations evidenced by promissory notes or similar instruments plus the unrestricted cash of the Company and its restricted subsidiaries, in each case as set forth in the Credit Agreement, to (ii) Consolidated EBITDA. Consolidated EBITDA is generally defined in the Credit Agreement as income (loss) from continuing operations before repositioning expenses, interest expense, foreign exchange losses reclassified from other comprehensive income (loss), refinancing expenses, acquisition-related costs, gains and losses on sale of capital assets, income taxes, asset impairment charges, depreciation and amortization, stock-based compensation expense, consulting costs related to the Company's operational initiatives, purchase accounting adjustments, other income and expenses, non-cash charges, expenses related to the Banner Acquisition, pro forma cost savings from operational excellence initiatives and plant consolidations, pro forma synergies from the Banner Acquisition, and proceeds from business interruption insurance, among other adjustments. Consolidated EBITDA is not equivalent to Adjusted EBITDA, which, as discussed in Note 6, is the Company's measure of segment performance.

The Company is required to make the following mandatory prepayments in respect of the Secured Term Loan: (i) 50% of Excess Cash Flow (as defined in the Credit Agreement) when the Company maintains a First Lien Leverage Ratio of greater than 3.50 to 1.00, with step downs to (a) 25% when the Company maintains a First Lien Leverage Ratio of less than or equal to 3.50 to 1.00 but greater than 3.00 to 1.00 and (b) 0% when the Company maintains a First Lien Leverage Ratio of less than or equal to 3.00 to 1.00; (ii) 100% of the net cash proceeds of certain asset sales (including insurance and condemnation proceeds), subject to thresholds, reinvestment rights and certain other exceptions; and (iii) 100% of the net cash proceeds of issuances of debt obligations, subject to certain exceptions and thresholds. Excess Cash Flow is generally defined in the Credit Agreement as Consolidated EBITDA (as defined in the Credit Agreement) plus, without duplication, (i) decreases in working capital, (ii) extraordinary or nonrecurring income or gains and (iii) certain other adjustments, minus, without duplication, (a) interest, (b) taxes, (c) increases in working capital, (d) capital expenditures paid in cash and (e) certain other adjustments, in each case as set forth in the Credit Agreement. In the event the Secured Term Loan is prepaid, refinanced, substituted or replaced (including by way of amendment) in whole or in part prior to December 14, 2013 concurrently with the incurrence of indebtedness similar to the Secured Term Loan with a lower all-in yield than that of the Secured Term Loan, any amounts so prepaid, refinanced, substituted or replaced will be subject to a prepayment fee of 1.00%

Under the Credit Agreement, the Company is required to maintain a First Lien Leverage Ratio below a certain amount for each of the Testing Periods as set forth in the Credit Agreement. For purposes of the Credit Agreement, a Testing Period means a single period consisting of the most recent four consecutive fiscal quarters ending on the covenant determination date. The following table discloses the maximum permitted First Lien Leverage Ratios permitted under the Credit Agreement:

Testing Period Ending	Maximum Ratio
April 30, 2013 through July 31, 2014	5.50 to 1.00
October 31, 2014 through July 31, 2015	5.00 to 1.00
October 31, 2015 through April 30, 2016	4.75 to 1.00
July 31, 2016 through October 31, 2016	4.50 to 1.00
January 31, 2017 and thereafter	4.25 to 1.00

The Credit Agreement also provides for (i) certain representations, warranties and affirmative covenants, (ii) certain negative covenants in addition to the requirement to maintain the First Lien Leverage Ratio levels described above, including limitations on incurring indebtedness, liens, fundamental changes, asset sales, investments, dividends and repayment of certain indebtedness, and transactions with affiliates, in each case with baskets, thresholds and exceptions, and (iii) certain events of default, including for non-payment of principal and interest, breach of affirmative or negative covenants, certain cross defaults, change in control, bankruptcy events, certain ERISA events, certain unsatisfied judgments and actual or asserted invalidity of guarantees or security documents.

The Company's failure to maintain the required First Lien Leverage Ratio or its breach of the other covenants and requirements contained in the Credit Agreement could result in an event of default, which may allow the Company's lenders to accelerate the Company's debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. As of January 31, 2013, the Company was in compliance with the covenants and other requirements in the Credit Agreement.

Provided that the Company is in compliance with the First Lien Leverage Ratio test and no default under the Credit Agreement is continuing or would result therefrom, the covenant in the Credit Agreement that limits the Company's ability to pay dividends or make other distributions to its shareholders generally permits (with certain exceptions and qualifications) the Company to pay dividends or make such distributions in an aggregate amount, when taken together with the aggregate amount of any prepayment, repurchase, redemption or defeasance of subordinated indebtedness, not to exceed (i) $15.0 million plus (ii) (a) $7.5 million plus (b) the aggregate amount of Excess Cash Flows for all fiscal years beginning with fiscal 2013 (net of required prepayments) and proceeds from equity issuances. The Company historically has not paid dividends on its restricted voting shares.

The Credit Facility is guaranteed by certain wholly owned subsidiaries of the Company and secured by a first priority pledge on substantially all of the assets of the Company and the subsidiary guarantors, in each case subject to certain exceptions.

As part of the Refinancing, effective December 14, 2012, the Company terminated all commitments and repaid all amounts owed under its $75.0 million asset-based revolving credit facility. In addition, on November 26, 2012, the Company commenced a cash tender offer for the Notes. As of 12:00 midnight, New York City time, on December 13, 2012, $279.4 million principal amount of the Notes had been tendered and not validly withdrawn, representing approximately 99.80% of the aggregate outstanding principal amount of the Notes. On December 14, 2012, the Company paid an aggregate of approximately $307.2 million in order to purchase the Notes tendered prior to December 14, 2012. In addition, the Company deposited with the trustee in respect of the Notes sufficient funds to redeem the remaining outstanding Notes on January 23, 2013 and pay accrued and unpaid interest thereon. As a result, the Company has been released from its obligations under the Notes and the indenture governing the Notes pursuant to the satisfaction and discharge provisions of such indenture.

During the three months ended January 31, 2013, the Company incurred $29.1 million of refinancing expense comprised of a $23.8 million early redemption penalty related to the repayment of the Notes, and $5.3 million related to the write-off of deferred financing costs on the Notes and the ABL and other related charges. In addition, new creditor and third party fees of $21.7 million were capitalized in long term assets and an original issue discount of $17.3 million was capitalized and netted against the carrying value of the related debt. Both the new fees and the original issue discount will be amortized to interest expense over the term of the Credit Agreement.

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Consolidated Statements of Comprehensive Loss (unaudited) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Net loss attributable to restricted voting shareholders	$ (51.4)	$ (19.4)
Other comprehensive income (losses), net of income taxes
Change in foreign currency gains (losses) on investments in subsidiaries, net of hedging activities	9.6	(12.4)
Change in value of derivatives designated as foreign currency cash flow hedges	0.4	(0.1)
(Losses) gains on foreign currency cash flow hedges reclassified to consolidated statement of loss	(0.4)	0.2
Net change in pension liability	0.3	(0.1)
Comprehensive loss attributable to restricted voting shareholders	$ (41.5)	$ (31.8)

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Segmented Information

3 Months Ended

Jan. 31, 2013

Segment Reporting [Abstract]

Segmented Information

SEGMENTED INFORMATION

The Company is organized and managed in two business segments: CMO and PDS. These segments are organized around the service activities provided to the Company's customers.

	As of and for the three months ended January 31, 2013
	Commercial	PDS	Corp. & Other		Total
	$	$	$		$
Revenues	180.1	33.4	—		213.5
Adjusted EBITDA	22.5	6.4	(9.1	)	19.8
Total assets	720.6	68.3	264.0		1,052.9
Depreciation	9.1	1.0	0.9		11.0
Goodwill	43.9	—	—		43.9
Impairment charge	10.1	—	—		10.1
Capital expenditures	7.9	0.5	—		8.4

	As of and for the three months ended January 31, 2012
	Commercial	PDS	Corp. & Other		Total
	$	$	$		$
Revenues	122.8	31.1	—		153.9
Adjusted EBITDA	1.4	4.1	(7.4	)	(1.9	)
Total assets	611.5	72.2	100.4		784.1
Depreciation	9.1	1.3	0.2		10.6
Goodwill	3.4	—	—		3.4
Capital expenditures	5.3	1.1	0.1		6.5

Cash and cash equivalents as well as deferred tax assets are considered to be part of "Corp. & Other" in the breakout of total assets shown above. In the first quarter of fiscal 2013, the Company announced the closure of its Olds, Canada facility and recorded impairment charges of $10.1 million.

The Company evaluates the performance of its segments based on segment Adjusted EBITDA. Commencing with the first quarter of fiscal 2013, the Company revised its calculation of Adjusted EBITDA to exclude stock-based compensation expense, consulting costs related to the Company's operational initiatives and purchase accounting adjustments. The Company's chief operating decision-maker determined that excluding these items from Adjusted EBITDA better reflected the underlying performance of the Company's segments. Based on the revisions to the Company's segment performance measure, the Company has recast the presentation of its segment results for the prior period to be consistent with the current period presentation. Following the change in the segment performance measure, the Company's definition of Adjusted EBITDA is now income (loss) from continuing operations before repositioning expenses, interest expense, foreign exchange losses reclassified from other comprehensive income (loss), refinancing expenses, acquisition-related costs, gains and losses on sale of capital assets, income taxes, asset impairment charges, depreciation and amortization, stock-based compensation expense, consulting costs related to the Company's operational initiatives, purchase accounting adjustments and other income and expenses. The Company's presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies it is not equivalent to "Consolidated EBITDA" as defined in the Credit Agreement (as discussed in Note 12).

Below is a reconciliation of Adjusted EBITDA to its closest U.S. GAAP measure.

	Three months ended January 31,
	2013		2012
	$		$
Total Adjusted EBITDA	19.8		(1.9	)
Depreciation and amortization	(11.0	)	(10.6	)
Repositioning expenses	(4.0	)	(0.8	)
Acquisition-related costs	(4.4	)	—
Interest expense, net	(9.8	)	(6.5	)
Impairment charge	(10.1	)	—
Gain on sale of capital assets	0.3		—
Benefit from income taxes	0.2		7.7
Refinancing expenses	(29.1	)	—
Operational initiatives related consulting costs	(0.1	)	(6.3	)
Stock-based compensation expense	(0.8	)	(1.0	)
Purchase accounting adjustments	(2.9	)	—
Other	0.5		0.1
Loss from continuing operations	(51.4	)	(19.3	)

As illustrated in the table below, revenues are attributed to countries based on the location of the customer's billing address, capital assets are attributed to the country in which they are located and goodwill is attributed to the country in which the entity to which the goodwill pertains is located:

	As of and for the three months ended January 31, 2013
	Canada*** $	US* $	Europe** $	Other $	Total $
Revenues	4.7	133.9	61.9	13.0	213.5
Capital assets	118.6	208.7	173.6	1.5	502.4
Goodwill	3.5	30.0	7.2	3.2	43.9

* Includes Puerto Rico

** European assets reflect the fiscal 2012 impairment of Swindon assets.

***Canada assets reflect the fiscal 2013 impairment of Olds, Canada assets.

	As of and for the three months ended January 31, 2012
	Canada	US*	Europe	Other	Total
	$	$	$	$	$
Revenues	2.3	89.4	54.4	7.8	153.9
Capital assets	114.3	133.4	209.4	1.5	458.6
Goodwill	3.4	—	—	—	3.4

* Includes Puerto Rico

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Preferred Shares and Restricted Voting Shares

3 Months Ended

Jan. 31, 2013

Equity [Abstract]

Preferred Shares and Restricted Voting Shares

PREFERRED SHARES AND RESTRICTED VOTING SHARES

The following table summarizes information regarding the Company's outstanding preferred shares, restricted voting shares and restricted voting share stock options as of January 31, 2013:

	Outstanding	Exercisable
Class I preferred shares series D	150,000	N/A
Restricted voting shares	139,806,375	N/A
Restricted voting share stock options	11,529,777	2,447,075

On December 3, 2012, the Company mailed the holders of record of its restricted voting shares as of November 27, 2012 offering materials related to a $30.0 million offering of transferable subscription rights, with every 13.75 rights entitling the holder thereof to subscribe for one whole restricted voting share at a price of, at such holder's choice, either US$3.19 per whole share or CAD$3.19 per whole share (the "Rights Offering").

On December 31, 2012, the Company completed the Rights Offering, which expired on December 28, 2012. The Rights Offering was fully subscribed for with gross proceeds totaling approximately $30.0 million. Patheon issued 9,403,483 restricted voting shares as a result of the Rights Offering. This issuance represents approximately 7.2% of the Company's restricted voting shares issued and outstanding prior to the Rights Offering.  Upon the issuance of these new restricted voting shares, the Company had 139,701,375 restricted voting shares outstanding. The Company used the proceeds from the Rights Offering to partially finance the Banner Acquisition.

An affiliate of JLL Partners Fund V, L.P., a related party of the Company ("JLL Partners Fund V"), exercised its subscription rights in full, including its over-subscription privilege, up to the full amount of the Rights Offering. All excess subscription payments received from over-subscribing rights holders, including JLL Partners Fund V, were returned, without interest or penalty.  As a result of the rights offering, JLL Partners Fund V received 5,786,805 restricted voting shares (524,392 of which were received pursuant to the exercise of its over-subscription privilege), and as a result, JLL Partners Fund V's ownership of restricted voting shares, together with its affiliates, is approximately 55.9% of the Company's issued and outstanding restricted voting shares.

The Rights Offering contained a subscription price that was less than the fair value of the Company's restricted voting shares on the last day the rights could be exercised, which created a bonus element similar to a stock dividend. Because of this bonus element, the Company adjusted both the weighted-average basic and diluted shares outstanding immediately prior to the completion of the Rights Offering by multiplying those weighted-average shares by an adjustment factor that represented the fair value per restricted voting share immediately prior to the exercise of the basic and over-subscription privileges under the Rights Offering divided by the theoretical ex-rights fair value per restricted voting share immediately prior to the exercise of the basic and over-subscription privileges under the Rights Offering. Weighted-average basic and diluted shares outstanding and net loss per weighted-average basic and diluted share for the three months ended January 31, 2012 as originally reported and as adjusted for this bonus element were as follows:

	As originally reported			As adjusted		Effect of change
Three months ended January 31, 2012:
Weighted-average basic and diluted shares outstanding	129,168			129,639		471
Net loss per basic and diluted share	$	(0.15	)	$	—	$	(0.15	)

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Basis of Presentation and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Jan. 31, 2013

Accounting Policies [Abstract]

Basis of presentation

Basis of presentation

The accompanying unaudited consolidated financial statements have been prepared by Patheon Inc. (the "Company" or "Patheon") in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Operating results for the three months ended January 31, 2013 are not necessarily indicative of the results that may be expected for the fiscal year ending October 31, 2013 ("fiscal 2013"). These consolidated financial statements do not include all the information and footnotes required by U.S. GAAP for annual financial statements and therefore should be read in conjunction with the audited consolidated financial statements and notes for the fiscal year ended October 31, 2012 ("fiscal 2012") contained in the Company's Annual Report on Form 10-K for the year then ended.

The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect: the reported amounts of assets and liabilities; the disclosure of contingent assets and liabilities at the date of the consolidated financial statements; and the reported amounts of revenue and expenses in the reporting period. Management believes that the estimates and assumptions used in preparing its consolidated financial statements are reasonable and prudent, however, actual results could differ from those estimates.

Revenue recognition on prodcut sales

Revenue recognition on product sales

The Company now manufactures and sells proprietary products. With respect to the sales of these products, the Company recognizes revenue when title has transferred to the customer and the customer has assumed the risks and rewards of ownership. The Company also has agreements with various distributors that allow the Company to share in product profits. The Company recognizes these profits once the distributor ships the product and title passes to the distributor's customer. The Company does not offer return policies to their distributors except for through their warranty provision for defective products.

Goodwill

Goodwill

As a result of the Banner Acquisition, the Company recorded goodwill representing the excess of the purchase price over the fair value of the assets acquired and the liabilities assumed. The Company tests goodwill for impairment at least annually in the fiscal fourth quarter, or when indications of potential impairment exist. The Company monitors for the existence of potential impairment indicators throughout the fiscal year. Testing is performed with respect to each of the Company's reporting units that have been allocated goodwill, which the Company has determined are the sites within its CMO segment.

If our qualitative assessment reveals that goodwill impairment is more likely than not, we perform the two-step impairment test. Alternatively, we may bypass the qualitative test and initiate goodwill impairment testing with the first step of the two-step goodwill impairment test.

During the first step of the goodwill impairment test, the Company compares the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of a reporting unit exceeds its carrying value, then we conclude that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, the Company performs the second step of the goodwill impairment test to measure possible goodwill impairment loss. During the second step, the Company hypothetically values the reporting unit's tangible and intangible assets and liabilities as if the reporting unit had been acquired in a business combination. The Company then compares the implied fair value of the reporting unit's goodwill to the carrying value of its goodwill. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of the goodwill, the Company recognizes an impairment loss in an amount equal to the excess, not to exceed the carrying value of the reporting unit's goodwill. Once an impairment loss is recognized, the adjusted carrying value of the goodwill becomes the new accounting basis of the goodwill for the reporting unit.

Intangible Assets

Intangible Assets

As a result of the Banner Acquisition, the Company has recorded various intangible assets, including technology, in process research and development, customer relationships and trade name. The Company will test for definite lived intangible assets whenever events or changes in circumstances indicate that the carrying amount will not be recoverable. If such indicators are present, the Company assesses the recoverability of the intangible assets by determining whether the carrying value of such assets can be recovered through undiscounted future cash flows. If the sum of the undiscounted cash flows is less than the carrying amount, the excess of the carrying amount over the estimated fair value, based on the discounted cash flows, is recorded as a charge to earnings.

Research and development expenses

Research and development expenses

The Company now has research and development costs that are expensed as incurred. These expenses relate to proprietary research and development efforts and consist of salaries and benefits, supplies and other costs.

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Related Party Transactions

3 Months Ended

Jan. 31, 2013

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

Revenues for contract manufacturing from a company controlled by Joaquin B. Viso (the "Viso Affiliate"), a director and significant shareholder of the Company, were nil for the three months ended January 31, 2013, and were less than $0.1 million for the three months ended January 31, 2012. These transactions were conducted in the normal course of business and are recorded at the exchanged amounts. Accounts receivable at January 31, 2013 and October 31, 2012 were nil, respectively, resulting from these transactions. In addition, Patheon manufactures a product for a third party for which the product's intellectual property is owned by the Viso Affiliate. The manufacturing agreement was originally contracted between the third party and the Viso Affiliate, but has been administered directly between Patheon and the third party on normal commercial terms since 2003.

As of January 31, 2013 and October 31, 2012, the Company had an investment of $4.7 million and $4.0 million, respectively, representing an 18% interest in two Italian companies (collectively referred to as "BSP Pharmaceuticals") whose largest investor was previously an officer of the Company until December 31, 2009. These companies specialize in the manufacture of cytotoxic pharmaceutical products. As a result of the shareholders' agreement with the other investors in BSP Pharmaceuticals that provides the Company with significant influence over BSP Pharmaceuticals' operations, the Company accounts for its investment in BSP Pharmaceuticals using the equity method. Accordingly, for the three months ended January 31, 2013 and 2012, the Company recorded investment income of approximately $0.5 million and $0.1 million, respectively.

In connection with its investment in BSP Pharmaceuticals, the Company has a management services agreement with BSP Pharmaceuticals that provides on-going sales and marketing services, and provided engineering and operational services during the construction of the BSP facility which was completed in 2008. There were no management fees recorded under this agreement for the three months ended January 31, 2013 and 2012, respectively. There was no accounts receivable balance at January 31, 2013 and October 31, 2012 in connection with the management services agreement, respectively. These services were conducted in the normal course of business and are recorded at the exchanged amounts.

In connection with certain of BSP Pharmaceuticals' bank financing, the Company had made commitments that it would not dispose of its interest in BSP Pharmaceuticals prior to January 1, 2011, and if needed, on an ongoing basis irrevocably inject equity (pro-rata) in order to ensure BSP complies with certain specific bank covenants. The Company has not made any injections since fiscal 2010.

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Repositioning Expense

3 Months Ended

Jan. 31, 2013

Restructuring and Related Activities [Abstract]

Repositioning Expense

REPOSITIONING EXPENSE

During the three months ended January 31, 2013, the Company incurred $4.0 million, in repositioning expenses, which related to Banner synergy initiatives; the plan of termination the Company announced on May 9, 2012 (the "Plan of Termination"), which is discussed below; and the shutdown of the Caguas facility. During the three months ended January 31, 2012, the Company incurred $0.8 million in repositioning expenses, all of which related to the shutdown of the Caguas facility.

On May 9, 2012, the Company announced the Plan of Termination to reduce the Company's workforce by approximately 91 employees across the Company's global PDS and CMO segments. In connection with the Plan of Termination, the Company recorded approximately $4.4 million of estimated expenses associated with employee termination benefits during fiscal 2012. The Company anticipates that it may further adjust the size of the workforce at the Swindon or other facilities as it continues its transformation process.

The following is a summary of these expenses and other charges associated with operational improvements (collectively "repositioning expenses") as of and for the three months ended January 31, 2013 and 2012:

	As of and for the three months ended January 31, 2013
	Commercial $	PDS $	Corporate $	Total $
Total repositioning liabilities at October 31, 2012				5.5
Employee-related expenses	0.4	0.5	2.9	3.8
Consulting, professional and project management costs	0.2	—	—	0.2
Total expenses	0.6	0.5	2.9	4.0
Repositioning expenses paid				(1.6	)
Repositioning expenses to be reimbursed				3.1
Total repositioning liabilities at January 31, 2013				11.0

	As of and for the three months ended January 31, 2012
	Commercial	PDS	Corporate	Total
	$	$	$	$
Total repositioning liabilities at October 31, 2011				6.7
Employee-related expenses	0.1	—	—	0.1
Consulting, professional and project management costs	0.7	—	—	0.7
Total expenses	0.8	—	—	0.8
Repositioning expenses paid				(2.1	)
Total repositioning liabilities at January 31, 2012				5.4

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Financial Instruments, Fair Value and Risk Management - Narrative (Details) In Millions, unless otherwise specified	3 Months Ended				3 Months Ended				0 Months Ended	3 Months Ended
	Jan. 31, 2013 USD ($)	Oct. 31, 2012 USD ($)	Jan. 31, 2012 USD ($)	Oct. 31, 2011 USD ($)	Jan. 31, 2013 Canada [Member]	Jan. 31, 2013 Contingent Consideration [Member] USD ($)	Oct. 31, 2012 Contingent Consideration [Member] USD ($)	Aug. 31, 2012 Contingent Consideration [Member] USD ($)	Aug. 31, 2012 BCS [Member] USD ($)	Oct. 31, 2012 BCS [Member]	Jan. 31, 2013 United States of America, Dollars Foreign Exchange Forward Contracts [Member] Canada [Member] USD ($)	Jan. 31, 2013 United States of America, Dollars Foreign Exchange Collars [Member] Canada [Member] USD ($)	Jan. 31, 2013 Canada, Dollars Foreign Exchange Forward Contracts [Member] Canada [Member] USD ($)	Jan. 31, 2013 Canada, Dollars Foreign Exchange Forward Contracts [Member] Canada [Member] EUR (€)
Derivative [Line Items]
Financial assets pledged as collateral for long-term debt facilities		$ 131.2
Total consideration to be paid to the Company for the sale of BCS									2.7
Consideration paid in cash									1.35
Consideration to be paid in 24 months, contingent upon revenue targets									1.35
Contingency consideration terms, period of time from date of close										24 months
Contingency consideration receivable, fair value						0.3	0.3	0.3
Foreign exchange forward sale contracts, notional amount											57.8	48.1		4.0
Average exchange rate											1.0377	0.9975		1.2800
Gain recognized in accumulated other comprehensive income											2.1		0.3
Loss recognized in accumulated other comprehensive income												0.4
Percent of revenue from foreign country					90.00%
Percent of operating expenses, transacted in foreign currency					10.00%
Percentage, potential increase/decrease in exchange rate impacting operating income	10.00%
Amount, potential change in exchange rate impacting operating income	4.6
Derivatives, percent of cash flow exposure covered by hedges	80.00%
Derivative, collateral held directly, cash deposits	17.6	16.4
Cash and cash equivalents	55.4	39.4	32.5	33.4
Line of credit available	$ 72.7

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Stock-Based Compensation

3 Months Ended

Jan. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

The Company has an incentive stock option plan in which directors, officers and key employees of the Company and its subsidiaries, as well as other persons engaged to provide ongoing management or consulting services to Patheon, are eligible to participate. On March 10, 2011, the Company's shareholders approved an amendment to the stock option plan, which, among other things, provides that the maximum number of shares that may be issued under the plan is 15,500,151, which currently represents 11% of the issued and outstanding restricted voting shares. As of January 31, 2013 and 2012, the total number of restricted voting shares issuable under the plan was 15,500,151 shares, respectively, of which there were stock options outstanding to purchase 11,529,777 shares and 10,755,509 shares, respectively, under the plan. Before the March 2011 amendments, the plan provided that the exercise prices of options were determined at the time of grant and could not be less than the weighted-average market price of the restricted voting shares of Patheon on the Toronto Stock Exchange ( the "TSX") during the two trading days immediately preceding the grant date. Following the March 2011 amendments, the exercise prices of the options may not be less than the closing price of the restricted voting shares on the TSX (or on such other stock exchange in Canada or the United States on which restricted voting shares may be then listed and posted) on the date of the grant. Options generally expire in no more than 10 years after the grant date and are subject to early expiry in the event of death, resignation, dismissal or retirement of an optionee. Options generally have vesting periods of either three years or five years, with either one-third or one-fifth vesting on each anniversary of the grant date, respectively.

On June 18, 2012 the Company granted 1,291,750 options to its executive committee members with a vesting based upon the parameters that all granted options will have cliff performance vesting which will vest at the earlier of the achievement of an adjusted EBITDA target or five years after date of grant.

For the purposes of calculating the stock-based compensation expense in connection with the Company's incentive stock option plan, the fair value of stock options is estimated at the date of the grant using the Black-Scholes option pricing model and the cost is amortized over the vesting period.

Stock-based compensation expense recorded in the three months ended January 31, 2013 was $0.8 million. Stock-based compensation expense recorded in the three months ended January 31, 2012 was $1.0 million.

A summary of the plan activity during the three months ended January 31, 2013 is as follows:

	January 31, 2013
(Dollar amounts in Canadian dollars)	Number of shares		Weighted- average exercise price	Weighted-average contractual term	Aggregate intrinsic value
			$		$
Outstanding as of October 31, 2012	12,479,677		2.54		15,585,209
Granted	450,000		3.30		—
Exercised	(1,105,000	)	2.58		756,500
Forfeited	(294,900	)	3.63		97,076
Outstanding as of January 31, 2013	11,529,777		2.54	7.76	13,583,736
Exercisable as of January 31, 2013	2,447,075		2.94	5.04	2,192,768

The total fair value of shares that vested during the three months ended January 31, 2013 and 2012 was less than $0.1 million and less than $0.1 million, respectively. As of January 31, 2013, the total unrecognized compensation cost related to the nonvested stock options was $5.2 million, which is expected to be recognized through the fiscal year ending October 31, 2017, with a weighted-average remaining vesting period of 2.37 years.

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Pension and Post-Retirement Benefits

3 Months Ended

Jan. 31, 2013

Postemployment Benefits [Abstract]

Pension and Post-Retirement Benefits

PENSION AND POST-RETIREMENT BENEFITS

Employee future benefits

The components of net periodic benefit cost for the defined benefit plans and other benefit plans for the three months ended January 31, 2013 and 2012 were as follows:

	Three months ended January 31,
	2013			2012
	Defined benefit pension plans		Other benefit plans	Defined benefit pension plans		Other benefit plans
	$		$	$		$
Service cost	0.5		—	1.1		—
Interest cost	1.3		0.1	1.4		0.1
Expected return on plan assets	(1.4	)	—	(1.3	)	—
Amortization of actuarial loss	0.3		—	0.3		—
Net periodic benefit costs	0.7		0.1	1.5		0.1

Amounts for fiscal 2013 include the defined benefit pension plans for Mexico and The Netherlands under which the Company became obligated in connection with the Banner Acquisition.

Based on current information available from actuarial estimates, the Company anticipates that contributions required under its defined benefit pension plans and other benefit plans for fiscal 2013 will be approximately $6.6 million compared to contributions of $5.8 million that were made in fiscal 2012. Required contributions to defined benefit pension plans in future years may vary and will be dependent upon a number of variables, including the long-term rate of return on plan assets.

The defined benefit and other benefit plans estimates above do not include the unfunded termination indemnities related to the employees of the Company's Italian subsidiary. In accordance with Italian severance pay statutes, an employee benefit is accrued for service to date and is payable when the employee's employment with the Company ceases. The termination indemnity liability is calculated in accordance with local civil and labor laws based on each employee's length of service, employment category and remuneration. The termination liability is adjusted annually by a cost-of-living index provided by the Italian government. Although there is no vesting period, the Italian government has established private accounts for these benefits and has required the Company to contribute $3.8 million and $3.2 million in fiscal 2013 and 2012, respectively, to these accounts, with additional contributions in the future. The liability recorded in the consolidated balance sheets is the amount to which the employees would be entitled if their employment with the Company ceased. The related expenses for the three months ended January 31, 2013 and 2012 was $0.8 million and $0.7 million, respectively.

The defined benefit and other benefit plans estimates above also do not include the unfunded termination indemnities related to the employees of the Company's Mexican subsidiary, which the Company acquired as part of the Banner Acquisition. According to the Mexican labor law, a termination indemnity is payable when a company terminates an employment relationship without justified cause (as defined in the labor law) and is equal to three months of salary and benefits, plus 20 days of salary and benefits per each credited service year. The termination indemnity liability is unfunded; therefore the liability is recognized through a reserve calculated by the actuaries. The related expected expense for fiscal 2013 is less than $0.1 million, and the reserve is recorded on the consolidated balance sheet as of January 31, 2013.

The employee future benefit expense in connection with defined benefit pension plans, other post retirement benefit plans and the unfunded termination indemnities for the three months ended January 31, 2013 and 2012 was $1.6 million and $2.3 million, respectively.

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Other Information

3 Months Ended

Jan. 31, 2013

Other information [Abstract]

Other Information

OTHER INFORMATION

Foreign exchange

During the three months ended January 31, 2013, the Company recorded foreign exchange losses of $0.8 million. These losses were primarily from operating exposures, partially offset by hedging gains. During the three months ended January 31, 2012, the Company recorded foreign exchange gains of $0.3 million. These gains were primarily due to operating exposures, partially offset by hedge losses.

Contingencies

A putative class action and two individual plaintiff actions are pending in the United States against one of the Company's customers in connection with the recall of certain lots of allegedly defective products manufactured by the Company for the customer. The Company has also been named in the putative class action and in one of the individual plaintiff actions. The customer has given the Company notice of its intent to seek indemnification from the Company for all damages, costs and expenses, pursuant to the manufacturing services agreement between the customer and the Company. As these cases are at an early stage, the Company is unable to estimate the number of potential claimants or the amount of potential damages for which the Company may be directly or indirectly liable in the above actions.

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Long-Term Obligations and Other Short-Term Borrowings - Narrative (Details) (USD $)	3 Months Ended							3 Months Ended								0 Months Ended				1 Months Ended
	Jan. 31, 2013	Jan. 31, 2012	Dec. 14, 2012	Oct. 31, 2012	Jan. 31, 2013 Dividend and Distribution Payment Requirement (i) [Member]	Jan. 31, 2013 Dividend and Distribution Payment Requirement (ii) (a) [Member]	Dec. 14, 2012 Term Loan [Member] Secured Term Loan, December 14, 2018 [Member]	Jan. 31, 2013 Term Loan [Member] Secured Term Loan, December 14, 2018 [Member] Prepayment Terms, Requirement (i) [Member]	Jan. 31, 2013 Term Loan [Member] Secured Term Loan, December 14, 2018 [Member] Prepayment Terms, Requirement (i), part (a) [Member] Step Down One [Member]	Jan. 31, 2013 Term Loan [Member] Secured Term Loan, December 14, 2018 [Member] Prepayment Terms, Requirement (i), part (b) [Member] Step Down Two [Member]	Jan. 31, 2013 Term Loan [Member] Secured Term Loan, December 14, 2018 [Member] Prepayment Terms, Requirement (ii) [Member]	Jan. 31, 2013 Term Loan [Member] Secured Term Loan, December 14, 2018 [Member] Prepayment Terms, Requirement (iii) [Member]	Jan. 31, 2013 Term Loan [Member] Secured Term Loan, December 14, 2018 [Member] Prepayment Prior to December 14, 2013 [Member]	Dec. 14, 2012 Term Loan [Member] Secured Term Loan, December 14, 2018 [Member] LIBOR [Member] Interest Rate, Option 1 [Member]	Dec. 14, 2012 Term Loan [Member] Secured Term Loan, December 14, 2018 [Member] Alternate Base Rate [Member] Interest Rate, Option 2 [Member]	Dec. 14, 2012 Line of Credit [Member] Revolving Credit Facility [Member] Secured Revolving Credit Facility, December 14, 2017 [Member]	Jan. 31, 2013 Line of Credit [Member] Revolving Credit Facility [Member] Secured Revolving Credit Facility, December 14, 2017 [Member]	Dec. 14, 2012 Line of Credit [Member] Revolving Credit Facility [Member] Secured Revolving Credit Facility, December 14, 2017 [Member] Base Rate [Member] Interest Rate, Option 2 [Member]	Dec. 14, 2012 Line of Credit [Member] Revolving Credit Facility [Member] Secured Revolving Credit Facility, December 14, 2017 [Member] Eurodollar Rate [Member] Interest Rate, Option 1 [Member]	Apr. 30, 2010 Line of Credit [Member] Revolving Credit Facility [Member] Asset-based Revolving Credit Facility [Member]	Dec. 14, 2012 Letter of Credit [Member] Secured Revolving Credit Facility, December 14, 2017 [Member]	Dec. 14, 2012 Senior Notes [Member] Senior Secured Notes, April 15, 2017 [Member]
Debt Instrument [Line Items]
Debt instrument, face amount							$ 575,000,000
Credit facility, current borrowing capacity																85,000,000	85,000,000				30,000,000
Basis spread on variable rate														6.00%	5.00%			4.50%	5.50%
Debt instrument, floor interest rate														1.25%	2.25%
Commitment fee percentage on unused portion of facility																0.50%
Commitment fee percentage on unused portion of facility, step down upon first lien leverage ratio																0.375%
Leverage ratio, maximum									3.50	3.00						3.00
Leverage ratio, minimum								3.5	3.00
Prepayment amount, percentage of excess cash flow during period								50.00%
Prepayment amount, percentage of excess cash flow during period, step down upon first lien leverage ratio									25.00%	0.00%
Prepayment amount, percentage of net cash proceeds of certain asset sales											100.00%
Prepayment amount, percentage of net cash proceeds of issuances of debt obligations												100.00%
Prepayment fee percentage													1.00%
Debt instrument, covenant, limitation of dividends, including subordinated debt payments, base amount					15,000,000
Debt instrument, covenant, limitation of dividends, including subordinated debt payments, incremental amount						7,500,000.0
Repayments of lines of credit																				75,000,000
Principal amount of Notes tendered and not validly withdrawn																						279,400,000
Principal amount of Notes tendered and not validly withdrawn, percentage																						99.80%
Amount paid for Notes tendered and not validly withdrawn																						307,200,000
Refinancing expenses	29,100,000	0
Refinancing expenses, early bond redemption fees	23,800,000
Refinancing expenses, old deferred financing costs and other related charges	5,300,000
Deferred finance costs capitalized to long term assets, new creditor and thirty party fees	21,700,000
Debt instrument, unamortized discount	$ 17,000,000		$ 17,300,000	$ 0

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Long-Term Obligations and Other Short-Term Borrowings - Schedule of Maximum First Lien Leverage Ratios (Details)	Jan. 31, 2013
April 30, 2013 through July 31, 2014 [Member]
Line of Credit Facility [Line Items]
Leverage ratio, maximum	5.50
October 31, 2014 through July 31, 2015 [Member]
Line of Credit Facility [Line Items]
Leverage ratio, maximum	5.00
October 31, 2015 through April 30, 2016 [Member]
Line of Credit Facility [Line Items]
Leverage ratio, maximum	4.75
July 31, 2016 through October 31, 2016 [Member]
Line of Credit Facility [Line Items]
Leverage ratio, maximum	4.50
January 31, 2017 and thereafter [Member]
Line of Credit Facility [Line Items]
Leverage ratio, maximum	4.25

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Financial Instruments, Fair Value and Risk Management - Level 3 Financial Instruments (Details) (Contingent Consideration [Member], USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Aug. 31, 2012
Contingent Consideration [Member]
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Opening balance	$ 0.3	$ 0.3
Purchases	0
Issues	0
Total gains (losses)
In net loss	0
In other comprehensive income	0
Settlements	0
Transfers out of Level 3	0
Closing balance (January 31, 2013)	$ 0.3	$ 0.3

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Basic and Diluted Income (Loss) per Share (Tables)

3 Months Ended

Jan. 31, 2013

Earnings Per Share [Abstract]

Schedule of Components of Basic and Diluted Earnings per Share

The components of basic and diluted earnings per share for the three months ended January 31, 2013 and 2012 are as follows:

	Three months ended January 31,
	2013			2012
Numerator:
Income (loss) from continuing operations	$	(51.4	)	$	(19.3	)
Income (loss) from discontinued operations	—			(0.1		)
Net income (loss)	$	(51.4	)	$	(19.4	)
Denominator:(in thousands of shares)
Weighted-average number of shares outstanding - Basic	133,849			129,639
Dilutive effect of restricted voting shares options	—			—
Weighted-average number of shares outstanding - Diluted	133,849			129,639

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Stock-Based Compensation - Narrative (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended					3 Months Ended		0 Months Ended
	Jan. 31, 2013	Jan. 31, 2012	Oct. 31, 2012	Mar. 10, 2011 D	Jan. 31, 2013 Stock Options [Member]	Jan. 31, 2013 Stock Options [Member] Minimum [Member]	Jan. 31, 2013 Stock Options [Member] Maximum [Member]	Jun. 18, 2012 Executive Committee Members [Member] Performance Shares [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Maximum number of shares authorized under plan (in shares)	15,500,501	15,500,501		15,500,151
Shares authorized as percent of total outstanding common stock (as a percent)	11.00%
Restricted voting share stock options, Outstanding (in shares)	11,529,777	10,755,509	12,479,677
Number of days used to determine exercisable price (in days)				2
Term of option awards (in years)							10 years
Options vesting period (in years)						3 years	5 years
Percentage of award vesting at each anniversary date of grant						20.00%	33.30%
Options granted under plan (in shares)								1,291,750
Time from grant date to vesting (in years)								5 years
Stock-based compensation expense	$ 0.8	$ 1.0
Total fair value of shares vested in period (less than $0.1 million)	0.1	0.1
Total unrecognized compensation cost, nonvested stock options					$ 5.2
Weighted average remaining vesting period, options (in years)	2 years 4 months 13 days

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Basic and Diluted Income (Loss) per Share

3 Months Ended

Jan. 31, 2013

Earnings Per Share [Abstract]

Basic and Diluted Income (Loss) per Share

BASIC AND DILUTED INCOME (LOSS) PER SHARE

Shares used in basic earnings per share are computed using the weighted-average number of common shares outstanding during each period. Shares used in diluted earnings per share include the dilutive effect of unvested restricted voting share stock options under the incentive stock option plan using the treasury stock method. For the three months ended January 31, 2013, 2,167,067 weighted-average restricted voting shares options had a grant price that was less than the average market price. The computation of net income per share did not include 11,529,777 and 10,755,509 outstanding options in the three months ended January 31, 2013 and 2012, respectively, because such options were anti-dilutive in nature.

The components of basic and diluted earnings per share for the three months ended January 31, 2013 and 2012 are as follows:

	Three months ended January 31,
	2013			2012
Numerator:
Income (loss) from continuing operations	$	(51.4	)	$	(19.3	)
Income (loss) from discontinued operations	—			(0.1		)
Net income (loss)	$	(51.4	)	$	(19.4	)
Denominator:(in thousands of shares)
Weighted-average number of shares outstanding - Basic	133,849			129,639
Dilutive effect of restricted voting shares options	—			—
Weighted-average number of shares outstanding - Diluted	133,849			129,639

The weighted-average number of shares outstanding have been adjusted to reflect the impact of the rights offering (as described in Note 5).

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Supplemental Balance Sheet Information (Tables)

3 Months Ended

Jan. 31, 2013

Supplemental balance sheet information [Abstract]

Schedule of Inventories

Inventories consisted of the following as of January 31, 2013 and October 31, 2012:

	January 31, 2013	October 31, 2012
	$	$
Raw materials, packaging components and spare parts	67.9	47.9
Work-in-process	38.5	34.4
Finished goods	35.3	—
Balance, end of period	141.7	82.3

Schedule of Accounts Payable and Accrued Liabilities

The following is the breakdown of accounts payable and accrued liabilities:

	January 31, 2013	October 31, 2012
	$	$
Trade payables	106.6	101.2
Interest payable	1.9	1.0
Accrued salaries and related expenses	47.5	51.4
Customer deposits	17.6	16.4
Other accruals	19.5	16.2
Balance, end of period	193.1	186.2

Schedule of Intangible Assets Acquired

The following table sets forth the components of the acquired intangible assets by type:

	Estimated Fair Value	Estimated Useful Life (in years)
	$
Trade names	0.8	5-6
Technology	46.4	10-12
Customer relationships	11.1	7-12
In-process research and development(1)	16.8	Indefinite
Total	75.1

As part of the Banner Acquisition, the Company obtained intangible assets. The gross carrying amounts and accumulated amortization related to the Company's identifiable intangible assets are as follows:

	Gross carrying value	Accumulated amortization		Net carrying value
January 31, 2013
Trade names	0.8	(0.1	)	0.7
Technology	46.4	(0.5	)	45.9
Customer relationships	11.1	(0.1	)	11.0
In-process research and development	16.8	—		16.8
Balance, end of period	75.1	(0.7	)	74.4

Schedule of Goodwill

The following table summarizes the changes between October 31, 2012 and January 31, 2013 in the carrying amount of goodwill in total and by reporting segment:

	Commercial		PDS	Corp. & Other	Total
Balance at October 31, 2012	3.5		—	—	3.5
Additions	40.5		—	—	40.5
Impairments	(0.1	)	—	—	(0.1	)
Balance at January 31, 2013	43.9		—	—	43.9

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Segmented Information - Adjusted EBITDA (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Segment Reporting [Abstract]
Total Adjusted EBITDA	$ 19.8	$ (1.9)
Depreciation and amortization	(11.0)	(10.6)
Repositioning expenses	(4.0)	(0.8)
Acquisition-related costs	(4.4)	0
Interest expense, net	(9.8)	(6.5)
Impairment charge	(10.1)	0
Gain on sale of capital assets	0.3	0
Benefit from income taxes	0.2	7.7
Refinancing expenses	(29.1)	0
Operational initiatives related consulting costs	(0.1)	(6.3)
Stock-based compensation expense	(0.8)	(1.0)
Purchase accounting adjustments	(2.9)	0
Other	0.5	0.1
Loss from continuing operations	$ (51.4)	$ (19.3)

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Supplemental Balance Sheet Information - Accounts Payable and Accrued Liabilities (Details) (USD $) In Millions, unless otherwise specified	Jan. 31, 2013	Oct. 31, 2012
Supplemental balance sheet information [Abstract]
Trade payables	$ 106.6	$ 101.2
Interest payable	1.9	1.0
Accrued salaries and related expenses	47.5	51.4
Customer deposits	17.6	16.4
Other accruals	19.5	16.2
Accounts payable and accrued liabilities, total	$ 193.1	$ 186.2

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Consolidated Statements of Changes in Shareholders' Equity (unaudited) (USD $) In Millions, unless otherwise specified	Total	Restricted Voting Shares [Member]	Contributed Surplus [Member]	Accumulated Deficit [Member]	Accumulated Other Comprehensive Income [Member]
Balance at Oct. 31, 2012	$ 124.3	$ 572.5	$ 16.5	$ (478.6)	$ 13.9
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Proceeds from equity offering	29.1	29.1	0	0	0
Stock options exercised	2.9	4.4	(1.5)	0	0
Stock-based compensation	0.8	0	0.8	0	0
Comprehensive income (loss):
Net loss attributable to restricted voting shareholders	(51.4)			(51.4)
Change in foreign currency translation on investments in subsidiaries, net of hedging activities	9.6	0	0	0	9.6
Change in value of derivatives designated as foreign currency cash flow hedges	0.4	0	0	0	0.4
Losses on foreign currency hedges reclassified to consolidated statement of operations	(0.4)	0	0	0	(0.4)
Net change in pension liability	0.3	0	0	0	0.3
Subtotal	(41.5)	0	0	(51.4)	9.9
Balance at Jan. 31, 2013	$ 115.6	$ 606.0	$ 15.8	$ (530.0)	$ 23.8

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Supplemental Balance Sheet Information

3 Months Ended

Jan. 31, 2013

Supplemental balance sheet information [Abstract]

Supplemental Balance Sheet Information

SUPPLEMENTAL BALANCE SHEET INFORMATION

Inventories

Inventories consisted of the following as of January 31, 2013 and October 31, 2012:

	January 31, 2013	October 31, 2012
	$	$
Raw materials, packaging components and spare parts	67.9	47.9
Work-in-process	38.5	34.4
Finished goods	35.3	—
Balance, end of period	141.7	82.3

Accounts payable and accrued liabilities

The following is the breakdown of accounts payable and accrued liabilities:

	January 31, 2013	October 31, 2012
	$	$
Trade payables	106.6	101.2
Interest payable	1.9	1.0
Accrued salaries and related expenses	47.5	51.4
Customer deposits	17.6	16.4
Other accruals	19.5	16.2
Balance, end of period	193.1	186.2

Intangible assets

As part of the Banner Acquisition, the Company obtained intangible assets. The gross carrying amounts and accumulated amortization related to the Company's identifiable intangible assets are as follows:

	Gross carrying value	Accumulated amortization		Net carrying value
January 31, 2013
Trade names	0.8	(0.1	)	0.7
Technology	46.4	(0.5	)	45.9
Customer relationships	11.1	(0.1	)	11.0
In-process research and development	16.8	—		16.8
Balance, end of period	75.1	(0.7	)	74.4

Banner's in process research and development are currently classified as indefinite-lived intangible assets and will either begin to be amortized upon product approvals or written-off if not approved.

Goodwill

The following table summarizes the changes between October 31, 2012 and January 31, 2013 in the carrying amount of goodwill in total and by reporting segment:

	Commercial		PDS	Corp. & Other	Total
Balance at October 31, 2012	3.5		—	—	3.5
Additions	40.5		—	—	40.5
Impairments	(0.1	)	—	—	(0.1	)
Balance at January 31, 2013	43.9		—	—	43.9

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Other Information - Other Information (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Other information [Abstract]
Foreign exchange loss (gain), net	$ 0.8	$ (0.3)

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Basic and Diluted Income (Loss) per Share - Narrative (Details)	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share (in shares)	11,529,777	10,755,509
Grant Price less than Average Market Price [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share (in shares)	2,167,067

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Preferred Shares and Restricted Voting Shares (Tables)

3 Months Ended

Jan. 31, 2013

Equity [Abstract]

Schedule of Stock by Class

The following table summarizes information regarding the Company's outstanding preferred shares, restricted voting shares and restricted voting share stock options as of January 31, 2013:

	Outstanding	Exercisable
Class I preferred shares series D	150,000	N/A
Restricted voting shares	139,806,375	N/A
Restricted voting share stock options	11,529,777	2,447,075

Schedule of Rights Offering, Weighted Average Shares Outstanding and Net Loss per Weighted Average Share as Affected by Bonus Element

Weighted-average basic and diluted shares outstanding and net loss per weighted-average basic and diluted share for the three months ended January 31, 2012 as originally reported and as adjusted for this bonus element were as follows:

	As originally reported			As adjusted		Effect of change
Three months ended January 31, 2012:
Weighted-average basic and diluted shares outstanding	129,168			129,639		471
Net loss per basic and diluted share	$	(0.15	)	$	—	$	(0.15	)

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Banner Acquisition - Unaudited Pro Forma Financial Information (Details) (Banner Acquisition [Member], USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Jan. 31, 2013	Jan. 31, 2012
Banner Acquisition [Member]
Business Acquisition, Pro Forma Information [Abstract]
Revenues	$ 247.1	$ 228.5
Loss from continuing operations	$ (29.7)	$ (18.4)
Loss per share from continuing operations, basic and diluted (in dollars per share)	$ (0.22)	$ (0.14)

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Income Taxes

3 Months Ended

Jan. 31, 2013

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Company accounts for income taxes under FASB ASC 740, Income Taxes ("ASC 740"). The Company calculates its quarterly tax provision consistent with the guidance provided by ASC 740-270, whereby the Company forecasts its estimated annual effective tax rate then applies that rate to its year-to-date pre-tax book (loss) income. The effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective rate, including factors such as the valuation allowances against deferred tax assets, the recognition or de-recognition of tax benefits related to uncertain tax positions, or changes in or the interpretation of tax laws in jurisdictions where the Company conducts business. There is no tax benefit recognized on certain of the net operating losses incurred in foreign jurisdictions due to insufficient evidence supporting the Company's ability to use these losses in the future.

The Company has decided to release $0.5 million of the valuation allowance against the U.S. deferred tax assets and recognize a tax benefit, due to the creation of deferred tax liabilities from the Banner acquisition.

For the three months ended January 31, 2013 and 2012, the Company recorded a tax benefit of $0.2 million, and $7.7 million, respectively.

There were no material changes in uncertain tax positions for the three months ended January 31, 2013 and 2012. The Company does not reasonably expect any change to the amount of uncertain tax positions within the next 12 months.