10-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

___________________

FORM 10-K

(Mark one)

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended March 31, 2008

[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File No. 1-5438

FOREST LABORATORIES, INC.
(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	11-1798614 (I.R.S. Employer Identification Number)
909 Third Avenue New York, New York (Address of principal executive offices)	10022-4731 (Zip code)

(212) 421-7850
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange    on which registered
Common Stock, $.10 par value	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes    X      No         .

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes            No    X    ..

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   X      No        .

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in the Proxy Statement incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.       .

Indicate by a 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   X       Accelerated filer            Non-accelerated filer            Smaller reporting company        
                                                                                      (Do not check if a Smaller
                                                                                        reporting company)

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

The aggregate market value of the voting stock held by non-affiliates of the registrant as of September 30, 2007 was $11,637,003,638.

Number of shares outstanding of the registrant's Common Stock as of May 29, 2008: 304,758,195.

The following documents are incorporated by reference herein:

Portions of the definitive proxy statement to be filed pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934 in connection with the 2008 Annual Meeting of Stockholders of registrant have been incorporated by reference into Part III of this Form 10-K.

Portions of the registrant's Annual Report to Stockholders for the fiscal year ended March 31, 2008 have been incorporated by reference into Parts II and IV of this Form 10-K.

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TABLE OF CONTENTS
(Quick Links)

PART I

              ITEM 1. BUSINESS
              ITEM 1A. RISK FACTORS
              ITEM 1B. UNRESOLVED STAFF COMMENTS              ITEM 2. PROPERTIES
              ITEM 3. LEGAL PROCEEDINGS
              ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
                             MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
             ITEM 6. SELECTED FINANCIAL DATA
             ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS
             ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
                             FINANCIAL DISCLOSURE
             ITEM 9A. CONTROLS AND PROCEDURES
             ITEM 9B. OTHER INFORMATION

PART III

ITEM 10. DIRECTORS AND OFFICERS OF THE REGISTRANT ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
                             AND RELATED STOCKHOLDER MATTERS

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES S-1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM S-2 VALUATION AND QUALIFYING ACCOUNTS

CONSOLIDATED FINANCIAL STATEMENTS:

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM BALANCE SHEETS STATEMENTS OF INCOME STATEMENTS OF COMPREHENSIVE INCOME STATEMENTS OF STOCKHOLDERS' EQUITY STATEMENTS OF CASH FLOWS
                         NOTES TO FINANCIAL STATEMENTS

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXHIBIT 10.12 EXHIBIT 10.19 EXHIBIT 10.27 EXHIBIT 10.28 EXHIBIT 13 EXHIBIT 23 EXHIBIT 31.1                   EXHIBIT 31.2
                   EXHIBIT 32.1
                   EXHIBIT 32.2

PART I

ITEM 1.  BUSINESS

General

                  Forest Laboratories, Inc. and its subsidiaries develop, manufacture and sell both branded and generic forms of ethical drug products which require a physician's prescription, as well as non-prescription pharmaceutical products sold over-the-counter. Our most important United States products consist of branded ethical drug specialties marketed directly, or "detailed," to physicians by our Forest Pharmaceuticals, Forest Therapeutics, Forest Healthcare, Forest Ethicare and Forest Specialty Sales salesforces. We emphasize detailing to physicians of those branded ethical drugs which we believe have the most potential for growth and benefit to patients, and the development and introduction of new products, including products developed in collaboration with licensing partners.

                  Our products include those developed by us and those acquired from other pharmaceutical companies and integrated into our marketing and distribution systems.

                  We are a Delaware corporation organized in 1956, and our principal executive offices are located at 909 Third Avenue, New York, New York 10022 (telephone number 212-421-7850). Our corporate website address is http://www.frx.com. We make all electronic filings with the Securities and Exchange Commission (or SEC), including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those Reports available on our corporate website free of charge as soon as practicable after filing with or furnishing to the SEC.

Recent Developments

                   Bystolic™: In December 2007 we received approval from the United States Food and Drug Administration (or FDA) for the marketing of Bystolic for the treatment of hypertension. We commenced the sale and marketing of Bystolic in January 2008. Bystolic is a novel beta-1 selective beta-blocker with vasodilating properties that we believe may provide certain advantages compared to other beta-blockers on the market. In its Phase III study program, Bystolic demonstrated significant reductions in sitting diastolic and systolic blood pressure in a general hypertension population. The studies also found that Bystolic was well tolerated, with a low incidence of side effects traditionally associated with beta-blockers. Bystolic has received five years of marketing exclusivity under the Hatch-Waxman legislation and is also covered by a U.S. pharmaceutical composition of matter patent set to expire in 2020 which may offer additional exclusivity. See "Business – Patents and Trademarks." Hypertension affects approximately 72 million adults in the United States and a substantial number of patients diagnosed with hypertension have not reduced their blood pressure to an acceptable range.

                  We plan to file a New Drug Application (or NDA) in early calendar 2009 for a congestive heart failure indication based on a completed Phase III study.

                  We license exclusive U.S. and Canadian rights to Bystolic from Mylan Inc. (or Mylan). In February 2008, we amended our license agreement with Mylan to terminate Mylan’s further commercial rights for Bystolic in the U.S. and Canada and to reduce future payment obligations to Mylan. Pursuant to the amendment, we made a one-time cash payment of $370 million to Mylan. Following such payment, we remain obligated to pay Mylan its original contractual royalties for a period of three years, after which our royalty rate will be reduced.

                  Milnacipran: In January 2004, we entered into a license and collaboration agreement with Cypress Bioscience, Inc. (or Cypress) for the development and marketing in the United States of milnacipran. An NDA was submitted in December 2006 for the use of milnacipran for the treatment of fibromyalgia syndrome (or FMS). FDA action with respect to this NDA is expected in October 2008. FMS is a frequent cause of chronic, widespread pain and is estimated to affect six to twelve million people in the United States. There is currently only one product approved by the FDA for the treatment of this disorder. Pursuant to the collaboration agreement, we paid Cypress an upfront license fee, milestone payments on the achievement of specific product development milestones, and we will pay an additional milestone payment upon FDA approval of the product. We will also pay Cypress royalties based on net sales of the product following approval. We will be responsible for funding further development activities, which will be jointly managed by the two companies, and will have responsibility for sales and marketing activities, with Cypress having the option to perform up to 25% of physician details on a fee-for-service basis. The license agreement includes two patents covering the use of milnacipran for the treatment of FMS. In addition, we believe that, as a new chemical entity not previously approved by the FDA, milnacipran will qualify for five years of exclusivity under the Hatch-Waxman Act.

                  Cerexa, Inc.: Effective January 10, 2007, we acquired Cerexa, Inc. (or Cerexa), a biopharmaceutical company based in Alameda, California, in a cash merger pursuant to which Cerexa became a wholly-owned subsidiary of the Company.

                  Pursuant to the merger, we acquired worldwide development and marketing rights (excluding Japan) to ceftaroline acetate (or ceftaroline), a next generation, broad spectrum, hospital-based injectable cephalosporin antibiotic that exhibits bactericidal activity against the most resistant strains of gram-positive bacteria, including MRSA (methicillin resistant Staphylococcus aureus) as demonstrated by a completed Phase II comparative trial in patients with complicated skin and skin structure infections (or cSSSI). Ceftaroline has also demonstrated bactericidal activity against penicillin resistant Streptococcus pneumonia and common gram-negative bacteria. Ceftaroline is being developed initially for the cSSSI indication and for the treatment of community acquired pneumonia (or CAP). Two Phase III studies of ceftaroline for cSSSI have completed enrollment. Additionally, two Phase III studies in CAP have begun enrollment. We anticipate the cSSSI results in mid 2008 and the CAP results in calendar 2009. Based on positive results, we anticipate submitting an NDA to the FDA by the end of calendar 2009.

                  The acquisition of Cerexa also included a second development stage hospital-based antibiotic, ME1036, which has shown activity against both aerobic and anaerobic gram-positive and gram-negative bacteria, including common drug-resistant pathogens, such as MRSA, in preclinical studies. ME1036, for which we have worldwide rights, is currently in Phase I testing and is expected to move into Phase II clinical studies in early calendar 2009.

                  The rights to ceftaroline and ME1036 are in-licensed by Cerexa on an exclusive basis from Takeda Pharmaceutical Company and Meiji Seika Kaisha, Ltd., respectively.

                  We paid cash consideration of approximately $494 million in connection with the merger and certain related expenses. We will be obligated to pay an additional $100 million in the event that annual United States sales of ceftaroline exceed $500 million during the five year period following product launch. The merger consideration paid at closing was expensed in fiscal 2007 as purchased in-process research and development.

                   NXL104: In January 2008, we entered into an agreement with Novexel, S.A. (or Novexel) for the development, manufacture and commercialization of Novexel’s novel intravenous beta lactamase inhibitor, NXL104 in combination with our ceftaroline compound. NXL104 is designed to be co-administered with select antibiotics to enhance their spectrum of activity. Under the terms of the license, we received the exclusive rights to administer NXL104 with ceftaroline as a combination product in North America. We intend to initiate Phase I studies of the ceftaroline/NXL104 combination during calendar 2009. We also received a first negotiation right in North America to an additional NXL104 combination with ceftazidime, a cephalosporin antibiotic having a different spectrum of activity compared to ceftaroline. This combination is currently being studied in Phase I clinical trials conducted by Novexel.

                  NXL104 inhibits bacterial enzymes called beta-lactamases that break down beta-lactam antibiotics (in particular penicillins and cephalosporins). Beta-lactamase inhibition represents a mechanism for counteracting resistance and enhancing broad-spectrum activity of beta-lactam antibiotics. A composition of matter patent which claims NXL104 would provide protection for the ceftaroline/NXL104 combination product until 2022, subject to possible patent term extension.

                  Under the terms of the agreement, we made an upfront license payment of approximately $110 million to Novexel. We will fund development and commercialization of the ceftaroline/NXL104 combination. Additional milestone payments to Novexel if the combination product is successfully developed could total a further $110 million. Following the product’s regulatory marketing approval, we will pay Novexel a low double digit royalty on product sales throughout North America.

                   Linaclotide: In September 2007, we entered into a 50/50 partnership in the United States with Ironwood Pharmaceuticals, Inc. (or Ironwood, formerly known as Microbia, Inc.) to co-develop and co-market Ironwood’s first-in-class compound linaclotide. Linaclotide is currently being investigated for the treatment of constipation-predominant irritable bowel syndrome (or IBS-C), chronic constipation (or CC) and other gastrointestinal disorders.

                  Under the terms of the agreement, we initially paid Ironwood $70 million in licensing fees. Ironwood and Forest will jointly and equally fund development and commercialization of linaclotide in the United States, sharing profits equally. Additionally, we will have exclusive rights in Canada and Mexico and will pay Ironwood a royalty on sales in these countries.

                  Linaclotide is an agonist of the guanylate cyclase type-C receptor found in the intestine and acts by a mechanism distinct from previously developed products for IBS-C and CC. Linaclotide is administered orally but acts locally in the intestine with no measurable systemic exposure.

                  One out of six adults in developed countries suffers from IBS, a chronic condition marked by abdominal pain and disturbed bowel function. IBS accounts for 12% of adult visits to primary care physicians and is the most common disorder diagnosed by gastroenterologists. Health care costs associated with IBS exceed $25 billion annually. IBS patients fall into three subgroups – constipation-predominant IBS-C, diarrhea-predominant (or IBS-D), and alternating (or IBS-A) – and 30% to 40% of these patients suffer from IBS-C. There are currently few available therapies to treat the nine million U.S. patients diagnosed with IBS-C.

                  As many as 26 million Americans suffer from CC. Patients with CC often experience hard and lumpy stools, straining during defecation, a sensation of incomplete evacuation and fewer than three bowel movements per week. The discomfort of CC significantly affects patient’s quality of life by impairing their ability to work and participate in typical daily activities.

                  In March 2008, we announced positive top-line results from two Phase II(b) randomized, double-blind, placebo-controlled studies assessing the safety, therapeutic effect and dose response of four different once-daily doses of linaclotide: 75 mcg, 150 mcg, 300 mcg, and 600 mcg. The first study examined the effects of linaclotide in patients with CC, while the second study examined its effects in patients with IBS-C. The analysis of the CC study data and the IBS-C study data indicate that each study met its primary endpoint. Linaclotide was well tolerated at all doses. Based on this data we anticipate initiating Phase III studies in both indications in the second half of calendar 2008.

                   Aclidinium (LAS 34273): In April 2006, we entered into a collaboration and license agreement with Laboratorios Almirall, S.A. (or Almirall), a pharmaceutical company headquartered in Barcelona, Spain, for the development and exclusive United States marketing rights to aclidinium, Almirall’s novel long-acting muscarinic antagonist. Aclidinium is being developed as an inhaled therapy for chronic obstructive pulmonary disease (or COPD). Aclidinium has been evaluated in Phase II studies that demonstrate that it has a fast onset of action and provides 24 hours of bronchodilation when administered once-daily. An international Phase III program is currently being conducted by us and Almirall. Enrollment has been completed and we expect top-line results to be available in the second half of calendar 2008. Aclidinium is designed to have specific action in the lungs and is believed to be rapidly metabolized in the lungs with limited systemic exposure. Studies to date support a favorable side effects profile. The product is being developed in a Multi-Dose Dry Powder Inhaler (or MDPI) which we believe represents an improvement in drug delivery over currently available devices.

                  COPD is a debilitating respiratory condition that includes two related lung diseases: chronic bronchitis and emphysema. It affects approximately 24 million Americans, a population even larger than the 20 million who suffer from asthma. However, COPD frequently goes undiagnosed and untreated because it is difficult to identify in its early stages. The primary cause of COPD is prolonged cigarette smoking. It is the fourth leading cause of death in the United States after heart disease, cancer and stroke. According to the National Heart, Lung and Blood Institute, COPD’s prevalence and associated death rate are rising. In 2020, COPD is projected to become the third leading cause of death in the United States. Today, the economic burden of COPD on the U.S. healthcare system is substantial, estimated at over $30 billion annually.

                  Under the terms of the agreement, we made an upfront payment of $60 million to Almirall in May 2006, a development milestone payment in May 2007 and may be obligated to pay future milestone payments. In addition, Almirall will receive royalty payments based on aclidinium sales. Forest and Almirall will jointly oversee the development and regulatory approval of aclidinium and share all expenses for current and future development programs. Almirall has granted us certain rights of first negotiation for other Almirall respiratory products that could be combined with aclidinium. Pursuant to such rights, we have commenced the development of a fixed-dose combination of aclidinium and the beta-agonist formoterol, which is currently in Phase II testing.

                  We will be responsible for sales and marketing of aclidinium in the U.S. and Almirall has retained an option to co-promote the product in the U.S. in the future while retaining commercialization rights for the rest of the world. In addition to five years of Hatch-Waxman exclusivity granted upon approval, aclidinium is protected by an issued U.S. composition of matter patent expiring in September 2020. We expect a patent term extension under the Drug Price Competition and Patent Term Restoration Act.

                  Lexapro®: In September 2002, we launched Lexapro (escitalopram oxalate), a single isomer version of citalopram HBr for the treatment of major depression, following approval of the product by the FDA in August 2002. Citalopram is a racemic mixture with two mirror image molecules, the S- and R-isomers. The S-isomer of citalopram is the active isomer in terms of its contribution to citalopram's antidepressant effects, while the R-isomer does not contribute to the antidepressant activity. With Lexapro, the R-isomer has been removed, leaving only the active S-isomer. Clinical trials demonstrate that Lexapro is a more potent selective serotonin reuptake inhibitor (or SSRI) than its parent compound, and confirm the antidepressant activity of Lexapro in all major clinical measures of depression. During fiscal 2008, sales of Lexapro were $2,292,036,000. According to data published by IMS, an independent prescription audit firm, as of April 30, 2008, Lexapro achieved a 17.5% share of total prescriptions for antidepressants in the SSRI/SNRI category.

                  In December 2003, Lexapro received FDA approval for the treatment of generalized anxiety disorder (or GAD), a disorder characterized by excessive anxiety and worry about everyday events or activities for a period of six months or more. The approval was based upon three GAD studies involving Lexapro which demonstrated significantly greater improvement in anxiety symptoms relative to placebo. Forest began marketing Lexapro for the treatment of GAD in January 2004.

                  In May 2008, we announced results from a Phase III study of Lexapro in the treatment of adolescents, aged 12-17, with Major Depressive Disorder (or MDD). These results indicate that patients treated with Lexapro experienced statistically significant improvement in symptoms of depression, as measured by the study’s primary endpoint, the Children’s Depression Rating Scale-Revised (or CDRS-R), compared to placebo. The CDRS-R is a commonly used clinician-rated instrument that covers 17 symptom areas of depression relevant to adolescents, including impaired schoolwork, difficulty having fun, social withdrawal, physical complaints and low self-esteem. Based on these results, along with an earlier study conducted with the racemate, we submitted a supplemental NDA to the FDA in May 2008 for Lexapro, to expand the indication to include the treatment of MDD in adolescent patients.

                  Lexapro was developed by us and H. Lundbeck A/S (or Lundbeck), a Danish pharmaceutical firm which licenses to us the exclusive United States marketing rights to this compound, as well as Celexa.

                  Lexapro is covered by a U.S. composition of matter patent which expires March 14, 2012, inclusive of additional exclusivity granted as a result of a pediatric study we performed. In September 2007, the United States Court of Appeals for the Federal Circuit affirmed a July 2006 decision by the United States District Court for the District of Delaware which determined that our composition of matter patent for Lexapro is valid and upheld our injunction against Teva Pharmaceuticals (or Teva) preventing Teva from launching a generic equivalent to Lexapro. During fiscal 2008, Caraco Pharmaceutical Laboratories (or Caraco), a generic manufacturer, filed an Abbreviated New Drug Application (or ANDA) seeking approval to market a generic version of Lexapro. We, together with Lundbeck, have commenced patent infringement litigation against Caraco which is pending in the United States District Court for the Eastern District of Michigan. See "Item 3. Legal Proceedings".

                   Namenda®: In October 2003, Namenda (memantine HC1) was approved for marketing and distribution by the FDA for the treatment of moderate to severe Alzheimer's disease. Namenda is a moderate-affinity, uncompetitive NMDA receptor antagonist that modulates the effects of glutamate - a neurotransmitter found in the brain. Excessive levels of glutamate are hypothesized to contribute to the dysfunction and eventual death of brain cells observed in Alzheimer's disease. We believe that Namenda's mechanism of action is distinct from other drugs currently available to treat Alzheimer's disease. We obtained the exclusive rights to develop and market memantine in the United States by license agreement with Merz Pharma GmbH of Germany (or Merz), the originator of the product.

                  Namenda achieved sales of $829,657,000 during our 2008 fiscal year and, according to data published by IMS, an independent prescription audit firm, as of April 30, 2008, Namenda achieved a 33.4% share of total prescriptions in the Alzheimer’s market. Namenda is covered by a U.S. patent which expires in 2010 and should be subject to a patent term extension until September 2013. In January 2008, we and Merz commenced patent infringement litigation against several generic manufacturers who had filed ANDAs seeking FDA approval to market generic equivalents of Namenda. The actions are pending in the United States District Court for the District of Delaware. We intend to fully enforce our patent rights for Namenda.

                  In February 2008, we received preliminary results of a Phase III study of memantine HC1 in a novel once-daily formulation. The study evaluated the efficacy, safety and tolerability of an innovative, proprietary, 28 mg memantine extended-release, once-daily formulation compared to placebo in outpatients with moderate to severe Alzheimer’s disease currently treated with a cholinesterase inhibitor. The results indicate that patients treated with memantine 28 mg extended-release formulation experienced statistically significant benefits in cognition and clinical global status compared to placebo. Based on the results of this study, we intend to prepare and file an NDA for this new formulation.

                  Finally, during fiscal 2006 we completed a Phase II "proof of concept" study of neramexane, in moderate to severe Alzheimer’s disease. Neramexane is a second NMDA receptor antagonist which we licensed from Merz. Based on an analysis of the results of this study, we have determined to discontinue development of the product.

                   Benicar® Co-Promotion with Daiichi Sankyo: In December 2001, we entered into a co-promotion agreement with Daiichi Sankyo (or Sankyo) for the co-promotion in the United States of Benicar (olmesartan medoxomil) an angiotensin receptor blocker (or ARB) discovered and developed by Sankyo for the treatment of hypertension. The NDA for Benicar was approved by the FDA in April 2002. In August 2003, the FDA approved Benicar HCT®, a combination of Benicar and hydrochlorothiazide, which is also jointly promoted by Forest and Sankyo.

                  Pursuant to the co-promotion agreement with Sankyo, we shared with Sankyo in the detailing of the product to physicians, hospitals, managed care organizations and other institutional users of pharmaceutical products over a six-year period ended March 31, 2008 (we subsequently agreed to perform limited additional detailing through May 2008). We received co-promotion income based upon the relative contribution of the two companies to the co-promotion effort through fiscal year ended March 31, 2008, and will receive residual payments on a reduced basis following the end of the co-promotion period based on sales levels achieved through the fiscal year ending March 31, 2014. During fiscal 2008, we received co-promotion income of $212,100,000. According to market share data published by IMS, an independent prescription audit firm, as of April 30, 2008, Benicar and Benicar HCT achieved a combined 17.0% share of total prescriptions in the ARB market.

                  On May 12, 2008, we and Sankyo announced that effective July 1, 2008, we have terminated our co-promotion agreement for Azor™ (amlodipine and olmesartan medoxomil), Sankyo’s fixed-dose combination of two antihypertensives, the calcium channel blocker amlodipine besylate and the angiotensin receptor blocker olmesartan medoxomil. We will record a one-time charge of approximately $44,100,000 which is composed of a one-time payment to Sankyo of approximately $26,600,000 related to the termination of the agreement and $17,500,000 related to the unamortized portion of the initial upfront payment. We determined that the resources we had allocated to the Azor co-promotion will be better utilized in providing additional support for our other currently marketed products.

                   RGH-188: In November 2004, we entered into a collaboration and license agreement with Gedeon Richter Ltd. (or Richter), based in Budapest, Hungary, for the development of and exclusive United States rights to Richter's RGH-188 and related compounds, being developed as an atypical antipsychotic for the treatment of schizophrenia, bipolar mania and other psychiatric conditions.

                  During fiscal 2008, we received top-line results of a Phase II study in schizophrenia that indicated that RGH-188 demonstrated a nominally statistically significant (i.e., not adjusted for multiple comparisons) therapeutic effect compared to placebo in a low-dose arm and a numerical improvement compared to placebo in a high-dose arm that did not reach nominal statistical significance. Based on the review of the results, we will be initiating a Phase II dose-ranging study in schizophrenic patients in the first half of fiscal 2009. An additional Phase II study of RGH-188 for the treatment of bipolar mania was commenced in 2007 and results are expected in calendar 2008. RGH-188 is currently claimed by a U.S. Patent application which, if issued, will expire in 2024.

                  Upon execution of the collaboration agreement, we paid Richter an upfront license fee and we will be obligated to pay further milestone payments if development and commercialization are successfully completed. We are also obligated to pay Richter a royalty based on net sales and to purchase our requirements of the active pharmaceutical ingredient from them. Our license grants us exclusive development and commercialization rights in the United States and Canada. We will collaborate with Richter in product development and will jointly fund such development activities.

                   RGH-896; mGLUR1/5 Compounds: In November 2005, we entered into two new collaboration agreements with Richter with whom we are currently developing RGH-188 for the treatment of schizophrenia and bipolar mania.

                  The first collaboration will focus upon a group of compounds that target the NR2B receptor that will be developed for the treatment of chronic pain and other central nervous system (or CNS) conditions. RGH-896 is the first of this group and is currently in early clinical development. We paid Richter an upfront payment and will become obligated to pay milestone payments based upon achievement of development objectives. The two companies will jointly fund the development program. Forest has exclusive marketing rights in the United States and Canada and will pay Richter a royalty on net sales. RGH-896 has patent applications that, if allowed, will provide us patent protection until at least 2022.

                  The second new collaboration will focus upon a series of novel compounds that target metabotropic glutamate receptors (or mGLUR1/5). mGLUR1/5 antagonists represent novel potential agents for the treatment of anxiety, depression and other CNS conditions. Richter and Forest intend to advance promising leads to clinical trials within the next two to three years. We paid Richter an upfront payment and will pay milestone payments based upon the achievement of development objectives in addition to royalties. We will have exclusive marketing rights in North America while Richter will retain exclusive rights in Europe and countries comprising the former Soviet Union. The two companies will share rights in other countries.

                   GRC 3886: In September 2004, we entered into a collaboration and license agreement with Glenmark Pharmaceuticals Ltd. (or Glenmark), of Mumbai, India, covering Glenmark's PDE4 inhibitor referred to as GRC 3886. GRC 3886 is a novel, orally available phosphodiesterase-IV (or PDE4) inhibitor in development for COPD and asthma, and may also have use in other conditions.

                  Bronchodilators and anticholinergics are the most commonly prescribed therapies in COPD, but do not address the underlying inflammation. PDE4 inhibitors represent a new class of drugs that are interesting because they have the potential to relax the smooth muscles of the airway resulting in bronchodilation, as well as inhibit inflammatory cell activity, thus providing both short-term relief and control over the progression of the disease.

                  We have commenced a Phase II study of this compound for the COPD indication with results expected in the second half of calendar 2009. GRC 3886 is currently claimed by U.S. patent applications which, if issued, will expire in 2024.

                  We will develop, register and commercialize GRC 3886 for the North American market, while Glenmark will retain commercialization rights for the rest of the world. We paid Glenmark an upfront payment upon initiation of the agreement and additional milestone payments upon the successful completion of the antigen challenge study in asthma patients and in connection with proceeding with the Phase II study program. We will be required to pay future milestones if the development and commercialization of the product is successfully completed in the North American market. Additionally, after commercial launch, Glenmark will earn a royalty from us on net sales of the product, and will supply all active pharmaceutical ingredient required by us.

                   Campral®: Campral (acamprosate calcium) was approved by the FDA in July 2004, for the maintenance of abstinence from alcohol in patients with alcohol dependence who are abstinent at treatment initiation. Sales of Campral were $30,921,000 in fiscal 2008.

                  The mechanism of action of Campral in maintenance of alcohol abstinence is not completely understood. Chronic alcohol exposure is hypothesized to alter the normal balance between neuronal excitation and inhibition. Campral interacts with neurotransmitter systems and is hypothesized to restore the normal balance. This mechanism of action is different from that ascribed to other currently available medications, which either block the "high" associated with alcohol consumption or induce vomiting if alcohol is ingested. Treatment with Campral should be part of a comprehensive management program that includes psychosocial support.

                  Campral was developed by Merck Sante s.a.s., a subsidiary of Merck KGaA of Darmstadt, Germany, and is licensed to us for exclusive marketing and distribution in the United States.  Our license requires us to purchase our requirements of Campral's active pharmaceutical ingredient from Merck Sante. Campral’s five years of exclusivity under the Hatch-Waxman Act will expire in fiscal 2010.

                   Termination of Desmoteplase License: During fiscal 2008, we terminated our license agreement for Desmoteplase, being developed for the treatment of acute ischemic stroke. We terminated this license based upon the receipt of unfavorable data upon completion of a Phase II study.

                   Share Repurchase Program: On May 18, 2006 our Board of Directors (or the Board) authorized a share repurchase program for up to 25 million shares of our common stock (or the 2007 Repurchase Program). On August 13, 2007 the Board authorized the purchase of an additional 10 million shares of common stock. The authorizations became effective immediately and have no set expiration dates. We expect to make the repurchases from time to time on the open market, depending on market conditions. As of May 29, 2008, 25,843,600 shares have been repurchased and we continue to have authority to purchase up to an additional 9,156,400 shares under the 2007 Repurchase Program.

                   Forward Looking Statements: Except for the historical information contained herein, this report contains forward looking statements that involve a number of risks and uncertainties, including the difficulty of predicting FDA approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, the impact of legislative and regulatory developments on the manufacture and marketing of pharmaceutical products and the uncertainty and timing of the development and launch of new pharmaceutical products.

Principal Products

                  We actively promote in the United States those branded products which we believe have the most potential for growth and patient benefit, and which enable our salesforces to concentrate on groups of physicians who are high prescribers of our products. Such products include: Lexapro, our SSRI for the treatment of major depression and GAD; Namenda, our NMDA antagonist for the treatment of moderate to severe Alzheimer's disease; Bystolic, our novel beta-blocker for the treatment of hypertension; and Campral, for the maintenance of alcohol abstinence.

                  Sales of Lexapro, launched in September 2002, accounted for 66% of our sales for the fiscal year ended March 31, 2008 and 66% and 67% of our sales for our fiscal years ended 2007 and 2006, respectively.

                  Sales of Namenda, launched in December 2003, accounted for 24% of our sales for the fiscal year ended March 31, 2008 and 21% and 18%, respectively, of our sales for fiscal 2007 and 2006.

                  Our generic line, marketed by our Inwood Laboratories, Inc. subsidiary, includes generic equivalents to certain of our branded products, including Tiazac, as well as products using our controlled release technology.

                  Our United Kingdom and Ireland subsidiaries sell both ethical products requiring a doctor's prescription and over-the-counter preparations. Their most important products include Sudocrem®, a topical preparation for the treatment of diaper rash; Colomycin®, an antibiotic used in the treatment of cystic fibrosis; Infacol®, used to treat infant colic; and Exorex®, used in the treatment of eczema and psoriasis.

Marketing

                  In the United States, we directly market our products through our domestic salesforces, Forest Pharmaceuticals, Forest Therapeutics, Forest Healthcare, Forest Ethicare and Forest Specialty Sales, currently numbering approximately 2,700 persons, which detail products directly to physicians, pharmacies, hospitals, managed care and other healthcare organizations. In the United Kingdom, our Forest Laboratories U.K. subsidiary's salesforce, currently 38 persons, markets its products directly. Our products are sold elsewhere through independent distributors.

Competition

                  The pharmaceutical industry is highly competitive as to the sale of products, research for new or improved products and the development and application of competitive drug formulation and delivery technologies. There are numerous companies in the United States and abroad engaged in the manufacture and sale of both proprietary and generic drugs of the kind which we sell. Many of these companies have substantially greater financial resources than we do. We also face competition for the acquisition or licensing of new product opportunities from other companies. In addition, the marketing of pharmaceutical products is increasingly affected by the growing role of managed care organizations, including pharmaceutical benefit management companies, in the provision of health services. Such organizations negotiate with pharmaceutical manufacturers for highly competitive prices for pharmaceutical products in equivalent therapeutic categories, including certain of our principal promoted products. Failure to be included or to have a preferred position in a managed care organization's drug formulary could result in decreased prescriptions of a manufacturer's products.

Government Regulation

                  The pharmaceutical industry is subject to comprehensive government regulation which substantially increases the difficulty and cost incurred in obtaining the approval to market newly proposed drug products and maintaining the approval to market existing drugs. In the United States, products which we develop, manufacture or sell are subject to regulation by the FDA, principally under the Federal Food, Drug and Cosmetic Act, as well as by other federal and state agencies. The FDA regulates all aspects of the testing, manufacture, safety, labeling, storage, record keeping, advertising and promotion of new and old drugs, including the monitoring of compliance with good manufacturing practice regulations. Non-compliance with applicable requirements can result in fines and other sanctions, including the initiation of product seizures, injunction actions and criminal prosecutions based on practices that violate statutory requirements. In addition, administrative remedies can involve voluntary recall of products as well as the withdrawal of approval of products in accordance with due process procedures. Similar regulations exist in most foreign countries in which our products are manufactured or sold. In many foreign countries, such as the United Kingdom, reimbursement under national health insurance programs frequently require that manufacturers and sellers of pharmaceutical products obtain government approval of initial prices and increases if the ultimate consumer is to be eligible for reimbursement for the cost of such products.

                  During the past several years, the FDA, in accordance with its standard practice, has conducted a number of inspections of our manufacturing facilities. Following these inspections, the FDA called our attention to certain "Good Manufacturing Practices" compliance and record keeping deficiencies. We have responded to the FDA's comments and modified our procedures to comply with the requests made by the FDA.

                  The cost of human healthcare products continues to be a subject of investigation and action by governmental agencies, legislative bodies and private organizations in the United States and other countries. In the United States, most states have enacted generic substitution legislation requiring or permitting a dispensing pharmacist to substitute a different manufacturer's version of a drug for the one prescribed. Federal and state governments continue to press efforts to reduce costs of Medicare and Medicaid programs, including restrictions on amounts agencies will reimburse for the use of products. In addition, several states have adopted prescription drug benefit programs which supplement Medicaid programs and are seeking discounts or rebates from pharmaceutical manufacturers to subsidize such programs. Failure to provide such discounts or rebates may lead to restrictions upon the availability of a manufacturer's products in health programs, including Medicaid, run by such states. Under the Omnibus Budget Reconciliation Act of 1990 (or OBRA), manufacturers must pay certain statutorily-prescribed rebates on Medicaid purchases for reimbursement of prescription drugs under state Medicaid plans. Federal Medicaid reimbursement for drug products of original NDA-holders is denied if less expensive generic versions are available from other manufacturers. In addition, the Federal government follows a diagnosis related group (or DRG) payment system for certain institutional services provided under Medicare or Medicaid. The DRG system entitles a healthcare facility to a fixed reimbursement based on discharge diagnoses rather than actual costs incurred in patient treatment, thereby increasing the incentive for the facility to limit or control expenditures for many healthcare products.  Under the Prescription Drug User Fee Act of 1992, the FDA has imposed fees on various aspects of the approval, manufacture and sale of prescription drugs.

                  In April 2003, the Federal Office of the Inspector General published guidance for pharmaceutical manufacturers with respect to compliance programs to assure manufacturer compliance with Federal laws and programs relating to healthcare. In addition, several states have adopted laws and regulations requiring certain specific disclosures with respect to our compliance program and our practices relating to interactions with physicians and other healthcare providers. We maintain a company-wide compliance program to assure compliance with applicable laws and regulations, as well as the standards of professional bodies governing interactions between pharmaceutical manufacturers and physicians, and believe we are in compliance with all material legal requirements and standards.

                  A prescription-drug benefit for Medicare beneficiaries was established pursuant to the Medicare Prescription Drug, Improvement and Modernization Act of 2003. Under the program, pharmaceutical benefit managers and health programs offer discounted prices on prescription drugs to qualified Medicare recipients reflecting discounts negotiated with manufacturers. The failure of a manufacturer to offer discounts to these programs could result in reduced use of the manufacturer's products.

                  From time to time, we have implemented revised product labeling in accordance with FDA requirements. There can be no assurance that such labeling changes or changes which may be required by subsequent rulemaking will not have an adverse effect upon the marketing of our products. In addition, the FDA continues to review various aspects of our NDAs and product labeling for approved products as we submit supplements seeking approval for new indications or dosage forms, labeling changes or to comply with FDA requests, and at the agency’s own initiative in light of post-marketing experience. In connection with such reviews, the FDA may request labeling changes based on the data submitted by us or from other sources, including post-marketing experience data. Sometimes those requested changes may apply to an entire class of drugs which includes one of our products, and sometimes the changes requested may apply only to our product. In some cases, the labeling changes requested, if implemented, might adversely affect the prescribing of our products by physicians. If we believe changes requested by the FDA are not correct, we may submit further data and analyses to the FDA which may modify the agency’s position. There can be no assurance, however, that the FDA will ultimately agree with our position or that post-marketing clinical experience will not require labeling changes, either initiated by us or by the FDA, which may adversely affect our products’ acceptance and utilization.

                  We expect that competing healthcare reform proposals will continue to be introduced and debated. The adoption of any such proposal may entail new regulatory requirements and may affect the marketing of prescription drugs. We cannot predict the outcome or effect on the marketing of prescription drug products of the legislative and political process.

Principal Customers

                  The following sets forth information with respect to the percentage of net sales accounted for by our principal customers:

Customer	2008	2007	2006
McKesson Drug Company	38%	37%	35%
Cardinal Health, Inc.	30%	27%	26%
AmeriSource Bergen Corporation	15%	13%	20%

No other customer accounted for 10% or more of our net sales for the fiscal years presented.

Geographic Area Financial Information

                  For financial information concerning the geographic areas in which we operate, see Note 3 to our Consolidated Financial Statements incorporated by reference herein.

Environmental Standards

                  We anticipate that the effects of compliance with federal, state and local laws and regulations relating to the discharge of materials into the environment will not have any material effect on our capital expenditures, earnings or competitive position.

Raw Materials

                  The active pharmaceutical ingredients in our principal promoted products, including Lexapro, Namenda, Bystolic and Campral, are patented or otherwise available to us only pursuant to our contractual arrangements with our licensing partners. Other raw materials used by us are purchased in the open market. We have not experienced any significant shortage in supplies of active pharmaceutical ingredients or other raw materials.

Product Liability Insurance

                  We currently maintain $140 million of product liability coverage per "occurrence" and in the aggregate. Although in the past there have been product liability claims asserted against us, none for which we have been found liable, there can be no assurance that all potential claims which may be asserted against us in the future would be covered by our present insurance. See "Item 3. Legal Proceedings" and "Item 1A. Risk Factors".

Research and Development

                  During the year ended March 31, 2008, we spent $670,973,000 for research and development, as compared to $941,003,000 and $410,431,000 in the fiscal years ended March 31, 2007 and 2006, respectively. Included in research and development expense are payments made pursuant to licensing and acquisition agreements for new product opportunities where FDA approval has not yet been received and accordingly payments made in connection with acquiring the product rights are charged to research and development. Research and development expense for fiscal 2008 included an upfront payment of $70,000,000 in connection with the collaboration agreement with Ironwood for the rights to co-develop and co-market linaclotide and an upfront license payment of approximately $110,000,000 made to Novexel in connection with the acquisition of rights to develop, manufacture and commercialize NXL104 in combination with ceftaroline. Research and development expenses for fiscal 2007 included approximately $476,000,000 of acquisition and related costs incurred in the acquisition of Cerexa, which was treated as the acquisition of in-process research and development and approximately $60,000,000 in upfront license payments to Almirall for aclidinium. With respect to the 2006 fiscal year, such payments included upfront and milestone payments of $75,000,000 and $60,000,000 to Mylan and Replidyne, Inc., respectively, in connection with our acquisition of rights to nebivolol and faropenem medoxomil. During fiscal 2007, we terminated our further participation in faropenem development. Other research and development expenditures consist primarily of the conduct of pre-clinical and clinical studies required to obtain approval of new products, as well as clinical studies designed to further differentiate our products from those of our competitors or to obtain additional labeling indications.

Employees

                  At March 31, 2008, we had a total of 5,211 employees.

Patents and Trademarks

                  Forest seeks to obtain, where possible, patents and trademarks for Forest’s products in the United States and all countries of major marketing interest to Forest. Forest owns or has licenses to a substantial number of patents and patent applications. Several of these patents, which expire during the period 2012 to 2021, are believed to be of material importance in the operation of Forest’s business. Forest believes that patents, licenses and trademarks (or related group of patents, licenses, or trademarks) covering our marketed products are material in relation to Forest’s business as a whole.

                  The following patents, licenses and trademarks are significant for Forest’s business: those related to Lexapro, those related to Namenda, those related to olmesartan medoxomil (which is sold under the trademark Benicar, and Benicar HCT) and those related to Bystolic. The U.S. composition of matter patent covering escitalopram oxalate is licensed from Lundbeck and will expire in 2012. The principal U.S. method of use patent related to memantine hydrochloride is licensed from Merz and will expire in 2010. (Forest has filed a patent term extension application to extend this patent until 2013.) The U.S. composition of matter patent covering olmesartan medoxomil is owned by Daiichi-Sankyo and expires in 2016. A U.S. method of use patent related to olmesartan medoxomil/hydrochlorothiazide expires in 2021. Forest and Daiichi Sankyo are parties to a co-promotion agreement with respect to Benicar and Benicar HCT pursuant to which Forest will continue to receive contract revenues through March 2014. The U.S. composition of matter patent covering nebivolol hydrochloride is licensed from Mylan and expires in 2020 (Forest has submitted a patent term extension application to extend this patent until 2021). On January 26, 2007, Janssen Pharmaceutica N.V., the owner of the patent, filed a request with the U.S. Patent and Trademark Office (or the Office) for re-examination of the patent covering nebivolol hydrochloride. While the timing for resolution of the re-examination cannot be predicted, we expect that the Office will again certify that the claims of the patent are valid. Litigation involving Forest’s patents covering escitalopram oxalate and memantine HCl is discussed at "Item 3. Legal Proceedings".

                  When a product patent expires, the patent holder often loses effective market exclusivity for the product. This can result in a severe and rapid decline in sales of the formerly patented product, particularly in the United States. However, in some cases the innovator company may achieve exclusivity beyond the expiry of the product patent through manufacturing trade secrets, later-expiring patents on methods of use or formulations, or data-based exclusivity that may be available under pharmaceutical regulatory laws.

                  We own or exclusively license various trademarks and trade names which we believe are of significant benefit to our business.

Backlog - Seasonality

                  Backlog of orders is not considered material to our business prospects. Our business is not seasonal in nature.

ITEM 1A. RISK FACTORS

We are Substantially Dependent on Sales of Our Two Principal Products.

                  For the 2008 fiscal year, sales of Lexapro and Namenda accounted for 66% and 24%, respectively, of our net sales. Any unexpected negative development with respect to such products (for example, loss of market exclusivity or an unexpected safety or efficacy concern) would have a material adverse effect on our results of operations, financial condition and liquidity. While the validity and enforceability of our patent covering escitalopram, the active ingredient in Lexapro, were upheld in September 2007 by decision of the United States Court of Appeals for the Federal Circuit, we are currently prosecuting patent infringement litigation against a generic manufacturer who is seeking FDA approval to market a generic equivalent to Lexapro. In addition, we have instituted patent infringement litigation against multiple generic manufacturers who are seeking FDA approval to market generic versions of Namenda. See "Item 3. Legal Proceedings".

Pharmaceutical Research is Expensive and Uncertain.

                  New product development is subject to a great deal of uncertainty, risk and expense. Promising pharmaceutical candidates may fail at various stages of the research and development process, often after a great deal of financial and other resources have been invested in their exploration and development. Further, even where pharmaceutical development is successfully completed, a product may fail to reach the market or have limited commercial success because the safety and efficacy profile achieved during the course of development is not as favorable as originally anticipated or favorable in light of new and competing therapies which may become available during the lengthy period of drug development.

Regulatory Compliance Issues Could Materially Affect Our Operations.

                  The marketing and promotional practices of pharmaceutical manufacturers, as well as the manner in which manufacturers interact with prescribers of pharmaceutical products and other healthcare decision makers, are subject to extensive regulation. Such regulation takes the form of explicit governmental regulation and guidance, as well as practices established by healthcare and industry codes of conduct. In addition, both federal and state governmental authorities actively seek to enforce such regulations and can assert both civil and criminal theories of enforcement not specifically prescribed by published regulations or standards and accordingly with little objective guidance to permit voluntary industry compliance. Such enforcement can include actions initially commenced by "whistleblowers" under the Federal False Claims Act which provides incentives to whistleblowers based upon penalties successfully imposed as a result of the investigation or related legal proceedings or settlements. See "Item 3. Legal Proceedings" for information about pending government investigations of our marketing and promotional practices. There can be no assurance that the resolution of pending or future claims, as well as the resolution of shareholder or consumer litigation which may be associated with any such claims or their resolution, will not entail material fines, penalties or settlement payments. In addition, the manufacturing, testing, storage and shipment of pharmaceutical products is highly regulated and the failure to comply with regulatory standards can lead to product withdrawals or seizures or to delays in FDA approval of products pending resolution of such issues. Moreover, even when a manufacturer has fully complied with applicable regulatory standards, products manufactured and distributed may ultimately fail to comply with applicable specifications, leading to product withdrawals or recalls.

Our Business Depends on Intellectual Property Protection.

                  Our ability to generate the returns necessary to support our investment in acquiring and developing new product opportunities, as well as the commitment of resources to successfully market our products, greatly depends on effective intellectual property protection to ensure we can take advantage of lawful market exclusivity. Manufacturers of generic products have strong incentives to challenge the patents which cover our principal products. While we believe that our patent portfolio, together with market exclusivity periods granted by the Hatch-Waxman Act, offers adequate exclusivity protection for our current products, there can be no assurance that some of our patents will not be determined to be invalid or unenforceable, resulting in unanticipated early generic competition for the affected product. See "Item 3. Legal Proceedings" for a description of pending patent litigation involving Lexapro and Namenda, our principal products.

Our Business Model Currently Depends on the Successful In-Licensing or Acquisition of New Product Opportunities.

                  In order to remain competitive, we must continue to develop and launch new pharmaceutical products. Our pipeline of new products is currently dependent on the licensing and acquisition of new product opportunities. To successfully accomplish these transactions, we commit substantial effort and expense to seeking out, evaluating and negotiating collaboration arrangements and acquisitions. The competition for attractive product opportunities may require us to devote substantial resources to an opportunity with no assurance that such efforts will result in a commercially successful product.

Pharmaceutical Cost-Containment Initiatives May Negatively Affect Our Net Income.

                  The Medicare Prescription Drug Improvement and Modernization Act of 2003 included a prescription drug benefit for Medicare participants. Companies that negotiate prices on behalf of Medicare drug plans will have a significant degree of purchasing power and we expect pricing pressure as a result. In addition, our net income continues to be impacted by cost-containment initiatives adopted by managed care organizations and pharmaceutical benefit managers which negotiate discounted prices from pharmaceutical manufacturers in order to secure placement on formularies adopted by such organizations or their health-plan or employer customers. Failure to be included in such formularies or to achieve favorable formulary status may negatively impact the utilization of our products.

We Face Substantial Competition from Other Pharmaceutical Manufacturers and Generic Product Distributors.

                  Our industry is characterized by significant technological innovation and change. Many of our competitors are conducting research and development activities in therapeutic areas served by our products and our product-development candidates. The introduction of novel therapies as alternatives to our products may negatively impact our revenues or reduce the value of specific product development programs. In addition, generic alternatives to branded products, including alternatives to brands of other manufacturers in therapeutic categories where we market products, may be preferred by doctors, patients or third-party payors.

Our Business, and in Particular the Treatment of CNS Disorders, Presents Risk of Product Liability Claims.

                  As more fully discussed in "Item 3. Legal Proceedings", we are subject to approximately 45 legal actions asserting product liability claims relating to the use of Celexa or Lexapro. These cases include claims for wrongful death from suicide or injury from suicide attempts while using Celexa or Lexapro. We believe that suicide and related events are inherent in the symptoms and consequences of major depressive disorder and therefore these types of occurrences are not unexpected from patients who are being treated for such condition, including patients who may be using our products. While we believe there is no merit to the cases which have been brought against us, litigation is inherently subject to uncertainties and there can be no assurance that we will not be required to expend substantial amounts in the defense or resolution of some of these matters.

The Effective Rate of Taxation upon Our Results of Operations is Dependent on Multi-National Tax Considerations.

                  A portion of our earnings is taxed at more favorable rates applicable to the activities undertaken by our subsidiaries based or incorporated in the Republic of Ireland. Changes in tax laws or in their application or interpretation, such as to the transfer pricing between Forest’s non-U.S. operations and the United States, could increase our effective tax rate and negatively affect our results of operations. Our transfer pricing is the subject of an ongoing audit by the Internal Revenue Service (or IRS). In connection with such audit, the IRS has issued a Revenue Agent Report which seeks to assess approximately $206.7 million of additional corporation income tax with respect to the 2002 and 2003 fiscal years, excluding interest and penalties. We continue to disagree with the IRS position and have filed a formal written protest of the proposed adjustment. If the IRS prevails in a position that increases the U.S. tax liability in excess of established reserves, it is likely that the IRS could make similar claims for years subsequent to fiscal 2003 which could be material. See Note 14 to our Consolidated Financial Statements incorporated by reference herein.

Our Business Could be Negatively Affected by the Performance of Our Collaboration Partners.

                  Our principal products, as well as certain of our principal product development opportunities, involve strategic alliances with other companies. Our alliance partners typically possess significant patents or other technology which are licensed to us and remain significantly involved in product research and development activities and in the exclusive manufacture and supply of active pharmaceutical ingredients upon which our products are based. While some of our collaboration partners are large well-established companies, others are smaller companies, often in the "start-up" stage. A failure or inability of our partners to perform their collaboration obligations could materially negatively affect our operations or business plans. In addition, while our relationships with our strategic partners have been good, differences of opinion upon significant matters arise from time to time. Any such differences of opinion, as well as disputes or conflicting corporate priorities, could be a source of delay or uncertainty as to the expected benefits of the alliance.

Many of Our Principal Products and Active Pharmaceutical Ingredients are Only Available From a Single Manufacturing Source.

                  As described immediately above, many of the proprietary active ingredients in our principal products are available to us only pursuant to contractual supply arrangements with our collaboration partners. In addition, our manufacturing facilities in the Republic of Ireland are the exclusive qualified manufacturing facilities for finished dosage forms of our principal products, including Lexapro and Namenda. While we continue to expand our manufacturing capabilities (see "Item 2. Properties"), difficulties or delays in product manufacture or the inability to locate and qualify third party alternative sources, if necessary, in a timely manner, could lead to shortages or long-term product unavailability, which would adversely affect our operations and results.

ITEM 1B. UNRESOLVED STAFF COMMENTS

                  None.

ITEM 2.  PROPERTIES

                  We own a 372,000 square foot building on 28 acres in Commack, New York. This facility is used for packaging, warehousing, administration and sales training. In addition, we lease a portion of a hotel facility in Hauppauge, New York, for the purpose of housing sales representatives during sales training. We also own a 105,000 square foot facility in Hauppauge, which is used for warehousing, administrative offices and clinical packaging. We lease an additional 57,000 square foot facility in Hauppauge, which is used for our information technology departments.

                  We own buildings of 180,000, 100,000 and 20,000 square feet in Commack, New York, which are or will be part of our research and development complex. The 100,000 and 20,000 square foot facilities are operational; the 180,000 square foot facility (on 11 acres) is currently sub-leased to a tenant through fiscal 2009. We also lease 28,000 square feet in Hauppauge, as well as approximately 59,000 square feet in Farmingdale, New York, both of which facilities are used as laboratory testing facilities.

                  During fiscal 2007, we closed our facilities in Inwood, New York totaling approximately 105,000 square feet which had been used for manufacturing, research and development, warehousing and administration. The buildings and certain machinery and equipment were sold in September 2007.

                  We presently lease approximately 120,000 square feet of executive office space at 909 Third Avenue, New York, New York. The lease expires in 2010.

                  We also lease approximately 203,000 square feet of office space in Jersey City, New Jersey, which is used by certain of our medical, scientific and regulatory personnel. The lease expires in 2017.

                  Forest Pharmaceuticals, Inc. (or FPI), a wholly-owned subsidiary, owns two facilities in Cincinnati, Ohio, aggregating approximately 150,000 square feet used for manufacturing, warehousing and administration. In St. Louis, Missouri, FPI owns a 471,000 square foot facility on 26 acres of land. This facility is being used for warehousing, distribution and administration. FPI also owns a 40,000 square foot facility near its current distribution center, which is being used as offices and a data center.

                  Cerexa, Inc., a wholly-owned subsidiary, leases approximately 25,000 square feet of office space in Alameda, California, which is used by research and administrative personnel. The lease expires in 2009.

                  Forest Laboratories UK, a wholly-owned subsidiary, owns an approximately 95,000 square foot complex in the London suburb of Bexley, England, which is used for manufacturing and administration.

                  Our Tosara subsidiary owns a 33,000 square foot manufacturing and distribution facility located in an industrial park in Dublin, Ireland. Forest Ireland Limited, a wholly-owned subsidiary, owns an approximately 130,000 square foot manufacturing and distribution facility located in Dublin, Ireland. The facility is currently used principally for the manufacture and distribution to the United States of Lexapro and Namenda tablets. Forest Ireland Limited also owns a 90,000 square foot facility in Dublin which will provide complete redundancy for the manufacture of Lexapro and Namenda and additional capacity for future products. This facility commenced limited operations in April 2008.

                  We believe that our current facilities will adequately meet our operating needs for the foreseeable future.

                  Net rentals for leased space for the fiscal year ended March 31, 2008 aggregated approximately $17,694,000 and for the fiscal year ended March 31, 2007 aggregated approximately $16,696,000.

ITEM 3.  LEGAL PROCEEDINGS

                  We remain a defendant in actions filed in various federal district courts alleging certain violations of the federal anti-trust laws in the marketing of pharmaceutical products. In each case, the actions were filed against many pharmaceutical manufacturers and suppliers and allege price discrimination and conspiracy to fix prices in the sale of pharmaceutical products. The actions were brought by various pharmacies (both individually and, with respect to certain claims, as a class action) and seek injunctive relief and monetary damages. The Judicial Panel on Multi-District Litigation ordered these actions coordinated (and, with respect to those actions brought as class actions, consolidated) in the Federal District Court for the Northern District of Illinois (Chicago) under the caption "In re Brand Name Prescription Drugs Antitrust Litigation."

                  On November 30, 1998, the defendants remaining in the consolidated federal class action (which proceeded to trial beginning in September 1998), including Forest, were granted a directed verdict by the trial court after the plaintiffs had concluded their case. In ruling in favor of the defendants, the trial judge held that no reasonable jury could reach a verdict in favor of the plaintiffs and stated "the evidence of conspiracy is meager, and the evidence as to individual defendants paltry or non-existent." The Court of Appeals for the Seventh Circuit subsequently affirmed the granting of the directed verdict in the federal class case in our favor.

                  Following the Seventh Circuit’s affirmation of the directed verdict in our favor, we have secured the voluntary dismissal of the conspiracy allegations contained in all of the federal cases brought by individual plaintiffs who elected to "opt-out" of the federal class action, which cases were included in the coordinated proceedings, as well as the dismissal of similar conspiracy and price discrimination claims pending in various state courts. We remain a defendant, together with other manufacturers, in many of the federal opt-out cases included in the coordinated proceedings to the extent of claims alleging price discrimination in violation of the Robinson-Patman Act. While no discovery or other significant proceedings with respect to us have been taken to date in respect of such claims, there can be no assurance that we will not be required to actively defend such claims or to pay substantial amounts to dispose of such claims. However, by way of a decision dated January 25, 2007, the judge handling the Robinson-Patman Act cases for certain of a smaller group of designated defendants whose claims are being litigated on a test basis, granted summary judgment to those designated defendants due to plaintiffs’ failure to demonstrate any antitrust injury. Subsequently, the Court also granted the designated defendants’ motion for summary judgment with respect to plaintiffs’ effort to obtain injunctive relief. It is likely that the plaintiffs will pursue an appeal of both rulings.

                  We and certain of our officers have been named as defendants in consolidated securities cases brought in the U.S. District Court for the Southern District of New York (or the Court) on behalf of a purported class of all purchasers of our securities between August 15, 2002 and August 31, 2004 or September 1, 2004 and consolidated under the caption "In re Forest Laboratories, Inc. Securities Litigation, 05-CV-2827-RMB." The consolidated complaints, which assert substantially similar claims, allege that the defendants made materially false and misleading statements and omitted to disclose material facts with respect to our business, prospects and operations, in violation of Section 19(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 thereunder. In July 2006, the Court granted in part and denied in part our motion to dismiss. Claims remain pending with respect to alleged marketing statements and omissions with respect to our drugs for the treatment of depression. The complaint seeks unspecified damages and attorneys’ fees. Fact and expert discovery have been completed and a trial date is expected to be set shortly. In addition, our directors and certain of our officers have been named as defendants in two derivative actions purportedly brought on behalf of the company, filed in the same Court and consolidated under the caption "In re Forest Laboratories, Inc. Derivative Litigation, 05-CV-3489 (RJH)." The complaints in these derivative actions allege that the defendants have breached their fiduciary duties by, among other things, causing Forest to misrepresent its financial results and prospects, selling shares of our common stock while in possession of proprietary non-public information concerning our financial condition and future prospects, abusing their control and mismanaging the company and wasting corporate assets. The complaint seeks damages in an unspecified amount and various forms of equitable relief. In September 2006, the Court granted our motion to dismiss this case on the ground that the plaintiffs failed to make a pre-suit demand on our Board of Directors. By stipulation, plaintiffs appeal of this decision to the United States Court of Appeals for the Second Circuit and any other actions in this litigation have been stayed until August 31, 2008.

                  Forest Laboratories, Inc. and Forest Pharmaceuticals, Inc. are named, in one capacity or another, as defendants, along with numerous other manufacturers of pharmaceutical products in various actions which allege that the plaintiffs (all governmental entities) were overcharged for their share of Medicaid drug reimbursement costs as a result of reporting by manufacturers of "average wholesale prices" (or AWP) which did not correspond to actual provider costs of prescription drugs. Actions brought by nearly all of the counties of the State of New York (first action commenced January 14, 2003) and by the State of Iowa (commenced October 9, 2007) are pending in the United States District Court for the District of Massachusetts under the caption "In re Pharmaceutical Industry AWP Litigations" for coordinated treatment. In addition, various state court actions are pending in actions brought by the States of Alabama (commenced January 26, 2005), Alaska (commenced October 6, 2006), Hawaii (commenced April 27, 2006), Idaho (commenced June 8, 2007), Illinois (commenced February 7, 2005) and Mississippi (commenced October 20, 2005), as well as actions brought by the Commonwealth of Kentucky (commenced November 4, 2004) and the State of Utah (commenced in May 2008). Furthermore, state court actions pending in the State Court of New York were brought by three of the New York counties, Erie (commenced March 8, 2005), Schenectady (commenced May 10, 2006) and Oswego (commenced May 11, 2006).

                  Motions to dismiss have been filed with respect to most of the actions. While the motions to dismiss largely have been denied, some claims have been dismissed, including RICO claims brought by various New York counties whose remaining claims are pending in the MDL proceeding in Massachusetts. Discovery is ongoing. As of this date, no trials have been scheduled with respect to Forest, and it is not anticipated that any trial involving Forest will take place before the end of calendar 2009, at the earliest.

                  We are a defendant in an action commenced on December 27, 2004, in the District of Columbia entitled Louisiana Wholesale Drug Company, Inc. and Rochester Drug Cooperative v. Biovail Corporation and Forest Laboratories, Inc. The complaint alleges attempts to monopolize under Section 2 of the Sherman Act with respect to the product Tiazac resulting from Biovail’s January 2001 patent listing in the Food and Drug Administration’s "Orange Book" of Approved Drug Products with Therapeutic Equivalence Evaluations. Biovail withdrew the Orange Book listing of the patent at issue following an April 2002 Consent Order between Biovail and the Federal Trade Commission. Biovail is the owner of the NDA covering Tiazac which we distribute in the United States under license from Biovail. The action, which purports to be brought as a class action on behalf of all persons or entities who purchased Tiazac directly from us from February 12, 2001 to the present, seeks treble damages and related relief arising from the allegedly unlawful acts. By way of a ruling dated March 31, 2005, Judge Robertson granted Biovail’s motion for summary judgment in a related action (Twin Cities v. Biovail) to which we are not a party. The plaintiffs in the Louisiana Wholesale case then amended their complaint to add a conspiracy charge against Biovail and Forest and an allegation that plaintiffs were damaged as a result of a delay by Biovail and Forest in marketing their own generic version of Tiazac. We and Biovail filed a motion for summary judgment and a motion to dismiss directed to the complaint. By way of a decision dated June 22, 2006, Judge Robertson granted defendants’ motion for summary judgment, both with respect to original claims, as well as the newly-added claim asserted by the Louisiana Wholesale plaintiffs. That decision, along with the original Twin Cities decision, is now sub judice before the United States Court of Appeals for the District of Columbia.

                  The United States Attorney’s Office for the District of Massachusetts is investigating whether we may have committed civil or criminal violations of the federal "Anti-Kickback" laws and laws and regulations related to "off-label" promotional activities in connection with our marketing of Celexa, Lexapro and other products. As part of this investigation, we received a subpoena from the Office of Inspector General of the Federal Office of Personnel Management requesting documents relating to Celexa and have subsequently received further subpoenas from the United States Attorney’s Office concerning Lexapro and other products, including Namenda and Combunox. The subpoenas request documents relating to a broad range of our marketing and promotional activities during the period from January 1, 1997 to the present. In April 2006, we received an additional subpoena from the United States Attorney’s Office for the District of Massachusetts requesting documents concerning our manufacture and marketing of Levothroid, our levothyroxine supplement for the treatment of hypothyroidism. We understand that this subpoena was issued in connection with that office’s investigation of potential civil or criminal violation of federal health laws in connection with Levothroid. We are continuing to cooperate with this investigation.

                  We received a subpoena dated January 26, 2006 from the United States Attorney’s Office for the District of Massachusetts requesting documents related to our commercial relationship with Omnicare, Inc. (or Omnicare), a long term care pharmacy provider, including but not limited to documents concerning our contracts with Omnicare, and rebates and other payments made by us to Omnicare. We understand that the subpoena was issued in connection with that office’s investigation of potential criminal violations of federal healthcare laws by Omnicare and potentially others. We are cooperating in this investigation.

                  In September 2007, the United States Court of Appeals for the Federal Circuit upheld the validity of our composition of matter patent covering Lexapro and the decision of the United States District Court for the District of Delaware granting us an injunction preventing Teva from marketing a generic version of Lexapro. In July 2006, we and Lundbeck commenced similar patent infringement litigation against Caraco Pharmaceutical Laboratories, Ltd., who had filed an ANDA with the FDA seeking to market a generic equivalent to Lexapro, in the United States District Court for the Eastern District of Michigan under the caption Forest Laboratories, Inc. et al. v. Caraco Pharmaceutical Laboratories, Ltd. et al. This case was stayed during the pendency of the Federal Circuit appeal in the case against Teva. A status conference is scheduled for June 12, 2008.

                  In February 2007, Caraco filed a single-count declaratory judgment action against us and Lundbeck in the United States District Court for the Eastern District of Michigan for non-infringement of a different patent for Lexapro that is listed in the FDA’s Orange Book. After Forest and Lundbeck granted Caraco an irrevocable covenant not to sue, Chief Judge Freidman dismissed Caraco’s action for lack of subject matter jurisdiction. On April 1, 2008, a three-judge panel of the United States Court of Appeals for the Federal Circuit reversed and remanded Chief Judge Freidman’s decision. We have filed a combined petition for panel rehearing and hearing en banc.

                  Beginning in January 2008, Forest and Merz, our licensor for Namenda, commenced a series of patent infringement lawsuits in the United States District Court for the District of Delaware and other districts, including the United States District Court for the Eastern District of North Carolina, against several companies (including Teva, Mylan and Barr Laboratories, Inc.) who have notified us that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Namenda. These actions are in the early stages and no scheduling order has been entered.

                  On July 14, 2006, we were named as a defendant, together with approximately 20 other pharmaceutical manufacturers and wholesalers in an action brought by RxUSA Wholesale, Inc. in the United States District Court for the Eastern District of New York under the caption RxUSA Wholesale, Inc. v. Alcon Laboratories, et al. The action alleges various antitrust and related claims arising out of an alleged concerted refusal by the defendant manufacturers and wholesalers to sell prescription drugs to plaintiff, a secondary drug wholesaler. Motions to dismiss have been filed by all of the defendants, and those motions are now sub judice before the court.

                  In April 2006, an action was commenced in the United States District Court for the Southern District of New York against us and Lundbeck under the caption Infosint S.A. v. H. Lundbeck A/S, H. Lundbeck Inc. and Forest Laboratories, Inc. In the action, the plaintiff alleges that the importation and sale in the United States of "citalopram products" by Lundbeck and us infringes certain claims of a manufacturing process patent owned by plaintiff. The action seeks injunctive relief as well as damages under U.S. patent laws. We believe that the plaintiff’s claim is without merit. Further, we believe that our license agreements with Lundbeck require Lundbeck to indemnify us from the cost of defending this action and from any associated damages or awards.

                  We have been named in approximately 45 product liability lawsuits that remain active. Most of the lawsuits allege that Celexa or Lexapro caused or contributed to individuals committing or attempting suicide. The suits seek substantial compensatory and punitive damages. We are vigorously defending these suits. A multi-district proceeding (or MDL) has been established for this litigation, with the federal court cases being transferred to Judge Rodney Sippel in the United States District Court for the Eastern District of Missouri.

                  We expect the MDL will ease the burden of defending these cases. While litigation is inherently subject to uncertainty and accordingly we cannot predict or determine the outcome of this litigation, we believe there is no merit to these actions and that the consolidated proceedings will promote the economical and efficient resolution of these lawsuits and provide us with a meaningful opportunity to vindicate our products. We currently maintain $140 million of product liability coverage per "occurrence" and in the aggregate.

                  We received two subpoenas dated April 27, 2007 from the Office of the Attorney General of the State of Delaware requesting documents relating to our use of the "nominal price" exception to the Medicaid program’s "Best Price" rules.  We understand that comparable subpoenas have been or will be issued to other pharmaceutical manufacturers as part of that office’s investigation of the use of the "nominal price" exception. We are complying with the subpoenas.

                  We are also subject to various legal proceedings that arise from time to time in the ordinary course of our business. Although we believe that the proceedings brought against us, including the product liability cases described above, are without merit and we have product liability and other insurance, litigation is subject to many factors which are difficult to predict and there can be no assurance that we will not incur material costs in the resolution of these matters.

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE
                   OF SECURITY HOLDERS                            

                  Not Applicable.

PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON
                   EQUITY, RELATED STOCKHOLDER
                   MATTERS AND ISSUER PURCHASES OF
                   EQUITY SECURITIES                                                                                                

Market Information, Holders and Performance Graph

                  The information required by this item is incorporated by reference to the information under the heading Stock Market Data in our Annual Report.

Dividends

                  We have never paid cash dividends on our common stock. We presently intend to retain all available funds for the development of our business, for use as working capital and for the share repurchase programs. Future dividend policy will depend upon our earnings, capital requirements, financial condition and other relevant factors.

Issuer Repurchases of Equity Securities

                  In July 2004, our Board of Directors approved the repurchase of up to 20 million shares of our outstanding Common Stock (or 2005 Repurchase Program) which was increased to 30 million shares in December 2004. Under the 2005 Repurchase Program we repurchased the shares from time-to-time at prevailing prices and as permitted by applicable securities laws (including SEC Rule 10b-18) and New York Stock Exchange requirements, and subject to market conditions. As of May 11, 2005, all shares authorized for repurchase under the 2005 Repurchase Program have been purchased.

                  On May 10, 2005 our Board of Directors authorized a share repurchase program (or 2006 Repurchase Program) for up to 25 million shares of our common stock. Under the 2006 Repurchase Program, we repurchased the shares from time to time on the open market at prevailing prices and as permitted by applicable securities laws (including SEC Rule 10b-18) and New York Stock Exchange requirements. As of February 27, 2006, all shares authorized for repurchase under the 2006 Repurchase Program have been purchased.

                  On May 18, 2006 our Board of Directors authorized a new share repurchase program (or 2007 Repurchase Program) for up to 25 million shares of our common stock. On August 13, 2007 the Board authorized the purchase of an additional 10 million shares of common stock. The authorizations became effective immediately and have no set expiration dates. We expect to make the repurchases from time to time on the open market, depending on market conditions and as permitted by applicable securities laws (including SEC Rule 10b-18) and New York Stock Exchange requirements. As of May 29, 2008, 25,843,600 shares have been repurchased and we continue to have authority to purchase up to an additional 9,156,400 shares under the 2007 Repurchase Program.

ITEM 6.     SELECTED FINANCIAL DATA

                  The information required by this item is incorporated by reference to the information under the heading Selected Financial Data in our Annual Report.

ITEM 7.    MANAGEMENT'S DISCUSSION AND
                    ANALYSIS OF FINANCIAL CONDITION
                    AND RESULTS OF OPERATIONS              

                  The information required by this item is incorporated by reference to the information under the heading Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE
                    DISCLOSURES ABOUT MARKET RISK

                  The information required by this item is incorporated by reference to the information under the heading Quantitative and Qualitative Disclosures About Market Risk in our Annual Report.

ITEM 8.    FINANCIAL STATEMENTS AND
                    SUPPLEMENTARY DATA              

                  The information required by this item is incorporated by reference to from the Consolidated Financial Statements and Notes to Consolidated Financial Statements and the related Reports of Independent Registered Public Accounting Firm in our Annual Report.

ITEM 9.    CHANGES IN AND DISAGREEMENTS
                    WITH ACCOUNTANTS ON ACCOUNTING
                    AND FINANCIAL DISCLOSURE                   

                   Not Applicable.

ITEM 9A. CONTROLS AND PROCEDURES

                   Disclosure Controls

                  As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (or Exchange Act)). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective.

                   Internal Control Over Financial Reporting

                  Management's report on internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act), and the related report of our independent registered public accounting firm, are included in our Annual Report under the headings Management's Report on Internal Control Over Financial Reporting and Reports of Independent Registered Public Accounting Firm, respectively, and are incorporated by reference.

                   Changes in Internal Control Over Financial Reporting

                  During our most recent fiscal quarter, there has not occurred any change 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) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

                   None.

PART III

                  In accordance with General Instruction G(3), and except for certain of the information called for by Items 10 and 12 which is set forth below, the information called for by Items 10 through 14 of Part III is incorporated by reference from Forest's definitive proxy statement to be filed pursuant to Regulation 14A promulgated under the Securities Exchange Act of 1934 in connection with Forest's 2008 Annual Meeting of Stockholders.

ITEM 10.  DIRECTORS AND OFFICERS OF THE REGISTRANT

                   Code of Ethics

                  We have adopted a written code of business conduct and ethics that applies to our Chief Executive Officer, Chief Financial Officer and all of our officers and employees and can be found on our website, which is located at www.frx.com under the "Investors" link. We will also provide a copy of our code of ethics to any person without charge upon his or her request. Any such request should be directed to our Corporate Secretary at 909 Third Avenue, New York, New York 10022. We intend to make all required disclosures concerning any amendments to or waivers from our code of business conduct and ethics on our website. 

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                    MANAGEMENT AND RELATED STOCKHOLDER MATTERS            

                  The following sets forth certain information as of March 31, 2008 with respect to our compensation plans under which Forest securities may be issued:

                  Equity Compensation Plan Information

Plan category	Number of securities to be issued upon exercise of outstanding options	Weighted-average exercise price of outstanding options	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in first column)
Equity compensation plans approved by security holders	19,293,850	$40.38	10,368,325
Equity compensation plans not approved by security holders		N/A
Total	19,293,850	$40.38	10,368,325

PART IV

ITEM 15.
	(a)		1.	Financial statements. The following consolidated financial statements of Forest Laboratories, Inc. and Subsidiaries included in the Annual Report are incorporated by reference herein in Item 8:
					Management's report on internal control over financial reporting
					Reports of Independent Registered Public Accounting Firm
					Consolidated balance sheets – March 31, 2008 and 2007
					Consolidated statements of income – years ended March 31, 2008, 2007 and 2006
					Consolidated statements of comprehensive income – years ended March 31, 2008, 2007 and 2006
					Consolidated statements of stockholders' equity – years ended March 31, 2008, 2007 and 2006
					Consolidated statements of cash flows – years ended March 31, 2008, 2007 and 2006
					Notes to consolidated financial statements
			2.	Financial statement schedules. The following consolidated financial statement schedules of Forest Laboratories, Inc. and Subsidiaries are included herein:
Report of Independent Registered Public Accounting Firm							S-1
Schedule II						Valuation and Qualifying Accounts	S-2
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
	3.			Exhibits:
	(3)(a)			Articles of Incorporation of Forest, as amended. Incorporated by reference from the Current Report on Form 8-K dated March 9, 1981 filed by Forest, from Registration Statement on Form S-1 (Registration No. 2-97792) filed by Forest on May 16, 1985, from Forest's definitive proxy statement filed pursuant to Regulation 14A with respect to Forest's 1987, 1988 and 1993 Annual Meetings of Stockholders and from the Current Report on Form 8-K dated March 15, 1988.
	(3)(b)			By-laws of Forest. Incorporated by reference to Forest's Current Report on Form 8-K dated October 11, 1994.
	(10)			Material Contracts
		10.1		Benefit Continuation Agreement dated as of December 1, 1989 between Forest and Howard Solomon. Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 1990 (or 1990 l0-K).
		10.2		Benefit Continuation Agreement dated as of May 27, 1990 between Forest and Kenneth E. Goodman. Incorporated by reference to the 1990 10-K.
		10.3		Employment Agreement dated as of September 30, 1994 by and between Forest and Howard Solomon. Incorporated by reference to Forest’s Annual Report on Form 10-K for the fiscal year ended March 31, 1995.
		10.4		Employment Agreement dated June 24, 1997 between Forest and Elaine Hochberg. Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 1998.
		10.5		Employment Agreement dated November 22, 2000 between Forest and Charles E. Triano. Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 2001.
		10.6		Letter Agreement dated as of September 6, 2004 between Forest and Francis I. Perier, Jr. Incorporated by reference to Forest's Current Report on Form 8-K dated September 30, 2004 (or September 30, 2004 8-K).
		10.7		Employment Agreement dated as of October 5, 2004 between Forest and Francis I. Perier, Jr. Incorporated by reference to September 30, 2004 8-K.
		10.8		Letter Agreement dated as of January 30, 2006 between Forest and Herschel S. Weinstein. Incorporated by reference to Forest’s Annual Report on Form 10-K for the fiscal year ended March 31, 2006 (or 2006 10-K).
		10.9		Employment Agreement dated as of January 30, 2006 between Forest and Herschel S. Weinstein. Incorporated by reference to the 2006 10-K.
		10.10		Letter Agreement dated September 5, 2006 between Forest and Dr. Lawrence S. Olanoff. Incorporated by reference to Forest’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2006 (or September 30, 2006 10-Q).
		10.11		Employment Agreement dated September 5, 2006 between Forest and Dr. Lawrence S. Olanoff. Incorporated by reference to the September 30, 2006 10-Q.
		10.12		Separation Agreement and General Release dated February 11, 2008 by and between Dr. Ivan Gergel and Forest Laboratories, Inc.
		10.13		1998 Stock Option Plan of Forest Laboratories, Inc. Incorporated by reference to Forest's Proxy Statement for the fiscal year ended March 31, 1998.
		10.14		2000 Stock Option Plan of Forest Laboratories, Inc. Incorporated by reference to Forest's Proxy Statement for the fiscal year ended March 31, 2000.
		10.15		2004 Stock Option Plan of Forest Laboratories, Inc. Incorporated by reference to Forest's Proxy Statement for the fiscal year ended March 31, 2004.
		10.16		2007 Equity Incentive Plan of Forest Laboratories, Inc. Incorporated by reference to Forest’s Proxy Statement for the fiscal year ended March 31, 2007.
		10.17		Form of Director Restricted Stock Agreement under the 2007 Equity Incentive Plan of Forest Laboratories, Inc. Incorporated by reference to Forest’s Form S-8 on Registration Statement No. 333-145415, dated August 13, 2007.
		10.18		Form of Director Stock Option Agreement under the 2007 Equity Incentive Plan of Forest Laboratories, Inc. Incorporated by reference to Forest’s Quarterly Report on Form 10-Q for the Quarter ended September 30, 2007 (or September 30, 2007 10-Q).
		10.19		Form of Employee Restricted Stock Agreement (Time-Based) under the 2007 Equity Incentive Plan of Forest Laboratories, Inc.
		10.20		Form of Employee Stock Option Agreement under the 2007 Equity Incentive Plan of Forest Laboratories, Inc. Incorporated by reference to September 30, 2007 10-Q.
		10.21		Co-Promotion Agreement dated December 10, 2001 by and between Sankyo Pharma Inc. and Forest Laboratories, Inc. Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 2002 (or 2002 10-K).
		10.22		S-Enantiomer License Agreement dated May 29, 2002 by and between Forest Laboratories Ireland Limited and H. Lundbeck A/S. Incorporated by reference to the 2002 10-K.
		10.23		S-Enantiomer Supply Agreement dated May 29, 2002 by and between Forest Laboratories Ireland Limited and H. Lundbeck A/S. Incorporated by reference to the 2002 10-K.
		10.24		License and Cooperation Agreement dated June 28, 2000 by and between Merz & Co. GmbH and Forest Laboratories Ireland Limited. Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 2004.
		10.25		Settlement Agreement by and between Forest Laboratories, Inc., Forest Laboratories Holdings Limited and H. Lundbeck A/S and Alphapharm Pty Ltd. effective October 3, 2005. Incorporated by reference to Forest’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2005.
		10.26		Agreement and Plan of Merger dated December 13, 2006 by and among Forest Laboratories, Inc., FL Acquisition Corp., Cerexa, Inc. and Dennis Podlesak and Eckard Weber, M.D., as Shareholders’ Agents. Incorporated by reference to Forest’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2006.
		10.27		Nebivolol Development and Commercialization Agreement by and between Forest Laboratories Holdings Limited and Mylan Inc. dated as of January 6, 2006.
		10.28		Amendment Agreement, dated as of February 27, 2008, by and between Forest Laboratories Holdings Limited and Mylan Inc. to that certain Nebivolol Development and Commercialization Agreement dated as of January 6, 2006.
		10.29		Credit Agreement, dated December 7, 2007, by and among Forest Laboratories, Inc., Forest Laboratories Holdings Limited, Forest Laboratories Ireland Limited, Forest Finance B.V., Forest Laboratories UK Limited, the lenders party thereto, and JPMorgan Chase Bank, N.A. Incorporated by reference to Forest’s Current Report on Form 8-K dated December 7, 2007.
		13		Portions of the Registrant's 2008 Annual Report to Stockholders.
		21		List of Subsidiaries.  Incorporated by reference to Forest's Annual Report on Form 10-K for the fiscal year ended March 31, 2007.
		23		Consent of Independent Registered Public Accounting Firm.
		31.1		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		31.2		Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		32.1		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
		32.2		Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

                  Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange Act of 1934, Forest has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: May 30, 2008

                  Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of Forest and in the capacities and on the dates indicated.

PRINCIPAL EXECUTIVE OFFICERS:
/s/ Howard Solomon           Howard Solomon	Chairman of the Board, Chief Executive Officer and Director	May 30, 2008
/s/ Lawrence S. Olanoff          Lawrence S. Olanoff	President, Chief Operating Officer and Director	May 30, 2008
PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER:
/s/ Francis I. Perier, Jr.           Francis I. Perier, Jr.	Senior Vice President - Finance and Chief Financial Officer	May 30, 2008
DIRECTORS:
/s/ Nesli Basgoz           Nesli Basgoz	Director	May 30, 2008
/s/ William J. Candee, III           William J. Candee, III	Director	May 30, 2008
/s/ George S. Cohan           George S. Cohan	Director	May 30, 2008
/s/ Dan L. Goldwasser           Dan L. Goldwasser	Director	May 30, 2008
/s/ Kenneth E. Goodman           Kenneth E. Goodman	Director	May 30, 2008
/s/ Lester B. Salans           Lester B. Salans	Director	May 30, 2008

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors and Stockholders
Forest Laboratories, Inc.


The audits referred to in our report dated May 28, 2008 relating to the consolidated financial statements of Forest Laboratories Inc. and Subsidiaries, which is contained in Item 8 of this Form 10-K, included the audit of the financial statement schedule listed in the accompanying index. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statement schedule based on our audits.

In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.


 /s/ BDO Seidman, LLP 
BDO Seidman, LLP


New York, New York
May 28, 2008

S-1

				SCHEDULE II
FOREST LABORATORIES, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS
Column A	Column B	Column C	Column D		Column E
Description	Balance at beginning of period	Additions	Deductions		Balance at end of period
Year ended March 31, 2008:
Allowance for doubtful accounts	$20,033,000	$     906,000	$  1,057,000	(i)	$19,882,000
Allowance for cash discounts	11,237,000	84,722,000	84,144,000	(ii)	11,815,000
Inventory reserve	22,165,000	5,100,000	8,495,000	(i)	18,770,000
Year ended March 31, 2007:
Allowance for doubtful accounts	$18,941,000	$  1,280,000	$     188,000	(i)	$20,033,000
Allowance for cash discounts	11,157,000	77,316,000	77,236,000	(ii)	11,237,000
Inventory reserve	12,004,000	11,536,000	1,375,000	(i)	22,165,000
Year ended March 31, 2006:
Allowance for doubtful accounts	$20,773,000	$       45,000	$   1,877,000	(i)	$18,941,000
Allowance for cash discounts	13,890,000	65,396,000	68,129,000	(ii)	11,157,000
Inventory reserve	12,278,000	1,963,000	2,237,000	(i)	12,004,000
(i)  Represents actual amounts written off.
(ii) Represents cash discounts given.

S-2

FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2008, 2007 AND 2006

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed 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 in the United States of America. Our internal control over financial reporting includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of March 31, 2008. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment and those criteria, management believes that we maintained effective internal control over financial reporting as of March 31, 2008.

Our independent registered public accounting firm has issued an attestation report on management's assessment of our internal control over financial reporting which is included herein.

/s/ Howard Solomon    
Howard Solomon
Chairman and
Chief Executive Officer

/s/ Francis I. Perier, Jr.    
Francis I. Perier, Jr.
Senior Vice President-Finance and
Chief Financial Officer

May 30, 2008

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Forest Laboratories, Inc.
New York, New York

We have audited Forest Laboratories, Inc. and Subsidiaries internal control over financial reporting as of March 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Forest Laboratories, Inc. and Subsidiaries’ management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, "Internal Control Over Financial Reporting". Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed 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. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Forest Laboratories, Inc. and Subsidiaries maintained in all material respects, effective internal control over financial reporting as of March 31, 2008, based on the COSO criteria.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Forest Laboratories, Inc. and Subsidiaries as of March 31, 2008 and March 31, 2007 and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 2008, and our report dated May 28, 2008 expressed an unqualified opinion thereon.

 /s/ BDO Seidman, LLP 
BDO Seidman, LLP

New York, New York
May 28, 2008

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Forest Laboratories, Inc.
New York, New York

We have audited the accompanying consolidated balance sheets of Forest Laboratories, Inc. and Subsidiaries as of March 31, 2008 and 2007, and the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended March 31, 2008. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Forest Laboratories, Inc. and Subsidiaries at March 31, 2008 and 2007, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2008 in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 1 to the consolidated financial statements, effective April 1, 2007 Forest Laboratories, Inc. and Subsidiaries adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109".

As discussed in Note 1 to the consolidated financial statements, in 2007 Forest Laboratories, Inc. and Subsidiaries changed its method of accounting for stock-based compensation in accordance with Statement of Financial Accounting Standards No. 123(R), "Share-Based Payment".

We also have audited, in accordance with standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Forest Laboratories, Inc. and Subsidiaries' internal control over financial reporting as of March 31, 2008, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated May 28, 2008 expressed an unqualified opinion thereon.

 /s/ BDO Seidman, LLP 
BDO Seidman, LLP

New York, New York
May 28, 2008

FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

	MARCH 31,
	2008	2007
Assets
Current assets:
Cash (including cash equivalent investments of         $833,018 in 2008 and $556,586 in 2007)	$  833,052	$   563,663
Marketable securities	943,972	788,951
Accounts receivable, less allowance for doubtful         accounts of $19,882 in 2008 and $20,033 in 2007	445,987	382,655
Inventories, net	425,138	434,163
Deferred income taxes	226,095	226,433
Other current assets	33,260	26,852
Total current assets	2,907,504	2,422,717
Marketable securities	663,625	660,392
Property, plant and equipment:
Land and buildings	309,474	301,040
Machinery, equipment and other	257,857	231,821
	567,331	532,861
Less: accumulated depreciation	217,294	171,775
	350,037	361,086
Other assets:
Goodwill	14,965	14,965
License agreements, product rights and
other intangibles, net	527,787	157,049
Deferred income taxes	59,778	27,681
Other	1,671	9,482
	604,201	209,177
	$4,525,367	$3,653,372
	========	========

See accompanying notes to consolidated financial statements.

FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except for par values)

	MARCH 31,
	2008	2007
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$   223,720	$   154,614
Accrued expenses	387,105	332,995
Income taxes payable		139,999
Total current liabilities	610,825	627,608
Long-term liabilities:
Income tax liabilities	198,410
Deferred income taxes	815	951
	199,225	951
Commitments and contingencies
Stockholders' equity:
Series preferred stock, $1.00 par; shares authorized 1,000;         no shares issued or outstanding
Common stock $.10 par; shares authorized         1,000,000; issued 421,421 shares in 2008 and         420,695 shares in 2007	42,142	42,069
Additional paid-in capital	1,434,172	1,354,264
Retained earnings	5,611,493	4,657,356
Accumulated other comprehensive income	34,592	21,879
Treasury stock, at cost         (110,014 shares in 2008 and 101,143 shares in 2007)	(  3,407,082)	(  3,050,755)
	3,715,317	3,024,813
	$4,525,367	$3,653,372
	========	========

See accompanying notes to consolidated financial statements.

FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)

	YEARS ENDED MARCH 31,
		2008	2007	2006
Net sales		$3,501,802	$3,183,324	$2,793,934
Contract revenue		216,500	176,943	118,170
Interest income		108,680	80,200	50,286
Other income		9,347	1,318
		3,836,329	3,441,785	2,962,390
Costs and expenses:
Cost of sales		800,114	745,602	650,996
Selling, general and administrative		1,154,845	1,046,336	1,031,451
Research and development		670,973	941,003	410,431
		2,625,932	2,732,941	2,092,878
Income before income tax expense		1,210,397	708,844	869,512
Income tax expense		242,464	254,741	160,998
Net income		$   967,933	$   454,103	$   708,514
		========	========	========
Net income per share:
Basic		$3.08	$1.43	$2.11
		====	====	====
Diluted		$3.06	$1.41	$2.08
		====	====	====
Weighted average number of common
shares outstanding:
Basic		314,660	318,539	335,912
		======	======	======
Diluted		316,133	322,781	340,321
		======	======	======

See accompanying notes to consolidated financial statements.

FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)

		YEARS ENDED MARCH 31,
	2008		2007	2006
Net income	$967,933		$454,103	$708,514
Other comprehensive income (loss):
Foreign currency translation gains (losses)	25,815		13,753	(      8,909)
Unrealized gains (losses) on securities:
Unrealized holding (loss) gain arising
during the period, net of tax	(     13,102)		1,364	6,643
Other comprehensive income (loss)	12,713		15,117	(      2,266)
Comprehensive income	$980,646		$469,220	$706,248
	=======		=======	=======

See accompanying notes to consolidated financial statements.

FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 2008, 2007 AND 2006

(In thousands)

	Common stock		Additional paid-in	Retained	Accumulated    other           comprehensive	Treasury stock
	Shares	Amount	capital	earnings	income (loss)	Shares	Amount
Balance, March 31, 2005	407,234	$40,723	$893,864	$3,494,739	$9,028	59,591	$1,305,969
Shares issued upon exercise of stock
options	4,890	489	83,234
Treasury stock acquired from employees
upon exercise of stock options						123	5,057
Purchase of treasury stock						31,070	1,265,471
Tax benefit related to stock options
exercised by employees			45,981
Other comprehensive loss					(    2,266)
Net income				708,514
Balance, March 31, 2006	412,124	41,212	1,023,079	4,203,253	6,762	90,784	2,576,497
Shares issued upon exercise of stock	8,571	857	212,043
options
Treasury stock acquired from employees
upon exercise of stock options						44	1,979
Purchase of treasury stock						10,315	472,279
Tax benefit related to stock options
exercised by employees			78,372
Stock-based compensation			40,770
Other comprehensive income					15,117
Net income				454,103
Balance, March 31, 2007	420,695	42,069	1,354,264	4,657,356	21,879	101,143	3,050,755
Adoption of new accounting standard				(     13,796)
Shares issued upon exercise of stock
options and vesting of restricted stock	726	73	26,582
Purchase of treasury stock						8,871	356,327
Tax benefit related to stock options
exercised by employees			11,069
Stock-based compensation			42,257
Other comprehensive income					12,713
Net income				967,933
Balance, March 31, 2008	421,421	$42,142	$1,434,172	$5,611,493	$34,592	110,014	$3,407,082
	======	======	========	========	======	======	========

See accompanying notes to consolidated financial statements.

FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

		YEARS ENDED MARCH 31,
	2008		2007	2006
Cash flows from operating activities:
Net income	$   967,933		$    454,103	$   708,514
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation	47,101		45,444	40,712
Amortization, impairments and write-offs	44,646		55,699	52,385
Stock-based compensation expense	42,257		40,770
Deferred income tax benefit	(       22,581)		(       84,919)	(       33,034)
Foreign currency transaction (gain) loss	(         2,051)		(            779)	727
Net change in operating assets and liabilities:
Decrease (increase) in:
Accounts receivable, net	(      63,332)		(       16,117)	(       43,409)
Inventories, net	9,025		201,556	(       21,816)
Other current assets	(        6,408)		(         6,690)	(              13)
Other assets	7,811		(         8,225)	2
Increase (decrease) in:
Accounts payable	69,106		13,703	(       87,105)
Accrued expenses	54,110		90,205	(       15,122)
Income tax liabilities	44,615		102,733	(       40,496)
Net cash provided by operating activities	1,192,232		887,483	561,345
Cash flows from investing activities:
Purchase of property, plant and equipment	(       34,888)		(       29,987)	(       55,017)
Purchase of marketable securities	(  3,141,953)		(  2,559,653)	(     826,543)
Redemption of marketable securities	2,983,699		2,018,325	1,100,855
Purchase of license agreements, product
rights and other intangibles	(     415,000)			(         1,397)
Net cash provided by (used in) investing
activities	(     608,142)		(     571,315)	217,898
Cash flows from financing activities:
Net proceeds from common stock options
exercised by employees under stock option plans	26,655		210,920	78,666
Tax benefit realized from the exercise of stock
options by employees	1,755		80,225	35,311
Purchase of treasury stock	(     356,327)		(     472,279)	(  1,265,471)
Net cash used in financing
activities	(     327,917)		(     181,134)	(  1,151,494)
Effect of exchange rate changes on cash	13,216		14,050	(         1,723)
Increase (decrease) in cash and cash equivalents	269,389		149,084	(     373,974)
Cash and cash equivalents, beginning of year	563,663		414,579	788,553
Cash and cash equivalents, end of year	$   833,052		$    563,663	$   414,579
	========		=========	========

See accompanying notes to consolidated financial statements.

FOREST LABORATORIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

	YEARS ENDED MARCH 31,
	2008	2007	2006
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Income taxes	$226,022	$135,555	$199,560
	=======	=======	=======

See accompanying notes to consolidated financial statements.

FOREST LABORATORIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Summary of significant accounting policies (In thousands, except for estimated useful lives which are stated in years):

Basis of consolidation: The consolidated financial statements include the accounts of Forest Laboratories, Inc. (or the Company) and its subsidiaries, all of which are wholly-owned. All significant intercompany accounts and transactions have been eliminated.

Estimates and assumptions: The preparation of financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and of revenues and expenses during the reporting period. Estimates are made when accounting for sales allowances, returns, rebates and other pricing adjustments, depreciation, amortization, tax assets and liabilities and certain contingencies. The Company is subject to risks and uncertainties, which may include but are not limited to competition, federal or local legislation and regulations, litigation and overall changes in the healthcare environment that may cause actual results to vary from estimates. The Company reviews all significant estimates affecting the financial statements on a recurring basis and records the effect of any adjustments when necessary.

Foreign currency translation: A European subsidiary group of the Company reports its financial position and results of operations in the reporting currency of the Company. The financial position and results of operations of the Company's other foreign subsidiaries, which in the aggregate are immaterial, are determined using the respective local currency.

Cash equivalents: Cash equivalents consist of short-term, highly liquid investments purchased with original maturities of three months or less and are readily convertible into cash at par value (cost).

Inventories: Inventories are stated at the lower of cost or market, with cost determined on the first-in, first-out basis.

Pre-launch inventories: The Company may scale-up and make commercial quantities of certain of its product candidates prior to the date it anticipates that such products will receive final FDA approval. The scale-up and commercial production of pre-launch inventories involves the risk that such products may not be approved for marketing by the FDA on a timely basis, or ever. This risk notwithstanding, the Company plans to continue to scale-up and build pre-launch inventories of certain products that have not yet received final governmental approval when the Company believes that such action is appropriate in relation to the commercial value of the product launch opportunity. As of fiscal years ended March 31, 2008 and 2007, the Company had no such pre-launch inventory quantities.

Marketable securities: Marketable securities, which are all accounted for as available-for-sale, are stated at fair value based on quoted market prices in accordance with Statement of Financial Accounting Standards No. 115, "Accounting for Certain Investments in Debt and Equity Securities", and consist of high quality investments.

Accounts receivable and credit policies: The carrying amount of accounts receivable is reduced by a valuation allowance that reflects management's best estimate of the amounts that will not be collected. In addition to reviewing delinquent accounts receivable, management considers many factors in estimating its general allowance, including historical data, experience, customer types, credit worthiness and economic trends. From time to time, management may adjust its assumptions for anticipated changes in any of those or other factors expected to affect collectability.

Property, plant and equipment and depreciation: Property, plant and equipment are stated at cost. Depreciation is provided primarily by the straight-line method over the following estimated useful lives:

	Years
Buildings and improvements	10-50
Machinery, equipment and other	3-10

Leasehold improvements are depreciated over the lesser of the useful life of the assets or the lease term. Included in property, plant and equipment in fiscal 2008 is construction in progress of $40,017 for facility expansions at various locations necessary to support the Company’s current and future operations. Projects currently in-process or under evaluation are estimated to cost approximately $10,000 to complete.

Goodwill and other intangible assets: The Company has made acquisitions in the past that include goodwill, license agreements, product rights and other intangibles. Goodwill is not amortized but is subject to an annual impairment test based on its estimated fair value. License agreements, product rights and other intangibles are amortized over their useful lives and are tested periodically to determine if they are recoverable from future cash flows on an undiscounted basis over their remaining useful lives.

Revenue recognition: Revenues are recorded in the period the merchandise is shipped. As is typical in the pharmaceutical industry, gross product sales are subject to a variety of deductions, primarily representing rebates and discounts to government agencies, wholesalers and managed care organizations. These deductions represent estimates of the related liabilities and, as such, judgment is required when estimating the impact of these sales deductions on gross sales for a reporting period. If estimates are not representative of actual future settlement, results could be materially affected. Provisions for estimated sales allowances, returns, rebates and other pricing adjustments are accrued at the time revenues are recognized as a direct reduction of such revenue.

The accruals are estimated based on available information, including third party data, regarding the portion of sales on which rebates and discounts can be earned, adjusted as appropriate for specific known events and the prevailing contractual discount rate. Provisions are reflected either as a direct reduction to accounts receivable or, to the extent that they are due to entities other than customers, as accrued expense. Adjustments to estimates are recorded when customer credits are issued or payments are made to third parties.

Deductions for chargebacks (primarily discounts to group purchasing organizations and federal government agencies) closely approximate actual as these deductions are settled generally within 2-3 weeks of incurring the liability.

Sales incentives are generally given in connection with a new product launch. These sales incentives are recorded as a reduction of revenues and are based on terms fixed at the time goods are shipped. New product launches may result in expected temporary increases in wholesaler inventories, which are closely monitored and historically have not resulted in increased product returns.

Shipping and handling costs: Presently, the Company does not charge its customers for any freight costs. The amounts of such costs are included in selling, general and administrative expenses and are not material.

Research and development: Expenditures for research and development, including licensing fees and milestone payments (or License Payments) associated with development products that have not yet been approved by the FDA, are charged to expense as incurred. Once a product receives approval, subsequent License Payments are recorded as an asset and classified as License agreements, product rights and other intangibles, net.

Savings and profit sharing plan: Substantially all non-bargaining unit employees of the Company's domestic subsidiaries may participate in the savings and profit sharing plan after becoming eligible (as defined). Profit sharing contributions are primarily at the discretion of the Company. The savings plan contributions include a matching contribution made by the Company. Savings and profit sharing contributions amounted to approximately $32,100, $29,500 and $28,200 for fiscal 2008, 2007 and 2006, respectively.

Earnings per share: Basic earnings per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflect, in periods in which they have a dilutive effect, the effect of common shares issuable upon exercise of stock options and restricted stock. The weighted average number of diluted common shares outstanding is reduced by the treasury stock method which, in accordance with Statement of Financial Accounting Standards No. 123(R), "Share-Based Payment", takes into consideration the compensation cost attributed to future services not yet recognized.

Accumulated other comprehensive income: Other comprehensive income (loss) refers to revenues, expenses, gains and losses that under generally accepted accounting principles are excluded from net income as these amounts are recorded directly as an adjustment to stockholders' equity. Accumulated other comprehensive income is comprised of the cumulative effects of foreign currency translation and unrealized gains (losses) on securities which amounted to approximately $47,780 and ($13,188) at March 31, 2008 and $21,965 and ($86) at March 31, 2007, respectively.

Income taxes: The Company accounts for income taxes using the liability method. Under the liability method, deferred income taxes are provided on the differences in bases of assets and liabilities between financial reporting and tax returns using enacted tax rates.

Effective April 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board (or FASB) Interpretation No. 48 (or FIN 48), "Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109". Pursuant to FIN 48, the Company must recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate resolution. See Note 14 for further discussion of the impact of adopting FIN 48.

Long-lived assets: Long-lived assets, such as intangible assets, property and equipment and certain sundry assets, are evaluated for impairment periodically or when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable through the estimated undiscounted future cash flows from the use of these assets. When any such impairment exists, the related assets will be written down to fair value.

Fair value of financial instruments: The carrying amounts of cash, accounts receivable, accounts payable, accrued expenses and income taxes payable are reasonable estimates of their fair value because of the maturity of these items.

Stock-based compensation: Effective April 1, 2006, the Company adopted the provisions of Statement of Financial Accounting Standards No. 123(R), "Share-Based Payment" (or SFAS 123R). The Board of Directors awards stock options and restricted stock to employees and non-employee directors. The fair value for stock options is calculated using the Black-Scholes valuation model and restricted stock is accounted for at fair value based upon the average high and low stock price on the date of grant. These compensation costs are amortized on an even basis (net of estimated forfeitures) over the requisite service period. The Company previously accounted for its stock option awards to employees under the intrinsic value based method of accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees". Under the intrinsic value based method, compensation cost is the excess, if any, of the quoted market price of the stock at grant date or other measurement date over the amount an employee must pay to acquire the stock. The Company has never granted options below market price on the date of grant.

In fiscal 2007, the Company elected to adopt the modified prospective application method provided by SFAS 123R, and accordingly, compensation expense of $42,257 ($35,423 net of tax) and $40,770 ($34,229 net of tax) was recorded for the years ended March 31, 2008 and March 31, 2007, respectively, to cost of sales, selling, general and administrative and research and development expense, as appropriate, while the pro forma schedule required for SFAS 123 below shows the compensation expense for the year ended March 31, 2006. Total compensation cost related to non-vested stock based awards not yet recognized as of March 31, 2008 was $96,368 pre-tax and the weighted-average period over which the cost is expected to be recognized is approximately 3.1 years. Amounts capitalized as part of inventory costs were not significant.

Under the accounting provisions of SFAS 123R, the Company's prior period net income and net income per share would have been reduced to the pro forma amounts indicated below:

Year ended March 31, (In thousands, except per share data)	2006
Net income:
As reported	$708,514
Deduct: Total stock-based employee compensation expense
determined under fair value method, net of tax	(   35,631)
Pro forma	$672,883
	=======
Net income per common share:
Basic:
As reported	$2.11
Pro forma	$2.00
Diluted:
As reported	$2.08
Pro forma	$1.98

The following weighted-average assumptions were used in determining the fair values of stock options using the Black-Scholes model:

Years ended March 31,	2008	2007	2006
Expected dividend yield	0%	0%	0%
Expected stock price volatility	31.15%	29.63%	27.86%
Risk-free interest rate	4.2%	4.8%	4.3%
Expected life of options (years)	6	5	5

The Company has never declared a cash dividend. The expected stock price volatility is based on implied volatilities from traded options on the Company’s stock as well as historical volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant in conjunction with considering the expected life of options. The expected life is based on vesting and represents the period of time that granted options are expected to be outstanding.

Recent accounting standards: In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities - An Amendment of FASB Statement No. 133" (or SFAS 161). This statement revises the requirements for the disclosure of derivative instruments and hedging activities that include the reasons a company uses derivative instruments, how derivative instruments and related hedged items are accounted under SFAS 133 and how derivative instruments and related hedged items affect a company’s financial position, financial performance and cash flows. SFAS 161 will be effective in the fourth quarter of fiscal 2009. The Company is currently evaluating the impact of adopting SFAS 161 and does not anticipate a material effect.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), "Business Combinations" (or SFAS 141(R)) which is a revision of SFAS 141. SFAS 141(R) requires an acquirer in a business combination to measure all assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their fair values on the date of acquisition with limited exceptions. This Statement also requires the acquirer in a business combination achieved in stages to recognize the identifiable assets and liabilities, as well as the noncontrolling interest in the acquiree, at the full amounts of their fair values. SFAS 141(R) will further require that acquired in-process research and development as of the acquisition date is to be capitalized at fair value. Assets acquired and liabilities assumed arising from contingencies at the acquisition date are to be measured at their fair value and acquisition costs generally will be expensed as incurred. This statement is effective for business combinations for which the acquisition date is on or after April 1, 2009. The Company is currently evaluating the impact of adopting SFAS 141(R).

In December 2007 and in conjunction with SFAS 141(R), the FASB issued SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements - An Amendment of ARB No. 51" (or SFAS 160). This Statement requires companies to report a noncontrolling interest in a subsidiary as equity in its consolidated financial statements and to disclose the amount of consolidated net income attributable to the parent and to the noncontrolling interest in the consolidated statement of income. SFAS 160 also clarifies that a transaction resulting in a change to the parent’s ownership in a subsidiary that does not result in deconsolidation will be deemed as an equity transaction, while a gain or loss will be recognized by the parent when a subsidiary is deconsolidated. This statement is effective as of the beginning of fiscal 2010. The Company is currently evaluating the impact of adopting SFAS 141(R) and does not anticipate a material effect.

In December 2007, the FASB ratified the consensus reached by the Emerging Issues Task Force (EITF) on Issue No. 07-1, "Accounting for Collaborative Arrangements" (EITF 07-1).  This Issue defines a collaborative arrangement, establishes reporting requirements and clarifies the manner in which revenues, costs and sharing payments between parties and with third parties be presented in the consolidated statement of income. This Issue is effective as of the beginning of fiscal 2010.  The Company is currently evaluating the impact of adopting EITF 07-1.

In June 2007, the FASB ratified the consensus reached by EITF on Issue No. 07-3, "Accounting for Nonrefundable Advance Payments for Goods or Services Received for Use in Future Research and Development Activities" (EITF 07-3). Nonrefundable advance payments for goods or services that will be used or rendered for future research and development activities should be deferred and capitalized.  Such amounts should be recognized as an expense when the related goods are delivered or services are performed, or when the goods or services are no longer expected to be provided.  This Issue is effective as of the beginning of fiscal 2009.  EITF 07-3 is not expected to have a material effect on the Company’s consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159 (or SFAS 159), "The Fair Value Option for Financial Assets and Financial Liabilities" which permits an entity to measure certain financial assets and financial liabilities at fair value. The purpose of SFAS 159 is to improve financial reporting by allowing entities to mitigate volatility in reported earnings caused by the measurement of related assets and liabilities using different attributes, without having to apply complex hedge accounting provisions. Under SFAS 159, entities that elect the fair value option (by instrument) will report unrealized gains and losses in earnings at each subsequent reporting date. The fair value option election is irrevocable, unless a new election date occurs. SFAS 159 establishes presentation and disclosure requirements to help financial statement users understand the effect of the entity’s election on its earnings, but does not eliminate disclosure requirements of other accounting standards. Assets and liabilities that are measured at fair value must be displayed on the face of the balance sheet. This statement is effective as of the beginning of fiscal 2009. The Company is currently evaluating the impact of adopting SFAS 159 and does not anticipate a material effect, if adopted.

In September 2006, the FASB issued SFAS No. 157 (or SFAS 157), "Fair Value Measurements". This pronouncement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This statement is effective as of the beginning of fiscal 2009. In February 2008, the FASB issued FSP FAS 157-2 which delays the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). This FSP partially defers the effective date of SFAS No. 157 to the beginning of fiscal 2010, and interim periods within those fiscal years for items within the scope of this FSP. The Company is currently evaluating the impact of adopting SFAS 157 and does not anticipate a material effect.

2.  Net income per share:

A reconciliation of shares used in calculating basic and diluted net income per share follows:

Years ended March 31, (In thousands)	2008	2007	2006
Basic	314,660	318,539	335,912
Effect of assumed conversion
of employee stock options
and restricted stock	1,473	4,242	4,409
Diluted	316,133	322,781	340,321
	======	======	======

Options to purchase approximately 12,312, 6,000 and 7,401 shares of common stock at exercise prices ranging from $36.50 to $76.66 per share were outstanding during a portion of fiscal 2008, 2007 and 2006, respectively, but were not included in the computation of diluted earnings per share because they were anti-dilutive. These options expire through 2018.

3.  Business operations:

The Company and its subsidiaries, which are located in the United States, Ireland and the United Kingdom, manufacture and market ethical and other pharmaceutical products. The Company operates in only one segment. Sales are made primarily in the United States and European markets. The net sales and long-lived assets for the years ended March 31, 2008, 2007 and 2006, are from the Company's or one of its subsidiaries' country of origin, as follows:

(In thousands)	2008		2007		2006
		Long-lived		Long-lived			Long-lived
	Net sales	Assets	Net sales	assets		Net sales	assets
United States	$3,433,233	$371,442	$3,121,091	$410,211		$2,738,592	$474,451
Ireland	17,729	513,559	13,680	121,610		11,064	118,786
United Kingdom	50,840	9,459	48,553	10,761		44,278	10,430
	$3,501,802	$894,460	$3,183,324	$542,582		$2,793,934	$603,667
	========	=======	========	=======		========	=======

Net sales exclude sales between the Company and its subsidiaries.

Net sales by therapeutic class are as follows:

Years ended March 31, (In thousands)	2008	2007	2006
Central nervous system (CNS)	$3,137,878	$2,794,685	$2,400,304
Cardiovascular	35,616	50,199	67,002
Other	328,308	338,440	326,628
	$3,501,802	$3,183,324	$2,793,934
	========	========	========

The Company's CNS franchise consisting of Lexapro®, Celexa® and Namenda® accounted for 90%, 88% and 86% of the Company's net sales for the years ended March 31, 2008, 2007 and 2006, respectively.

The following illustrates net sales to the Company’s principal customers:

	2008	2007	2006
McKesson Drug Company	38%	37%	35%
Cardinal Health, Inc.	30%	27%	26%
AmeriSource Bergen Corporation	15%	13%	20%

4.  Accounts receivable:

Accounts receivable, net, consist of the following:

March 31, (In thousands)	2008	2007
Trade	$377,779	$330,580
Other	68,208	52,075
	$445,987	$382,655
	=======	=======

5.  Inventories:

Inventories, net of reserves for obsolescence, consist of the following:

March 31, (In thousands)	2008	2007
Raw materials	$234,288	$257,042
Work in process	1,360	8,449
Finished goods	189,490	168,672
	$425,138	$434,163
	=======	=======

6.  Acquisitions (In thousands):

On January 10, 2007, the Company acquired Cerexa, Inc. (or Cerexa), a biopharmaceutical company based in Alameda, California for approximately $494,000 in a merger pursuant to which Cerexa became a wholly-owned subsidiary of the Company.  The Company acquired worldwide development and marketing rights (excluding Japan) to ceftaroline acetate (or ceftaroline), a next generation, broad spectrum, hospital-based injectable cephalosporin antibiotic.  The acquisition of Cerexa also included a second development-stage hospital-based antibiotic, ME1036, which has shown activity against both aerobic and anaerobic gram-positive and gram-negative bacteria, including common drug-resistant pathogens, such as methicillin resistant Staphylococcus aureus, in preclinical studies.  The rights to ceftaroline and ME1036 are in-licensed by Cerexa on an exclusive basis from Takeda Pharmaceutical Company and Meiji Seika Kaisha, Ltd., respectively.  The Company will be obligated to pay an additional $100,000 in the event that annual United States sales of ceftaroline exceed $500,000 during the five year period following product launch. The acquisition was accounted for under the purchase method of accounting and accordingly, Cerexa’s results of operations are included in the accompanying consolidated financial statements from the acquisition date.

Of the $494,000 purchase price, $476,000 was assigned as in-process research and development (or IPR&D). Substantially all of this charge represented the value assigned to ceftaroline, which had completed a Phase II clinical trial program in patients with complicated skin and skin structure infections (or cSSSI). Ceftaroline is being developed initially for the cSSSI indication and the treatment of community acquired pneumonia (or CAP). Phase III studies of ceftaroline for cSSSI began in February 2007. ME1036 was still in preclinical development at the acquisition date. These compounds had not yet achieved regulatory approval for marketing and consequently, the IPR&D was taken as a charge against income during the fourth quarter of fiscal 2007. This charge was not deductible for tax purposes.

In order to determine the estimated fair value of IPR&D, the "income method" was utilized. This method applies a probability weighting to the estimated future net cash flows that are derived from projected sales revenues and estimated costs. These projections are based on factors such as relevant market size, patent protection, historical pricing of similar products and expected industry trends. The estimated future net cash flows were then discounted to the present value using a discount rate of 16%. This analysis was performed for each compound independently.

For purposes of applying the income method, the projected launch dates following FDA approval were estimated for ceftaroline and ME1036, at which times the Company would expect the resulting products to generate cash flows. The cost to complete these development programs will depend on whether these programs are brought to their final stages of development and are ultimately submitted to the FDA for approval. All internal and external research and development expenses are expensed as incurred. All of our development programs are subject to the normal risks and uncertainties associated with demonstrating the safety and efficacy required to obtain FDA or other regulatory approvals.

During fiscal 2008, two Phase III studies of ceftaroline in complicated skin and skin structure infections completed enrollment and two Phase III studies in patients with community acquired pneumonia began enrollment. The Company anticipates the cSSSI results in calendar 2008 and the CAP results in 2009.

7.  Marketable securities:

Available-for-sale debt securities consist of the following: (In thousands)

	March 31, 2008
		Estimated fair        value	Gains in accumulated other comprehensive       income	Losses in accumulated other comprehensive       income
Current:
Variable rate demand notes		$   177,900
Municipal bonds and notes		59,144	$    309
Commercial paper		684,506	3,393
Floating rate notes		22,422		($     506)
Total current securities		943,972	3,702	(       506)
Noncurrent:
Variable rate demand notes		$   129,145	$     10
Municipal bonds and notes		70,009	798
Auction rate notes		55,340
Floating rate notes		409,131		($18,297)
Total noncurrent securities		663,625	808	(  18,297)
Total available-for-sale debt securities		$1,607,597	$4,510	($18,803)
		========	=====	======

	March 31, 2007
		Estimated fair        value	Gains in accumulated other comprehensive       income	Losses in accumulated other comprehensive       income
Current:
Variable rate demand notes		$   404,780
Municipal bonds and notes		54,237		($ 31)
Commercial paper		329,934
Total current securities		788,951		(   31)
Noncurrent:
Variable rate demand notes		$   116,580
Municipal bonds and notes		78,757		($ 55)
Auction rate notes		109,375
Floating rate notes		355,680
Total noncurrent securities		660,392		(   55)
Total available-for-sale debt securities		$1,449,343		($ 86)
		========		====

Proceeds from the sales of available-for-sale debt securities were $2,983,699 and $2,018,325 during 2008 and 2007, respectively. Gross realized gains on those sales during 2008 and 2007 were $22,318 and $3,517, respectively. For purpose of determining gross realized gains and losses, the cost of securities is based on average cost. Net unrealized holding losses on available-for-sale debt securities in the amount of $14,293 and $86 for the years ended March 31, 2008 and March 31, 2007, respectively, have been included in Stockholders’ equity: Accumulated other comprehensive income.

Contractual maturities of available-for-sale debt securities at March 31, 2008, are as follows: (In thousands)

	Estimated fair        value
Within one year	$   943,972
After 1-5 years	373,096
After 5-10 years	71,456
After 10 years	219,073
	$1,607,597
	========

Actual maturities may differ from contractual maturities because some borrowers have the right to call or prepay obligations with or without call penalties.

The Company currently invests funds in Variable Rate Demand Notes, Municipal Bonds and Notes, Commercial Paper including money market instruments, Auction Rate Securities and European Bank Floating Rate Notes that have major bank liquidity agreements. Certain securities are subject to a hard-put option(s) where the principal amount is contractually assured by the issuer and any resistance to the exercise of these options would be deemed as a default by the issuer. Such a potential default would be reflected in the issuer’s respective credit rating, for which the Company maintains investment grade requirements pursuant to its corporate investment guidelines. While the Company believes its investments that have net unrealized losses are temporary, further declines in the value of these investments may be deemed other than temporary if the credit and capital markets were to continue to deteriorate in future periods. The Company has the ability and intends to hold its investments until a recovery of fair value, which may be at maturity. Therefore, the Company does not consider these investments to be other-than-temporarily impaired and will continue to monitor global market conditions to minimize the uncertainty of impairments in future periods.

8.  Intangible assets:

License agreements, product rights and other intangibles consist of the following:

(In thousands, except for amortization		March 31, 2008		March 31, 2007
periods which are stated in years)	Weighted average	Gross carrying	Accumulated	Gross carrying		Accumulated
	amortization period	amount	amortization	amount		amortization
Amortized intangible assets:
License agreements	11	$191,300	$95,374		$225,209		$151,556
Product rights	11	71,350	29,963		83,008		31,224
Buy-out of royalty agreements	11	465,061	82,768		95,061		74,262
Trade names	20	34,190	26,076		34,190		23,487
Non-compete agreements	13	16,000	16,000		22,987		22,987
Other	1	3,921	3,854		8,848		8,738
Total	11	781,822	$254,035		$469,303		$312,254
		========	========		========		========

Amortization of license agreements, product rights and other intangibles was charged to selling, general and administrative expense for fiscal years ended March 2008, 2007 and 2006 and amounted to approximately $44,646, $54,736 and $44,385, respectively. Future annual amortization expense expected is as follows:

Years ending March 31, (In thousands)
2009	$  56,632
2010	33,286
2011	23,767
2012	39,555
2013	41,723
	$194,963
	=======

In fiscal 2008 and 2007, the Company determined that certain license agreements and product rights were impaired due to a significant reduction in sales of those products because of heightened competition. These impairments amounted to $5,080 in fiscal 2008 and $12,564 in fiscal 2007, and were included in amortization expense.

In December 2007, the Company received marketing approval from the FDA for Bystolic™, its novel beta-blocker for the treatment of hypertension. Upon approval, the Company paid Mylan Inc. (or Mylan), its licensor for the product, $25,000. This milestone payment is currently being amortized using the straight-line method over the useful life of the product and is being recorded to selling, general and administrative expense. In February 2008, the Company and Mylan amended their agreement which terminated Mylan’s further commercial rights for Bystolic and reduced the Company’s future payment obligations to Mylan. Pursuant to the amendment, the Company paid Mylan $370,000 and remains obligated to pay Mylan its original contractual royalties for a period of three years after which the royalty rate will be reduced. The payment will be amortized beginning in the fourth quarter of fiscal 2011, the point at which the Company begins deriving the benefit of the payment. This amount was recorded to Buy-out of royalty agreements.

Also in fiscal 2008, the Company made a milestone payment of $20,000 to Daiichi Sankyo (or Sankyo) for the co-promotion rights to Azor™. On May 12, 2008 the Company and Sankyo terminated their co-promotion agreement for Azor, effective July 1, 2008. See Note 16 to the Consolidated Financial Statements.

In fiscal 2008, the Company entered into two license agreements: the first was with Ironwood Pharmaceuticals, Inc. (or Ironwood, formerly know as Microbia, Inc.) for their first-in-class compound linaclotide, currently being developed for the treatment of constipation predominant irritable bowel syndrome (or IBS-C), chronic constipation (or CC) and other gastrointestinal disorders. The second was with Novexel, S.A. (or Novexel) for the development of Novexel’s novel intravenous beta lactamase inhibitor, NXL104 in combination with the Company’s ceftaroline. These upfront payments were recorded to research and development expense since these products are in the early states of development.

In fiscal 2007, the Company entered into a license agreement with Laboratorios Almirall, S.A. (or Almirall), a pharmaceutical company headquartered in Barcelona, Spain for the development and exclusive U.S. marketing rights to aclidinium (or LAS 34273), Almirall’s novel long-acting muscarinic antagonist.

For fiscal years ended March 31, 2008 and 2007, the upfront and milestone payments made in conjunction with new license agreements recorded to research and development expense amounted to $180,000 and $80,000, respectively.

9.   Accrued expenses:

Accrued expenses consist of the following:

March 31, (In thousands)	2008	2007
Managed care and Medicaid rebates	$  173,705	$146,500
Employee compensation and other benefits	111,129	83,003
Clinical research and development costs	65,608	69,973
Other	36,663	33,519
	$387,105	$332,995
	=======	=======

10.  Long Term Debt (In thousands):

On December 7, 2007, the Company established a $500,000 revolving credit facility for the purpose of providing additional financial liquidity for the financing of business development and corporate strategic initiatives. The facility can be increased up to $750,000 based upon agreement with the participating lenders and expires on December 7, 2012. As of May 28, 2008, the Company has not drawn any funds from the available credit. The utilization of the revolving credit facility is subject to the adherence to certain financial covenants such as leverage and interest coverage ratios.

11.  Commitments (In thousands):

Leases: The Company leases manufacturing, office and warehouse facilities, equipment and automobiles under operating leases expiring through fiscal 2018. Rent expense approximated $34,630, $33,149 and $30,814 for fiscal years ended March 31, 2008, 2007 and 2006, respectively. Future minimum rental payments under noncancellable leases are as follows:

Years ending March 31,
2009	$  32,594
2010	24,510
2011	14,505
2012	8,973
2013	9,162
Thereafter	35,433
	$125,177
	=======

Royalty agreements: The Company has royalty agreements on certain of its licensed products. Royalties are paid based on a percentage of sales, as defined. For fiscal years ended March 31, 2008, 2007 and 2006, royalty expense amounted to $1,071, $4,742 and $5,896, respectively.

License agreements: The Company has entered into several license agreements for products currently under development. The Company may be obligated in future periods to pay additional amounts subject to the achievement of certain product milestones, as defined.

Inventory purchase commitments: The Company has inventory purchase commitments of $136,209 as of March 31, 2008.

12.  Stockholders' equity (In thousands, except per share data):

In August 2007, the stockholders of the Company voted to adopt the 2007 Equity Incentive Plan (or the 2007 Plan) which replaces and supersedes all prior stock option plans. Under the 2007 Plan, 13,950 shares were authorized to be issued to employees of the Company and its subsidiaries at prices not less than the fair market value of the common stock at the date of grant. The 2007 Plan provides for the granting of incentive and nonqualified stock options, restricted stock, stock appreciation rights and stock equivalent units. These awards generally vest in three to five years. Stock option grants may be exercisable for up to ten years from the date of issuance.

The following table summarizes information about stock options outstanding at March 31, 2008:

	Options outstanding			Options exercisable
		Weighted average
		remaining
Range of	Number	contractual life	Weighted average	Number	Weighted average
exercise prices	outstanding	(in years)	exercise price	exercisable	exercise price
$ 9.77 to $30.00	1,916	1.4	$12.90	1,916	$12.90
30.01 to   50.00	13,784	4.4	40.52	7,383	40.42
50.01 to   76.66	3,594	4.9	54.46	1,480	56.68
	19,294	4.2	40.38	10,779	37.77
	=====			=====

Transactions under the stock option plan are summarized as follows:

			Weighted average
			remaining	Aggregate
		Weighted average	contractual life	intrinsic
	Shares	exercise price	(in years)	value
Stock options:
Outstanding at March 31, 2005
(at $4.55 to $76.66 per share)	27,603	30.92
Granted (at $36.50 to $45.76 per share)	2,950	40.45
Exercised (at $4.55 to $48.34 per share)	(  4,890)	17.13
Forfeited	(  1,598)	44.46
Outstanding at March 31, 2006
(at $4.55 to $76.66 per share)	24,065	33.98
Granted (at $38.94 to $51.54 per share)	3,859	49.35
Exercised (at $4.55 to $53.23 per share)	(  8,568)	24.84
Forfeited	(  1,132)	38.90
Outstanding at March 31, 2007
(at $5.64 to $76.66 per share)	18,224	40.91
Granted (at $37.26 to $51.96 per share)	3,248	38.68
Exercised (at $5.64 to $53.23 per share)	(     734)	36.68
Forfeited	(  1,444)	44.62
Outstanding at March 31, 2008
(at $9.77 to $76.66 per share)	19,294	$40.38	4.2	$74
	=====	=====	===	====
Exercisable at March 31, 2008	10,779	$37.77	3.0	$69
	=====	=====	===	====
		Weighted average
		grant date
		fair value
Restricted stock:
Outstanding at March 31, 2007
Granted	453	$37.33
Vested	(         2)	$39.88
Outstanding at March 31, 2008
	451	$37.32
	=====	=====

At March 31, 2008, 10,368 shares were available for grant.

The total intrinsic value of stock options exercised during the years ended March 31, 2008, 2007 and 2006 was $9,461, $203,105, and $109,638, respectively, and the total intrinsic value of restricted stock vested during the year ended March 31, 2008 was $62. The weighted average grant date fair value per stock option granted during the years ended March 31, 2008, 2007 and 2006 were $15.20, $16.52 and $14.91, respectively. The total cash received as a result of stock option exercises for the years ended March 31, 2008, 2007 and 2006 was approximately $26,655, $210,920 and $78,666, respectively. In connection with these exercises, the tax benefit realized was $1,755, $80,225 and $35,311, respectively. The Company settles employee stock option exercises with newly issued common shares.

13.  Contingencies:

The Company remains a defendant in actions filed in various federal district courts alleging certain violations of the federal anti-trust laws in the marketing of pharmaceutical products. In each case, the actions were filed against many pharmaceutical manufacturers and suppliers and allege price discrimination and conspiracy to fix prices in the sale of pharmaceutical products. The actions were brought by various pharmacies (both individually and, with respect to certain claims, as a class action) and seek injunctive relief and monetary damages. The Judicial Panel on Multi-District Litigation ordered these actions coordinated (and, with respect to those actions brought as class actions, consolidated) in the Federal District Court for the Northern District of Illinois (Chicago) under the caption "In re Brand Name Prescription Drugs Antitrust Litigation."

On November 30, 1998, the defendants remaining in the consolidated federal class action (which proceeded to trial beginning in September 1998), including the Company, were granted a directed verdict by the trial court after the plaintiffs had concluded their case. In ruling in favor of the defendants, the trial judge held that no reasonable jury could reach a verdict in favor of the plaintiffs and stated "the evidence of conspiracy is meager, and the evidence as to individual defendants paltry or non-existent." The Court of Appeals for the Seventh Circuit subsequently affirmed the granting of the directed verdict in the federal class case in the Company’s favor.

Following the Seventh Circuit’s affirmation of the directed verdict in the Company’s favor, the Company secured the voluntary dismissal of the conspiracy allegations contained in all of the federal cases brought by individual plaintiffs who elected to "opt-out" of the federal class action, which cases were included in the coordinated proceedings, as well as the dismissal of similar conspiracy and price discrimination claims pending in various state courts. The Company remains a defendant, together with other manufacturers, in many of the federal opt-out cases included in the coordinated proceedings to the extent of claims alleging price discrimination in violation of the Robinson-Patman Act. While no discovery or other significant proceedings with respect to the Company has been taken to date in respect of such claims, there can be no assurance that the Company will not be required to actively defend such claims or to pay substantial amounts to dispose of such claims. However, by way of a decision dated January 25, 2007, the judge handling the Robinson-Patman Act cases for certain of a smaller group of designated defendants whose claims are being litigated on a test basis, granted summary judgment to those designated defendants due to plaintiffs’ failure to demonstrate any antitrust injury. Subsequently, the Court also granted the designated defendants’ motion for summary judgment with respect to plaintiffs’ effort to obtain injunctive relief. It is likely that the plaintiffs will pursue an appeal of both rulings.

The Company and certain of its officers have been named as defendants in consolidated securities cases brought in the U.S. District Court for the Southern District of New York (or the Court) on behalf of a purported class of all purchasers of the Company’s securities between August 15, 2002 and August 31, 2004 or September 1, 2004 and consolidated under the caption "In re Forest Laboratories, Inc. Securities Litigation, 05-CV-2827-RMB." The consolidated complaints, which assert substantially similar claims, allege that the defendants made materially false and misleading statements and omitted to disclose material facts with respect to the Company’s business, prospects and operations, in violation of Section 19(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 thereunder. In July 2006, the Court granted in part and denied in part the Company’s motion to dismiss. Claims remain pending with respect to alleged marketing statements and omissions with respect to the Company’s drugs for the treatment of depression. The complaint seeks unspecified damages and attorneys’ fees. Fact and expert discovery have been completed and a trial date is expected to be set shortly. In addition, the Company’s directors and certain of its officers have been named as defendants in two derivative actions purportedly brought on behalf of the Company, filed in the same Court and consolidated under the caption "In re Forest Laboratories, Inc. Derivative Litigation, 05-CV-3489 (RJH)." The complaints in these derivative actions allege that the defendants have breached their fiduciary duties by, among other things, causing the Company to misrepresent its financial results and prospects, selling shares of its common stock while in possession of proprietary non-public information concerning its financial condition and future prospects, abusing its control and mismanaging the Company and wasting corporate assets. The complaint seeks damages in an unspecified amount and various forms of equitable relief. In September 2006, the Court granted the Company’s motion to dismiss this case on the ground that the plaintiffs failed to make a pre-suit demand on our Board of Directors. By stipulation, plaintiffs appeal of this decision to the United States Court of Appeals for the Second Circuit and any other actions in this litigation have been stayed until August 31, 2008.

Forest Laboratories, Inc. and Forest Pharmaceuticals, Inc. are named, in one capacity or another, as defendants, along with numerous other manufacturers of pharmaceutical products in various actions which allege that the plaintiffs (all governmental entities) were overcharged for their share of Medicaid drug reimbursement costs as a result of reporting by manufacturers of "average wholesale prices" (or AWP) which did not correspond to actual provider costs of prescription drugs. Actions brought by nearly all of the counties of the State of New York (first action commenced January 14, 2003) and by the State of Iowa (commenced October 9, 2007) are pending in the United States District Court for the District of Massachusetts under the caption "In re Pharmaceutical Industry AWP Litigations" for coordinated treatment. In addition, various state court actions are pending in actions brought by the States of Alabama (commenced January 26, 2005), Alaska (commenced October 6, 2006), Hawaii (commenced April 27, 2006), Idaho (commenced June 8, 2007), Illinois (commenced February 7, 2005) and Mississippi (commenced October 20, 2005), as well as actions brought by the Commonwealth of Kentucky (commenced November 4, 2004) and the State of Utah (commenced in May 2008). Furthermore, state court actions pending in the State Court of New York were brought by three of the New York counties, Erie (commenced March 8, 2005), Schenectady (commenced May 10, 2006) and Oswego (commenced May 11, 2006).

Motions to dismiss have been filed with respect to most of the actions. While the motions to dismiss largely have been denied, some claims have been dismissed, including RICO claims brought by various New York counties whose remaining claims are pending in the MDL proceeding in Massachusetts. Discovery is ongoing. As of this date, no trials have been scheduled with respect to The Company, and it is not anticipated that any trial involving the Company will take place before the end of calendar 2009, at the earliest.

The Company is a defendant in an action commenced on December 27, 2004, in the District of Columbia entitled Louisiana Wholesale Drug Company, Inc. and Rochester Drug Cooperative v. Biovail Corporation and Forest Laboratories, Inc. The complaint alleges attempts to monopolize under Section 2 of the Sherman Act with respect to the product Tiazac resulting from Biovail’s January 2001 patent listing in the Food and Drug Administration’s "Orange Book" of Approved Drug Products with Therapeutic Equivalence Evaluations. Biovail withdrew the Orange Book listing of the patent at issue following an April 2002 Consent Order between Biovail and the Federal Trade Commission. Biovail is the owner of the NDA covering Tiazac which the Company distributes in the United States under license from Biovail. The action, which purports to be brought as a class action on behalf of all persons or entities who purchased Tiazac directly from the Company from February 12, 2001 to the present, seeks treble damages and related relief arising from the allegedly unlawful acts. By way of a ruling dated March 31, 2005, Judge Robertson granted Biovail’s motion for summary judgment in a related action (Twin Cities v. Biovail) to which the Company is not a party. The plaintiffs in the Louisiana Wholesale case then amended their complaint to add a conspiracy charge against Biovail and Forest and an allegation that plaintiffs were damaged as a result of a delay by Biovail and Forest in marketing their own generic version of Tiazac. The Company and Biovail filed a motion for summary judgment and a motion to dismiss directed to the complaint. By way of a decision dated June 22, 2006, Judge Robertson granted defendants’ motion for summary judgment, both with respect to original claims, as well as the newly-added claim asserted by the Louisiana Wholesale plaintiffs. That decision, along with the original Twin Cities decision, is now sub judice before the United States Court of Appeals for the District of Columbia.

The United States Attorney’s Office for the District of Massachusetts is investigating whether the Company may have committed civil or criminal violations of the federal "Anti-Kickback" laws and laws and regulations related to "off-label" promotional activities in connection with our marketing of Celexa, Lexapro and other products. As part of this investigation, the Company received a subpoena from the Office of Inspector General of the Federal Office of Personnel Management requesting documents relating to Celexa and have subsequently received further subpoenas from the United States Attorney’s Office concerning Lexapro and other products, including Namenda and Combunox. The subpoenas request documents relating to a broad range of the Company’s marketing and promotional activities during the period from January 1, 1997 to the present. In April 2006, the Company received an additional subpoena from the United States Attorney’s Office for the District of Massachusetts requesting documents concerning its manufacture and marketing of Levothroid, the Company’s levothyroxine supplement for the treatment of hypothyroidism. The Company understands that this subpoena was issued in connection with that office’s investigation of potential civil or criminal violation of federal health laws in connection with Levothroid. The Company is continuing to cooperate with this investigation.

The Company received a subpoena dated January 26, 2006 from the United States Attorney’s Office for the District of Massachusetts requesting documents related to its commercial relationship with Omnicare, Inc. (or Omnicare), a long term care pharmacy provider, including but not limited to documents concerning its contracts with Omnicare, and rebates and other payments made by the Company to Omnicare. The Company understands that the subpoena was issued in connection with that office’s investigation of potential criminal violations of federal healthcare laws by Omnicare and potentially others and is cooperating in this investigation.

In September 2007, the United States Court of Appeals for the Federal Circuit upheld the validity of the Company’s composition of matter patent covering Lexapro and the decision of the United States District Court for the District of Delaware granting the Company an injunction preventing Teva from marketing a generic version of Lexapro. In July 2006, the Company and Lundbeck commenced similar patent infringement litigation against Caraco Pharmaceutical Laboratories, Ltd., who had filed an ANDA with the FDA seeking to market a generic equivalent to Lexapro, in the United States District Court for the Eastern District of Michigan under the caption Forest Laboratories, Inc. et al. v. Caraco Pharmaceutical Laboratories, Ltd. et al. This case was stayed during the pendency of the Federal Circuit appeal in the case against Teva. A status conference is scheduled for June 12, 2008.

 In February 2007, Caraco filed a single-count declaratory judgment action against the Company and Lundbeck in the United States District Court for the Eastern District in Michigan for non-infringement of a different patent for Lexapro that is listed in the FDA’s Orange Book. After Forest and Lundbeck granted Caraco an irrevocable covenant not to sue, Chief Judge Friedman dismissed Caraco’s action for lack of subject matter jurisdiction. On April 1, 2008, a three-judge panel of the United States Court of Appeals for the Federal Circuit reversed and remanded Chief Judge Friedman’s decision. We have filed a combined petition for panel rehearing and hearing en banc.

Beginning in January 2008, the Company and Merz, its licensor for Namenda, commenced a series of patent infringement lawsuits in the United States District Court for the District of Delaware and other districts, including the United States District Court for the Eastern District of North Carolina, against several companies (including Teva, Mylan and Barr Laboratories, Inc.) who have notified them that they have filed ANDAs with the FDA seeking to obtain approval to market generic versions of Namenda. These actions are in the early stages and no scheduling order has been entered.

On July 14, 2006, the Company was named as a defendant, together with approximately 20 other pharmaceutical manufacturers and wholesalers in an action brought by RxUSA Wholesale, Inc. in the United States District Court for the Eastern District of New York under the caption RxUSA Wholesale, Inc. v. Alcon Laboratories, et al. The action alleges various antitrust and related claims arising out of an alleged concerted refusal by the defendant manufacturers and wholesalers to sell prescription drugs to plaintiff, a secondary drug wholesaler. Motions to dismiss have been filed by all of the defendants, and those motions are now sub judice before the court.

In April 2006, an action was commenced in the United States District Court for the Southern District of New York against the Company and Lundbeck under the caption Infosint S.A. v. H. Lundbeck A/S, H. Lundbeck Inc. and Forest Laboratories, Inc. In the action, the plaintiff alleges that the importation and sale in the United States of "citalopram products" by Lundbeck and the Company infringes certain claims of a manufacturing process patent owned by plaintiff. The action seeks injunctive relief as well as damages under U.S. patent laws. The Company believes that the plaintiff’s claim is without merit. Further, the Company believes that its license agreements with Lundbeck require Lundbeck to indemnify the Company from the cost of defending this action and from any associated damages or awards.

The Company has been named in approximately 45 product liability lawsuits that remain active. Most of the lawsuits allege that Celexa or Lexapro caused or contributed to individuals committing or attempting suicide. The suits seek substantial compensatory and punitive damages. The Company is vigorously defending these suits. A multi-district proceeding (or MDL) has been established for this litigation, with the federal court cases being transferred to Judge Rodney Sippel in the United States District Court for the Eastern District of Missouri.

The Company expects the MDL will ease the burden of defending these cases. While litigation is inherently subject to uncertainty and accordingly the Company cannot predict or determine the outcome of this litigation, the Company believes there is no merit to these actions and that the consolidated proceedings will promote the economical and efficient resolution of these lawsuits and provide the Company with a meaningful opportunity to vindicate the Company’s products. The Company currently maintains $140 million of product liability coverage per "occurrence" and in the aggregate.

 The Company received two subpoenas dated April 27, 2007 from the Office of the Attorney General of the State of Delaware requesting documents relating to its use of the "nominal price" exception to the Medicaid program’s "Best Price" rules.  The Company understands that comparable subpoenas have been or will be issued to other pharmaceutical manufacturers as part of that office’s investigation of the use of the "nominal price" exception and is complying with the subpoenas.

The Company is also subject to various legal proceedings that arise from time to time in the ordinary course of its business. Although the Company believes that the proceedings brought against it, including the product liability cases described above, are without merit and it has product liability and other insurance, litigation is subject to many factors which are difficult to predict and there can be no assurance that the Company will not incur material costs in the resolution of these matters.

14.  Income taxes:

The components of income before income tax expense were:

Years ended March 31, (In thousands)	2008	2007	2006
U.S.	$   440,271	($  26,935)	$446,610
Foreign	770,126	735,779	422,902
Income before income tax expense	$1,210,397	$708,844	$869,512
	========	=======	=======

The provision for income taxes consists of the following:

Years ended March 31, (In thousands)	2008	2007	2006
Current:
U.S. federal	$194,491	$248,846	$155,906
Section 965 repatriation			(    36,414)
State and local	18,139	15,397	12,690
Foreign	56,885	61,230	61,850
	269,515	325,473	194,032
Deferred:
U.S.	(    26,549)	(    79,147)	(    14,499)
Foreign	(         502)	8,415	(    18,535)
	(    27,051)	(    70,732)	(    33,034)
	$242,464	$254,741	$160,998
	=======	=======	=======

The reasons for the difference between the provision for income taxes and expected federal income taxes at statutory rates are as follows:

Years ended March 31, (percentage of income before income tax expense)	2008	2007	2006
U.S. statutory rate	35.0%	35.0%	35.0%
Acquired in-process research and development		23.5
Effect of foreign operations	(14.5)	(21.8)	(10.8)
Impact of Section 965 repatriation			(  4.2)
Research credit	(  1.6)	(  2.2)	(  1.5)
State and local taxes, less federal tax benefit	1.4	2.4	0.8
Permanent differences and other items	(  0.3)	(  1.0)	(  0.8)
	20.0%	35.9%	18.5%
	===	===	===

The Company’s effective tax rate for fiscal 2008 and 2006, respectively, is lower than the statutory rate principally as a result of the proportion of earnings generated in lower-taxed foreign jurisdictions as compared with the United States. These earnings include development and manufacturing income from our operations in Ireland, which operate under tax incentives that currently expire in 2010. The Company's effective tax rate in fiscal 2007 was higher than the statutory rate principally as a result of the in-process R&D expensed as part of the Cerexa acquisition completed in January 2007.

Net deferred income taxes relate to the following timing differences:

March 31, (In thousands)	2008	2007
Inventory reserves	$  47,278	$  40,631
Receivable allowances and other reserves	93,900	85,486
Depreciation	(      2,097)	(      4,031)
Amortization	52,212	23,467
Carryforwards and credits	81,334	91,566
Accrued liabilities	21,548	22,886
Employee stock option tax benefits	1,932	16,139
Other	12,723	743
	308,830	276,887
Valuation allowance	(    23,772)	(    23,724)
Deferred taxes, net	$285,058	$253,163
	=======	=======

The Company has net operating loss carryforwards primarily related to the purchase of Cerexa in January 2007 as well as excess charitable contribution carryovers which are available to reduce future U.S. federal and state taxable income, expiring at various times between 2008 and 2025. Although not material, valuation allowances have been established for a portion of deferred tax assets acquired as part of the Cerexa purchase as the Company has determined that it was more likely than not that these benefits will not be realized.

On October 22, 2004, the American Jobs Creation Act of 2004 (or the Act) was signed into law. One of the key provisions of the Act, Internal Revenue Code Section §965, included a temporary incentive for U.S. multinationals to repatriate foreign earnings by providing an elective 85% dividends received deduction for certain cash dividends from controlled foreign corporations.

 Pursuant to the provision, in fiscal 2005, the Company repatriated $1,238,900 and recorded a resulting tax cost of $90,657. In fiscal 2006, the Company reversed $36,414 of the prior year accrual due to updated guidance issued by the U.S. Treasury Department. The originally enacted law did not specifically address whether the dividends received deduction applied to the required tax gross-up related to the dividend. As of the date the financial statements were prepared for the March 2005 fiscal year, the Company accrued the tax assuming the deduction did not apply, which represented the additional $36,414 of tax. In May 2005, the U.S. Treasury Department clarified that the dividends received deduction in fact did apply to the tax gross-up amount and accordingly the $36,414 tax accrual was reversed in the March 2006 fiscal year.

The Company has satisfied all of the requirements of this provision including that the dividend amounts have been invested in the United States pursuant to the domestic reinvestment plan. As of fiscal 2006, the Company has made 100% of the required expenditures under the safe harbor provided by the Internal Revenue Service (or IRS).

Excluding the repatriation discussed above, no provision has been made for income taxes on the remaining undistributed earnings of the Company’s foreign subsidiaries of approximately $2,335,962 at March 31, 2008 as the Company intends to indefinitely reinvest such earnings.

The Company is subject to income taxes in the United States and several foreign jurisdictions. The Company and its U.S. subsidiaries file a consolidated U.S. federal income tax return. Tax returns are routinely audited by U.S. federal and state as well as foreign tax authorities. The Company accrues liabilities for identified tax contingencies that result from positions that are being challenged or could be challenged by tax authorities. The Company believes that its accrual for tax liabilities is adequate for all open years, based on Management’s assessment of many factors, including its interpretations of the tax law and judgments about potential actions by tax authorities. However, it is possible that the ultimate resolution of any tax audit may be materially greater or lower than the amount accrued.

The Company files tax returns in the United States and certain foreign jurisdictions including Ireland. The Company’s income tax returns for fiscal years prior to 1999 in most jurisdictions and prior to 2002 in Ireland are no longer subject to review as such fiscal years are generally closed. Tax authorities in various jurisdictions are in the process of reviewing the Company’s tax returns for various post-1999 fiscal years, including the Internal Revenue Service, which has recently concluded its examination of the Company’s U.S. federal income tax returns for fiscal 2002 and 2003. In connection with that examination, in July 2007, the IRS issued a notice of proposed adjustment primarily relating to the Company’s intercompany transfer pricing methodology. On November 5, 2007, the IRS issued a Revenue Agent Report which seeks to assess approximately $206.7 million of additional U.S. corporation income tax relating to the examination period, excluding interest and penalties. The Company continues to disagree with the IRS position and adjustment because it believes that it is inconsistent with applicable tax laws and the Company intends to defend its position vigorously. In accordance with the Company’s taxpayer appeals rights, a formal written protest of the proposed adjustment has been filed with the IRS and the matter is in administrative appeals.

 While the resolution of this issue may result in tax liabilities that are greater or less than the reserves established, Management believes that the ultimate resolution will not have a material effect on the Company’s financial position or liquidity. If the IRS prevails in a position that increases the U.S. tax liability in excess of established reserves, it is likely that the IRS could make similar claims for years subsequent to fiscal 2003 which could be material. However, at this time Management believes that it is unlikely that the ultimate outcome will be determined within the next 12 months.

On April 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board (or FASB) Interpretation 48 (or FIN 48), "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109". As a result of adoption of FIN 48, the Company recognized an increase of $13,796, net of related tax benefits, to the unrecognized tax benefits (or UTB) balance with a corresponding reduction to the April 1, 2007 balance of retained earnings, resulting in an opening UTB balance of $143,605. As of March 31, 2008, the Company’s consolidated balance sheet reflects UTBs of $178,471, of which $167,671 would impact the effective tax rate if recognized. A reconciliation of the beginning and ending amount of UTBs is as follows:

(In thousands)

Balance as of April 1, 2007	$143,605
Additions related to prior year positions	16,883
Reduction related to prior year positions	(    24,435)
Additions related to current year positions	42,418
Balance as of March 31, 2008	$178,471
	=======

The Company recognized interest accrued related to UTBs in income tax expense and related liability accounts on the balance sheet. During the fiscal year ended March 31, 2008, the Company recognized $9,599 of interest. Accrued interest related to UTBs totaled $19,939 as of March 31, 2008.

It is anticipated that the amount of UTBs will not change significantly within the next 12 months.

15.  Quarterly financial data (unaudited):

(In thousands, except per share data)

				Diluted
			Net	earnings (loss)
	Net sales	Gross profit	income (loss)	per share
2008
First quarter	$842,616	$656,376	$268,162	$0.83
Second quarter	842,337	652,345	225,244	0.71
Third quarter	918,146	704,640	301,757	0.96
Fourth quarter	898,703	688,327	172,770	0.55
2007
First quarter	$758,768	$583,083	$200,607	$0.62
Second quarter	778,676	593,578	241,111	0.75
Third quarter	830,431	634,892	250,301	0.78
Fourth quarter (a)	815,449	626,169	( 237,916)	( 0.75)

(a) Includes a $476,000 charge to IPR&D related to the Cerexa acquisition.

16.  Subsequent Event (In thousands):

On May 12, 2008, the Company and its licensing partner Daiichi Sankyo, Inc. (or Sankyo) announced that effective July 1, 2008, they have terminated their co-promotion agreement for Azor (amlodipine and olmesartan medoxomil), Sankyo’s fixed-dose combination of two antihypertensives, the calcium channel blocker amlodipine besylate and the angiotensin receptor blocker olmesartan medoxomil. In the first quarter of fiscal 2009, the Company will record a one-time charge of approximately $44,100 which is composed of a one-time payment to Sankyo of approximately $26,600 related to the termination of the agreement and $17,500 related to the unamortized portion of the initial upfront payment. The Company determined that the resources it had allocated to the Azor co-promotion will be better utilized in providing additional support for the Company’s currently marketed products.

FOREST LABORATORIES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

(Dollar amounts in thousands)

This year marked continued growth of our key marketed products, continued investment in research and development to enhance and develop our pipeline of products and support behind a fourth fiscal quarter new product launch. For the fiscal year ended March 31, 2008, total net revenues increased by $394,544 to a record high of $3,836,329 as a result of increased sales growth of our key marketed products Lexapro® and Namenda® and higher co-promotion income from Benicar®.

On December 18, 2007, the United States Food and Drug Administration (or FDA) approved our novel beta-blocker Bystolic™ (nebivolol) for the treatment of hypertension. We licensed the U.S. and Canadian rights to Bystolic from Mylan Inc. (or Mylan) in January 2006. Pursuant to that licensing agreement, we made a milestone payment of $25,000 upon FDA approval. We commenced the sale and marketing of Bystolic in January 2008. On February 27, 2008, we amended the agreement with Mylan to terminate Mylan’s further commercial rights for Bystolic in the United States and Canada and to reduce further payment obligations to Mylan. In connection with this modified agreement, we made a one-time cash payment of $370,000 to Mylan and will continue to make contractual royalty payments through calendar 2010, after which our royalty rate will be reduced.

On January 22, 2008, we entered into an agreement with Novexel, S.A. (or Novexel) for the development, manufacture and commercialization of Novexel’s novel intravenous beta lactamase inhibitor, NXL104 in combination with Forest’s ceftaroline. NXL104 inhibits bacterial enzymes called beta-lactamases that break down beta-lactam antibiotics (in particular penicillins and cephalosporins). Beta-lactamase inhibition represents a mechanism for counteracting resistance and enhancing broad-spectrum activity of beta-lactam antibiotics. Under the terms of the agreement, we received the exclusive rights to administer NXL104 with ceftaroline as a combination product in North America. We intend to initiate Phase I studies of the ceftaroline/NXL104 combination in calendar 2009. Pursuant to the agreement, we paid Novexel an upfront license payment of approximately $110,000, which was charged to research and development expense. Additional milestone payments to Novexel, if the combination product is successfully developed, could total another $110 million. Following the product’s regulatory marketing approval, we will pay Novexel a low double-digit royalty on product sales throughout North America.

On May 12, 2008, we and our licensing partner Daiichi Sankyo, Inc. (or Sankyo) announced that effective July 1, 2008 we have terminated our co-promotion agreement for Azor™ (amlodipine and olmesartan medoxomil), Sankyo’s fixed-dose combination of two antihypertensives, the calcium channel blocker amlodipine besylate and the angiotensin receptor blocker olmesartan medoxomil. In the first quarter of fiscal 2009, we will record a one-time charge of approximately $44,100 which is composed of a one-time payment to Sankyo of approximately $26,600 related to the termination of the agreement and $17,500 related to the unamortized portion of the initial upfront payment. We determined that the resources we had allocated to the Azor co-promotion will be better utilized in providing additional support for our other currently marketed products.

In September 2007, we entered into a 50/50 partnership in the United States with Ironwood Pharmaceuticals, Inc. (or Ironwood, formerly known as Microbia, Inc.) to co-develop and co-market Ironwood’s first-in-class compound linaclotide. Linaclotide is currently being investigated for the treatment of constipation-predominant irritable bowel syndrome (or IBS-C), chronic constipation (or CC) and other gastrointestinal disorders. Under the terms of the agreement, we initially paid Ironwood $70,000 in licensing fees. We and Ironwood will jointly and equally fund development and commercialization of linaclotide in the United States, sharing profits equally. Additionally, we will have exclusive rights in Canada and Mexico and will pay Ironwood a royalty on sales in these countries.

During fiscal 2007 our Board of Directors (or the Board) approved the 2007 Repurchase Program which authorized the purchase of up to 25 million shares of common stock. On August 13, 2007, the Board authorized the purchase of an additional 10 million shares of common stock. For the year ended March 31, 2008, we have repurchased a total of 8.9 million shares at a cost of $356,327. As of May 29, 2008, we have repurchased, cumulatively, a total of 25.8 million shares at a cost of $1,059,791 under the 2007 Repurchase Program, leaving us the authority to purchase 9.2 million more shares.

Financial Condition and Liquidity

Net current assets increased by $501,570 for fiscal 2008. Cash, marketable securities and accounts receivable increased from ongoing operations. During fiscal 2008 we had significant outlays of cash. In the fourth quarter of 2008, we made a one-time payment of $370,000 to Mylan in connection with amending our agreement for Bystolic as discussed above. During the first three quarters of fiscal 2008, pursuant to the 2007 Repurchase Program, we repurchased 8.9 million shares of common stock at a cost of $356,327. No shares were repurchased during the fourth quarter and 15.8 million shares were available for repurchase under the program at March 31, 2008. Of our total cash and marketable securities position at March 31, 2008, 42%, or about $1,029,000, was domiciled domestically with the remainder held by our international subsidiaries. We currently invest funds in Variable Rate Demand Notes, Municipal Bonds and Notes, Commercial Paper including money market instruments, Auction Rate Securities and European Bank Floating Rate Notes that have major bank liquidity agreements. These investments, which are subject to general credit, liquidity and market risks, have not been materially affected by the U.S. sub-prime mortgage defaults that have affected certain sectors of the financial markets and caused credit and liquidity issues. At March 31, 2008, approximately 26% of our investments were affected by net unrealized losses. While we believe that these net unrealized losses are temporary, further declines in the value of these investments may be deemed other than temporary if the credit and capital markets were to continue to deteriorate in future periods. We have the ability and intend to hold our investments until a recovery of fair value, which may be at maturity. Therefore, we do not consider these investments to be other-than-temporarily impaired and will continue to monitor global market conditions to minimize the uncertainty of impairments in future periods. Raw materials and work in process inventories decreased as we are bringing these balances to more normalized levels. Finished goods inventory increased in order to support continued demand for our products including the recent launch of Bystolic. We believe that current inventory levels are adequate to support the growth of our ongoing business. License agreements, product rights and other intangibles before accumulated amortization increased during fiscal 2008 as a result of three agreements. In October 2007, we paid Daiichi Sankyo $20,000 in connection with the co-promotion agreement for Azor. In December 2007, we paid $25,000 to Mylan upon FDA approval of Bystolic. In February 2008, we paid an additional $370,000 to Mylan in connection with the amended agreement. Non-current deferred income taxes increased as a result of an upfront licensing charge in connection with the collaboration agreement with Ironwood for the right to co-develop and co-market linaclotide. Increases in accounts payable and accrued expenses were due to normal operating activities.

Property, plant and equipment before accumulated depreciation increased from fiscal 2007. During the year we completed the refurbishment of a 90,000 square foot facility in Ireland which will provide additional capacity for the manufacturing of Lexapro, Namenda and for future products. This facility commenced operations in April 2008. We also continued to make technology investments to expand our principal operating systems to enhance supply chain and salesforce applications.

On April 1, 2007, we adopted the provisions of Financial Accounting Standards Board (or FASB) Interpretation (or FIN 48), "Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109". As a result of adoption of FIN 48, we recognized an increase of $13,796, net of related tax benefits, to the unrecognized tax benefits (or UTB) balance with a corresponding reduction to the April 1, 2007 balance of retained earnings, resulting in an opening UTB balance of $143,605. As of March 31, 2008, our consolidated balance sheet reflects UTBs of $178,471, of which $167,671 would impact the effective tax rate if recognized. We also recognized interest accrued related to UTBs in income tax expense and related liability accounts on the balance sheet. During the fiscal year ended March 31, 2008, we recognized $9,599 of interest. Accrued interest related to UTBs totaled $19,939 as of March 31, 2008.

Management believes that current cash levels, coupled with funds to be generated by ongoing operations, will continue to provide adequate liquidity to facilitate potential acquisitions of products, payment of achieved milestones, capital investments and continued share repurchases.

Contractual Obligations

The following table shows our contractual obligations related to lease obligations and inventory purchase commitments as of March 31, 2008:

		Payments due by period (in thousands)
	<1 year	1-3 years	3-5 years	>5 years	Total
Operating lease obligations	$  32,594	$39,015	$18,135	$35,433	$125,177
Inventory purchase commitments	136,209				136,209
	$168,803	$39,015	$18,135	$35,433	$261,386
	=======	======	======	======	=======

The Company’s income tax liabilities are not included in this table because the Company cannot be certain as to when they will become due. See Note 14 to the Consolidated Financial Statements.

Off-Balance Sheet Arrangements

Forest is a party to several license agreements for products currently under development. Such agreements may require us to make future payments to the licensors, subject to the achievement of specific product or commercial development milestones, as defined.

Results of Operations

Net sales increased $318,478 or 10% to $3,501,802 in fiscal 2008 from $3,183,324 in fiscal 2007 and $389,390 or 13.9% in fiscal 2007 as compared to $2,793,934 in fiscal 2006 primarily due to strong sales of Lexapro and Namenda.

Lexapro, which is indicated for the treatment of major depressive disorder and generalized anxiety disorder, and is our most significant product, had sales of $2,292,036 in fiscal 2008, growing 9% and contributing $186,046 to the net sales change as compared with fiscal 2007, of which $106,205 was due to price and $79,841 was related to volume. In fiscal 2007, Lexapro sales totaled $2,105,990 and contributed $232,735 to the net sales change compared to fiscal 2006, of which $136,196 was due to price and $96,539 was related to volume. Lexapro achieved a 17.7% share of total prescriptions for antidepressants in the SSRI/SNRI category in fiscal 2008. We expect Lexapro sales to remain strong during fiscal 2009. In fiscal 2004, we, along with our licensing partner, H. Lundbeck A/S (or Lundbeck) filed suit against Teva Pharmaceuticals (or Teva) for patent infringement related to our Lexapro patent. A trial was held regarding the patent litigation with Teva in March 2006 and on July 13, 2006, the U.S. District Court for the District of Delaware determined that the patent covering Lexapro is valid and enforceable. Lexapro’s patent is set to expire in March 2012. Teva filed an appeal of the court’s ruling, and on September 5, 2007, a federal appeals court upheld the patent’s validity. Another generic manufacturer, Caraco Pharmaceutical Laboratories, Ltd. (or Caraco), has filed an Abbreviated New Drug Application (or ANDA) with a Paragraph IV Certification for a generic equivalent to Lexapro. Forest and Lundbeck have filed a lawsuit in the U.S. District Court for the Eastern District of Michigan against Caraco for patent infringement.

Sales of Namenda, our N-methyl-D-aspartate (or NMDA) receptor antagonist for the treatment of moderate to severe Alzheimer's disease grew 26%, an increase of $169,362 to $829,657 in fiscal 2008 as compared with fiscal 2007, of which $134,804 was due to volume and $34,558 was due to price. In fiscal 2007, sales of Namenda grew 30.0%, an increase of $152,252 to $660,295 as compared to $508,043 in fiscal 2006, of which $143,174 was due to volume and $9,078 was due to price. Namenda achieved a 33.8% share of total prescriptions in the Alzheimer's market as of March 31, 2008. We anticipate Namenda continuing positive growth. During the third quarter of fiscal 2008, we received notification from several companies that they filed ANDAs with Paragraph IV certifications to obtain approval to market generic equivalents of Namenda. In January 2008, we along with our licensing partner Merz Pharma GmbH & Co. KgaA (or Merz) filed lawsuits in the U.S. District Court of Delaware against several companies for patent infringement. Namenda’s patent is set to expire in April 2010. We have applied for patent term restoration which, if granted, would extend Namenda’s patent protection until September 2013.

Bystolic, our recently approved novel beta blocker for the treatment of hypertension, was launched in January 2008, and achieved sales of $11,070, primarily initial wholesaler stocking, in fiscal 2008. Sales of Campral®, our treatment for maintenance of abstinence from alcohol in patients with alcohol dependence who are abstinent at treatment initiation, amounted to $30,921 in fiscal 2008, $29,649 in fiscal 2007 and $22,868 in fiscal 2006. The remainder of the net sales change for the periods presented was due principally to volume fluctuations of our older and non-promoted product lines.

Contract revenue for fiscal year 2008 was $216,500 compared to $176,943 in fiscal year 2007 and $118,170 in fiscal year 2006, primarily due to co-promotion income from our co-marketing agreement with Daiichi Sankyo for Benicar. Forest has been co-promoting Benicar, indicated for the treatment of hypertension, since May 2002. Under the agreement, we are entitled to a share of the product profits (as defined) from the point the product became cumulatively profitable in fiscal year 2005. Fiscal 2008 was the final year of our active co-promotion activities and we will receive a reduced share of product profits over the remaining six-year term of the agreement, as defined.

Interest income increased in fiscal 2008 primarily due to interest received on higher levels of invested funds offset by lower average rates of return. Fiscal 2007 interest income increased primarily due to higher interest income received on funds available for investment resulting from more favorable rates of return.

Cost of sales as a percentage of net sales was 23% in fiscal 2008, unchanged from fiscal years 2007 and 2006.

Selling, general and administrative expense increased to $1,154,845 in fiscal 2008 from $1,046,336 in fiscal 2007 and $1,031,451 in fiscal 2006. The increase was primarily attributable to salesforce activity and promotional support for products currently marketed as well as launch and pre-launch costs for Bystolic and milnacipran.

Research and development expense decreased to $670,973 in fiscal 2008 from $941,003 in fiscal 2007, but increased from $410,431 in fiscal 2006. Fiscal 2007 included a one-time charge of $476,000 for in-process research and development (or IPR&D) related to the acquisition of Cerexa. During the fiscal 2007 year, we also paid $20,000 in connection with a development milestone. Fiscal 2008 included a $70,000 licensing charge in connection with the collaboration agreement with Ironwood for the right to co-develop and co-market linaclotide. Linaclotide, which is currently in Phase II testing, is being investigated for the treatment of constipation-predominant irritable bowel syndrome and chronic constipation. Also during the current year, we made an upfront license payment of approximately $110,000 to Novexel for the development, manufacture and commercialization of Novexel’s novel intravenous beta lactamase inhibitor, NXL104, in combination with Forest’s ceftaroline. The increase in research and development expense in fiscal 2007 as compared with fiscal 2006 was due to the Cerexa acquisition and upfront and milestone payments in connection with licensing agreements.

Research and development expense also reflects the following:

·        In May 2008, we announced results from a Phase III study of Lexapro in the treatment of adolescents, aged 12-17, with Major Depressive Disorder. These results indicate that patients treated with Lexapro experienced statistically significant improvement in symptoms of depression. Based on the results of this study, we filed for an adolescent depression indication in May 2008.

·        During the fourth quarter of fiscal 2006, we entered into an agreement with Mylan for the commercialization, development and distribution rights for nebivolol, a novel beta blocker. On December 18, 2007, we received FDA approval for Bystolic (nebivolol) for the treatment of hypertension. On February 27, 2008, we amended the agreement with Mylan to terminate Mylan’s further commercial rights for Bystolic in the United States and Canada and to reduce future payment obligations to Mylan. In connection with this modified agreement, we made a one-time cash payment of $370,000 to Mylan. Following such payment, we remain obligated to pay Mylan contractual royalties through calendar 2010, after which our royalty rate will be reduced. Regarding a new indication for congestive heart failure, following input we have received from the FDA, we plan to file a New Drug Application (or NDA) in early calendar 2009 for that indication based on a previously completed Phase III study. The U.S. composition of matter patent covering nebivolol hydrochloride is licensed from Mylan and expires in 2020. (We have submitted a patent term extension application to extend this patent until 2021.) On January 26, 2007, Janssen Pharmaceutica N.V., the owner of the patent, filed a request with the U.S. Patent and Trademark Office (or the Office) for re-examination of the patent covering nebivolol hydrochloride. While the timing for resolution of the re-examination cannot be predicted, we expect that the Office will again certify that the claims of the patent are valid.

·        In May 2007, we announced that top-line results of a Phase III study demonstrated significantly therapeutic effects of milnacipran, as a treatment of fibromyalgia syndrome (or FMS). In December 2007, we submitted an NDA to the FDA including data from this study and an earlier Phase III study. We expect FDA action with respect to this NDA by the end of October 2008. We also expect results from a third randomized pivotal Phase III study in late 2008 or early 2009.

·        In connection with our acquisition of Cerexa, Inc. in January 2007, we acquired worldwide development and marketing rights (excluding Japan) to ceftaroline, a next generation, broad spectrum, hospital-based injectable cephalosporin antibiotic. Two Phase III studies of ceftaroline in complicated skin and skin structure infections (or cSSSI) have completed enrollment and two Phase III studies in patients with community acquired pneumonia (or CAP) have begun enrollment. We anticipate the cSSSI results in mid 2008 and the CAP results in 2009. Based on positive results, we anticipate submitting an NDA to the FDA by the end of calendar 2009.

·        In April 2006, we entered into a collaboration agreement with Laboratorios Almirall, S.A. (or Almirall) for the U.S. rights to aclidinium, a novel long-acting muscarinic antagonist which is being developed as an inhaled therapy for the treatment of chronic obstructive pulmonary disease (or COPD). An international Phase III program is currently being conducted by us and Almirall. Enrollment has been completed and we expect top-line results to be available in the second half of calendar 2008. We and Almirall are also pursuing the development of a fixed-dose combination of aclidinium and the beta-agonist formoterol, which is currently in Phase II testing.

·        During the September 2007 quarter, we entered into a 50/50 partnership with Ironwood to co-develop and co-market the compound linaclotide. Linaclotide is currently being investigated for the treatment of constipation-predominant irritable bowel syndrome, chronic constipation and other gastrointestinal disorders. In March 2008, we and Ironwood announced positive top-line results from two Phase II(b) randomized, double-blind, placebo-controlled studies assessing the safety, therapeutic effect and dose response of four different once-daily doses of linaclotide. Linaclotide was well tolerated at all doses. Based on this data we anticipate initiating Phase III studies in both indications in the second half of calendar 2008.

·        In February 2008, we received preliminary results of a Phase III study of memantine HCl in a novel once-daily formulation of Namenda for the treatment of moderate to severe Alzheimer’s disease.  The results indicate that patients treated with this formulation experienced statistically significant benefits in cognition and clinical global status compared to placebo.  Based on the results of this study, we intend to prepare and file an NDA for this new once-daily formulation.

·        During the third quarter of fiscal 2005, Forest entered into a collaboration agreement with Gedeon Richter Ltd. for the North American rights to RGH-188, and related compounds, being developed as an atypical antipsychotic for the treatment of schizophrenia, bipolar mania and other psychiatric conditions. A review of top-line results of a Phase II study in schizophrenia indicated that RGH-188 demonstrated a nominally statistically significant (i.e., not adjusted for multiple comparisons) therapeutic effect compared to placebo in a low-dose arm and a numerical improvement compared to placebo in a high-dose arm that did not reach nominal statistical significance. Based on the review of the results, we will be initiating a second Phase II dose-ranging study in schizophrenia patients in the first half of fiscal 2009. An additional Phase II study of RGH-188 for the treatment of bipolar mania was commenced in April 2007 and we expect results in calendar 2008.

·        During the second quarter of fiscal 2005, Forest entered into a collaboration agreement with Glenmark Pharmaceuticals Ltd. (or Glenmark) for the North American development and marketing of GRC 3886, a PDE4 inhibitor for the treatment of asthma and COPD. We have commenced a Phase II study of this compound for the COPD indication with results expected in the second half of calendar 2009.

Among other research and development projects we continue to support are the following: RGH-896, a compound being developed for the treatment of chronic pain and other CNS conditions; a series of novel compounds that target group 1 metabotropic glutamate receptors (mGLUR1/5); and ME1036, an injectable antibiotic which has demonstrated pre-clinical activity against both gram-positive and gram-negative bacteria. In addition, we have entered into several collaborations to conduct pre-clinical drug discovery.

The effective tax rate decreased to 20% in fiscal 2008 as compared to 21% (excluding the one-time Cerexa IPR&D charge) and 19% in fiscal 2007 and 2006 respectively. The effective tax rate for fiscal 2008 was lower compared to fiscal 2007 due primarily to a higher proportion of earnings generated in lower taxed foreign jurisdictions as compared with the United States. Effective tax rates can be affected by ongoing tax audits. See Note 14 to the Consolidated Financial Statements.

We expect to continue our profitability into fiscal 2009 with continued sales growth in our principal promoted products.

Inflation has not had a material effect on our operations for the periods presented.

Critical Accounting Policies

The following accounting policies are important in understanding our financial condition and results of operations and should be considered an integral part of the financial review. Refer to the notes to the consolidated financial statements for additional policies.

Estimates and Assumptions

The preparation of financial statements in conformity with generally accepted accounting principles requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and of revenues and expenses during the reporting period. Estimates are made when accounting for sales allowances, returns, rebates and other pricing adjustments, depreciation, amortization and certain contingencies. Forest is subject to risks and uncertainties, which may include but are not limited to competition, federal or local legislation and regulations, litigation and overall changes in the healthcare environment that may cause actual results to vary from estimates. We review all significant estimates affecting the financial statements on a recurring basis and record the effect of any adjustments when necessary. Certain of these risks, uncertainties and assumptions are discussed further under the section entitled "Forward Looking Statements".

Stock-Based Compensation

On April 1, 2006, we adopted SFAS 123R "Share-Based Payment" under the modified prospective method. Since we had previously accounted for stock options under Accounting Principles Board No. 25, "Accounting for Stock Issued to Employees" we recorded stock option and restricted stock expense in fiscal 2008 and 2007 while no expense was recorded in fiscal 2006.

Also under SFAS 123R, actual tax benefits recognized in excess of tax benefits previously established upon grant are reported as financing on the consolidated statements of cash flows. Prior to adoption, such tax benefits were reported as an increase to operating activities. The adoption of SFAS 123R did not have a significant impact on our financial position or results of operations.

We account for our employee stock option and restricted stock expense at the date of grant. All stock option and restricted stock grants have an exercise price equal to the fair market value of our common stock at the date of grant and generally have a 5 to 10 year term. The fair value of stock option and restricted stock grants are amortized to expense on an even basis over the vesting period.

Revenue Recognition

Revenues are recorded in the period the merchandise is shipped. As is typical in the pharmaceutical industry, gross product sales are subject to a variety of deductions, primarily representing rebates and discounts to government agencies, wholesalers and managed care organizations. These deductions represent estimates of the related liabilities and, as such, judgment is required when estimating the impact of these sales deductions on gross sales for a reporting period. Historically, our adjustments for actual future settlements have not been material, and have resulted in either a net increase or a net decrease to net income. If estimates are not representative of actual settlement, results could be materially affected. Provisions for estimated sales allowances, returns, rebates and other pricing adjustments are accrued at the time revenues are recognized as a direct reduction of such revenue.

The accruals are estimated based on available information, including third party data, regarding the portion of sales on which rebates and discounts can be earned, adjusted as appropriate for specific known events and the prevailing contractual discount rate. Provisions are reflected either as a direct reduction to accounts receivable or, to the extent that they are due to entities other than customers, as accrued expenses. Adjustments to estimates are recorded when customer credits are issued or payments are made to third parties.

The sensitivity of estimates can vary by program and type of customer. However, estimates associated with Medicaid and contract rebates are most at risk for adjustment because of the extensive time delay between the recording of the accrual and its ultimate settlement, an interval that can range up to one year. Because of this time lag, in any given quarter, adjustments to actual may incorporate revisions of prior quarters.

Provisions for Medicaid and contract rebates during a period are recorded based upon the actual historical experience ratio of rebates paid and actual prescriptions written. The experience ratio is applied to the period's sales to determine the rebate accrual and related expense. This experience ratio is evaluated regularly to ensure that the historical trends are as current as practicable. As appropriate, we will adjust the ratio to more closely match the current experience or expected future experience. In assessing this ratio, we consider current contract terms, such as the effect of changes in formulary status, discount rate and utilization trends. Periodically, the accrual is adjusted based upon actual payments made for rebates. If the ratio is not indicative of future experience, results could be affected. Rebate accruals for Medicaid were $31,756 at March 31, 2008 and $30,606 at March 31, 2007. Commercial discounts and other rebate accruals were $141,949 at March 31, 2008 and $115,893 at March 31, 2007. These and other rebate accruals are established in the period the related revenue was recognized, resulting in a reduction to sales and the establishment of a liability, which is included in accrued expenses.

The following table summarizes the activity in the accounts related to accrued rebates, sales returns and discounts (In thousands):

 
 
Beginning balance
 
Provision for rebates Changes in estimates
Settlements
 
 
Provision for returns Changes in estimates
Settlements
 
 
Provision for chargebacks and discounts Changes in estimates
Settlements
 
 
Ending balance
   March 31, 2008

        $208,063

          440,975               2,500
       (  412,852)
            30,623

            30,804                         
       (    28,273)
               2,531

          346,496        (      7,700)
       (  350,332)
       (    11,536)

        $229,681
        =======    March 31, 2007

        $158,277

          369,473               3,301
       (  324,695)
            48,079

            27,398        (      1,264)
       (    21,925)
              4,209

          378,809        (      7,053)
       (  374,258)
       (      2,502)
              
        $208,063
        =======

Deductions for chargebacks (primarily discounts to group purchasing organizations and federal government agencies) closely approximate actual as these deductions are settled generally within 2-3 weeks of incurring the liability.

Forest's policy relating to the supply of inventory at wholesalers is to maintain stocking levels of up to three weeks and to keep monthly levels consistent from year to year, based on patterns of utilization. We have historically closely monitored wholesale customer stocking levels by purchasing information directly from customers and by obtaining other third party information. Unusual or unexpected variations in buying patterns or utilizations are investigated.

Sales incentives are generally given in connection with a new product launch. These sales incentives are recorded as a reduction of revenues and are based on terms fixed at the time goods are shipped. New product launches may result in expected temporary increases in wholesaler inventories, which as described above, are closely monitored and historically have not resulted in increased product returns.

Forward Looking Statements

Except for the historical information contained herein, the Management Discussion and other portions of this Annual Report contain forward looking statements that involve a number of risks and uncertainties, including the difficulty of predicting FDA approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, the timely development and launch of new products, changes in laws and regulations affecting the healthcare industry and the risk factors listed from time to time in our filings with the SEC, including the Annual Report on Form 10-K for the fiscal year ended March 31, 2008.

Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, operations may be exposed to fluctuations in currency values and interest rates. These fluctuations can vary the costs of financing, investing and operating transactions. Because we had no debt and only minimal foreign currency transactions, there was no material impact on earnings due to fluctuations in interest and currency exchange rates.

EX-10

Exhibit 10.12
SEPARATION AGREEMENT AND GENERAL RELEASE
This Separation Agreement and General Release ("Agreement") is made and entered into by and between DR. IVAN GERGEL ("Dr. Ivan Gergel") and FOREST LABORATORIES, INC. ("Forest").
In consideration of the mutual promises and covenants set forth herein, Dr. Ivan Gergel and Forest agree as follows:
Termination of Employment. Dr. Ivan Gergel hereby resigns from his position as Senior Vice President, Scientific Affairs, President FRI in the Corporate Research & Development organization within the Executive area with Forest (as well as from any and all other positions with Forest in whatever capacity) effective March 31, 2008. Dr. Ivan Gergel’s last day of regular work in his current capacity at Forest shall be on or about March 31 2008 as determined in consultation with Dr. Lawrence S. Olanoff, M.D., President & COO of Forest Laboratories, Inc. From April 1, 2008, to and including December 31, 2008, Dr. Gergel will serve the Company in the capacity of Special Advisor to the President & COO. Dr. Ivan Gergel’s last day of employment with Forest shall be December 31, 2008 (the "Separation Date"). Dr. Ivan Gergel shall have permission to use his current position title throughout the period of this agreement, up to and including the Separation Date.
1.         Continued Employment. Forest agrees to continue Dr. Ivan Gergel’s employment up to and including the Separation Date (December 31, 2008). Forest's sole obligations to Dr. Ivan Gergel in connection with such continued employment shall be the continued payment of salary and provision of benefits as set forth in this Agreement. The period from January 1, 2008 through March 31, 2008 shall serve as the Notice Period and be inclusive in this Agreement. From April 1, 2008 up to and including the Separation Date, Dr. Ivan Gergel’s employment shall consist of making himself available for consultations with members of Forest's management and providing requested reports and/or works as determined by Forest. Such employment may or may not require Dr. Ivan Gergel’s presence at meetings. It is understood that Dr. Ivan Gergel will cooperate and will not refuse any appropriate and reasonable request by Forest for information and/or assistance during the time period from April 1, 2008 through the Separation Date, inclusive, subject to Dr. Ivan Gergel’s reasonable availability. Failure to accept, and/or respond to such reasonable requests may be considered as a breach of this Agreement and may result in, among other things, a suspension or termination of monetary benefits. It is understood that Dr. Ivan Gergel may engage in interviews and other activities up to and including the Separation Date for purposes of securing new employment.
Dr. Ivan Gergel acknowledges and agrees that if Dr. Ivan Gergel does not enter into this Agreement, his employment with Forest will not be extended to the Separation Date and he will not receive the salary and other benefits set forth in this Agreement (with the exception of any benefits that would otherwise be required by law). Further, Dr. Ivan Gergel acknowledges that the agreement known as Change in Control between Forest and Dr. Gergel shall be canceled as of March 31, 2008.
2.         Salary Payments by Forest to Dr. Ivan Gergel. Forest agrees to continue to pay Dr. Ivan Gergel his current annual salary of $565,000 on Forest's customary payroll dates, and in accordance with Forest's customary payroll practices, less all applicable taxes, withholdings and deductions for the period April 1, 2008 up to and including the Separation Date. Dr. Ivan Gergel may continue to possess and use the company provided vehicle through the separation date and its use shall be taxable as per IRS regulations. This company vehicle is to be returned to the Forest in good condition as per policy and plan no later than December 31, 2008. Dr. Ivan Gergel shall be eligible to receive a performance bonus only for the period January 1, 2008 through March 31, 2008. Such performance bonus shall be paid no later than the Separation Date. No eligibility for bonus will be made for the period of April 1, 2008 through December 31, 2008 (Separation Date). Upon the satisfactory execution of this agreement, Forest shall release Dr. Ivan Gergel from any obligation to Forest as a result of his relocation. Vacation time will vest up to the end of March 31, 2008; there will be no further accrual between that date and the Separation Date. Dr. Ivan Gergel shall be paid for all unused vacation as earned in a check no later than one month following Separation Date. Unemployment eligibility is determined by state law; however, Forest shall not contest any truthful application for benefits made by Dr. Ivan Gergel.
3.         Medical and Dental Benefits. Forest agrees to continue Dr. Ivan Gergel’s participation in its existing medical and dental plans at his existing co-pay, annual deductible and monthly premium contribution rates. These benefits shall continue up to and including the Separation Date, unless Dr. Ivan Gergel becomes covered by a medical and/or dental plan prior to the Separation Date and coverage is redundant or not needed. Dr. Ivan Gergel shall immediately notify Forest of any new medical and/or dental plan enrollment occurring prior to the Separation Date. In any event, regular enrollment in the Forest medical and dental benefit plans shall cease as of the Separation Date where no notification was provided to Forest. After the Separation Date, Dr. Ivan Gergel has the right to obtain benefits continuation through the provisions of COBRA at his own expense and at the then prevailing COBRA rate for such coverage through the carrier. Details regarding his COBRA rights have been provided to Dr. Ivan Gergel. Forest reserves the right to amend, alter, modify or otherwise terminate the company medical and dental plans at any time, with or without notice so long as such amendment, alteration, modification or termination is generally applicable to employees similarly situated to Dr. Ivan Gergel. In the event that Forest makes any changes to the plans (as opposed to terminating the plans) while Dr. Ivan Gergel is eligible for coverage, he will automatically be eligible to be enrolled in the same level of coverage, subject to any such applicable changes. Forest's human resources department will be available for benefit plan discussion and enrollment support.
4.         Life Insurance. Forest agrees to continue Dr. Ivan Gergel’s participation in Forest’s life insurance plan in an amount equal to Dr. Ivan Gergel’s current annual salary (as set forth in Section 2 of this Agreement) up to and including the Separation Date. Any supplemental life insurance amount presently in effect through any Forest plan will also be continued up to and including the Separation Date, unless canceled in writing prior to the Separation Date.
5.         Stock Options Dr. Gergel has access to the complete list of all stock option agreements (the "Option Agreements") (the "Optionee Statement") currently in effect between Forest and Dr. Ivan Gergel, including the number of shares of Forest's Common Stock covered, the exercise price, the expiration date and the extent to which such options are currently vested. For reference, Dr. Gergel may be directed to our stock option vendor, Smith Barney at their website (www.benefit.access.com) for further information. Forest and Dr. Ivan Gergel agree that the Option Agreements shall remain in full force and effect up to and including the Separation Date, in accordance with their respective terms and conditions and the provisions of this agreement. For a period of 90 days immediately following the Separation Date or his early resignation date which ever shall occur first, Dr. Ivan Gergel shall have the right to exercise any vested stock options in accordance with the terms and conditions contained in the plan documents. If, prior to the Separation Date, Dr. Ivan Gergel becomes employed with another employer, who requires him to not be employed by another firm, and in order to accept that employment, Dr. Ivan Gergel resigns from Forest, this Separation Agreement and General Release shall remain in full force and effect, except that Dr. Ivan Gergel will forego any stock option consideration beyond the date of his resignation.
Nothing contained herein shall be deemed a representation or warranty by Forest as to the market price or value of shares of Forest's Common Stock.
6.         401(k) Plan. Dr. Ivan Gergel will be eligible to participate in Forest's 401(k) salary reduction plan, subject to plan terms and limitations, on the same basis available to Forest's employees generally up to and including the Separation Date, or until new employment is obtained, whichever occurs first. Dr. Ivan Gergel will be eligible to receive Forest's matching 401k contributions according to the regular schedule during the period continuing salary payments are made to Dr. Ivan Gergel under this Agreement. In the event that Forest makes any changes to the plan (as opposed to terminating the plans) while Dr. Ivan Gergel is eligible for coverage, he will automatically be eligible to be enrolled in the same or similar level of coverage, subject to any such applicable changes. Any matching payments received will be based on the actual amounts contributed by Dr. Ivan Gergel into the 401(k) plan. Dr. Ivan Gergel has achieved 100% vesting in the 401k plan during the period up to and including the Separation Date.
7.         Profit Sharing. Dr. Ivan Gergel will be eligible to receive profit sharing distributions for the 2007 calendar year pursuant to Forest's profit sharing plan, as determined by the Board of Directors, and in accordance with plan terms and requirements. Dr. Ivan Gergel will be eligible to receive profit sharing distributions for the 2008 calendar year pursuant to Forest's profit sharing plan, as determined by the Board of Directors, and in accordance with plan terms and requirements. He will not be eligible for profit sharing distributions for the 2009 calendar year pursuant to Forest's profit sharing plan, as determined by the Board of Directors, and in accordance with plan terms and requirements.
Nothing set forth in Sections 4 through 7 of this agreement shall be deemed to require Forest to maintain any of the plans referred to in such Sections or prevent Forest from changing the terms, conditions or benefits of such plans on a basis applicable to Forest's employees generally.
Dr. Ivan Gergel acknowledges and agrees that the salary and other benefits provided for in Sections 3 through 7 of this Agreement exceed any and all salary, bonus, commission, vacation pay, personal time pay, holiday pay, floating holiday pay, sick pay, and other compensation and benefits of any kind to which Dr. Ivan Gergel may have been entitled from Forest absent this Agreement. Dr. Ivan Gergel further acknowledges and agrees that other than the salary and other benefits provided for in Sections 3 through 7 of this Agreement, Forest is under no further obligation to make any payments of any kind to, or on behalf of Dr. Ivan Gergel for any reason whatsoever.
8.         General Release by Dr. Ivan Gergel. Dr. Ivan Gergel acknowledges and agrees that for and in consideration of the continuation of his employment up to and including the Separation Date, along with his continued salary payments and other benefits provided for in this Agreement and the other promises and valuable consideration set forth in this Agreement, Dr. Ivan Gergel, for himself and for his heirs, executors, administrators, trustees, legal representatives, successors and assigns (collectively referred to for purposes of this General Release as the "Employee Releasors"), hereby forever releases and discharges Forest and any of Forest's past, present or future parent entities, subsidiaries, divisions, affiliates or related business entities, assets, employee benefit and/or pension plans or funds, successors and assigns and any of their and/or Forest's past, present or future owners, directors, officers, attorneys, fiduciaries, agents, trustees, administrators, employees, successors and assigns, whether acting as agents for Forest or in their individual capacities (collectively referred to as the, "Forest Releasees"), from all claims, demands, causes of action, liabilities of any kind whatsoever (upon any legal or equitable theory, whether based on any federal, state or local constitution, statute, ordinance, regulation, common law, court decision or otherwise), whether known or unknown, asserted or unasserted, which the Employee Releasors ever had, now have, or hereafter may have against any of the Forest Releasees by reason of any actual or alleged act, omission, transaction, practice, policy, conduct, occurrence and/or other matter from the beginning of the World up to and including the date that Dr. Ivan Gergel signs this Agreement.
Without in any way limiting the generality of the foregoing, the Employee Releasors so release and discharge the Forest Releasees from, including but not limited to: (a) any and all claims arising under: Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act, as amended by the Older Workers Benefit Protection Act; 42 U.S.C. § 1981; the Americans With Disabilities Act; the Family and Medical Leave Act; the Employee Retirement Income Security Act (except for vested benefits, which are not affected by this Agreement); the Fair Labor Standards Act; the Equal Pay Act; the National Labor Relations Act; the New York State Human Rights Law (the New York State Executive Law); and/or the New York City Human Rights Law (the New York City Administrative Code), and any amendments made to any of the above statutes; (b) any and all other claims for employment discrimination, harassment, and/or retaliation (whether based on a federal, state or local constitution, statute, ordinance, code, common law, court decision or otherwise); (c) any and all claims relating to Dr. Ivan Gergel 's employment by Forest and/or any of the other Forest Releasees, the terms and conditions of such employment and/or the termination of such employment; (d) any and all claims relating to, or arising out of, the making of this Agreement; (e) any and all claims for damages or personal injury of any type whatsoever (whether arising by virtue of any constitution, statute, ordinance, common law, court decision or otherwise); (f) any and all claims of breach of implied or express contract, misrepresentation, negligence, fraud, wrongful discharge, constructive discharge, infliction of emotional distress, intentional infliction of emotional distress, battery, defamation, libel, slander, compensatory and/or punitive damages; and (g) any and all claims for attorneys' fees, costs, disbursements and the like. At the time of signing, Forest is unaware of any claims it has or may have against Dr. Ivan Gergel arising prior to the date of its execution of this Separation Agreement and General Release. Accordingly, Forest hereby releases Dr. Ivan Gergel from all known claims against him arising prior to the date of Forest’s execution of this Separation Agreement and General Release.
9.         No Pending Or Future Claims. Dr. Ivan Gergel represents that as of the date of his signing of this Agreement he has not commenced, maintained, filed or prosecuted (nor has any person or entity commenced, maintained, filed or prosecuted on Dr. Ivan Gergel’s behalf) any action, charge, claim, complaint or proceeding of any kind (on his own behalf and/or on behalf of any other person and/or on behalf of or as a member of any alleged class of persons) that is presently pending in any court, or before any administrative or investigative body or agency or other tribunal (whether public, quasi public or private )("Pending Claims"), against or involving Forest and/or any of the other Forest Releasees. If there are any such Pending Claims, Dr. Ivan Gergel shall cause them to be withdrawn immediately with prejudice, and without attorneys' fees, disbursements or costs. Dr. Ivan Gergel further covenants and agrees that he will not at any time hereafter commence, maintain, file or prosecute (nor shall any person or entity commence, maintain, file or prosecute on his behalf) any action, charge, claim, complaint or proceeding of any kind against or involving Forest and/or any of the other Forest Releasees that in any way arises out of or relates to any actual or alleged act, omission, transaction, practice, policy, conduct, occurrence and/or other matter from the beginning of the World to the date that Dr. Ivan Gergel signs this Agreement ("Future Claims"). If, notwithstanding the representations, covenants and agreements made by Dr. Ivan Gergel in this Section 10, Dr. Ivan Gergel maintains or brings any Pending Claims or Future Claims against Forest and/or any of the other Forest Releasees, he shall indemnify and hold harmless Forest and the other Forest Releasees from and against any and all demands, assessments, judgment, costs, damages, losses and liabilities, and attorneys’ fees and other expenses which are related to such Pending Claims or Future Claims.
This Section 10 shall not apply to the filing of any charge or complaint arising under the Age Discrimination in Employment Act or to any participation in any investigation or proceeding conducted by the United States Equal Employment Opportunity Commission (the "EEOC") under the Age Discrimination in Employment Act. Dr. Ivan Gergel acknowledges and agrees that the immediately preceding two sentences shall have no affect on the validity of the General Release set forth in Section 9 hereto, including in particular, the validity of Dr. Ivan Gergel’s waiver and release of any and all claims she may have against Forest and/or any of the other Forest Releasees under the Age Discrimination in Employment Act. Nor do the first two sentences of this paragraph constitute a waiver of any kind by Forest (and/or any of the other Forest Releasees) of its (their) right to assert the General Release set forth in Section 9 hereto as a defense to any charge or complaint alleging any violations of the Age Discrimination in Employment Act.
10.         Confidential and Proprietary Information of Forest. Dr. Ivan Gergel understands and agrees that all books, records, documents and information, whether written or not, pertaining to Forest's business activities, are the confidential and proprietary property of Forest (hereinafter referred to as "trade secrets and confidential and proprietary information"). Dr. Ivan Gergel warrants, covenants, and agrees that he will not at any time prior to or following the Separation Date disclose any of Forest's trade secrets and confidential and proprietary information to any person or entity not employed, owned by, or otherwise affiliated with Forest and only for Forest’s benefit. Dr. Ivan Gergel further agrees that upon request at any time by Forest or on the Separation Date, whichever is sooner, Dr. Ivan Gergel shall return to Forest all trade secrets and confidential and proprietary information and all other property of Forest (e.g., keys, ID cards, other security-related devices, credit cards, equipment, documents, records, and manuals), in whatever form maintained, in his possession, custody or control, and shall not retain any copies of any of the foregoing.
11.         Cooperation by Dr. Ivan Gergel. At all times prior to and following the Separation Date, and subject to Dr. Ivan Gergel’s reasonable availability, Dr. Ivan Gergel agrees to cooperate with and make himself available to Forest (including, in particular, its General Counsel), as Forest may reasonably request, to assist in any matter including but not limited to giving truthful testimony in connection with any action or proceeding with respect to which Dr. Ivan Gergel has knowledge, information or expertise. In the event of such a request, Forest shall reimburse Dr. Ivan Gergel for reasonable expenses incurred by Dr. Ivan Gergel in providing such assistance.
12.         Testimony Required by Law or Regulatory Authority. Dr. Ivan Gergel further agrees that, except as may be required by law or regulation, he will not at any time discuss any matter concerning Forest with any person or entity adverse to or potentially adverse to Forest on any matter including but not limited to any employment claims or customer claims, without the prior written consent of Forest. However, if required by a court, a governmental regulatory agency or self-regulatory agency to provide testimony or information regarding Forest and/or any of the Forest Releasees, Dr. Ivan Gergel will cooperate with said court or regulatory agency. If compelled to testify by a validly served subpoena in any legal proceeding or by regulatory authority, Dr. Ivan Gergel will testify truthfully as to all matters concerning his employment at Forest. If a regulatory agency or self-regulatory agency contacts Dr. Ivan Gergel regarding Forest and/or any of the other Forest Releasees or if Dr. Ivan Gergel receives a subpoena or other court or legal process relating in any way to Forest, any of the other Forest Releasees and/or any present or former Forest customer or employee, he immediately will give Forest prior written notice and shall make himself available to Forest to be interviewed concerning the subject of such contact, to the extent permitted by applicable law.
This Section 13 shall not apply to the filing of any charge or complaint arising under the Age Discrimination in Employment Act or to any participation in any investigation or proceeding conducted by the EEOC under the Age Discrimination in Employment Act. Dr. Ivan Gergel acknowledges and agrees that the immediately preceding two sentences shall have no affect on the validity of the General Release set forth in Section 9 hereto, including in particular the validity of, Dr. Ivan Gergel’s waiver and release of any and all claims he may have against any of the Forest Releasees under the Age Discrimination in Employment Act. Nor do such first two sentences of this paragraph constitute a waiver of any kind by Forest (and/or any of the other Forest Releasees) of its (their) right to assert the General Release set forth in Section 9 hereto as a defense to any charge or complaint alleging any violations of the Age Discrimination in Employment Act.
13.         Confidentiality of Agreement. Dr. Ivan Gergel and Forest agree not to disclose or cause to be disclosed, either directly or indirectly, to any person or entity (with the exception of their respective attorneys, financial advisors, immediate family members, governmental agencies, taxing authorities, governmental regulatory or self-regulatory authority or as otherwise required by law), any information regarding the negotiation, existence, terms and conditions of this Agreement. For the purpose of reference checking, it is agreed that the Human Resources department shall be the provider of any information as to reference or employment.
14.         Entire Agreement and Severability. This Agreement constitutes the entire agreement and understanding between the parties and supersedes, cancels and terminates any and all prior agreements, arrangements, negotiations, discussions or understandings between the parties hereto, whether written or oral including the Change in Control Agreement entered into by Dr. Ivan Gergel and Forest Laboratories, Inc. upon his joining the company and dated June 16, 1998. This Separation Agreement and General Release ("the Agreement") may not be modified, amended or terminated, except by a written agreement signed by all of the parties hereto. The terms of this Agreement are deemed an enforceable contract and not a mere recital.
In the event any provision (or part thereof) of this Agreement is held to be invalid, illegal, void or unenforceable by a court of competent jurisdiction, such provision (or part thereof) shall be deemed to be modified so that its purpose can lawfully be effectuated to the fullest extent of the law and in any case shall not affect the validity or enforceability of the remainder of this Agreement. However, in the event that any of the waivers and releases set forth in Section 9 of this Agreement are held to be invalid, illegal, void and/or unenforceable by a court of competent jurisdiction, Dr. Ivan Gergel shall duly execute and deliver to Forest a general release and waiver that is legal and enforceable to the fullest extent of the law.
15.         Choice of Law and Forum. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. Each party hereto, as to any dispute with regard to this Agreement, hereby submits to the exclusive jurisdiction of the state and federal courts located in New York, New York and further agrees not to assert that any action brought in such jurisdiction has been brought in an inconvenient forum.
16.         Notices. Any notices required or permitted under this Agreement shall be in writing, addressed as follows:
	(a)	If to	DR. IVAN GERGEL:
	(b)	If to Forest:	Bernard J. McGovern Forest Laboratories, Inc. 909 Third Avenue New York, New York 10022
	With a copy to:		Peter J. Venaglia, Esq. Dornbush Schaeffer Strongin & Venaglia, LLP 747 Third Avenue New York, New York 10017
17.         Counterparts. This Agreement may be executed in any number of counterparts each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same Agreement.
18.         Enforcement of Agreement. In the event that any party to this Agreement commits a breach of this Agreement, the non-breaching party shall be entitled to pursue any and all of its or his remedies under law and/or in equity arising out of such breach of this Agreement. Should Forest (or Dr. Gergel) prevail in any such action brought by either party to enforce any of the terms of this Agreement, the prevailing party shall be entitled to an award in favor of the other for the reasonable attorneys’ fees, costs and disbursement incurred by the prevailing party in connection with such action. The immediately preceding sentence shall not apply to any action or proceeding commenced under the Age Discrimination in Employment Act.
Forest shall also have the right to enforce this Agreement (including, in particular, Sections 10 - 14 hereof), upon proof of any breach or threatened breach thereof, by obtaining, in any court of competent jurisdiction, a mandatory injunction requiring compliance with the terms of this Agreement. Forest shall be entitled to entry of a temporary restraining order, preliminary injunction and permanent injunction to enforce the terms of this Agreement, and Forest shall not be required to demonstrate irreparable harm or the absence of an adequate remedy at law in order to obtain such relief, nor will the posting of bond or other security be necessary. All of the rights and remedies set forth in this Section 19 are cumulative and not alternative. Notwithstanding any such relief, all of the terms of this Agreement, including, without limitation, the General Release set forth in Section 9 hereto, shall remain in full force and effect.
This Agreement may be used or introduced as evidence only in an action or proceeding to enforce its terms. This Agreement shall not be used or introduced for any other purpose except as otherwise provided in this Agreement.
19.         Knowing and Voluntary Execution. DR. IVAN GERGEL acknowledges and agrees that: (a) he has carefully read and fully understands all of the provisions of this Agreement, specifically including but not limited to the General Release contained in Section 9 of this Agreement; (b) he has not relied upon any representations or statements, written or oral, not set forth in this Agreement; (c) the Employee has thoroughly reviewed the releases and waivers contained herein, and understood the effect of said releases and waivers before executing this Agreement; (d) the only consideration for his signing this Agreement is as set forth herein; (e) the consideration provided to him under this Agreement is in addition to anything of value to which he may otherwise be entitled; (f) he executes this Agreement freely, voluntarily and with full knowledge of its terms and consequences; (g) he has been afforded sufficient time and opportunity to consult with an attorney and is hereby advised to consult with an attorney prior to signing this Agreement; (h) he has been given at least twenty-one (21) days within which to consider this Agreement and that if he signs this Agreement in less than twenty-one (21) days he does so voluntarily and without any pressure or coercion of any nature from Forest; (i) for a period of seven (7) days following his execution of this Agreement, he may revoke this Agreement by providing written notice of such revocation to Forest and that this Agreement shall not become effective or enforceable until the seven (7) day revocation period has expired; and (j) that if Dr. Ivan Gergel revokes this Agreement, this Agreement will not become effective or enforceable and Dr. Ivan Gergel will not receive or be entitled to receive any of the benefits and payments set forth in this Agreement.
IN WITNESS WHEREOF, the parties hereto evidence their agreement by their signatures.
Date: February 11, 2008			By:	FOREST LABORATORIES, INC. /s/ Lawrence S. Olanoff Dr. Lawrence S. Olanoff President & Chief Operating Officer
Date:   3/17/08                                    By: /s/ Ivan Gergel                                         Dr. Ivan Gergel

EX-10

Exhibit 10.19

EMPLOYEE RESTRICTED STOCK AGREEMENT

(Time-Based Conditions)

Under The 2007 Equity Incentive Plan
Of Forest Laboratories, Inc.

In consideration of services to be rendered by you (the "Grantee") to Forest Laboratories, Inc., a Delaware company (the "Company"), you have been awarded a stock grant (the "Grant") under the Company’s 2007 Equity Incentive Plan (the "2007 Plan"), which is incorporated herein by reference, covering a number of shares of Common Stock of the Company, par value $.10 per share (the "Shares") as listed on your restricted stock grant page (the "Information Page") on the website of the Stock Plan Administrator (as defined in Paragraph 13 below) subject to the terms and conditions of this Agreement and the 2007 Plan.

1.      STOCK GRANT TERMS AND STOCK CERTIFICATES. The date of the Grant, the total number of Shares subject to the Grant, the Vesting Dates, the number of Shares subject to the Grant which vest on each Vesting Date (as described in Paragraph 2 hereof) and the per Share consideration for the Grant, if any, are identified on the Information Page. The stock certificate(s), if any, evidencing the Shares underlying the Grant shall be registered on the Company’s books in the name of the Grantee as of the date of Grant. Physical possession or custody of any such stock certificate(s) shall be retained by the Company or by a bank or other institution designated by the Company, until such Shares are vested or forfeited in accordance with the terms of this Agreement. While in its possession, the Company reserves the right to place a legend on the stock certificate(s) restricting the transferability of such certificate(s) and referring to the terms and conditions (including, without limitation, forfeiture) relating to the Shares represented by the stock certificate(s). If the Shares subject to the Grant have been evidenced by stock certificate(s) pursuant to this Paragraph, then as soon as practicable after the end of the applicable Restricted Period (as defined in Paragraph 2 hereof), the Company shall cause unlegended stock certificate(s) covering the requisite number of vested Shares registered on the Company’s books in the name of the Grantee (or his permitted transferee pursuant to Paragraph 6 hereof), to be delivered to such person and will cancel the legended stock certificates. Shares issued hereunder shall be fully paid and non-assessable.

2.      VESTING. Subject to Paragraph 3 hereof, a number of Shares underlying the Grant will become vested and non-forfeitable on each vesting date as listed on the Information Page (the "Vesting Date"), provided that on the applicable Vesting Date the Grantee continues to be employed by the Company (the "Condition"). Promptly following each Vesting Date, the Stock Plan Administrator will release to the Grantee (or his permitted transferee pursuant to Paragraph 6 hereof) the number of Shares with respect to which the Condition was satisfied on such Vesting Date, subject to any amounts that are withheld pursuant to Paragraph 9. With respect to any Share underlying the Grant, the period of time commencing on the date of the Grant and, subject to Paragraph 3 hereof, ending on the applicable Vesting Date shall be referred to herein as the "Restricted Period".

3.      DISABILITY OR DEATH OF GRANTEE. In the event of the Grantee’s disability (as defined in the 2007 Plan) or death while an employee of the Company and during the Restricted Period, then provided the Grant was awarded to the Grantee at least one year prior to the Grantee’s employment termination date or as otherwise determined by the Committee (as defined below in Paragraph 13), the then unvested Shares subject to any remaining time-based restrictions shall immediately vest on the date of such employment termination and the Restricted Period shall end on such date.

4.      FORFEITURE OF UNVESTED SHARES UPON TERMINATION OF EMPLOYMENT. Except with respect to Shares which have vested pursuant to Paragraph 2 or 3 on or before the employment termination date, in the event that the Grantee ceases as an employee of the Company for any reason during the Restricted Period, all Shares subject to the Grant shall be forfeited by the Grantee as of the date that such employment terminates. Any Shares covered by the Grant that are forfeited by the Grantee shall be retired by the Company and resume the status of treasury shares. The Committee in its discretion may waive in whole or in part any time-based Conditions which have not been satisfied except in connection with an employment termination for gross misconduct.

5.      EMPLOYMENT. In consideration of the awarding of the Grant and regardless of whether the Conditions shall be satisfied, the Grantee will fulfill all the duties and obligations of his or her employment by the Company or its subsidiary. Nothing in this Agreement shall confer upon the Grantee any right to similar stock grants in future years or any right to be continued in the employ of the Company or its subsidiaries or shall interfere in any way with the right of the Company or any such subsidiary to terminate or otherwise modify the terms of the Grantee's employment.

6.      RESTRICTIONS ON TRANSFER. The Shares subject to the Grant shall not be transferable during the Restricted Period, other than by will or the laws of descent and distribution, and except that the Grantee may transfer the Shares by gift to one or more members of the Grantee's immediate family, including trusts for the benefit of such family members and partnerships or limited liability companies in which such family members are the only owners. In the event the Grantee wishes to transfer the Shares during the Restricted Period by gift as permitted by this Paragraph, the Grantee shall provide the Stock Plan Administrator notice of any such transfer in form and substance reasonably satisfactory to the Company and the Stock Plan Administrator, and no transferee shall have any rights in the Shares until such notice has been accepted by the Stock Plan Administrator. Transferred Shares shall be subject to all of the same terms and conditions of the 2007 Plan and this Agreement as if such Shares had not been transferred. More particularly (but without limiting the generality of the foregoing), during the Restricted Period the Shares may not be assigned, transferred (except as provided above), pledged or hypothecated in any way, shall not be assignable by operation of law and shall not be subject to execution, attachment, pledge, hypothecation or other disposition contrary to the provisions hereof, and the levy of any execution, attachment or similar process upon the Shares shall be null and void and without effect.

7.      EFFECT ON OTHER BENEFITS. In no event shall the value of the Shares covered by the Grant awarded under this Agreement at any time be included as compensation or earnings for purposes of determining any other compensation, retirement benefit or other benefit offered to employees of the Company or its subsidiaries under any benefit plan of the Company unless otherwise specifically provided for in such benefit plan.

8.      AVAILABLE SHARES; LEGAL COMPLIANCE. The Company shall pay all original issue and transfer taxes with respect to the issuance of such Shares and all other fees and expenses necessarily incurred by the Company in connection therewith and will from time to time use its best efforts to comply with all laws and regulations which, in the opinion of counsel for the Company, shall be applicable thereto.

9.      TAXES. Except as provided below, the Grantee must pay the Company in cash upon demand any and all amounts due for the purpose of satisfying the Company’s liability, if any, to withhold federal, state or local income tax or employment tax (plus interest or penalties thereon, if any, caused by a delay in making such payment) incurred by reason of the receipt of the Grant (including any such taxes incurred as a result of the Grantee’s election pursuant to Paragraph 10 hereof) or by reason of the vesting of the Shares in accordance with the terms of this Agreement. By accepting this Grant, the Grantee consents and directs that the Stock Plan Administrator may, but is not obligated to, withhold the number of Shares having an aggregate fair market value as of the date preceding the withholding sufficient to satisfy the Grantee’s obligations hereunder and to deliver such Shares to the Company. In addition, the Company shall, to the extent permitted by law, have the right to deduct such amount from any payment of any kind otherwise due to the Grantee.

10.    TAX ELECTION. The Grantee hereby agrees to deliver to the Company a signed copy of any documents he or she may file with the Internal Revenue Service evidencing an election under Section 83(b) of the Internal Revenue Code of 1986 as amended, which copy shall be delivered to the Company within five (5) days after the date on which any such election is made.

11.    CONDITION PRECEDENT TO GRANT. In the event that the award of the Grant shall be subject to, or shall require, any prior exchange listing, shareholder approval or other condition or act, pursuant to the applicable laws, regulations or policies of any stock exchange, federal or local government or its agencies or representatives, then the Grant hereunder shall not be deemed awarded until the fulfillment of such condition.

12.    RIGHTS AS A STOCKHOLDER. Subject to the terms and conditions of this Agreement and the 2007 Plan, including, without limitation, the restrictions on transfer and the risk of forfeiture applicable to the Shares covered by the Grant during the Restricted Period, from and after the date of Grant, the Grantee shall have all the rights of a stockholder of the Company with respect to the Shares covered by the Grant, including the right to vote the Shares and the right to receive dividends or other distributions paid thereon, provided that any dividends in the form of Shares will be subject to the terms and conditions of the 2007 Plan and this Agreement.

13.    ADMINISTRATION. The Compensation Committee (the "Committee") shall have full authority and discretion, subject only to the express terms of the 2007 Plan, to decide all matters relating to the administration and interpretation of the 2007 Plan and this Agreement and the Grantee agrees to accept all such Committee determinations as final, conclusive and binding. The Company may retain a third-party plan administrator or may designate an internal department to assist in the administration of the 2007 Plan. The term "Stock Plan Administrator" as used herein shall mean such third-party plan administrator or such internal department as designated by the Company from time to time. 

14.    COSTS. The Company shall not charge any Grantee for any part of the Company’s cost to administer and operate the 2007 Plan. If the Company retains a third-party plan administrator to assist in the administration of the 2007 Plan, the Grantee may be charged fees by such third-party plan administrator in connection with any transactions which the Grantee effects through such third-party plan administrator.

15.    AMENDMENT. This Agreement shall be subject to the terms of the 2007 Plan, as may be amended by the Company from time to time, except that no amendment of the 2007 Plan adopted after the date of this Agreement shall impair the Grantee’s rights hereunder without his or her consent. In addition to the foregoing, this Agreement may be amended by the Committee, provided that no such amendment shall impair the Grantee’s rights hereunder without his or her consent.

16.    DATA PRIVACY. By entering into this Agreement, the Grantee (a) authorizes the Company and its subsidiaries and the Stock Plan Administrator or any agent of the Company providing recordkeeping services for the 2007 Plan to disclose to each other such information and data as either of them shall request in order to facilitate the award of Grants and the administration of the 2007 Plan; (b) waives any data privacy rights the Grantee may have with respect to such information; and (c) authorizes the Company and the Stock Plan Administrator or any agent of the Company providing recordkeeping services for the 2007 Plan to store and transmit such information in electronic form.

17.    NOTICES. All notices and communications by the Grantee in connection with this Agreement or the Shares granted hereunder shall be delivered to the Stock Plan Administrator and to the Company. Notices to the Stock Plan Administrator shall be delivered in accordance with its established procedures as set forth on the website of the Stock Plan Administrator and notices to the Company shall be delivered in writing by electronic mail, nationally recognized overnight courier or certified mail, postage prepaid to the attention of Ms. Rita Weinberger, Finance Department, Forest Laboratories, Inc., 909 Third Avenue, New York, New York 10022 (e-mail: rita.weinberger@frx.com). All notices and communications by the Stock Plan Administrator or the Company to the Grantee in connection with this Agreement shall be given in writing and shall be delivered electronically to the Grantee's e-mail address appearing on the records of the Company, or by nationally recognized overnight courier or certified mail, postage prepaid to the Grantee's residence or to such other address as may be designated in writing by the Grantee.

18.    ENTIRE AGREEMENT AND WAIVER. This Agreement and the 2007 Plan contain the entire understanding of the parties and supersede any prior understanding and agreements between them representing the subject matter hereof. To the extent that there is an inconsistency between the terms of the 2007 Plan and this Agreement, the terms of the 2007 Plan shall control. There are no other representations, agreements, arrangements or understandings, oral or written, between the parties hereto relating to the subject matter hereof which are not fully expressed herein or in the 2007 Plan. Any waiver or any right or failure to perform under this Agreement shall be in writing signed by the party granting the waiver and shall not be deemed a waiver of any subsequent failure to perform.

19.    SEVERABILITY AND VALIDITY. The various provisions of this Agreement are severable and any determination of invalidity or unenforceability of any one provision shall have no effect on the remaining provisions.

20.    GOVERNING LAW. The interpretation, enforceability and validity of this Agreement shall be governed by the substantive laws (but not the choice of law rules) of the State of New York.

21.    HEADINGS. Paragraph and other headings contained in this Agreement are for reference purposes only and are in no way intended to describe, interpret, define or limit the scope, extent or intent of the Grant or any provision hereof.

22.    SUBSIDIARY. As used herein, the term "subsidiary" shall mean any present or future corporation which would be a "subsidiary corporation" of the Company, as that term is defined in Section 424(f) of the Internal Revenue Code of 1986, as amended.

EX-10

[***] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
Explanatory Note: This Agreement was amended by the Amendment Agreement between the Parties dated as of February 27, 2008 (the "2008 Amendment"), a copy of which is being filed with the Securities and Exchange Commission simultaneous with the filing of this Agreement. Accordingly, this Agreement includes notations to direct readers to the 2008 Amendment with respect to those sections which were revised by the 2008 Amendment and has been conformed to reflect the deletion of those sections which were removed by the 2008 Amendment.
EXHIBIT 10.27
NEBIVOLOL DEVELOPMENT AND COMMERCIALIZATION AGREEMENT
This NEBIVOLOL DEVELOPMENT AND COMMERCIALIZATION AGREEMENT (this "Agreement") is entered into as of January 6, 2006 ("Effective Date"), by and between Forest Laboratories Holdings Limited, an Irish corporation having offices at Milner House, 18 Parliament Street, Hamilton HM11, Bermuda ("Forest"), and Mylan Laboratories Inc., a Pennsylvania corporation having offices at 1500 Corporate Drive, Suite 400, Canonsburg, PA 15317 ("Mylan"). Forest and Mylan sometimes shall individually be referred to hereinafter as a "Party" and collectively as the "Parties."
WHEREAS, Mylan has entered into that certain License Agreement Concerning Nebivolol between Janssen Pharmaceutica NV ("Janssen") and Mylan dated as of February 21, 2001, which is attached hereto and made a part hereof as Exhibit A (the "Janssen Agreement");
WHEREAS, Mylan Bertek Pharmaceuticals Inc., a wholly owned subsidiary of Mylan, has prepared and submitted to the United States Food and Drug Administration New Drug Application No. 21-742; and
WHEREAS, Forest has expertise in the development and commercialization of pharmaceutical drug products as contemplated by this Agreement and Mylan has agreed to grant certain licenses and sublicenses relating to the subject matter of the Janssen Agreement to Forest and Forest has agreed to make certain payments in connection with such grants and to perform the further activities contemplated hereby, all on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements contained herein, the Parties, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following terms used in this Agreement are defined below:
1.1.      " Affiliate" means, with respect to any Party, any entity, directly or indirectly, controlling, controlled by or under common control with such Party, for only so long as such control exists. For purposes of this Section, "control" means (i) in the case of a corporate entity, direct or indirect ownership of more than fifty percent (50%) of the stock or shares having the right to vote (or such lesser percentage which is the maximum allowed to be owned by a foreign corporation in a particular jurisdiction) for the election of directors of such entity or (ii) in the case of an entity that is not a corporate entity, the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such entity, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling," "controlled by" or "under common control" shall have the meanings comparable to the foregoing.
1.2.      " Calendar Quarter" shall mean a three (3) month period beginning on the first day of January, April, July, and October.
1.3.      " Calendar Year" shall mean a period of twelve (12) consecutive months beginning on the first day of January.
1.4.      " Change of Control" shall have the meaning set forth in Section 15.1 hereof.
1.5.      " Commercialization" or "Commercialize" means activities directed to marketing, having marketed, promoting, detailing, distributing, selling, having sold, offering for sale and providing commercial support.
1.6.      " Commercially Reasonable Efforts" means the level of efforts required to carry out an obligation in a sustained manner consistent with the efforts a pharmaceutical company devotes to a product of similar market potential, profit potential or strategic value, based on market conditions then prevailing (including, without limitation, the extent of legal market exclusivity then reasonably expected), consistent with the exercise of prudent scientific and/or business judgment in accordance with generally accepted practices in the pharmaceutical industry. Commercially Reasonable Efforts shall be determined without regard to the particular circumstances of a Party, including any other product opportunities of such Party. The phrase "commercially reasonable" shall be construed in a comparable manner.
1.7.      " Commercial Year" shall mean each consecutive twelve (12) month period commencing with the first day of the Calendar Quarter in which the First Commercial Sale occurs.
1.8.      " Compound" shall mean the chemical entity Nebivolol (alpha, alpha – [iminobis (methylene)] bis [6-fluoro-3, 4-dihydro-2H-1-benzopyran-2-methanol] hydrochloride) and any and all analogues, homologous, derivatives, salts, metabolites, esters, isomers, enantiomers, and pro-drugs related thereto.
1.9.      " Cost of Goods" means the direct costs of raw materials and labor incurred in formulating, manufacturing, shipping, packaging and labeling, as the case may be, including quality assurance and quality control activities, together with directly allocable manufacturing overheads (but excluding corporate, general or administrative overheads). Cost of Goods shall be determined in accordance with the relevant Party’s standard cost accounting policies in each case as consistently applied to the manufacture of pharmaceutical products and accrued and reflected in accordance with US GAAP.
1.10.    " Detail" means a face-to-face presentation by a sales representative in which key attributes of the Product are verbally presented in the first or second position (a) to one or more target licensed physicians or other medical professionals who treat patients with cardiovascular diseases or disorders, or in an institutional setting or (b) to one or more persons who are responsible for making purchasing decisions. "Detail," when used as a verb, and "Detailing" shall have comparable meanings.
1.11.    " Develop" or "Development" means to research, develop, analyze, test and conduct preclinical, clinical and non-clinical trials. "Developing" and "Development" shall have comparable meanings. When used as a verb, "Developing" means to engage in Development.
1.12.    " Directly Competitive Product" shall have the meaning set forth in Section 5.16.
1.13.    " FDA" means the United States Food and Drug Administration, and any successor agency thereto.
1.14.    " First Commercial Sale" means, with respect to the Product, the first sale for end use or consumption of the Product in a country after Regulatory Approval. Sale to an Affiliate or sublicensee shall not constitute a First Commercial Sale unless the Affiliate or sublicensee is the end user of the Product.
1.15.    " Fair Market Value" means with respect to a valuation required by any provision hereof, the price which a willing buyer would pay, on an arm’s length basis, for all rights and related intellectual property assets which comprise the assets, data or rights being valued, in light of the status of development and reasonably anticipated risks and costs of further development and the market potential for the commercialization of such assets, data or rights. In any case where Fair Market Value must be determined, the determination shall be made by mutual agreement of the Parties through good faith negotiations based upon objective data possessed and disclosed by both Parties; provided that if no agreement as to Fair Market Value is reached after a period of sixty (60) days, Fair Market Value shall be determined by a Valuation Panel, whose decision shall be binding and conclusive upon the Parties.
1.16.    " Generic Product" shall have the meaning set forth in Section 6.1.
1.17.    " Janssen Development Plan" shall mean the plan agreed between Janssen and Mylan under the Janssen Agreement.
1.18.    " Janssen Know-How" shall mean all methods, processes, techniques, products, machines, materials, compositions, technology, information, data, results of tests, studies, analyses and expertise, whether patented or unpatented, now or hereafter during the term of or prior to this Agreement in the possession of Janssen, or any Affiliate or to which Janssen has rights (other than Mylan Know-How) which are useful in, and specifically related to, formulating, manufacturing, marketing or using the Compound or the Product, including, without limitation, pharmacology, toxicology, drug stability, manufacturing and formulation methodologies and techniques, clinical and non-clinical safety and efficacy studies, marketing studies and absorption, distribution, excretion and metabolism studies; provided that, Janssen Know-How shall not be deemed to include any of the preceding to the extent not included in Know-How as defined in, and licensed by Janssen to Mylan under, the Janssen Agreement.
1.19.    " Law" means any applicable statute, law, ordinance, regulation, order, or rule of any federal, state, local, foreign, or other governmental agency or body or of any other type of regulatory body (including common law) or securities exchange, including those covering pharmaceutical sales, environmental, pollution, energy, safety, health, transportation, bribery, record-keeping, zoning, antidiscrimination, antitrust, wage and hour, and price and wage control matters.
1.20.    " Letter Agreement" shall have the meaning set forth in Section 2.1.
1.21.    " Licensed Know-How" shall mean the Janssen Know-How and the Mylan Know-How.
1.22.    " Licensed Patents" means those patents and patent applications listed in Schedule 1.22, as well as any patent issuing from such patent applications and any re-examinations and reissues of patents included in Schedule 1.22.
1.23.    " Mylan Know-How" means all methods, processes, techniques, products, machines, materials, compositions, technology, information, data, results of tests, studies, analyses and expertise, whether patented or unpatented, now or hereafter during the term of or prior to this Agreement in the possession of Mylan or any Affiliate (other than Janssen Know-How) which are useful in, and specifically related to, formulating, manufacturing, marketing or using the Compound or the Product, including, without limitation, pharmacology, toxicology, drug stability, manufacturing and formulation methodologies and techniques, clinical and non-clinical safety and efficacy studies, marketing studies and absorption, distribution, excretion and metabolism studies.
1.24.    " NDA" shall mean a New Drug Application (and its Canadian equivalent).
1.25.    " Net Sales" shall mean the gross amount invoiced with respect to commercial sales of the Product by Forest, its sublicensees and Affiliates to Third Parties, less
		(a)  quantity and/or normal and customary cash discounts allowed or taken;
		(b)  freight, postage and insurance to the extent included in the gross amount invoiced;
		(c)  credits, rebates and/or adjustments allowed or given by reason of expiration dating, rejections or returns, shelf stock adjustments, retroactive price reductions or programs with wholesalers or other distributors or resellers according to which they are entitled to chargeback rebates, credits or adjustments;
		(d)  rebates, administrative fees, reimbursements or similar payments to or for Medicaid or any other government programs (whether mandated or voluntary), hospitals, health maintenance organizations, insurance carriers, buying groups or other entities.
Notwithstanding the foregoing, where any such discounts, reductions, payments or rebates are based on sales to the customer of a bundled set of products in which the Product is included (where such sales are permitted by law and mutually agreed by the Parties), the applicable discount, reduction, payment or rebate for the Product in such bundled arrangement shall be based on the weighted average discount, reduction, payment or rebate of such bundled set of products.
1.26.    " Product" means any finished human pharmaceutical drug product(s) which (a) is covered by the Licensed Patents or the Licensed Know-How or (b) contains the Compound and is developed through the JDC.
1.27.    " Regulatory Approval" means, in any regulatory jurisdiction, any approvals (including, where necessary for the marketing, use, or other distribution of a drug in a regulatory jurisdiction, pricing, and reimbursement approvals), licenses, registrations, or authorizations or equivalents necessary for the manufacture, use, storage, import, export, clinical testing, transport, marketing, sale, and distribution of the Product in a regulatory jurisdiction anywhere in the Territory in accordance with applicable Law.
1.28.    " Regulatory Authority" means any federal, national, multinational, state, provincial, or local governmental or regulatory agency, department, bureau, or other governmental entity with responsibility for granting any Regulatory Approval in a country in the Territory, including, without limitation, the FDA in the United States.
1.29.    " Territory" means the United States of America and Canada and their territories and possessions.
1.30.    " Third Party" means any party other than Forest or Mylan or their respective Affiliates.
1.31.    " Trademarks" means the trademarks set forth in Schedule 1.31 and any other trademark selected by Forest in consultation with Mylan, and subject to any applicable provisions of the Janssen Agreement, for use in the marketing, promotion or sale of the Product (but not including trademarks or trade names of general applicability to Forest’s business and not specifically related to the Product).
1.32.    " Valuation Panel" means a panel of three independent Third Parties having expertise and experience in the valuation of pharmaceutical products in the Territory for human use appointed by mutual agreement of the Parties. In the event the Parties are required by the terms hereof to select a Valuation Panel, each Party shall select one such expert within thirty (30) days and the two experts so chosen shall select a third who shall serve as chairperson of the panel. Each Party shall instruct the expert chosen by it to attempt to reach agreement upon such third expert as promptly as practicable and if possible within fifteen days. The decision of a majority of the members of the panel entered into shall be deemed the decision of the Valuation Panel. The parties shall instruct the Valuation Panel to reach its decision as promptly as practicable, and if possible within 30 days of selection of the third member. The costs of this Valuation Panel shall be covered equally (50-50%) by the Parties.
ARTICLE 2
DISTRIBUTION AND RELATED RIGHTS AND OBLIGATIONS
2.1.       License. Mylan hereby grants to Forest an exclusive license and sublicense, as the case may be, to the Licensed Patents and Licensed Know-How in the Territory and outside the Territory for the limited purpose of manufacturing the Product(s) and/or the Compound for Commercialization in the Territory. To the extent such license consists of a sublicense of Mylan’s rights under the Janssen Agreement, such sublicense shall be subject to the applicable provisions of the Janssen Agreement and compliance with the Janssen Agreement shall not be a breach of this Agreement. For all purposes of this Agreement, the Janssen Agreement shall be interpreted and construed so as to give effect to that certain Supplemental Agreement of even date herewith by and between Janssen and Mylan (the "Letter Agreement").
2.2.       Trademark License. Mylan hereby grants to Forest an exclusive license to use the Trademarks set forth on Schedule 1.31 during the Term of this Agreement.
2.3.       Sublicensing. The licenses granted hereby may be sublicensed by Forest (i) to its Affiliates, subject to notification to Mylan of such sublicense, (ii) with respect to the Development and Commercialization of the Product in Canada subject to Mylan’s prior written consent, not to be unreasonably withheld, and (iii) otherwise only with Mylan’s prior written consent.
ARTICLE 3
DEVELOPMENT AND THE JOINT DEVELOPMENT COMMITTEE
3.1.       Development. As of the Effective Date Forest shall be responsible for and will pay for its own costs and all external costs for all ongoing and future Development activities. Schedule 3.1 hereto sets forth a complete list of all studies and related Development activities in progress as of the Effective Date. Notwithstanding the preceding, in the event approval of the NDA submitted to the FDA with respect to the hypertension indication requires the performance of any additional pre-clinical or clinical Development, the responsibilities for such Development activities shall be determined by the JDC (as defined below) and irrespective of which Party performs such activities, Forest shall be responsible for the external costs thereof (including for this purpose the costs of monitoring clinical sites, data management, and IVRS or other randomization systems even if performed through internal resources of a Party). Further, to the extent Mylan performs such activities; Mylan shall offer Forest the opportunity to utilize its internal resources to perform such functions, whether contemplated to be performed by Mylan internally or to be outsourced, to the extent Forest has adequate internal resources to perform such functions in an equivalent manner.
[Sections 3.2 through 3.9 deleted pursuant to Section 2.3 of the 2008 Amendment.]
3.10.      Improvements/Know-How. Pursuant to Sections 2.3 and 2.4 of the Janssen Agreement, Janssen and Mylan may have certain rights and obligations with respect to Improvements and Know-How (as those terms are defined and used in the Janssen Agreement). Forest acknowledges such rights and obligations, and agrees that all Improvements and/or Know-How developed by Forest, if any, shall be subject to such rights and obligations of Janssen and Mylan. Mylan acknowledges that all such Know-How developed or owned by Janssen is included in the license granted to Forest hereunder and Mylan’s rights with respect to any Improvements developed by Janssen shall be deemed held for and exercised for the account and at the discretion of Forest to the extent related to the Product in or for purposes of the Territory.
3.11.      Development Data. From time to time during the Term, Mylan shall provide Forest with all Development data (including, without limitation, study protocols, data sets, data specification documents, data definition tables, original and annotated case report forms, statistical analysis plans, final table/figure/listings (TFL), final programs for the derived data sets and TFLSs, integrated databases, final clinical study reports and all supporting documentation) and related summaries and analyses owned or controlled by Mylan as Forest may reasonably request in connection with Development, regulatory matters or the Commercialization of Product.
ARTICLE 4
REGULATORY MATTERS
[See 2008 Amendment for amendments to Article 4]
4.1.       Regulatory Approvals and Expenses. As of the Effective Date, Forest shall be responsible for and will pay its own costs and all external costs of all ongoing and future regulatory activities including, without limitation, preparation and execution of any advisory committee meetings. A representative of Mylan shall be the primary contact with the FDA until the earlier of the date on which (i) an approval from the FDA of the NDA for the use of nebivolol in the treatment of hypertension is granted or (ii) the FDA requires additional studies or other Development activities in order to grant such approval. At such time, Mylan will transfer the NDA to Forest, and, from that time forward, Forest shall be the primary contact with the FDA. Notwithstanding Forest’s primary FDA contact responsibilities, with respect to seeking an approval from the FDA for an NDA or sNDA for the treatment of congestive heart failure on the basis of the SENIORS trial, Mylan shall have the primary responsibility in formulating and preparing the submission strategy, briefing books and related FDA communications until the earlier of the date on which (i) an approval is granted or (ii) the FDA requires additional studies or other Development activities in order to grant such approval. Any other regulatory activity which the JDC decides to pursue will be the primary responsibility of Forest, and a representative of Forest shall be the primary contact with the FDA. The Parties agree that, in their dealings with the Regulatory Authorities, they will at all times comply with Sections 15.1, 15.2 and 15.3 of the Janssen Agreement. Notwithstanding the preceding, Mylan and Forest shall jointly negotiate with the FDA for purposes of all labeling discussions, and Forest shall be the primary contact with the FDA for the purpose of submitting all promotional materials. Mylan shall appoint Forest as Mylan’s agent as necessary for purposes of Forest’s role in FDA activities.
4.2.       Strategy and Implementation. Each Party shall, immediately upon receipt of any contact with or communication from any Regulatory Authority relating to this Agreement, but in no event more than two (2) business days after such receipt or contact, forward a copy (if in writing) or description (if oral) of the same to the other Party and respond to all reasonable inquiries by the other Party relating thereto. Mylan and Forest shall cooperate through the JDC in the drafting and review of all submissions to Regulatory Authorities. Each Party shall promptly provide the other with copies of all written or electronic communications proposed to be forwarded by it to the Regulatory Authorities with respect to obtaining or maintaining Regulatory Approvals. Each Party shall have a right to review and comment on the content and subject matter of, and strategy for, any Regulatory Approval, all correspondence, including briefing books and other communications, submitted to Regulatory Authorities related to clinical trial design, all proposed labeling and labeling discussions and decisions with the Regulatory Authorities, all post-Regulatory Approval labeling discussions and decisions with the Regulatory Authorities (including the final approved labeling), and post-Regulatory Approval labeling changes; provided that disputes under this Section shall be settled by the JDC or as otherwise provided in this Agreement.
4.3.       Meetings. To the extent practicable and not prohibited by applicable Law, each Party will have an opportunity to participate in all meetings between the other Party and a Regulatory Authority to the extent that they pertain to Regulatory Approvals. To the extent practicable, Mylan’s and Forest’s members of the JDC shall use reasonable efforts to agree in advance on the scheduling of such meetings, conferences and discussions and on the objectives to be accomplished at such meetings, conferences and discussions and the agenda for the meetings, conferences and discussions with the Regulatory Authorities. To the extent practicable and not previously provided, each Party shall provide the other Party at least five (5) business days before any such meeting, conference or discussion with copies of all documents, correspondence, and other materials in its possession, which are relevant to the matters to be addressed at any such meeting, conference or discussion.
4.4.       Pharmacovigilence. At Forest’s expense, Mylan shall continue to perform its obligations under that certain Global Safety Database Agreement by and among Janssen, Mylan and Menarini International Operations Luxembourg, S.A. dated as of May 3, 2005 which is attached hereto as Exhibit B and made a part hereof in accordance with and for the period provided thereunder, provided that Forest’s expense obligations shall be limited to the reimbursement of Mylan’s actual incremental costs of performing such obligations, including out-of-pocket costs and allocations of directly related overheads (but not including general or administrative overheads). Schedule 4.4 sets forth Mylan’s current material costs of complying with its obligations under such agreement. Promptly following the date hereof, Mylan and Forest will develop and agree upon a pharmacovigilance reporting protocol providing for the reporting of adverse events by Forest to Mylan for use in compliance with the provisions of the Global Safety Database Agreement and to provide Forest with access to or timely reports from the database so maintained in a manner permitting Forest’s compliance with all applicable regulatory requirements in the Territory. Pending finalization of such protocol, each of the Parties hereto shall disclose to the other Party all safety reports and other information which they may from time to time receive or obtain whether from sources within or without the Territory with respect to any adverse experiences with respect to the Product. Specifically, all serious adverse events and reactions, whether believed due to the Product or not, will be transmitted to the other Party as promptly as possible and in any event within ten (10) calendar days of first knowledge of the event/reaction except for deaths which will be transmitted within five (5) calendar days. All aggregate reports (e.g., IND annual reports, NDA periodic reports, PSURs etc.) submitted to a Regulatory Authority will be transmitted to the other Party within five (5) calendar days of transmission to the Regulatory Authority. All questions from and responses to a health authority will be transmitted to the other Party within five (5) days of receipt/transmission.
To the extent Forest develops or acquires the capacity to manage such global safety database at any time during the Term of this Agreement, upon Forest’s request Mylan will use Commercially Reasonable Efforts in cooperation with Forest to effect a prompt and smooth transition of Mylan’s responsibilities under the Global Safety Database Management Agreement to Forest.
ARTICLE 5
COMMERCIALIZATION
[Sections 5.1 through 5.9 deleted pursuant to Section 3.1 of the 2008 Amendment.]
5.10.      Promotional Material. With respect to the use of promotional material, Forest shall be responsible for complying with Section 16.2 of the Janssen Agreement.
[Sections 5.11 through 5.15 deleted pursuant to Section 3.1 of the 2008 Amendment.]
5.16.      Non-Competition. From the Effective Date through the [***], neither Party nor its respective Affiliates will Commercialize, either directly, or indirectly by means of license, distributorship or similar arrangement, in the Territory a branded pharmaceutical product [***] (a "Directly Competitive Product"). Following [***], in the event a Party elects to market a Directly Competitive Product, it may only do so [***] so as to assure, to the reasonable satisfaction of the other party that marketing and promotional efforts with respect to the Product will not be adversely affected by the marketing of such other product. To the extent a Party would be Commercializing a Directly Competitive Product as a result of a Change of Control, the provisions of Article 15 shall apply in lieu of the provisions of this Section.
5.17.      Orders, Booking Sales. Forest shall have the sole right and responsibility in the Territory to (i) receive, accept, and fill orders, (ii) control invoicing, order processing, and collection of accounts receivable for sales, (iii) record sales in its books of account, and (iv) receive returns. The Product shall not be discounted disproportionately for any reason, including, without limitation, to attract sales for other products sold by Forest.
ARTICLE 6
GENERIC PRODUCT
6.1.       Generic Competition. Should a Third Party introduce a fully substitutable generic version of any Product (a "Generic Product") in the Territory, Forest shall continue to use Commercially Reasonable Efforts to continue to distribute such Product [***]. In addition, from and after the introduction by a Third Party of a Generic Product in any country of the Territory, the Royalties payable by Forest with respect to Net Sales in such country (but only to the extent of Net Sales represented by the Product as to which such Generic Product is the generic equivalent) shall be reduced by: (i) [***] of the net Royalties which Mylan would have retained after [***] and (ii) [***]. The Parties agree that an authorized Generic Product may be launched at such time as the Parties agree, based upon objective evidence shared and discussed by the Parties, that a launch of a Generic Product by a Third Party in the Territory is imminent, but in no event later than simultaneously with the launch of a Generic Product by a Third Party. Provided Mylan provides Forest with reasonable advance notice (but at least six months), [***]. In the event authorized generics are not permitted, either Party may develop, distribute, manufacture or commercialize its own Generic Product at the time of Third Party generic introduction. In light of the exclusive license grants contained in this Agreement, irrespective of which Party markets the authorized version or any other such Generic Product, the Party selling such Generic Product shall pay the other Party [***] with respect to such Generic Product. No Royalties shall be due or payable by Forest with respect to Net Sales of Generic Product. For purposes of this Section, [***].
ARTICLE 7
SUPPLY ADDENDUM
7.1.      The Parties agree that the manufacturing of the Product shall be done in accordance with the terms set forth in the Supply Addendum which is attached hereto as Exhibit C and shall be deemed a part hereof. Mylan will manufacture the Product until a site transfer can be made to Forest, provided that Forest may purchase such Product in bulk finished form and assume responsibility for final packaging and labeling activities as promptly as Forest’s facilities are properly qualified and subject to coordination of work in progress with Mylan in a commercially reasonable manner. In addition, in connection with the transfer of manufacturing responsibilities to Forest, the Parties shall use Commercially Reasonable Efforts to provide for a smooth and uninterrupted supply transition (including the coordination of forecasts and orders for Compound from Janssen). At that time, Forest shall become the primary manufacturer, and Mylan shall remain as a secondary manufacturer.
ARTICLE 8
PRODUCT RECALLS
8.1.       Product Recall Liability. In the event a Regulatory Authority shall order any Recall with respect to the Product supplied hereunder or a recall is voluntarily initiated by a Party hereto or by Janssen, and the cause of such Recall is due to (a) a breach by Mylan of any of its representations, warranties, obligations, covenants or other agreements contained herein or in the Supply Addendum, then Mylan shall be liable, and shall reimburse Forest for the reasonable out-of-pocket costs and expenses relating to or arising out of such Recall, or (b) a breach by Forest of any of its representations, warranties, obligations, covenants or other agreements contained herein or in the Supply Addendum, then Forest shall be liable and shall reimburse Mylan for its reasonable out-of-pocket costs and expenses relating to or arising out of such Recall; provided that if both Parties share responsibility with respect to such Recall, the costs shall be shared in the ratio of the Parties' contributory responsibility.
8.2.       Product Recall. Whenever a field alert and/or recall and/or withdrawal of the Product from the Territory is being contemplated by the Parties or Janssen for any reason whatsoever (such as inadequate labeling or governmental action) the Party manufacturing the Product at that time shall, without prejudice to its obligations under the law and prior to any notification to the authorities in the Territory, and prior to any unilateral action and/or communication, consult with the other Party and Janssen to enable them to participate in deciding the appropriate actions to be taken during the implementation of such field alert and/or recall and/or withdrawal, provided that Forest shall have the final decision-making authority as to a voluntary recall. However, nothing stated herein shall prevent, constrain or delay any action which the Party manufacturing the Product at that time, in its sole discretion, deems to be to protect the public, comply with the Law or to protect its business interests or reputation.
8.3.       Records and Notification. Forest and Mylan shall each maintain traceability records as are sufficient and as may be necessary to permit a Recall. Forest and Mylan agree that if either Party shall discover or become aware of any fact, condition, circumstance or event (whether actual or potential) concerning or related to the Product which may reasonably require a Recall, such Party shall promptly communicate such fact, condition, circumstance or event to the other Party as soon as possible but in all instances within twenty-four (24) hours. In the event (a) any Regulatory Authority or other governmental body requests that the Product be Recalled, (b) a court of competent jurisdiction orders such a Recall, or (c) Forest determines in accordance with Section 8.2 that the Product should be Recalled from the market, the Parties shall take all appropriate remedial actions with respect to such Recall. To the extent that it is necessary to communicate with any Party, including but not limited to any Regulatory Authority or other governmental body, the media, or any customer of Forest, concerning any such fact, condition, circumstance or event, a Forest official shall be the primary contact person concerning the Recall and remedial action. The obligations under this Section shall survive the complete or partial termination of this Agreement. Each party shall make every reasonable effort to mitigate any costs or expenses to be reimbursed by the other Party pursuant to this Article 8.
ARTICLE 9
MILESTONES
9.1.       Up Front Milestone. Within five (5) days of the Effective Date of this Agreement, Forest will pay Mylan a one time non-refundable, non-creditable milestone payment of Seventy Five Million Dollars ($75,000,000.00).
[Sections 9.2 through 9.4 deleted pursuant to Section 4.2 of the 2008 Amendment.]
ARTICLE 10
ROYALTIES
[Sections 10.1 and 10.2 deleted pursuant to Sections 4.3 and 4.5, respectively, of the 2008 Amendment.]
10.3.       Royalty Reports and Payments. Within forty-five (45) days following the end of each Calendar Quarter, Forest shall deliver to Mylan a report setting forth in reasonable detail the information listed below sufficient to determine the Royalties under this Agreement, which report shall be accompanied by payment of the Royalty for such quarter. The report shall include at least the following, separately stated as to the Product:
		(a)  the quantity of the Product invoiced by Forest and its Affiliates, permitted sublicensees and subdistributors during such calendar quarter and the billings therefor;
		(b)  the allowable deductions therefrom; and
		(c)  the calculation of Royalties thereon.
10.4.       Records. Forest shall keep or cause to be kept such records as are necessary to determine accurately, in a manner consistent with GAAP and this Agreement, the sums or credits due to Mylan under this Agreement including, but not limited to, Net Sales, for a period of at least three years following the end of the period to which such records relate.
10.5.       Foreign Exchange. For the purpose of computing the Net Sales for the Product sold in Canadian currency, such amounts shall be converted into United States Dollars ("Dollars") on a Calendar Quarter basis using the prevailing exchange rate as reported in The Wall Street Journal as applicable on the last business day of such Calendar Quarter with respect to which payment is due.
10.6.       Manner of Payments. All sums due to either Party under this Agreement shall be payable by electronic funds transfer in immediately available funds to such bank account(s) as each of Forest and Mylan shall designate in writing.
ARTICLE 11
REASONABLE INSPECTION
11.1.       Audit. The Parties shall maintain such records as are necessary to document their compliance with this Agreement and to comply with the obligations of Section 7.1 of the Janssen Agreement. Such records shall be retained by the Party (in such capacity, the "Recording Party") for a period of at least three years from the end of the period to which such records relate, and, at the request and expense of the other Party, shall be made available for inspection, review, and audit, by the other Party or an internationally recognized independent public accounting firm appointed by such other Party and reasonably acceptable to the Recording Party for the sole purpose of verifying the Recording Party’s accounting reports and payments made or to be made pursuant to this Agreement; provided that notwithstanding the foregoing, such audits may not be performed by either Party more than once per Calendar Year and only once with respect to each periodic report and payment. Any underpayment or overpayment determined by such inspection shall be paid within thirty (30) days after the delivery of the accountant’s report to the Parties. Forest agrees to be subject to Janssen audit rights set forth in Section 7.2 of the Janssen Agreement.
11.2.       Costs of Audits. The auditing Party shall pay for such inspections, except that in the event where the audit discloses a variance to the detriment of the auditing Party of more than [***] percent in the amount of any such payment, or any payment determined in whole or in part pursuant to such report, covering a payment period obligation of 12 months or more, then the Recording Party shall pay the reasonable out of pocket fees and costs of such inspection.
ARTICLE 12
REPRESENTATIONS AND WARRANTIES
12.1.       Mutual Representations and Warranties. Each Party as to itself hereby represents, warrants and covenants to the other Party that:
		(a)  Representations of Authority. As of the Effective Date, it is duly organized, validly existing and in good standing under the Laws of its jurisdiction or incorporation or formation, and has full right, corporate power and authority to enter into this Agreement and to perform its respective obligations under this Agreement and that it has the right to grant to the other Party the licenses and sublicenses granted pursuant to this Agreement.
		(b)  Consents. Except for any Regulatory Approvals, pricing, and/or reimbursement approvals and/or similar approvals necessary for the Development or Commercialization, all necessary consents, approvals, and authorizations of all government authorities and Regulatory Authorities and other persons required to be obtained by it as of the Effective Date in connection with the execution, delivery, and performance of this Agreement have been obtained.
		(c)  No Conflict. Notwithstanding anything to the contrary in this Agreement, the execution and delivery of this Agreement by such Party, the performance of such Party’s obligations hereunder, and the licenses and sublicenses to be granted by such Party pursuant to this Agreement (i) do not conflict with or violate any requirement of Laws existing as of the Effective Date and applicable to such Party and (ii) do not breach or violate any provision of its constitutional documents, (iii) do not conflict with, violate, breach or constitute a default under any contractual obligations of such Party or any of its Affiliates existing as of the Effective Date. Each Party shall comply with all Laws applicable to Development and Commercialization.
		(d)  Brokers. Neither Party nor any of their officers, directors or employees has employed any investment banker, broker or finder that would impose any liability on the other Party for any investment banking fees, brokerage fees, commissions or finders’ fees in connection with the transactions contemplated by this Agreement.
		(e)  Enforceability. This Agreement is a legal and valid obligation binding upon it and is enforceable against it in accordance with its terms.
		(f)  Debarred Persons. Neither Party shall knowingly utilize the services of any employee or other person in the performance of any of its obligations hereunder who is debarred by the FDA or other governmental authority from participating in any federal health program.
12.2.      Additional Representations and Warranties of Mylan. Mylan represents and warrants to Forest that, as of the Effective Date:
		(a)  Mylan has not previously granted any rights that are inconsistent with the rights and licenses granted herein.
		(b)  Other than as discussed by the Parties: (i) to Mylan’s actual knowledge, there are no pending claims, judgments, or settlements against or owed by Mylan nor any pending reissue, reexamination, interference, opposition, or similar proceedings with respect to the Licensed Patents or the Trademarks; and (ii) Mylan has not received written notice of any threatened claims or litigation or any reissue, interference, opposition, reexamination, or similar proceedings seeking to invalidate or otherwise challenge the Licensed Patents or Trademarks, nor is Mylan aware of any reasonable basis for any such claim or proceeding. During the Term, Mylan shall promptly notify Forest in writing upon learning of any such actual or threatened claim, judgment, or settlement or the institution of any reissue, reexamination, interference, opposition, or similar proceeding.
		(c)  There is not currently and have not previously been any claims, nor to Mylan’s actual knowledge threatened, against Mylan by Janssen or any other party which would materially impair or delay Mylan’s ability to consummate the transactions contemplated by this Agreement.
		(d)  There is not currently and has not previously been any action, suit or proceeding pending, decided or settled or, to Mylan's actual knowledge, action, suit or proceeding threatened, against Mylan before any governmental entity or arbitral body which will materially impair or delay Mylan's ability to consummate the transactions contemplated by this Agreement, and to Mylan's actual knowledge, there are no circumstances existing which are likely to give rise to any such action, suit or proceeding. Mylan has not received notice that it is subject to any outstanding judgment, order, injunction, default notice or decree of any governmental entity or arbitral body which is reasonably likely to materially impair or delay Mylan's ability to consummate the transactions contemplated by this Agreement.
		(e)  The Janssen Agreement constitutes a legal and validly binding obligation of each Party thereto and is in full force and effect and enforceable in accordance with its terms. Except as provided in the Letter Agreement and for amendments provided to Forest by Mylan prior to the date hereof, the Janssen Agreement has not been amended or modified since its execution and sets forth the entire agreement and understanding between Janssen and Mylan as to its subject matter. No event has occurred which would give Janssen or Mylan the right to terminate or limit the Janssen Agreement, create a semi-exclusive license in favor of Janssen thereunder or give either Janssen or Mylan the legal right to seek damages or other legal or equitable remedies with respect thereto, provided that all representations in this Section 12.2(e) are limited to Mylan’s actual knowledge with respect to actions of Janssen.
		(f)  Except to the extent of Mylan’s obligations and Janssen’s interest and rights under the Janssen Agreement, Mylan holds exclusive rights to the Licensed Patents and Licensed Know-How, free and clear of all claims of ownership, inventorship or patent infringement (including, without limitation, by current or former employees, consultants or other personnel or agents of Mylan) and free and clear of any license agreement, royalty arrangement or obligation, confidentiality obligation, lien, claim or encumbrance in favor of any Third Party.
12.3.       Additional Representations and Warranties of Forest. Forest represents and warrants to Mylan that, as of the Effective Date:
		(a)  Forest, its Affiliates, assignees, licensees and contractors shall adhere in all material respects to all applicable Laws relating to the handling, storage, sale, distribution and disposal by any of them of the Product and shall not at any time do, or cause to be done, any act inconsistent with the labeling of any Product.
		(b)  There is not currently and has not previously been any action, suit or proceeding pending, decided or settled or, to Forest's knowledge, action, suit or proceeding threatened, against Forest before any governmental entity or arbitral body which will impair or delay Forest's ability to consummate the transactions contemplated by this Agreement, and to Forest's knowledge, there are no circumstances existing which are likely to give rise to any such action, suit or proceeding. Forest has not received notice that it is subject to any outstanding judgment, order, injunction, default notice or decree of any governmental entity or arbitral body which is reasonably likely to materially impair or delay Forest's ability to consummate the transactions contemplated by this Agreement.
		(c)  Forest has sufficient financial wherewithal to: (a) perform all of its obligations pursuant to this Agreement; and (b) meet all of Forest's obligations that come due in the ordinary course of business.
		(d)  Provided that Forest shall not be deemed to make any representation or warranty as to the success or potential success of the Development or Commercialization of the Product, Forest has sufficient technical expertise and know-how to manufacture the Product and has the requisite clinical and regulatory expertise and know-how to perform all of its obligations pursuant to this Agreement.
		(e)  Forest acknowledges that from and after Effective Date and subject to the compliance by Mylan with its obligations hereunder, Forest shall be, and hereby is, responsible to the Regulatory Authorities for full performance of all the obligations of the holder of such Regulatory Approvals that exist for the Product at any time. Forest has the necessary expertise to properly perform all of its obligations pursuant to this Agreement.
		(f)  Forest has conducted a comprehensive review and analysis of all relevant information to the transaction contemplated by this Agreement provided or made available by Mylan and acknowledges that, to the best of Forest’s knowledge, Forest has been provided adequate access to the personnel, properties, premises and records of Mylan for such review and analysis.
12.4.      Disclaimer of Warranties. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR WARRANTIES, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, CONCERNING THE DEVELOPMENT, COMMERCIALIZATION, MARKETING, OR SALE OF THE PRODUCT INCLUDING THE SUCCESS OR POTENTIAL SUCCESS THEREOF. EXCEPT AS EXPRESSLY SET FORTH HEREIN, EACH PARTY EXPRESSLY DISCLAIMS ANY AND ALL REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF ANY KIND, EXPRESS OR IMPLIED, INCLUDING THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 13
CONFIDENTIALITY
13.1.       Confidential Information. That certain Confidentiality Agreement by and between Mylan and Forest Laboratories Inc. dated as of September 23, 2005, which is attached hereto as Exhibit D (the "Confidentiality Agreement") is hereby incorporated by reference in its entirety into this Agreement.
13.2.       Publications. As of the Effective Date, Forest shall be responsible for preparing (and revising when appropriate), in each case after consultation with Mylan and subject to Janssen’s rights pursuant to Section 4.12 of the Janssen Agreement, publication plans for the Product.
13.3.       Public Announcements. The Parties will agree upon the text of a joint press release announcing the transactions contemplated hereby. Except for such press release and as permitted under the Confidentiality Agreement, neither Party will make any public announcement of any information regarding this Agreement, the Product or any research or Development activities under this Agreement without the prior written approval of the other Party and Janssen, if required, pursuant to Section 24.6 of the Janssen Agreement. Notwithstanding the above, but subject to Janssen’s rights, pursuant to the Janssen Agreement, the Parties and their respective Affiliates shall be free to publicly disclose information contained in the press release referenced in this Section, or in any other materials that have been previously approved for disclosure by the other Party, without further approval from the other Party hereunder. The Parties further agree that each Party may, in its sole reasonable discretion, file a Current Report on Form 8-K with the SEC to announce the filing of the press release and filing it as an exhibit thereto, as well as to incorporate it by reference into other SEC filings. Further, each Party may file this Agreement as a "Material Contract" exhibit to SEC filings to the extent it reasonably believes required by applicable SEC regulations, subject to consultation with the other Party and using Commercially Reasonable Efforts to seek confidential treatment of portions of this Agreement deemed by a Party to be commercially sensitive, to the extent permitted by law and SEC regulations and policy.
13.4.       Confidentiality of this Agreement. Subject to the provisions of Section 13.3, the terms of this Agreement shall be Information of each Party and, as such, shall be subject to the provisions of the Confidentiality Agreement.
ARTICLE 14
TERM AND TERMINATION
14.1.       Term. Unless earlier terminated, this Agreement shall commence on the Effective Date and shall continue in full force and effect until the Parties cease to sell, Develop and Commercialize a Product or a Generic Product in the Territory (the "Term").
14.2.       Termination for Breach. Either Party may, without prejudice to any other remedies available to it at Law or in equity, terminate this Agreement, in the event that the other Party (as used in this subsection, the "Breaching Party") shall have materially breached its obligations under this Agreement, and the Breaching Party has not cured such breach within [***] (or where the default is a failure to pay monies due, for [***]) after receipt of written notice of such breach is provided by the non-breaching Party to the Breaching Party to remedy such default. Any such termination shall become effective at the end of such [***] period unless the Breaching Party has cured any such breach prior to the expiration of such applicable period. If a material breach cannot be cured within the [***] cure period, this Agreement shall not terminate if the breaching Party has made diligent efforts to cure such breach within the [***] period and this Agreement shall remain in effect for such period after notice of breach as may be reasonable in the circumstances as long as the breaching Party continues to use diligent efforts to pursue the cure with a reasonable expectation that cure will be effected as promptly as practicable thereafter. In the event the Parties dispute the existence of a material breach or a Party’s diligence in attempting to cure a material breach, termination of this Agreement shall not be deemed to occur unless and until such dispute has been referred for resolution in accordance with Section 18.9 hereof, material breach of the Agreement or failure to make diligent efforts to cure such breach has been established by an arbitration thereunder and, if such breach can be cured by the payment of money or remedial actions within a defined period as established by the arbitration, the breaching Party does not pay the amount so determined to be due within [***] days or perform such remedial actions within such defined period following and as required by such arbitration decision.
14.3. Termination for Bankruptcy. Either Party may, subject to the provisions set forth herein, terminate this Agreement immediately without further notice to the other Party if, at any time, the other Party shall:
		(a)  commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law or seeking the appointment of a trustee, receiver, liquidator, custodian or similar official of it or of any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due, or shall take any corporate action to authorize any of the foregoing; or
		(b)  has an involuntary case or other proceeding commenced against it seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding remains undismissed and unstayed for a period of [***]; or an order for relief is entered against such Party under applicable bankruptcy laws.
14.4.       Forest Right of Termination. Forest reserves the right to terminate this Agreement at any time effective upon delivery of notice to Mylan that it reasonably believes that issues of safety or efficacy are likely to prevent Regulatory Approval of the Product in the United States, to materially delay such approval or to significantly negatively impact the commercial potential of the Product in the United States. In the event of a termination by Forest pursuant to this Section, Forest shall furnish Mylan with reasonable cooperation to assure a smooth transition of any clinical or other studies in progress which Mylan determines to continue in compliance with the Law and ethical guidelines applicable to the transfer or termination of any such studies. In addition, if any NDA has been transferred to Forest prior to the termination, Forest will transfer all such NDA(s) back to Mylan or its designee, and will return all Mylan Confidential Information to Mylan. Finally, in connection with any such termination, Mylan shall be deemed to have a perpetual, fully-paid license, with the right to sublicense, to all intellectual property and know-how of any kind (whether or not patented) owned or controlled by Forest with respect to the Product solely to the extent related to the manufacture, Development or Commercialization of the Product in or for purposes of the Territory. Except as provided by this Section, Forest shall have no further obligation to Mylan in respect of the termination of this Agreement pursuant to this Section, including, without limitation, the payment of any license fee payment the time for payment of which has not occurred as of the notice of termination by Forest in accordance with Article 9 hereof. If the Janssen Agreement is terminated and Mylan’s rights thereunder are extinguished in connection with such termination, the Parties will [***].
14.5.       Rights Following Expiration of Term or Termination.
		(a)  Upon any termination of this Agreement by either Party pursuant to Sections 14.2 or 14.3, the rights of the Party in breach under this Agreement shall automatically terminate. In such event, the non-breaching Party shall have a perpetual, fully paid license, with the right to sublicense, to all intellectual property and know-how of any kind (whether or not patented) owned or controlled by the breaching Party with respect to the Product solely to the extent related to the manufacture, Development or Commercialization of the Product in or for purposes of the Territory.
		(b)  Termination of this Agreement shall not relieve the Parties of any liability or obligation which accrued hereunder prior to the effective date of such termination nor, except as otherwise specifically provided herein, preclude either Party from pursuing all rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement nor prejudice either Party’s right to obtain performance of any obligation. In addition, termination of this Agreement shall not terminate provisions which provide by their respective terms for obligations or undertakings following the expiration of the term of this Agreement.
[ARTICLE 15 deleted pursuant to Section 8 of the 2008 Amendment.]
ARTICLE 16
INDEMNIFICATION
16.1.       Forest. Except for intellectual property infringement, which are covered in Article 17, Forest shall defend Mylan and its Affiliates at Forest’s cost and expense and will indemnify and hold Mylan and its Affiliates and their respective directors, officers, employees, consultants, contractors, representatives, and agents harmless from and against any and all losses, costs, damages, fees, or expenses (including reasonable attorneys’ fees and expenses) ("Losses") incurred in connection with or arising out of any Third Party claim (a "Third Party Claim") directly relating to (i) any material breach by Forest of its representations or warranties pursuant to this Agreement, (ii) any negligence or willful misconduct of Forest, its Affiliates, or their respective directors, officers, employees, contractors (including, without limitation, Forest’s contract sales force and permitted sub-distributors), consultants, agents, representatives, or permitted sub-licensees in the exercise of any of Forest’s rights or the performance of any of Forest’s obligations under this Agreement, (iii) personal injury and other product liability resulting from the Development, and (iv) the handling, packaging, pricing, marketing, distribution, off-label promotion, shipping, storage, manufacturing or Commercialization by Forest or any of its Affiliates or permitted sublicensees of the Product in the Territory; provided that notwithstanding the foregoing, in all cases referred to in this Section, Forest shall have no liability to Mylan for any Losses to the extent (and only to the extent) that such Losses were caused by any item for which Mylan is required to indemnify Forest pursuant to Section 16.2. Forest has no set-off rights for any such damages.
16.2.       Mylan. Except for intellectual property infringement, which are covered in Article 17, Mylan shall defend Forest and its Affiliates at Mylan’s cost and expense, and will indemnify and hold Forest and its Affiliates and their respective directors, officers, employees, consultants, contractors, representatives, and agents harmless from and against any and all Losses incurred in connection with or arising out of any Third Party Claim directly relating to (i) material breach by Mylan of any of its representations, warranties or obligations pursuant to this Agreement, and (ii) negligence or willful misconduct of Mylan in the exercise of any of its rights or the performance of any of its obligations under this Agreement, except for such Losses for which Forest is obligated to indemnify Mylan pursuant to this Agreement; provided that notwithstanding the foregoing, in all cases referred to in this Section, Mylan shall have no liability to Forest for any Losses to the extent (and only to the extent) that such Losses were caused by any item for which Forest is required to indemnify Mylan pursuant to Section 16.1. Mylan has no set off rights for any such damages.
16.3.       Additional Mylan Indemnification. In addition to the indemnification obligations of Mylan set forth in Section 16.2 and Article 17, Mylan shall defend Forest and its Affiliates and their respective directors, officers, employees, consultants, contractors, representatives and agents and hold them harmless from and against any and all Losses incurred in connection with or arising out of any matter (including, without limitation, Third Party Claims) directly relating to a material breach by Janssen of any of its representations, warranties or obligations under the Janssen Agreement, including the Letter Agreement, provided that, such indemnification shall be limited to the extent of Mylan’s recoveries from Janssen with respect to the same circumstances which occasioned the Loss in question, it being the intention of the parties that Janssen be responsible for the full amount of any such Forest Loss. Forest agrees that, in connection with any claim or proceeding which Forest may bring to enforce Mylan’s obligations pursuant to this Section 16.3, Forest will only bring such claim or proceeding in a forum where Mylan is not prohibited by the Janssen Agreement from asserting such corresponding claim against Janssen.
16.4.       Indemnification Procedures.
		(a)  Notification. In the case of a Third Party Claim as to which a Party may be obligated to provide indemnification pursuant to this Agreement (the "Indemnitor"), such Party seeking indemnification hereunder ("Indemnitee") will notify the Indemnitor in writing of the Third Party Claim (and specifying in reasonable detail the factual basis for the Third Party Claim and to the extent known, the amount of the Third Party Claim) reasonably promptly after becoming aware of such Third Party Claim; provided that notwithstanding the foregoing, failure to give such notification will not affect the indemnification provided hereunder except to the extent the Indemnitor shall have been materially prejudiced as a result of such failure.
		(b)  Acknowledgement. If the Indemnitor acknowledges in writing its obligation to indemnify the Indemnitee for a Third Party Claim, the Indemnitor will control the litigation and settlement of such matter. The Indemnitee will agree to any settlement, compromise, or discharge of such Third Party Claim that the Indemnitor may recommend that by its terms obligates the Indemnitor to pay the full amount of Losses (whether through settlement or otherwise) in connection with such Third Party Claim and unconditionally and irrevocably releases the Indemnitee completely from all liability in connection with such Third Party Claim; provided that notwithstanding the foregoing, without the Indemnitee’s prior written consent, the Indemnitor shall not consent to any settlement, compromise, or discharge (including the consent to entry of any judgment), and the Indemnitee may refuse in good faith to agree to any such settlement, compromise, or discharge, that provides for injunctive or other nonmonetary relief affecting the Indemnitee. If the Indemnitor acknowledges in writing its obligation to indemnify the Indemnitee for a Third Party Claim, the Indemnitee shall not (unless required by Law) admit any liability with respect to, or settle, compromise, or discharge, such Third Party Claim without the Indemnitor’s prior written consent (which consent shall not be unreasonably withheld, conditioned, or delayed).
		(c)  Contribution. If the indemnification provided for in this Article 16 is unavailable to an Indemnitee in respect of any Third Party Claim or Loss (other than by reason of a breach by Indemnitor of its indemnification obligations), then the Indemnitor, in lieu of indemnifying such Indemnitee, shall contribute to the amount paid or payable by such Indemnitor as a result of such Third Party Claim or Loss in such proportion as is appropriate to reflect the relative fault of the Forest Indemnitees, on the one hand, or Mylan Indemnitees, on the other hand, in connection with the actions or omissions which resulted in such Third Party Claim or Loss.
16.5.       Insurance. Each Party shall maintain, at its cost, an adequate program of self-insurance or insurance policy(ies) against liability and other risks associated with its activities contemplated by this Agreement, in such amounts and on such terms as are customary in the pharmaceutical industry for the activities to be conducted by it under this Agreement. At a minimum, each Party shall maintain, at its cost, a program of self-insurance or a policy providing coverage for (a) general liability insurance of at least [***] per occurrence, [***] in the annual aggregate, (b) workers’ compensation insurance in the amounts required by the Law of the jurisdiction(s) in which such Party’s workers are located; and (c) product liability insurance policy of at least [***] per occurrence and [***] annual aggregate. Each Party shall provide to the other not less than ten (10) days prior written notice of any cancellation or material change in its foregoing insurance coverage.
ARTICLE 17
PATENTS
17.1.       Ownership of Intellectual Property and Inventions. Neither Party shall have any ownership rights in any intellectual property or inventions, including, without limitation, any intellectual property that is neither licensed to a Party pursuant to this Agreement nor created by the Parties pursuant to Development activities under this Agreement. All intellectual property created by the Parties pursuant to Development activities carried out under this Agreement shall be owned by the Party creating such intellectual property, determined in accordance with the applicable laws of inventorship in the jurisdiction where such intellectual property is created or developed, subject only to the rights of the other Party provided herein. The Parties shall grant each other perpetual, paid up, royalty free licenses for such patents solely to the extent related to the Compound or Product with respect to the Territory.
17.2.       Prosecution of Patents. Each Party will be solely responsible for the preparation, filing and maintenance of patents owned by such Party; provided that, during the Term, each Party shall copy the other Party on all substantive documents relating to patents received from or to be filed in any patent office in the Territory, within [***] of receipt from the applicable patent office and at least [***] prior to filing with such patent office, respectively, including copies of each patent application, official action, response to official action, declaration, information disclosure statement, request for terminal disclaimer, request for patent term extension, and request for reexamination (which will only be undertaken by joint agreement of the Parties). Each Party shall have the right to comment on the prosecution of such patents and provide such comments to the filing Party’s patent counsel, and the filing Party shall require its patent counsel to consider in good faith such comments from the other Party and comments furnished will not be unreasonably rejected. With respect to inventions resulting from joint inventorship by the Parties, the JDC shall determine whether a joint patent should be filed and, if so, which Party should be responsible for filing, prosecuting, and maintaining any joint patent related to such joint invention based on a good faith determination of the relative contributions and level of interest of the Parties to the joint patents, and the relative extent to which the Product relating to such joint patent is being Developed or Commercialized. The Parties agree to negotiate in good faith a prosecution strategy with respect to any joint patents that would adequately cover the respective interests of the Parties.
17.3.       Election Not to Prosecute. If either Party elects not to pursue the initial filing of a potential patent or support the continued prosecution or maintenance of any such patent, such Party will promptly so notify the other Party, and in any event in good time to enable the other Party to timely meet any applicable deadlines. The other Party shall then have the right, but not the obligation, to pursue the filing or support the continued prosecution or maintenance of any such patent at its sole expense in any country where such Party owns or controls rights to the Product. If such other Party does so elect, then the Party which has elected not to pursue such filing, prosecution or maintenance shall provide such cooperation to the other Party, including the execution and filing of appropriate instruments, as may reasonably be requested to facilitate the transition of such patent activities, and shall assign all of its right, title and interest to such patent, other than its rights thereto provided by this Agreement, to the Party electing to pursue such patent activities. The Party electing to pursue such patent activities will grant the other Party a perpetual, paid up, royalty free license to any such patents solely to the extent related to the Compound or Product with respect to the Territory.
17.4.      Infringement.
		(a)  Third Party Infringement. Each of the Parties shall notify the other of any activity or product which it reasonably believes constitutes an infringement of the Licensed Patents or any other patents owned or controlled by a Party and covering the Product in the Territory or of any claim of invalidity in respect of any such patent. Forest shall have the right, in the first instance, to enforce Licensed Patents and such other patents against such infringing technology or to defend any such claim of invalidity within the Territory. In the event Forest declines to prosecute such infringing technology or to defend such claim within [***] (or such shorter period as may be required to comply with legal or regulatory deadlines which relate to such infringement) of becoming aware thereof, Mylan shall have the right to so enforce or defend. The Parties agree that, irrespective of which Party prosecutes the action, the costs of such prosecution or defense of validity, and the proceeds of any awards, judgments or settlements obtained in connection with an infringement in the Territory shall be [***]. Further, irrespective of which Party prosecutes the action, the other Party shall have the right to participate in all litigation strategies, and the prosecuting Party shall require its counsel to consider in good faith all comments the other Party has regarding such strategies and comments furnished will not be unreasonably rejected. Each Party agrees to furnish the other with such cooperation, including consenting to act as a Party to litigation if required, and exchange of information as the other Party may reasonably request in connection with the prosecution of any such action and the Party prosecuting an infringement or defending a claim of invalidity shall consult periodically with the other Party in connection with any such action. Neither Party shall take any action which would admit the invalidity of a Licensed Patent, or any such other patent without the consent of the other Party, which consent shall not be unreasonably withheld.
		(b)  Infringement of Third Party Rights. With respect to any and all Third Party claims alleging that the manufacture, use, offer for sale, or sale of the Product in the Territory during the Term infringes or has infringed any Third Party patent or other intellectual property, Mylan shall, subject to Janssen's rights and obligations under the Janssen Agreement, have the obligation to defend and the right to control any action or proceeding with respect to such claim. Mylan shall hold Forest harmless with respect to its involvement, if any, in such action or proceedings and as to all damages, royalties, settlements or costs incurred in connection therewith. Forest agrees to be joined as a party if necessary to defend the action or proceeding and shall provide all reasonable cooperation, including any necessary use of its name, required to defend such litigation.
17.5.       Patent Term Extension. The Parties agree to reasonably cooperate in the selection of the appropriate Licensed Patent or other patent covering the Product as listed in the Patent Information section of the Product NDA for filing to obtain a Patent Term Extension pursuant to all applicable laws and regulations ("PTE"). In addition, the Parties agree to timely compile and file the necessary documentation for a PTE request within sixty days of approval by the FDA of the U.S. NDA for the first indication.
17.6.       Privileged Communications. In furtherance of this Agreement, it is expected that Forest and Mylan will, from time to time, disclose to one another privileged communications with counsel, including opinions, memoranda, letters and other written, electronic and verbal communications. Such disclosures are made with the understanding that they shall remain confidential, they will not be deemed to waive any applicable attorney-client privilege and that they are made in connection with the shared community of legal interests existing between Mylan and Forest, including the community of legal interests in avoiding infringement of any valid, enforceable patents of Third Parties and maintaining the validity of Licensed Patents or other patents (including joint patents) which cover the Product.
[Section 17.7 deleted pursuant to Section 9.3 of the 2008 Amendment.]
17.8.       Condition Precedent. Notwithstanding anything to the contrary herein, this Agreement shall not become effective and the Effective Date shall not be deemed to have occurred unless and until the later of (i) 5 p.m. est on the second business day following a discussion between representatives of Forest and Janssen with respect to intellectual property matters, provided Forest has not sent written notice to Mylan in accordance with Section 18.1 hereof of Forest’s decision, made in its sole and absolute discretion, not to have the agreement become effective prior to such time, and (ii) the parties receipt of Menarini International Operations Luxemburg SA’s written consent to the license granted by Janssen to Mylan to the Irish Patents as defined in the Letter Agreement, provided such consent shall be received within fifteen (15) days of the date hereof. In the event Forest delivers notice of intent not to give effect to the Agreement or both of the conditions have not occurred within the time frames set forth above, this Agreement and that certain letter agreement between Forest and Mylan of even date herewith shall be deemed null and void and of no effect.
ARTICLE 18
MISCELLANEOUS
18.1.       Notices. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, by confirmed facsimile transmission, confirmed courier service, or by registered or certified mail (return receipt requested) to the respective Parties as follows:
	If to Mylan:		Mylan Pharmaceuticals Inc. 781 Chestnut Ridge Road Morgantown, WV 26505 Facsimile No.: 304-598-5408
	With a copy to:		Chief Legal Officer Mylan Pharmaceuticals Inc. 1500 Corporate Drive, Suite 400 Cannonsburg, PA 15317 Facsimile No.: 724-514-1870
	If to Forest:		Forest Laboratories Holdings Limited Milner House 18 Parliament Street Hamilton, HM11 Bermuda Facsimile No.: 441-292-7880 Attention: Chief Executive Officer
	With a copy to:		Forest Laboratories, Inc. 909 Third Avenue New York, NY 10022-4731 Facsimile No.: 212- 224-6740 Attention: Chief Executive Officer
18.2.       Captions. The article and section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the Parties and shall not in any way affect the meaning or interpretation of this Agreement.
18.3.       Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity of enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other situation or in any other jurisdiction. If the final judgment of a court of competent jurisdiction declares that any term or provision hereof is invalid or unenforceable, the Parties agree that the court making the determination of invalidity or unenforceability shall have the power to reduce the scope, duration, or area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement shall be enforceable as so modified after the expiration of the time within which the judgment may be appealed.
18.4.       Entire Agreement. This Agreement, including the documents, schedules, certificates and instruments referred to herein, the Supply Agreement and the Confidentiality Agreement embody the entire agreement and understanding of the Parties hereto in respect of the transactions contemplated by this Agreement. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those expressly set forth or referred to herein or therein. This Agreement supersedes all prior agreements and understandings between the Parties with respect to such transactions.
18.5.       Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any Party hereto without the prior written consent of the other Party, nor is this Agreement intended to confer upon any other person except the Parties hereto any rights or remedies hereunder; provided however, that either Party may assign any or all of its rights, interests and obligations hereunder to any Affiliate. This Agreement shall inure to the benefit of, and be binding upon, the Parties hereto and their successors and permitted assigns.
18.6.       No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of the Parties and their permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.
18.7.       Amendment and Modification. This Agreement may be amended, modified or supplemented only by prior written agreement signed by both Service Provider and Recipient.
18.8.       Waiver of Compliance; Consents. Any failure of any of the Parties to comply with any obligation, covenant, agreement or condition contained herein may be waived by the Party entitled to the benefits thereof only by waiver in writing and such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure.
18.9.       Dispute Resolution.
		(a)  Executive Resolution. If any dispute arises between the Parties relating to the interpretation, breach or performance of this Agreement or the grounds for the termination thereof, the Parties agree that before filing any claims in arbitration or before the appropriate court, the chief executive officer (or other senior executive officer of a Party or its Affiliates having principal executive responsibility for the activities contemplated hereby) of each Party shall, for a period of [***] after such dispute is formally submitted to either of such officers in writing, attempt in good faith to negotiate a resolution of the dispute. The foregoing shall not be interpreted to preclude either Party from seeking and obtaining from the appropriate court provisional remedies such as attachment, preliminary injunction, replevin, etc. to avoid irreparable harm, maintain the status quo, or preserve the subject matter of the dispute. In addition, the provisions of this subsection (a) shall apply to the resolution of any deadlocks between the Parties as to matters within the jurisdiction of the JDC or the JMC.
		(b)  Arbitration. The Parties agree that any disputes arising with respect to the interpretation or enforcement of, or claims with respect to, any provision of this Agreement (but not including the resolution of deadlocks as to matters within the jurisdiction of the JDC or JMC and not arising from the breach of a Party of its obligations hereunder), which cannot be resolved amicably between the Parties in [***] shall be submitted to arbitration in accordance with the then existing rules of the American Arbitration Association ("AAA"). In any arbitration pursuant to this agreement, the award or decision shall be rendered by a majority of the members of an arbitration panel consisting of three members, one of whom shall be chosen by each of the Parties hereto within [***] of the date a written demand for arbitration is made by a Party and the third of whom, who shall be the chairman of the panel, shall be appointed by mutual agreement of the two arbitrators so appointed by the Parties (or by the AAA in the event the arbitrators selected by the Parties fail to reach agreement upon a third arbitrator within [***] of their appointment by the Parties). The arbitration shall be held in New York, New York, USA and shall be conducted in the English language. The award or decision of the arbitration panel pursuant to this Section shall be binding and conclusive upon the Parties, provided that enforcement of such award or decision may be obtained in any court having jurisdiction over the Party against whom such enforcement is sought. In addition, the preceding shall not be deemed to limit either Party’s right to apply for injunctive or other equitable relief to any court of competent jurisdiction as permitted pursuant to the Collaboration Agreement.
		(c)  Discovery. In the event the Parties cannot agree upon procedures for discovery and conduct of the hearing meeting the schedule set forth in this Section, then the arbitrator(s) shall set dates for the hearing, any post-hearing briefing, and the issuance of the award in accord with the schedule set out in this Section. The arbitrator(s) shall provide discovery according to those time limits, giving recognition to the understanding of the Parties that they contemplate reasonable discovery, including document demands and depositions, but that such discovery be limited so that the schedule set out in this Section may be met without difficulty. Unless reasonably justified by the nature or complexity of the issues in question, in no event will the arbitrator(s), absent agreement of the Parties, allow more than a total of ten days for the hearing to permit either side to obtain more than a total of forty (40) hours of deposition testimony from all witnesses, including both fact and expert witnesses, or serve more than twenty (20) individual requests for documents, including subparts, or twenty (20) individual requests for admission or interrogations, including subparts. Multiple hearing days will be schedules consecutively to the greatest extent possible.
		(d)  LIMITATIONS OF LIABILITY. EACH PARTY HERETO WAIVES ITS RIGHT TO TRIAL OF ANY ISSUE BY JURY. EACH PARTY HERETO WAIVES ANY CLAIM TO PUNITIVE, EXEMPLARY, CONSEQUENTIAL OR MULTIPLIED DAMAGES FROM THE OTHER; (EXCEPT IN THE EVENT OF AND TO THE EXTENT SUCH DAMAGES MAY BE AWARDED TO A THIRD PARTY AND BE SUBJECT TO THE INDEMNIFICATION PROVISIONS SET FORTH HEREIN AND EXCEPT THAT THE WAIVER OF CONSEQUENTIAL DAMAGES (BUT ONLY TO THE EXTENT CONSISTING OF LOST PROFITS AND NOT INCLUDING OTHER INDIRECT OR REMOTE MEASURES OF DAMAGES) SHALL NOT APPLY WITH RESPECT TO A KNOWING OR WILLFUL BREACH BY A PARTY OF ITS REPRESENTATIONS PURSUANT TO ARTICLE 12). EACH PARTY HEREBY WAIVES ANY CLAIM FOR ATTORNEYS’ FEES AND COSTS FROM THE OTHER (EXCEPT THAT THIS WAIVER DOES NOT APPLY TO EACH PARTY’S OBLIGATION TO INDEMNIFY THE OTHER PARTY IN CONNECTION WITH THIRD PARTY CLAIMS PURSUANT TO THIS AGREEMENT).
18.10.     Janssen Agreement. Mylan agrees that it shall not amend or modify the Janssen Agreement or waive any of its rights thereunder without Forest’s prior written consent. Mylan shall timely make all payments and properly perform all obligations required by the Janssen Agreement. To the extent of Forest’s interest under this Agreement, Mylan shall not exercise any right under the Janssen Agreement except as directed by Forest. Mylan further agrees to take all lawful steps reasonably necessary or requested by Forest to permit Forest to exercise and enforce Mylan’s rights under the Janssen Agreement to the extent of Forest’s interests as provided herein or to exercise any rights Mylan may have, and, without limiting the generality of the foregoing, Mylan’s representatives on the Mylan/Janssen Review Committee shall act solely in accordance with Forest’s directions. Mylan shall promptly provide Forest with copies of all notifications and communications with respect to the Janssen Agreement and will arrange for Forest’s participation in any further meetings of the Mylan/Janssen Review Committee and any substantive discussions with Janssen regarding the activities contemplated hereby. Mylan hereby affirms that Forest shall have the right, but not the obligation, to cure any default by Mylan under the Janssen Agreement.
18.11.     Governing Law. This Agreement and any claims or disputes arising out of or related to this Agreement or to the transactions contemplated hereby or to the inducement of any Party to enter herein (whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed in accordance with the laws of the State of New York (regardless of the laws that might otherwise govern under principles of conflicts of law or lead to the application of other laws) as to all matters, including, but not limited to matters of validity, construction, effect, performance and remedies. The arbitrators chosen pursuant to Section 18.9(b) must render their award by application of the substantive law of the State of New York and are not free to apply "amiable compositeur" or "natural justice and equity." The arbitrators shall render a written opinion setting forth findings of fact and conclusions of law with the reasons therefore stated. A transcript of the evidence adduced at the hearing shall be made and shall, upon request, be made available to either Party. The arbitrators shall have power to exclude evidence on grounds of hearsay, prejudice beyond its probative value, redundancy, or irrelevance and no award shall be overturned by reason of such ruling on evidence. To the extent possible, the arbitration hearings and award will be maintained in confidence.
18.12.     Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile signatures will be binding on the Parties and Guarantor.
18.13.     Independent Contractors. It is understood and agreed that the Parties are independent contractors and nothing contained in this Agreement is intended to make either Party a general or special agent, legal representative, joint venturer, partner or employee of the other or otherwise as participants in a joint or common undertaking for any purpose. Personnel supplied by a Party shall work for that Party and shall not, for any purpose, be considered as partners, joint venturers, employees or agents of the other Party. Each Party assumes full responsibility for the acts of its personnel while performing services hereunder and shall be responsible solely for their supervision, direction and control, compensation, benefits and taxes. Neither Party has, expressly or by implication, or may represent itself as having, directly or indirectly, any authority to act for or on behalf of the other Party or to make contracts or enter into any agreements in the name of the other Party, or to obligate or bind the other Party in any manner whatsoever.
18.14.     Interpretation. The Parties acknowledge that this Agreement is a product of negotiations and that no inference should be drawn regarding the drafting or preparation of this Agreement.
18.15.     Construction. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall be applied against any Party. Any reference to any federal, state, local, or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise.
18.16.     Further Assurances. From time to time after the Effective Date, Mylan and Forest shall execute, acknowledge and deliver to each other any further documents, assurances, and other matters, and will take any other action consistent with the terms and conditions of this Agreement (including, without limitation, providing reasonable access to the other Party and its representatives, during normal business hours, to books, records, files and documents relating to the Product in the Territory as reasonably required to effectuate the purposes hereof), that may reasonably be requested by a Party and necessary or desirable to carry out the purpose of this Agreement. Forest and Mylan will cooperate and use all reasonable efforts to make all other registrations, filings, and applications, to give all notices, and to obtain as soon as practicable all governmental or other consents, transfers, approvals, orders, qualifications, authorizations, permits, and waivers, if any, and to do all other things necessary or desirable for the consummation of this Agreement.
18.17.     [Deleted pursuant to Section 11.3 of the 2008 Amendment.]
18.18.     Survival. Notwithstanding the term and termination provisions of this Agreement, each provision hereof which provides for obligations for a fixed period or which provide by their terms for survival beyond the Term shall survive the termination or expiration of this Agreement. The Confidentiality Agreement shall survive pursuant to its terms.
18.19.     No Adverse Inference. The Parties acknowledge and agree that this Agreement is the product of negotiations and that no inference shall be drawn regarding the drafting or preparation of this Agreement. In addition, the Parties acknowledge and agree that in no event shall negotiation history, prior discussions and/or proposals or the withdrawal thereof, or any prior understanding or statements control or affect the construction or interpretation of this Agreement.
[Signature Page Follows]

IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto as of the Effective Date.
	FOREST LABORATORIES HOLDINGS LIMITED By:                /s/ Howard Solomon                                Print Name:   Howard Solomon                                    Title:              Chairman                                                 Date:              January 6, 2006
	MYLAN LABORATORIES INC. By:       /s/ Robert J. Coury                                            Print Name:       Robert J. Coury                                   Title:       Chief Executive Officer                                 Date:              January 6, 2006

EXHIBIT C
Supply Addendum
ARTICLE I
ADDITIONAL DEFINITIONS
1.1.      " cGMPs" shall mean current Good Manufacturing Practices as (a) defined in 21 CFR §§ 210 and 211 et. seq., as amended from time to time, and relevant guidelines published by the FDA relating to the standard of practice that is acceptable to the FDA and (b) as required by Law in countries other than the United States where the Product is marketed.
1.2.      " GCP" shall mean current Good Clinical Practices as (a) set forth in the regulations established by the FDA and embodied in the Code of Federal Regulations and relevant guidelines published by the FDA, relating to the standard of practice that is acceptable to the FDA in the conduct of clinical studies and (b) as required by Law in countries other than the United States where clinical studies are conducted.
1.3.      " GLP" shall mean current Good Laboratory Practices (a) as promulgated under the Act at 21 C.F.R. Part 58, as the same may be amended or re-enacted from time to time and (b) as required by Law in countries other than the United States where non-clinical laboratory studies are conducted.
1.4.      " FFDCA" shall mean the Federal Food, Drug and Cosmetic Act, as amended, 21 U.S.C. § 301 et seq., and any related federal and/or state law or regulation pertaining to the safety, effectiveness, adulteration, mishandling, packaging, labeling or storage of pharmaceutical ingredients, finished pharmaceutical products, and/or medical devices that may be applicable to the Product.
1.5.      " Specifications" shall mean the specifications for the Products set forth in the approved NDA for the Products.
ARTICLE 2
MANUFACTURING
2.1.       Manufacturing. The Parties agree that Mylan shall manufacture the Product until such time as an alternate site transfer can be made to Forest. Forest shall use Commercially Reasonable Efforts to achieve such a site transfer for Forest's manufacturing facility as quickly as possible. Once the site transfer is approved by the Regulatory Authorities, Forest shall become the primary manufacturer for the Product, and Mylan shall remain a secondary manufacturer to manufacture the Product. Should Forest require Mylan to commence manufacturing as the secondary manufacturer, the Parties shall use commercially reasonable efforts to enable Mylan to begin manufacturing as soon as possible. The Parties acknowledge and agree that the manufacturing of the Product shall be in accordance with that certain Quality Addendum by and between Mylan and Janssen dated as of December 13, 2004, attached hereto as Exhibit A and made a part hereof (the "Quality Addendum").
2.2.       Payment for Manufacturing. During any period Mylan is manufacturing the Product, Forest shall pay for such manufacturing, [***], at the following rates: (i) for the [***] period immediately following the Effective Date, Forest will pay Mylan [***]; and (ii) after such [***] period, Forest will pay Mylan its [***]. If at any time a site transfer to Forest is achieved, thereafter any additional manufacturing by Mylan pursuant to this Agreement shall be paid for by Forest at a rate of [***]. Such rates shall represent [***]. As of the Effective Date, Mylan estimates that its Cost of Goods to manufacture finished tablets, but not package them, is [***]. Forest shall remit payment for shipments of Product sent by Mylan to Forest within thirty (30) days of Forest's receipt of Mylan's invoice. During any period that Forest is manufacturing the Product, Forest shall be responsible for all of its own costs.
2.3.       Labeling and Packaging. Within ninety (90) days following the Effective Date or the implementation of a material change in Product packaging design, Mylan shall provide to Forest the necessary technical information to enable Forest to prepare and provide to Mylan the layout of packaging material for the Product, including package inserts, labels and other elements. Mylan will review such packaging materials and make any comments or suggestions that it may have to such packaging material no more than seven (7) business days after its receipt. The Parties will then discuss the merits of such comments or suggestions; provided, however, that, subject to the requirements of any Regulatory Authority and any capability restraints relating to manufacturing machinery and equipment, Forest will have sole discretion with respect to the layout of such packaging material, except to the extent governed by Regulatory Authority requirements and machinery layout limitations. During any period that Mylan manufactures the Product, Mylan shall supply Forest with Product packaged in final packaging, and shall promptly implement any changes to the packaging or labeling decided upon pursuant to this Section. Forest shall not be permitted to select any materials which would (a) deviate from packaging components of the Product as contained in the Regulatory Approval, including any amendments or supplements thereto, or (b) materially delay receipt of Regulatory Approval. If Forest elects to make any change to the final packaging materials or design, or elects final packaging materials or designs which significantly deviate from standard packaging (e.g., requiring four (4) color processing or printing), Forest shall bear the costs specifically related to such change or significant deviation from standard packaging including the costs associated with design, tooling, obsolete inventory, regulatory expenses and any changes in the cost of the Product.
Notwithstanding the preceding, Forest may purchase Products in bulk finished form and assume responsibility for packaging and labeling as promptly as reasonably practicable, provided Forest’s facilities are properly qualified, and subject to coordination of work in process with Mylan in a commercially reasonable manner.
2.4.       Generic Product. The Party undertaking the distribution of the Generic Product when and as permitted by the terms of the Agreement shall be responsible for manufacturing the requirements of Product for such purpose.
ARTICLE 3
FORECASTS AND SUPPLY
3.1.       Forecast. During any period that Mylan manufactures the Product, Forest shall provide Mylan with forecasts in accordance with this Section. No later than [***], Forest shall provide Mylan with the quantities of the Product (clinical, commercial and sample) Forest anticipates it will order from Mylan during the first [***] following Regulatory Approval of the Product in the United States (the "Initial Forecast") of which the [***] following launch will be binding. The remainder of the Initial Forecast shall be non-binding on Forest. The Parties acknowledge that the lead time for the production of Compound by Janssen is approximately [***]. Within sixty (60) days following the Effective Date, the appropriate supply chain representatives of each Party shall agree on a forecast mechanism which [***] incorporates at least the following: (i) binding and non-binding forecast periods; (ii) finished good manufacturing lead times; (iii) a buffer mechanism providing for an upper and lower variation limit of eventual orders against the latest forecasts; (iv) mutually agreed upon inventory levels; (v) safety stock; and (vi) disaster recovery inventory.
3.2.       Janssen.
	(a)  Forecasts and Firm Orders. Mylan shall provide Janssen with the forecasts required by the Forecast Mechanism (as defined in the Janssen Agreement) and firm purchase orders as required by Article 8 of the Janssen Agreement for Compound.
	(b)  [Deleted pursuant to Section 6.1(a) of the 2008 Amendment.]
3.3.       Ordering Under the Forecast.
	(a)  Delivery of Purchase Order. During any period Mylan manufactures the Product, Forest will place orders with Mylan for Product in accordance with this Section. On or before the first day of each calendar month, Forest shall place purchase orders with Mylan for the binding portion of the Forecast that corresponds to such month (each, a "Purchase Order"). Forest shall submit each Purchase Order to Mylan not less than ninety (90) days prior to the requested delivery date or dates of the Product set forth in the applicable Purchase Order. Mylan shall deliver the Product against each Purchase Order in accordance with Article 5. Forest shall purchase all such Product ordered and delivered by the delivery date specified in a Purchase Order, provided that such Product meets the Specifications. Notwithstanding the foregoing, individual shipment quantities of the Product may vary from the quantities specified in any Purchase Order by an amount of up to plus or minus [***] and still be deemed to be in compliance with the Purchase Order; provided, however, Forest shall only be invoiced and required to pay for the quantities that Mylan actually shipped to Forest. Notwithstanding anything in Section 3.1 to the contrary, Mylan shall use Commercially Reasonable Efforts, but shall not be obligated, to supply any quantity of the Product ordered by Forest which exceeds the quantity in the applicable Forecast by (i) during the first [***] of the Term, up to [***] and (ii) during the agreed forecast periods applicable to the remainder of the Term, up to [***].
	(b)  Acceptance of Purchase Order. Mylan shall acknowledge and provide Forest with a written acceptance of each Purchase Order within five (5) business days following Mylan’s receipt thereof.
	(c)  Terms of Purchase Orders. Nothing in any Purchase Order submitted by Forest, or written acceptance thereof by Mylan, shall supercede the terms and conditions of this Agreement or the Quality Addendum, unless otherwise agreed to in writing by both Parties.
ARTICLE 4
STOCKS AND DISASTER RECOVERY PLANNING
4.1.       Maintenance of Stock. Mylan and Forest will cooperate to comply with Section 9.1 of the Janssen Agreement with respect to maintaining sufficient stock of Products. In addition to the requirements of Section 9.1 of the Janssen Agreement, the manufacturing Party shall maintain a safety stock of the Product, Compound and all other raw materials necessary to manufacture the Product in accordance with guidelines to be determined by the JDC.
4.2.       Storage. The Parties shall store the Product in storage facilities adapted to pharmaceutical preparations as required by Section 9.2 of the Janssen Agreement.
4.3.       Disaster Recovery Plan Between Mylan and Forest. At least ninety (90) days before the initial launch of the Product, and subject to Janssen's approval, if necessary, the Parties shall draft and agree upon a disaster recovery plan covering the loss of the manufacturing facility for the Product by the Parties.
4.4.       Janssen Disaster Recovery Plan. If Forest decides to qualify a secondary source of Compound in accordance with the disaster recovery plan agreed upon with Janssen covering the loss of the manufacturing facility for the Compound pursuant to the Letter Agreement, [***]. If Forest decides not to qualify such a secondary source, then, during the course of a Force Majeure Event due to the lack of Compound while Mylan is manufacturing the Product(s), Forest shall not be entitled to the license granted pursuant to Section 18.17.
4.5.       [Deleted pursuant to Section 6.1(b) of the 2008 Amendment.]
ARTICLE 5
SHIPPING
5.1.       Shipping and Delivery Dates. During the period that Mylan is manufacturing the Product, Mylan shall make the Product available at its distribution facilities for pick-up by a carrier designated by Forest, as designated by Forest in the applicable purchase order, no later than the delivery date set forth in Mylan's confirmation order.
5.2.       Terms of Delivery. During the period that Mylan is manufacturing the Product, Mylan shall make the Product available to Forest EXW (Incoterms 2000) Mylan's distribution facilities.
5.3.       Shipping Costs. Forest shall pay all costs, expenses, taxes, levies, tariffs, brokerage fees, insurance premiums and other costs and charges assessed or levied in connection with all transportation of the Product to Forest pursuant to Section 5.1 (the "Shipping Costs"). If Mylan pays any of the Shipping Costs on behalf of Forest, then Mylan shall invoice such Shipping Costs to Forest and Forest shall pay such costs. In the event that expediting costs are incurred due to either Mylan's late delivery or other fault of Mylan, that cost will be entirely borne by Mylan.
5.4.       Accompanying Documentation. With each shipment of the Product, Mylan shall provide Forest with commercially appropriate shipping documentation, including bills of lading, and with such certificates of analysis and other appropriate documentation identifying the applicable batch numbers, indicating conformance of the shipment with the Specifications, the Quality Addendum and all Regulatory Standards, statement of cGMP compliance, and, at Forest's request, Mylan shall provide Forest with reasonable access to any applicable Product data and information reasonably requested.
ARTICLE 6
TESTING, INSPECTION AND DEFECTIVE PRODUCTS
6.1.       Quality Assurance. During any period that Mylan manufactures the Product, Mylan shall be responsible for quality assurance testing with respect to the Products sold hereunder, including stability testing, in accordance with the Quality Addendum. Mylan shall provide the results thereof to Forest in the form of a Certificate of Analysis (hereinafter "COA"). Mylan also will provide Forest with Material Safety Data Sheets as required for the Product, and updates of same as necessary. Forest shall at all times be responsible for final release of the Product to the market. During any period that Forest manufactures the Product, Forest will perform quality assurance testing with respect to the Product, including stability testing, in accordance with the Quality Addendum.
6.2.       Inspection by Mylan. Prior to shipping the Product to Forest, Mylan shall determine if such Product conforms to the Specifications. Mylan shall notify Forest of any non-conforming Product immediately following Mylan's discovery or knowledge thereof and shall not ship any such nonconforming Product.
6.3.       Inspection by Forest.
	(a)  Inspection of the Product. Within thirty (30) days following its receipt of a shipment of the Product, Forest shall notify Mylan of any obvious defects or order quantity discrepancies.
	(b)  Acceptance of the Product. If notice is not given by Forest pursuant to Section 6.3(a) within the time period set forth therein, then the shipment shall be deemed accepted by Forest for purposes of this Section and, except as provided in Section 6.4, may not be rejected pursuant to Section 6.5 or Section 6.6.
6.4.       Latent Defects. In the case of the Product with defects not readily discoverable within the time period specified in Section 6.3, each Party shall notify the other Party of any such defects discovered by such Party promptly following such Party’s discovery thereof and in any case not later than [***] of such discovery.
6.5.       Defective Products Manufactured by Mylan.
	(a)  Rejection by Forest. In any case where Forest expects to reject or otherwise make a claim against Mylan with respect to non-conforming or otherwise defective Product, Mylan shall be offered a reasonable opportunity to offer proof or evidence as to why such Product should not be rejected and to inspect and/or test such Product. Any notice of rejection by Forest shall be accompanied by a reasonably detailed statement of its reasons for rejection and a report of any pertinent analysis performed by Forest on the allegedly non-conforming or otherwise defective Product, together with the methods and procedures used. Such notice will confirm that the testing methods and procedures used to analyze the alleged non-conformance or defect were conducted according to cGMP/GLP. Mylan shall notify Forest as promptly as reasonably possible (but in any event within [***] unless the investigation requires longer than [***] to complete) whether or not it accepts Forest's assertions of non-conformity or defectiveness.
	(b)  Testing of Shipment Samples. During any period Mylan manufactures the Product, Mylan shall be responsible for properly storing and retaining appropriate samples (identified by batch number) of the Product that it supplies to Forest in conditions and for times consistent with all applicable regulatory standards and to permit appropriate or required internal and regulatory checks and references (collectively, "Retention Samples"). All Mylan’s costs with respect to the Retention Samples shall be included in Cost of Goods. In the event of any dispute as to whether the Product may be rightfully rejected by Forest, such Product shall be tested, using the Product from the shipment or shipments in question, for conformance with the Retention Samples and Specifications and acceptance criteria by an independent GLP/cGMP certified laboratory of recognized repute, acceptable to both Parties who shall analyze the Product using such procedures and tests as the laboratory may consider necessary or appropriate to reach conclusion. This analysis shall be binding on Mylan and Forest solely for the purpose of determining whether such Product may be rightfully rejected, which, absent manifest error, shall be deemed final as to any dispute over compliance. Both Parties reasonably agree to cooperate with the independent laboratory's reasonable requests for assistance in connection with its analysis hereunder and both Parties shall be permitted to audit such testing and analysis. The fees and expenses charged by such independent testing organization shall be paid by the Party in error. For the sake of clarity, if the rejection is in error, Forest shall pay for such fees and expenses, and if the rejection is correct, Mylan shall pay for such fees and expenses.
	(c)  Disposal of Rejected Product. All or part of any shipment of the Product determined to have been rightfully rejected by Forest shall be held by Forest for a period of thirty (30) days following notice to Mylan for proper disposal by Mylan, at Mylan's expense. If Mylan does not provide instructions for disposal of the Product within such period, then Forest may dispose of such Product in accordance with all applicable Laws and Mylan shall either pay or reimburse Forest for all costs and expenses incurred by Forest in connection with the disposal of such Product.
6.6.       Remedies. In the event Forest receives non-conforming or otherwise defective Product from Mylan which Forest rightfully rejected as determined under Section 6.5(b), Forest may, in addition to any other rights or remedies it may have under Section 6.5 elect for Mylan to replace such Product with an equal quantity of the Product that conforms to the Specifications and is not otherwise defective or refund the purchase price and shipping costs for the quantity of such defective Product. If Forest requests Mylan to replace such Product as set forth above, Mylan shall replace such Product as soon as is reasonably practicable at no additional cost to Forest.
6.7.       Inspection and Audit. During any period that a Party manufactures the Product, to the extent permitted by Law and subject to any Third Party consents, the manufacturing Party shall permit the other Party (and/or Janssen pursuant to the terms of the Quality Addendum) to conduct an inspection and audit only as to the Product. Such inspection and audit will relate to: (i) those portions of each of the manufacturing facilities at which any manufacturing of the Product is performed, (ii) any facility that provides analytical testing of, packages, warehouses or stores the Product, (iii) any other facility to which the manufacturing Party transfers manufacturing, packaging, warehousing or storing obligations in accordance with the terms of this Agreement and (iv) any of the manufacturing Party’s manufacturing and quality control records and other documentation relating to the manufacturing activities (including any internal quality control audits or reviews conducted by the manufacturing Party) for the Product. Such inspections and audits shall be for the purpose of ascertaining compliance with GMPs, GCPs and GLPs and the manufacturing Party’s obligations under the Quality Addendum and this Agreement. Any information obtained by the inspecting Party through such inspections and audits shall be treated as Confidential Information of the manufacturing Party or of a Third Party, as the case may be. Such audits and inspections shall be conducted at the inspecting Party’s expense during normal business hours, with at least one week's prior written notice and no more than once per year per manufacturing facility (unless an issue in question or an issue raised by a prior audit justifies more frequent audits). Mylan shall use Commercially Reasonable Efforts to cause any Third Party conducting manufacturing activities related to the Product to permit inspections and audits as contemplated by this Section.
6.8.       Monitoring and Recordkeeping; Operating Procedures. During any period Mylan is manufacturing the Product and for so long thereafter as is required by Law, Mylan shall maintain records evidencing its compliance with GMPs, GCPs and GLPs to the extent such records are required by Law but in no event for less than three years. Mylan shall provide Forest with reasonable access to such documentation promptly upon Forest's request.
ARTICLE 7
SUPPLY REGULATORY MATTERS
7.1.       Regulatory Requirements. During any period that Mylan manufactures the Product, Mylan shall be responsible for maintaining and fulfilling all regulatory requirements in the Territory with respect to the Products that are imposed by Law upon Mylan as the manufacturer. During any period that Forest manufactures the Product, Forest shall be responsible for maintaining and fulfilling all regulatory requirements in the Territory with respect to the Products that are imposed by Law upon Forest as the manufacturer. In addition, following the transfer of the NDA to Forest, Forest shall be responsible for obtaining, maintaining and fulfilling all regulatory requirements in the Territory that are imposed by Law upon Forest as the NDA holder. Each Party will, on a timely basis, provide the other Party with all information that such Party has that the other Party does not have that is reasonably necessary and relevant to either Party's obligations in fulfilling such requirements.
7.2.       State Approvals. Forest shall be responsible for filing and maintaining all documentation and other information as required by each and every state and locality (hereinafter "State") for the purpose of listing the Products on each such State's formulary or other similar authority, and for obtaining such other approvals as may be necessary to distribute and sell the Products in the Territory.
7.3.       Inspection by Regulatory Authorities. Upon actual knowledge, the Party responsible for manufacturing the Product at any given time shall promptly (and in any case within twenty four (24) hours) notify the other Party of an audit or inspection by the FDA or any similar or related Regulatory Authority only insofar as (a) it directly affects the manufacturing facility or activities and (b) directly relates to the Product, and shall promptly disclose all relevant portions of any written notice of observations that may affect the obligations of the manufacturing Party to the other Party under this Agreement. In addition, the manufacturing Party shall provide the other Party with redacted copies (limited solely for the purpose of protecting Third Parties, Third Party products or the manufacturing Party's other products) of any Form FDA 483 Inspectional Observations under the FDA and Establishment Inspection Reports (or their equivalents) issued as a result of said audit and any follow-up written communications between the manufacturing Party or its Affiliates and the Regulatory Authority.
7.4.       Manufacturing and Regulatory Changes. Following receipt of Regulatory Approval, any change to the Specifications, the manufacturing process, analytical methods, production equipment (other than like replacements), raw materials (including their sources), packaging components, storage conditions, site of the manufacturing facilities, or shipment methods and supplies associated with the manufacturing activities or the Product (each a "Change") shall be made only in accordance with this Section. With respect to any Change required by the Regulatory Authorities (regardless of which Party is manufacturing the Product at such time), the Parties will work together through the JDC to implement such Change. Forest shall bear all costs of such Change, including, but not limited to, Regulatory Approval and validation. While Mylan is manufacturing the Product if Mylan requests a Change, the Parties will work together through the JDC to mutually agree on whether to implement such Change. If the JDC approves such Change, Mylan shall bear all costs of such Change, including, but not limited to, Regulatory Approval and validation. With respect to any Change requested by Forest (regardless of which Party is manufacturing the Product at such time), the Parties will work together through the JDC to mutually agree on whether to implement such Change. If the JDC approves such Change, Forest shall bear all costs of such Change, including, but not limited to, Regulatory Approval and validation. All Changes will be carried out in accordance with the Quality Addendum, if applicable.
ARTICLE 8
ADDITIONAL REPRESENTATIONS AND WARRANTIES
8.1.       Mutual Representations and Warranties. Each Party as to itself hereby represents, warrants and covenants to the other Party that:
	(a)  It is not debarred and has not and will not use in any capacity the services of any person debarred under subsection 306(a) or (b) of the Generic Drug Enforcement Act of 1992. If at any time this representation and warranty is no longer accurate, it shall immediately notify the other Party of such fact;
	(b)  It, its Affiliates, assignees, licensees and contractors shall adhere in all material respects to all applicable Laws relating to the handling, storage, manufacturing, sale, distribution and disposal by any of them of the Product and shall not at any time do, or cause to be done, any act inconsistent with the labeling;
	(c)  It has and will maintain throughout the term of this Agreement all permits, licenses, registrations and other forms of governmental authorization and approval as required by Law in order for it to execute and deliver this Agreement and to perform its obligations hereunder in accordance with all applicable Laws; and
	(d)  During any period that such Party is responsible for the manufacturing of the Product pursuant to this Agreement, it represents and warrants to the other Party that, at the time of shipment, such Product has been manufactured, packaged, stored and shipped in conformity with cGMPs, Specifications, and any other applicable Laws, and shall not be adulterated, misbranded or otherwise violative of the FFDCA or other applicable Laws.

EX-10

[***] = Certain confidential information contained in this document, marked by brackets, has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended.
EXHIBIT 10.28
AMENDMENT AGREEMENT (this "Amendment Agreement") dated as of February 27, 2008 (the "Amendment Effective Date") by and between FOREST LABORATORIES HOLDINGS LIMITED, an Irish corporation having offices at Milner House, 18 Parliament Street, Hamilton HM 11, Bermuda ("Forest") and MYLAN INC. (formerly known as MYLAN LABORATORIES INC.), a Pennsylvania corporation having offices at 1500 Corporate Drive, Suite 400, Canonsburg, Pennsylvania 15317, on behalf of itself and its subsidiaries (collectively, "Mylan") to that certain NEBIVOLOL DEVELOPMENT AND COMMERCIALIZATION AGREEMENT dated as of January 6, 2006, as amended by letter agreements dated January 6, 2006 and January 11, 2006 (collectively, the "Agreement") by and between Forest and Mylan.
R E C I T A L S:
A.         Mylan is a party to that certain License Agreement Concerning Nebivolol between Janssen Pharmaceutica NV ("Janssen") and Mylan dated as of February 21, 2001, as amended to date, including, without limitation, by the terms of the Supplemental Agreement (the "Supplemental Agreement") Concerning the Development and Commercialization of Nebivolol in the United States and Canada dated January 6, 2006 (the "Janssen Agreement") pursuant to which, among other things, Mylan was granted certain rights and licenses with respect to the compound generically known as Nebivolol;
B.         Pursuant to the Agreement, Mylan has granted to Forest certain licenses and sublicenses relating to Nebivolol, including, without limitation, licenses to Mylan Know-How and Licensed Patents and sublicenses under the Janssen Agreement to Licensed Patents and Janssen Know-How; and
C.         In consideration of the covenants and agreements set forth herein, Forest and Mylan have agreed to amend and modify the Agreement in accordance with the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing, the parties, intending to be legally bound, hereby agree as follows:
1.          Defined Terms. Unless otherwise defined herein, capitalized terms shall have the respective meanings assigned to them in the Agreement.
2.          Development and Regulatory Responsibilities.
2.1.      Section 2.1 of the Agreement is hereby amended by the addition of the following as a new second paragraph thereto:
	"Notwithstanding the preceding, Mylan retains the right on a co-exclusive basis with Forest (i.e., an exclusive right subject only to the rights granted to Forest hereunder) under the Licensed Patents and Licensed Know-How in the Territory for the limited purpose of Developing and Commercializing the Product (as defined in subsection (a) of Section 1.26) for the indication of [***] (the "Reserved Indication"). Such right shall not be assignable or sublicensable by Mylan and, with respect to Commercialization, may only be used for the Commercialization of Product in such dosage forms and strengths as are not reasonably likely to be substituted for dosage forms and strengths being Commercialized or Developed by Forest. In the event that sales of a Product by Mylan authorized by this paragraph are being made for indications other than the Reserved Indication during the Term ("Unauthorized Sales") as indicated by generally recognized Third Party data sources, Mylan agrees to pay Forest an amount equal to the Net Sales which Forest would have achieved if the Unauthorized Sales had been sales by Forest of the Product."
2.2.      From and after the Amendment Effective Date, Forest will have the sole authority, discretion and responsibility, at Forest’s sole cost and expense, for all further Development activities, including, without limitation, all studies currently underway (including NEB310 and NEB323), all interactions with Regulatory Authorities with respect to Regulatory Approval (including labeling discussions and finalization) and other matters relating to the Product and with respect to the conduct of any further Development activities. From and after the Amendment Effective Date, Forest will have the sole responsibility and authority for formulating and preparing the submission strategy for any further Development required for all future indications for which Regulatory Approval may be sought, including, without limitation, for the treatment of congestive heart failure. From and after the Amendment Effective Date, Mylan shall not perform any Development activities, provided that Mylan shall cooperate with Forest in obtaining any consent required by Janssen under the Janssen Agreement to Development plans or activities proposed to be conducted by Forest.
2.3.      In accordance with the assignment of authority and responsibility for future Development pursuant to Section 2.2 above, Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8 and 3.9 of the Agreement are hereby deleted in their entirety and the Parties acknowledge that from and after the Amendment Effective Date, Development and regulatory matters shall be conducted without the requirement of a JDC. Notwithstanding the preceding, Mylan shall continue to make appropriate personnel having regulatory or Development responsibilities with respect to the Product available for consultation with Forest from time to time as Forest may reasonably request in connection with Development and regulatory matters relating to the Product, including to provide for a smooth transition to Forest of Development activities, if any, currently being performed by Mylan. Any such activities requested by Forest having significant costs will be at Forest’s expense based upon Mylan’s standard cost accounting for similar activities consistently applied. In addition, Mylan hereby delegates to Forest its decision-making authority under Sections 15.1, 15.2 and 15.3 of the Janssen Agreement, as amended by the Supplemental Agreement, and agrees to cooperate with Forest and if necessary to act at Forest’s discretion on Forest’s behalf in any discussions with Janssen required by such Sections of the Janssen Agreement.
2.4.      The Parties will cooperate and use their Commercially Reasonable Efforts to obtain the consent of [***] to the assignment to, and assumption by, Forest of Mylan’s responsibilities under that certain [***]. Pending any such assignment and assumption, the Parties will continue to have the respective responsibilities for pharmacovigilance reporting set forth in Section 4.4 of the Agreement.
3.          Commercialization.
3.1.      Sections 5.1 through 5.9 and Sections 5.11 through 5.15 are hereby deleted from the Agreement in their entirety and replaced by the following new Section 5.1:
	5.1      Commercialization. Forest shall have the sole authority and responsibility, at Forest’s sole discretion and expense (including the responsibility for any amounts due to Janssen because of the failure by Forest to meet the minimum sales targets as required by the Janssen Agreement) for all Commercialization activities. Notwithstanding the preceding, Forest shall be obligated to conduct such Commercialization activities as may be required to be conducted pursuant to the terms of the Janssen Agreement.
The Parties acknowledge that from and after the Amendment Effective Date, Commercialization activities will be conducted without the requirement of a JMC and Mylan shall not have the Co-Promotion Option. Notwithstanding the preceding, the former members of the JMC or their designees shall meet at a mutually acceptable time and place twice each calendar year or such frequency as the parties may mutually agree to review: (i) Forest's marketing plan and updates thereto, including marketing programs and physician detailing activities; (ii) strategies for conducting further clinical trials following NDA approval; (iii) the effectiveness of marketing and detailing programs; and (iv) market strategy and pricing.
3.2.      From and after the Amendment Effective Date, Forest shall no longer be bound by the provisions of Section 5.16 of the Agreement; provided that Forest shall not undertake any Commercialization activity in the Territory which would cause Mylan to be in violation of any provision of the Janssen Agreement. In addition, Mylan agrees that during the Term it will not take any actions which contest the validity or enforceability of any of the Licensed Patents.
3.3.      Notwithstanding the provisions of Section 6.11 of the Agreement and subject only to the terms of the Janssen Agreement, Forest shall have the sole right to launch and distribute an authorized Generic Product in Forest’s sole discretion. In addition, from and after the Amendment Effective Date, Forest shall not be required to pay Mylan any portion of its Profit with respect to any Generic Product launched by Forest. Notwithstanding the preceding, Forest will not contract or enter into an arrangement with a third party (except in settlement of litigation or claims relating to patents with respect to the Compound or Product) to distribute an authorized Generic Product unless Forest shall have first have offered to negotiate with Mylan to distribute such Authorized Generic on commercially reasonable terms.
4.          Payments.
4.1.      Within ten (10) business days from the Amendment Effective Date, Forest will pay Mylan a one-time non-refundable, non-creditable payment of Three Hundred Seventy Million Dollars (US $370,000,000).
4.2.      Sections 9.2, 9.3 and 9.4 of the Agreement are hereby deleted in their entirety and replaced with the following:
	9.3      Congestive Heart Failure Milestone. If the SENIORS Study is used as one of the primary clinical studies to support an NDA submission to the FDA seeking approval for the use of nebivolol in the treatment of CHF, then Mylan shall be paid the following consideration by Forest:
		1.      Within thirty (30) days following the FDA’s final approval of such indication, a one-time payment of [***]; and 2.      Within thirty (30) days following the launch of nebivolol for the CHF indication in the United States and in any case no later than three (3) months following the FDA’s final approval of such indication, a second one-time payment of [***].
	Mylan represents that each of the payments in Subsections 1 and 2 of this Section are required to be paid to a Third Party and Mylan agrees to remit such payments to such Third Party and to perform all other obligations to Third Parties to the extent non-compliance would affect any of Forest’s rights under the Agreement. Except for obligations arising under the Janssen Agreement, Mylan further represents that no other amounts are payable to a Third Party pursuant to any agreement or other obligation to which Mylan is a party in connection with the future Development or Commercialization of the Product in the Territory.
4.3.      Section 10.1 of the Agreement is hereby deleted in its entirety and replaced with the following:
	10.1      Royalties.               (a)  For a period (the "Net Sales Royalty Period") of three (3) years beginning on January 8, 2008 (the first commercial sale of the Product), Forest shall pay to Mylan the following royalties based on aggregate annual Net Sales of all Product(s) (the "Royalties") in the Territory, as follows (the "Royalty Rates"):
			Aggregate Annual Net Sales of Products in the Territory	Royalty Rate
			Up to [***]	[***]
			Above [***] up to and including [***]	[***]
			Above [***] up to and including [***]	[***]
			Above [***] up to and including [***]	[***]
			Above [***]	[***]
	Each Royalty Rate shall apply to the corresponding amount of Aggregate Annual Net Sales described in the table above.               (b)  Beginning on the third anniversary of January 8, 2008, Forest shall pay Mylan a royalty of [***] of the amounts payable to Janssen in consideration for the supply of Compound by Janssen to Mylan for purposes of commercial sale under the Trademark pursuant to the Janssen Agreement and as such amounts are periodically "trued up" pursuant to the Janssen Agreement. For the avoidance of doubt, such royalty shall only be payable with respect to amounts payable to Janssen with respect to sales of Compound to Forest/Mylan and not with respect to milestone or other payments which may become due to Janssen. Royalties payable hereunder shall be paid within 30 days following each "true up" of amounts due to Janssen for the supply of Compound.
4.4.      In addition to the Royalties payable pursuant to Section 10.1 of the Agreement as amended hereby, from and after the Amendment Effective Date and unless arrangements for direct payments from Forest to Janssen are subsequently implemented by the Parties, Forest shall pay to Mylan all amounts due pursuant to the Janssen Agreement on or before the applicable due date of such payment in immediately available funds, which amounts shall be paid by Mylan to Janssen, including all milestones due under the Janssen Agreement and all amounts required for commercial supplies of Compound to be provided by Janssen (and with Forest bearing the cost and receiving the benefit, as applicable, of all "true ups" with respect to the supply of Compound provided by the Janssen Agreement and any amendments thereto). Without limiting the generality of the foregoing, promptly following the Amendment Effective Date, Forest shall reimburse amounts Mylan has paid to Janssen as Cost of Goods for Compound purchased from Janssen as of the Amendment Effective Date for purposes of supply to Forest and not previously paid for or reimbursed by Forest, provided that any such Cost of Goods so reimbursed shall not again be applied in determining Cost of Goods payable by Forest to Mylan for Product manufactured by Mylan under the Supply Addendum (Exhibit C to the Agreement). Mylan and Forest shall establish a working group which will serve as a mechanism for the exchange of information and to coordinate payments due under the Janssen Agreement with the objective of assuring efficient and timely payments from Forest to Mylan and from Mylan to Janssen to assure compliance with the Janssen Agreement. The provisions of Section 11.1 (Audit) of the Agreement shall be deemed to include a requirement by the Parties to maintain such records as are necessary to evidence compliance with this Amendment Agreement. Following the Net Sales Royalty Period, the Royalty reports required by the Agreement will be appropriately adjusted to reflect the basis for the Royalties payable pursuant to the Agreement as amended hereby.
4.5.      Section 10.2 of the Agreement is hereby deleted in its entirety.
5.          Janssen Agreement. In addition to and without limiting the provisions of Section 18.10 of the Agreement, the Parties hereby agree as follows with respect to the management of the Janssen Agreement:
5.1.      Mylan shall remain responsible for ordering Compound to be supplied by Janssen pursuant to the terms of the Janssen Agreement for Development, formulation, qualification, validation of manufacturing facilities, physician samples and Commercialization. Subject only to Forest’s payment obligations to Mylan provided by Section 4.4 of this Amendment, Mylan shall make all payments to Janssen required by the terms of the Janssen Agreement.
5.2.      In addition to and without limiting the obligations of indemnification provided by Sections 16.1, 16.2, 16.3 and Article 17 of the Agreement, each of Forest and Mylan agrees to indemnify the other and hold the other and the other’s Affiliates, directors, officers, employees, consultants, contractors, representatives and agents harmless from and against any and all Losses incurred in connection with or arising from any act or omission of the indemnifying Party to the extent such act or omission causes or constitutes a breach by Mylan of Mylan’s obligations under the Janssen Agreement, including without limitation with respect to intellectual property matters. Such indemnification will be governed by the procedures set forth in Section 16.4 of the Agreement.
5.3.      All further amendments or supplements to the Janssen Agreement, including, without limitation, the completion of the Disaster Recovery Plan (Exhibit F to the Supplemental Agreement) and the Second Amendment to the Janssen Agreement, will be negotiated and executed as reasonably directed by Forest, provided that any additional cost or expense imposed upon Mylan by any such amendment or supplement shall be the responsibility of Forest. Forest will not place any undue burden on Mylan with respect to any such further amendments or supplements. As between Forest and Mylan, Forest shall have the sole decision making authority with respect to all matters under the Janssen Agreement as amended by the Supplemental Agreement.
5.4.      Mylan shall furnish Forest with such cooperation as Forest may reasonably request to seek to obtain for Forest the benefits of any rights Mylan may have with respect to data or other intellectual property [***] with respect to the Compound or the Product in respect of the Territory.
5.5.      Notwithstanding any of the provisions of this Amendment Agreement and unless otherwise agreed by Forest, Mylan and Janssen, Forest shall perform its rights and obligations under the Agreement, including rights and obligations with respect to Development and Commercialization, in a manner which complies with the obligations of Mylan under the Janssen Agreement. Without limiting the generality of the foregoing, Forest shall maintain books and records of its activities which comply with Section 7.1 of the Janssen Agreement and will permit Janssen to exercise the right of inspection and audit provided by Section 7.2 of the Janssen Agreement with respect to such books and records.
6.          Supply Matters.
6.1.      The Supply Addendum (Exhibit C to the Agreement) shall continue to apply by its terms except to the extent set forth below:
	(a)      The provisions of Section 4.4 of this Amendment Agreement shall supersede the provisions for payments to Mylan for Compound set forth in Section 3.2(b) of the Supply Addendum. (b)      Section 4.5 of the Supply Addendum is hereby deleted in its entirety. (c)      Mylan shall not have the rights of inspection and audit provided by Section 6.7 of the Supply Addendum, provided that such rights shall continue to be extended to Janssen to the extent required by the Janssen Agreement or any Quality Agreement (each a "Quality Agreement") between Mylan and Janssen or between Forest and Janssen from time to time in effect. (d)      Except to the extent required by the Janssen Agreement or any Quality Agreement, Forest shall not be obligated to notify Mylan of any audit or inspection by the FDA or other Regulatory Authority of Forest’s facilities used in the manufacture of the Product. (e)      Notwithstanding Section 7.4 of the Supply Addendum, during any period that Mylan is manufacturing the Product, the decision of Forest shall be deemed the decision of the JDC contemplated by such Section and during any period the Product is being manufactured by Forest, Forest shall have the sole discretion, subject only to compliance with the terms of the Janssen Agreement, to implement changes to manufacturing processes, analytical materials, production equipment or other steps or processes relating to the manufacture of the Product. Notwithstanding Section 7.4, Forest will bear all costs of any Changes, regardless of which Party is manufacturing the Product; provided, however, in no event shall Mylan be required to implement a Change which would not be commercially reasonable and Forest and Mylan will meet and consider in good faith the most commercially reasonable solution to implement such Change or to otherwise address Forest’s requirements.
7.          Publications; Public Announcements.
7.1.      From and after the Amendment Effective Date, and subject only to such consultation as may be required to comply with Janssen’s rights under Section 4.12 of the Janssen Agreement, Forest shall have no further consultation obligations to Mylan with respect to publication plans. In addition, from and after the Amendment Effective Date, except to the extent of any approvals required pursuant to Section 24.6 of the Janssen Agreement, Forest shall not be required to obtain Mylan’s consent with respect to public announcements regarding the Product or research or Development activities under the Agreement. The provisions of Section 13.3 shall continue to apply in accordance with their terms with respect to Mylan and with respect to both Parties with respect to announcements regarding the Agreement, including this Amendment Agreement.
8.          Change of Control. Article 15 of the Agreement is hereby deleted in its entirety.
9.          Intellectual Property.
9.1.      Notwithstanding anything to the contrary set forth in Article 17 of the Agreement, from and after the Amendment Effective Date, Forest shall have the sole responsibility, at its sole discretion and expense, with respect to the prosecution and maintenance of all patents to the extent relating to the Compound or the Product and whether owned or controlled by Mylan or Forest, provided that to the extent such patents are owned or controlled by Mylan and except to the extent of Mylan's obligations and Janssen's interests and rights under the Janssen Agreement, such right shall only extend to the prosecution of such patents within the Territory. To the extent any such patents are owned or controlled by Mylan and except to the extent of Mylan's obligations and Janssen's interests and rights under the Janssen Agreement, Mylan shall furnish Forest such cooperation, including through the execution of appropriate documents and instruments and the obtaining of testimony or statements from Mylan employees, agents or consultants, as Forest may reasonably request, to facilitate the exercise by Forest of its rights pursuant to this Section. In addition, to the extent any such patents are owned or controlled by Mylan and except to the extent of Mylan's obligations and Janssen's interests and rights under the Janssen Agreement, Forest shall have the right, in its sole discretion, to elect whether or not to prosecute or maintain specific patents and patent applications within the Territory. Accordingly, except as may otherwise be agreed by Forest, or required in order to comply with the Janssen Agreement, Mylan shall not have the right to elect to prosecute or maintain any such patents within the Territory which Forest has determined not to prosecute or to cease prosecuting or maintaining.
9.2.      Subject to Janssen’s rights, from and after the Amendment Effective Date, as between Forest and Mylan, Forest shall have the right, at Forest’s sole discretion and without the obligation to discuss litigation strategies with Mylan, to enforce Licensed Patents and other patents relating to the Product or the Compound against Third Parties. Any such enforcement shall be at Forest’s sole cost and expense and the proceeds of any awards, judgments or settlements obtained by Forest in connection therewith shall be for the sole account of Forest. Mylan agrees to furnish Forest with such cooperation, including consenting to act as a party to litigation if required and to provide such information as Forest may reasonably request in connection with patent prosecution and enforcement matters.
9.3.      Section 17.7 (Adjustments) of the Agreement is hereby deleted in its entirety.
10.        Side Letters. Each of the side letter amendments to the Agreement dated January 6, 2006 and January 11, 2006, respectively, shall be of no further force or effect from and after the Amendment Effective Date; provided, however, the January 6, 2006 Guarantee Letter from Howard Solomon of Forest Laboratories, Inc. to Mylan shall continue to apply to the Agreement as amended by this Amendment Agreement.
11.        Miscellaneous.
11.1.    Each Party represents and warrants to the other that the execution and delivery of this Amendment Agreement by such Party and the performance of such Party’s obligations hereunder (i) do not conflict with or violate any requirement of Laws existing as of the Amendment Effective Date and applicable to such Party, (ii) do not breach or violate any provision of its constitutional documents and (iii) do not conflict with, violate, breach or constitute a default under any contractual obligations of such Party or any of its Affiliates existing as of the Amendment Effective Date. In addition, each Party represents to the other that the Agreement (and, with respect to Mylan’s representation, the Janssen Agreement) constitutes a legal and validly binding obligation of such Party and that, to the best of its knowledge, no event has occurred which would give it the right to terminate or limit the other Party’s (and, with respect to Mylan’s representation, Janssen’s) right thereunder or to seek damages or other legal or equitable remedies with respect thereto.
11.2.    Except to the extent amended hereby, the Agreement remains in full force and effect in accordance with its terms. The terms and conditions of this Amendment Agreement shall be construed together with the terms of the Agreement as a single agreement, provided that, to the extent any terms and conditions of the Amendment Agreement are inconsistent with the terms and conditions of the Agreement, the terms and conditions of this Amendment Agreement shall govern. Terms defined in the Agreement and no longer used in the Agreement as amended hereby shall not be given any force or effect in the interpretation of the Agreement.
11.3.    Section 18.7 of the Agreement is hereby amended to read in its entirety as follows:
	18.17    Force Majeure. The occurrence of an event which materially interferes with the ability of a Party to perform its obligations or duties hereunder which is not within the reasonable control of the Party affected or any of its Affiliates, not due to malfeasance by such Party or its Affiliates (each, a "Force Majeure Event"), including fire, earthquake, acts of God, acts of war, labor strikes, impossibility of obtaining raw materials or proprietary components or shortages in supply raw materials or proprietary components, terrorism or lockouts, riots, civil disturbances, actions or inactions of governmental authorities (except actions in response to a breach of applicable laws by such Party), or epidemics shall not excuse such Party from the performance of its obligations or duties under this Agreement, but shall merely suspend such performance during the continuation of the Force Majeure Event. The Party prevented from performing its obligations or duties because of a Force Majeure Event shall promptly notify the other Party of the occurrence and particulars of such Force Majeure Event and shall provide the other Party, from time to time, with its best estimate of the duration of such Force Majeure Event and with notice of the termination thereof. The Party so affected shall use Commercially Reasonable Efforts to avoid or remove such causes of nonperformance as soon as is reasonably practicable. Upon resolution, cessation, or termination of the Force Majeure Event, the performance of any suspended obligation or duty under this Agreement shall promptly recommence. This Section will not operate to excuse payment by Forest of any amounts due to Mylan under this Agreement or payments of any amounts due to Janssen under the Janssen Agreement.
11.4.    Notwithstanding anything to the contrary set forth in the Agreement and subject only to the terms and conditions of the Janssen Agreement, Forest shall have the right to freely assign or sublicense any of its rights under the Agreement, as amended hereby, to any Affiliate. Forest may assign its rights under the Agreement to Third Parties but only with the prior written consent of Mylan, not to be unreasonably withheld or delayed.
IN WITNESS WHEREOF, this Amendment Agreement has been executed by the Parties as of the Amendment Effective Date.
		FOREST LABORATORIES HOLDINGS LIMITED By:       /s/ Howard Solomon                                          Print Name:       Howard Solomon                                 Title:       Chairman
		MYLAN INC. f/k/a MYLAN LABORATORIES INC. By:       /s/ Robert J. Coury                                             Print Name:       Robert J. Coury                                    Title:       Vice Chairman and CEO

EX-13

EXHIBIT 13

 QUARTERLY STOCK MARKET PRICES

	High	Low
April-June 2006	45.01	36.18
July-September 2006	51.53	37.82
October-December 2006	54.70	46.34
January-March 2007	57.97	50.00
April-June 2007	56.65	44.51
July-September 2007	47.53	35.01
October-December 2007	41.00	34.89
January-March 2008	42.76	35.10

As of May 28, 2008 there were 1,316 stockholders of record of the Company's common stock.

SELECTED FINANCIAL DATA

March 31, (In thousands)	2008	2007	2006	2005	2004
Financial Position:
Current Assets	$2,907,504	$2,422,717	$2,207,187	$2,708,022	$2,916,234
Current Liabilities	610,825	627,608	420,967	563,690	604,754
Net Current Assets	2,296,679	1,795,109	1,786,220	2,144,332	2,311,480
Total Assets	4,525,367	3,653,372	3,119,840	3,705,002	3,862,736
Total Stockholders' Equity	3,715,317	3,024,813	2,697,809	3,132,385	3,255,864
Years Ended March 31, (In thousands,
except per share data)	2008	2007	2006	2005	2004
Summary of Operations:
Net Sales	$3,501,802	$3,183,324	$2,793,934	$3,052,408	$2,650,432
Other Income	334,527	258,461	168,456	107,231	29,842
Costs and Expenses	2,625,932	2,732,941	2,092,878	1,974,884	1,743,452
Income Before Income Tax Expense	1,210,397	708,844	869,512	1,184,755	936,822
Income Tax Expense	242,464	254,741	160,998	345,950	200,948
Net Income	967,933	454,103	708,514	838,805	735,874
Net Income Per Share:
Basic	$3.08	$1.43	$2.11	$2.30	$2.01
Diluted	$3.06	$1.41	$2.08	$2.25	$1.95
Weighted Average Number of
Common and Common
Equivalent Shares
Outstanding:
Basic	314,660	318,539	335,912	363,991	365,447
Diluted	316,133	322,781	340,321	372,090	376,779

No dividends were paid on common shares in any period.

EX-23

EXHIBIT 23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Forest Laboratories, Inc.

New York, New York

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 033-54965) and Form S-8 (No. 333-118969, No. 333-48656, No. 333-65715, No. 033-56221 and No. 333-145415) of Forest Laboratories, Inc. and Subsidiaries of our reports dated May 28, 2008, relating to the consolidated financial statements, and the effectiveness of Forest Laboratories, Inc. and Subsidiaries’ internal control over financial reporting, which appear in the Annual Report to Shareholders, incorporated by reference in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report dated May 28, 2008 relating to the financial statement schedule, which appears in this Form 10-K.



 /s/ BDO Seidman, LLP  
BDO Seidman, LLP


New York, New York
May 28, 2008

EX-31

Exhibit 31.1

CERTIFICATION

I, Howard Solomon, certify that:

       1.  I have reviewed this annual report on Form 10-K of Forest Laboratories, Inc. ("the Company");

       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 Company as of, and for, the periods presented in this
            report;

       4.  The Company'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))
            and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f)
            and 15d-15(f)) for the Company and we 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 Company, 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 Company'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 Company's internal control over financial
                        reporting that occurred during the Company's most recent fiscal quarter (the Company's
                        fourth fiscal quarter in the case of an annual report) that has materially affected, or is
                        reasonably likely to materially affect, the Company's internal control over financial
                        reporting.

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

                    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
                         Company'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 Company's internal control over financial reporting.

Date: May 30, 2008

/s/ Howard Solomon        
Howard Solomon
Chief Executive Officer

EX-31

Exhibit 31.2

CERTIFICATION

I, Francis I. Perier, Jr., certify that:

       1.  I have reviewed this annual report on Form 10-K of Forest Laboratories, Inc. ("the Company");

       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 Company as of, and for, the periods presented in this
            report;

       4.  The Company'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))
            and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f)
            and 15d-15(f)) for the Company and we 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 Company, 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 Company'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 Company's internal control over financial
                        reporting that occurred during the Company's most recent fiscal quarter (the Company's
                        fourth fiscal quarter in the case of an annual report) that has materially affected, or is
                        reasonably likely to materially affect, the Company's internal control over financial
                        reporting.

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

                    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
                         Company'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 Company's internal control over financial reporting.

Date: May 30, 2008

/s/ Francis I. Perier, Jr.          Francis I. Perier, Jr.
Senior Vice President - Finance and
Chief Financial Officer

EX-32

Exhibit 32.1

CERTIFICATION 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 Annual Report of Forest Laboratories, Inc. (the "Company") on Form 10-K for the period ended March 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Howard Solomon, Chief Executive 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, that:

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

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

/s/ Howard Solomon      
Howard Solomon
Chief Executive Officer
May 30, 2008

EX-32

Exhibit 32.2

CERTIFICATION 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 Annual Report of Forest Laboratories, Inc. (the "Company") on Form 10-K for the period ended March 31, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Francis I. Perier, Jr., 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, that:

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

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

/s/ Francis I. Perier, Jr.        
Francis I. Perier, Jr.
Senior Vice President - Finance and
Chief Financial Officer
May 30, 2008