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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 14, 2002
REGISTRATION NO. 333-89750
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
AMENDMENT NO. 1
TO
FORM F-10
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
DRAXIS HEALTH INC.
(Exact name of Registrant as specified in its charter)
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ONTARIO 2834 NOT APPLICABLE
(Province or other jurisdiction of (Primary Standard (IRS Employer
incorporation or organization) Industrial Classification Identification No.)
Code Number)
</Table>
6870 GOREWAY DRIVE, 2ND FLOOR
MISSISSAUGA, ONTARIO, CANADA L4V 1P1
(905) 677-5500
(Address and telephone number of Registrant's principal executive offices)
CT CORPORATION SYSTEM
208 SOUTH LASALLE STREET
CHICAGO, IL 60604
SUITE 814
(312) 263-1414
(Name, address (including zip code) and telephone number
(including area code) of agent for service in the United States)
------------------------------
COPIES TO:
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DOUGLAS M. PARKER CHARLES R. MANZONI JR. DAVID E. WOOLLCOMBE ANDREW J. BECK
General Counsel & Secretary Gardner, Carton & Douglas McCarthy Tetrault LLP Torys LLP
Draxis Health Inc. 321 North Clark Street Toronto Dominion Bank Tower 237 Park Avenue
6870 Goreway Drive, 2ndFloor Suite 3100 Suite 4700, Box 48 New York, New York 10017
Mississauga, Ontario, Canada Chicago, Illinois 60610 Toronto, Ontario, Canada (212) 880-6010
L4V 1P1 M5K 1E6
(905) 677-9642 (312) 245-8423 (416) 601-7555
</Table>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
------------------------------
PROVINCE OF ONTARIO, CANADA
(PRINCIPAL JURISDICTION REGULATING THIS OFFERING)
It is proposed that this filing shall become effective (check appropriate
box)
A. /X/ upon filing with the Commission, pursuant to Rule 467(a) (if in
connection with an offering being made contemporaneously in the United
States and Canada).
B. / / at some future date (check appropriate box below)
1. / / pursuant to Rule 467(b) on [ ] at [ ] (designate a time
not sooner than 7 calendar days after filing).
2. / / pursuant to Rule 467 (b) on [ ] at [ ] (designate a time 7
calendar days or sooner after filing) because the securities
regulatory authority in the review jurisdiction has issued a receipt or
notification of clearance on [ ].
3. / / pursuant to Rule 467(b) as soon as practicable after notification of
the Commission by the Registrant or the Canadian securities regulatory
authority of the review jurisdiction that a receipt or notification of
clearance has been issued with respect hereto.
4. / / after the filing of the next amendment to this Form (if preliminary
material is being filed).
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to the home jurisdiction's shelf
prospectus offering procedures, check the following box. / /
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PART I
INFORMATION REQUIRED TO BE
DELIVERED TO OFFEREES OR PURCHASERS
<Page>
<Table>
DRAXIS HEALTH INC.
US$10,973,212
[LOGO] 4,220,466 COMMON SHARES
</Table>
This is an offering of 4,220,466 Common Shares (the "Offered Shares") of
DRAXIS Health Inc. ("DRAXIS" or the "Corporation"). The Offered Shares will be
offered in Canada and the United States of America (the "United States"). The
outstanding Common Shares of DRAXIS are listed on The Toronto Stock Exchange
("TSX") under the symbol "DAX" and on The Nasdaq National Market ("Nasdaq")
under the symbol "DRAX". Unless otherwise specified, all dollar amounts
contained in this prospectus are expressed in United States dollars and "$",
"US$" or "US dollars" refer to United States dollars. "Cdn$" refers to Canadian
dollars.
3,043,996 of the Offered Shares are being offered by Elan International
Services, Ltd. ("Elan") and 1,176,470 of the Offered Shares are being offered by
Novopharm Limited ("Novopharm"), a subsidiary of Teva Pharmaceutical
Industries Ltd. (Elan and Novopharm, collectively, the "Selling Shareholders").
INVESTING IN THE OFFERED SHARES INVOLVES RISKS, INCLUDING THOSE DESCRIBED IN
THE "RISK FACTORS" SECTION BEGINNING ON PAGE 17 OF THIS PROSPECTUS.
PRICE: US$2.60 PER COMMON SHARE
---------------------------------
---------------------------------
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<Caption>
PRICE TO THE UNDERWRITERS' NET PROCEEDS TO THE
PUBLIC FEE SELLING SHAREHOLDERS(1)
------------- ------------- -----------------------
Per Common Share....................................... US$ 2.60 US$ 0.143 US$ 2.457
Total.................................................. US$10,973,212 US$603,527 US$10,369,685
</Table>
(1) Before deducting the aggregate expenses of the Offering, estimated to be
US$430,000, which will be paid for by the Corporation except that Novopharm
will bear its proportionate share of the filing fees related to the
Offering.
CIBC World Markets Inc., National Bank Financial Inc. ("NBF") and Ryan,
Beck & Co., LLC are acting as underwriters (the "Underwriters") of this
Offering. A portion of the Offered Shares will be offered for sale in the United
States through registered broker-dealers. See "Plan of Distribution".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
DRAXIS IS PERMITTED, UNDER THE MULTIJURISDICTIONAL DISCLOSURE SYSTEM ADOPTED
BY THE SECURITIES REGULATORY AUTHORITIES IN CANADA AND THE UNITED STATES, TO
PREPARE THIS PROSPECTUS IN ACCORDANCE WITH CANADIAN DISCLOSURE REQUIREMENTS,
WHICH ARE DIFFERENT FROM THOSE OF THE UNITED STATES. DRAXIS PREPARES ITS
CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES IN THE UNITED STATES.
PROSPECTIVE INVESTORS SHOULD BE AWARE THAT THE ACQUISITION OF THE SECURITIES
DESCRIBED HEREIN MAY HAVE TAX CONSEQUENCES BOTH IN THE UNITED STATES AND IN
CANADA. SUCH CONSEQUENCES FOR INVESTORS WHO ARE RESIDENT IN, OR CITIZENS OF, THE
UNITED STATES MAY NOT BE DESCRIBED FULLY HEREIN. PROSPECTIVE INVESTORS SHOULD
READ THE TAX DISCUSSION CONTAINED IN THIS PROSPECTUS.
THE ENFORCEMENT BY INVESTORS OF CIVIL LIABILITIES UNDER THE FEDERAL
SECURITIES LAWS MAY BE AFFECTED ADVERSELY BY THE FACT THAT DRAXIS IS
INCORPORATED UNDER THE FEDERAL LAWS OF CANADA, THAT MOST OF ITS OFFICERS AND
DIRECTORS, SOME OF THE EXPERTS, THE SELLING SHAREHOLDERS AND SOME OF THE
UNDERWRITERS NAMED IN THIS PROSPECTUS MAY BE RESIDENT OUTSIDE OF THE UNITED
STATES, AND THAT ALL OR A SUBSTANTIAL PORTION OF THE ASSETS OF DRAXIS AND SAID
PERSONS MAY BE LOCATED OUTSIDE OF THE UNITED STATES.
The Offered Shares are expected to be available for delivery on June 21,
2002.
CIBC WORLD MARKETS CORP.
NBC INTERNATIONAL (USA) INC.
RYAN, BECK & CO.
June 14, 2002
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TABLE OF CONTENTS
<Table>
<Caption>
PAGE
--------
DOCUMENTS INCORPORATED BY REFERENCE......................... 2
CORPORATE INFORMATION....................................... 4
BUSINESS OF THE CORPORATION................................. 4
CORPORATE STRATEGY.......................................... 7
RECENT DEVELOPMENTS......................................... 7
SELECTED FINANCIAL INFORMATION.............................. 9
PRICE RANGE AND TRADING VOLUME.............................. 10
DETAILS OF THE OFFERING..................................... 11
SELLING SHAREHOLDERS........................................ 11
PLAN OF DISTRIBUTION........................................ 12
USE OF PROCEEDS............................................. 13
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS..... 13
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS.......... 14
EXCHANGE RATE INFORMATION................................... 15
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES................. 15
AVAILABLE INFORMATION....................................... 16
ADDITIONAL INFORMATION...................................... 16
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT....... 16
STATEMENT REGARDING FORWARD-LOOKING INFORMATION............. 16
RISK FACTORS................................................ 17
LEGAL PROCEEDINGS........................................... 24
LEGAL MATTERS............................................... 24
AUDITORS, TRANSFER AGENT AND REGISTRAR...................... 25
</Table>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the securities commission or similar
authority in each province of Canada, and with the Securities and Exchange
Commission ("SEC") in the United States, are specifically incorporated by
reference in this short form prospectus:
(a) SEC Form 20-F (annual information form) of the Corporation dated
May 20, 2002;
(b) material change report of the Corporation dated January 24, 2002;
(c) audited comparative consolidated financial statements of the Corporation
and the notes thereto for the financial year ended December 31, 2001
(expressed in US dollars and presented in accordance with US GAAP),
together with the report of the auditors thereon, found at pages 30
through 48 of the 2001 annual report to shareholders of the Corporation;
(d) management's discussion and analysis for the year ended December 31,
2001 (in relation to financial statements presented in accordance with US
GAAP), included as pages 16 to 28 in the 2001 annual report to
shareholders of the Corporation;
(e) audited comparative consolidated financial statements of the Corporation
and the notes thereto for the financial year ended December 31, 2001
(expressed in US dollars and presented in accordance with
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Canadian GAAP), together with the report of the auditors thereon, found
at pages 17 to 39 of the Canadian GAAP Financial Information 2001
Supplement;
(f) management's discussion and analysis for the year ended December 31,
2001 (in relation to financial statements presented in accordance with
Canadian GAAP), included as pages 1 to 15 in the Canadian GAAP Financial
Information 2001 Supplement;
(g) unaudited comparative consolidated financial statements of the
Corporation included as pages 14 to 27 of the interim report to
shareholders for the period ended March 31, 2002;
(h) management's discussion and analysis included as pages 4 to 13 of the
interim report to shareholders for the period ended March 31, 2002; and
(i) management proxy circular of the Corporation dated April 2, 2002 in
connection with the 2002 annual meeting of shareholders of the
Corporation, other than the sections entitled "Executive
Compensation--Report of Compensation Committee", "Executive
Compensation--Stock Performance Graph" and "Corporate Governance".
ANY DOCUMENTS OF THE CORPORATION OF THE TYPE REFERRED TO ABOVE (EXCLUDING
CONFIDENTIAL MATERIAL CHANGE REPORTS) FILED WITH A SECURITIES COMMISSION OR
SIMILAR REGULATORY AUTHORITY IN CANADA ON OR AFTER THE DATE OF THIS SHORT FORM
PROSPECTUS AND PRIOR TO THE TERMINATION OF THE OFFERING SHALL BE DEEMED TO BE
INCORPORATED BY REFERENCE INTO THIS SHORT FORM PROSPECTUS.
IN ADDITION, ANY DOCUMENTS OF THE TYPE REFERRED TO ABOVE FILED WITH, OR ANY
REPORT OF FOREIGN PRIVATE ISSUER ON FORM 6-K FURNISHED TO, THE SEC AFTER THE
DATE OF THIS PROSPECTUS AND PRIOR TO THE TERMINATION OF THIS OFFERING, SHALL BE
DEEMED TO BE INCORPORATED BY REFERENCE INTO THIS PROSPECTUS IF AND TO THE EXTENT
EXPRESSLY PROVIDED FOR IN SUCH FILING OR REPORT.
INFORMATION HAS BEEN INCORPORATED BY REFERENCE IN THIS SHORT FORM PROSPECTUS
FROM DOCUMENTS FILED WITH SECURITIES COMMISSIONS OR SIMILAR AUTHORITIES IN
CANADA. COPIES OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE MAY BE OBTAINED
ON REQUEST WITHOUT CHARGE FROM THE SECRETARY OF THE CORPORATION, 6870 GOREWAY
DRIVE, 2ND FLOOR, MISSISSAUGA, ONTARIO L4V 1P1 (TELEPHONE (905) 677-5500). FOR
THE PURPOSE OF THE PROVINCE OF QUEBEC, THIS SIMPLIFIED PROSPECTUS CONTAINS
INFORMATION TO BE COMPLETED BY CONSULTING THE PERMANENT INFORMATION RECORD. A
COPY OF THE PERMANENT INFORMATION RECORD MAY BE OBTAINED FROM THE SECRETARY OF
THE CORPORATION AT THE ABOVE-MENTIONED ADDRESS AND TELEPHONE NUMBER.
ANY STATEMENT CONTAINED HEREIN OR IN A DOCUMENT INCORPORATED OR DEEMED TO BE
INCORPORATED BY REFERENCE HEREIN SHALL BE DEEMED TO BE MODIFIED OR SUPERSEDED,
FOR PURPOSES OF THIS SHORT FORM PROSPECTUS, TO THE EXTENT THAT A STATEMENT
CONTAINED HEREIN OR IN ANY OTHER SUBSEQUENTLY FILED DOCUMENT WHICH ALSO IS OR IS
DEEMED TO BE INCORPORATED BY REFERENCE HEREIN MODIFIES OR SUPERSEDES SUCH
STATEMENT. THE MODIFYING OR SUPERSEDING STATEMENT NEED NOT STATE THAT IT HAS
MODIFIED OR SUPERSEDED A PRIOR STATEMENT OR INCLUDE ANY OTHER INFORMATION SET
FORTH IN THE DOCUMENT WHICH IT MODIFIES OR SUPERSEDES. THE MAKING OF SUCH A
MODIFYING OR SUPERSEDING STATEMENT SHALL NOT BE DEEMED AN ADMISSION FOR ANY
PURPOSES THAT THE MODIFIED OR SUPERSEDED STATEMENT, WHEN MADE, CONSTITUTED A
MISREPRESENTATION, AN UNTRUE STATEMENT OF A MATERIAL FACT OR AN OMISSION TO
STATE A MATERIAL FACT THAT IS REQUIRED TO BE STATED OR THAT IS NECESSARY TO MAKE
A STATEMENT NOT MISLEADING IN LIGHT OF THE CIRCUMSTANCES IN WHICH IT WAS MADE.
ANY STATEMENT SO MODIFIED OR SUPERSEDED SHALL NOT BE DEEMED, EXCEPT AS SO
MODIFIED OR SUPERSEDED, TO CONSTITUTE A PART OF THIS SHORT FORM PROSPECTUS.
3
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CORPORATE INFORMATION
The Corporation was incorporated under the name Deprenyl Research Limited
under the CANADA BUSINESS CORPORATIONS ACT on October 13, 1987. In May 1994, the
Corporation changed its name to DRAXIS Health Inc. On July 1, 1994, DRAXIS
amalgamated with Bone Health Inc. pursuant to a statutory plan of arrangement.
On July 14, 1995, the Corporation amended its articles to create employee
participation shares. On January 1, 1997, DRAXIS amalgamated with Tican
Pharmaceuticals Inc. pursuant to articles of amalgamation. On October 1, 1997,
DRAXIS amalgamated with Spectro-Pharm Inc. ("Spectro-Pharm") pursuant to
articles of amalgamation. On January 1, 1999, DRAXIS amalgamated with DAHI
Animal Health Inc., DAHI Animal Health (Ontario) Inc., DRAXIS Animal Health
(Canada) Inc., Viapharm Inc. and DRAXIS Orthopaedics Inc. pursuant to articles
of amalgamation. The Corporation's registered and principal office is located at
6870 Goreway Drive, 2nd Floor, Mississauga, Ontario, L4V 1P1.
Unless otherwise noted or the context otherwise indicates, references to the
"Corporation" or "DRAXIS" are to DRAXIS and its subsidiaries.
BUSINESS OF THE CORPORATION
DRAXIS is an integrated specialty pharmaceutical company with strong core
competencies in two segments: the development, production, marketing and
distribution of radiopharmaceuticals through DRAXIMAGE Inc. ("DRAXIMAGE") and
the provision of contract pharmaceutical manufacturing services, specializing in
liquid and freeze-dried injectables and other sterile products through DRAXIS
Pharma Inc. ("DPI"). Management of the Corporation believes that both DRAXIMAGE
and DPI have significant long-term growth potential and has invested
considerable financial and management resources in developing these businesses.
RADIOPHARMACEUTICALS
DRAXIMAGE is involved in the discovery, development, manufacture, and supply
of therapeutic radiopharmaceuticals and diagnostic imaging agents. Nuclear
medicine entails the use of radioactive agents (radiopharmaceuticals) for
imaging and therapeutic purposes. The energy released as these products decay
can be harnessed to: (i) elicit a visual representation of various organs and
tissues (nuclear imaging), or (ii) destroy cancerous cells (radiotherapy).
Radiopharmaceuticals represent a well-defined, growing niche market with
high barriers to entry, including regulatory approval, specialized manufacturing
standards, access to supply and critical delivery logistics. DRAXIMAGE
discovers, develops, manufactures, and markets diagnostic imaging and
therapeutic radiopharmaceutical products for the global marketplace. Products
currently marketed by DRAXIMAGE include a line of lyophilized technetium-99m
kits used in nuclear imaging procedures, a line of imaging and therapeutic
products labelled with a variety of isotopes including radioiodine, and
BrachySeed-TM-, second generation iodine-125 and palladium-103 brachytherapy
implants. DRAXIMAGE also has a number of products in development including three
technetium-99m-based diagnostic imaging products:
Fibrimage-Registered Trademark- for imaging deep vein thrombosis currently in
Phase III clinical trials, Amiscan-TM- for the early diagnosis of acute
myocardial infarct currently in Phase II clinical trials, and INFECTON for
imaging infection in preclinical trials.
DRAXIMAGE and its predecessor have a long history of technological and
scientific progress in the field of radiopharmaceuticals. Notable achievements
include: the development of lyophilized kits for the in-situ preparation of
technetium-99m radiopharmaceutical products for nuclear medical imaging; the
development of chelates for the indium/yttrium and technetium/rhenium groups of
metals; and development of stabilisers for use in iodinated radiopharmaceuticals
which resulted in DRAXIMAGE being one of the few companies to market iodinated
products that do not require refrigeration.
One of the fastest-growing segments of the radiopharmaceuticals market is
brachytherapy--the implantation of radioactive "seeds" for the treatment of
localized cancers of the prostate and other organs. These seeds contain either
iodine-125 or palladium-103, depending on the status of the cancer and the
required duration of treatment. The seeds deliver a concentrated, defined
radiation dose that destroys cancer cells while
4
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minimizing damage to surrounding tissues. This targeted strategy is particularly
important for organs such as the prostate, which is nestled between the bladder
and the rectum. The procedure involves placement of approximately 100-150 of
these seeds into a locally anaesthetised patient.
DRAXIMAGE's licensed brachytherapy seed therapeutics are an important new
addition to the Corporation's line of commercial products. DRAXIS' iodine-125
implant was approved by the United States Food and Drug Administration (the
"FDA") in the second half of 2000 and launched into the Canadian and
U.S. markets during the second quarter of 2001. The palladium-103 product was
approved by the FDA in the fourth quarter of 2001 and was launched during the
second quarter of 2002. The palladium isotope releases its energy over a shorter
time-span, and tends to be used in the treatment of more aggressive cancers.
DRAXIS' brachytherapy seed utilizes a patented design that delivers a more
uniform distribution of radiation than its competitors' products, which can
result in the use of relatively fewer BrachySeed-TM- implants per procedure.
BrachySeed-TM- implants are marketed in the U.S. by Cytogen Corporation
("Cytogen").
DRAXIS currently manufactures over 40 radiopharmaceuticals, including
brachytherapy seeds, technetium-99m kits used in kidney, lung and brain imaging
procedures and imaging and therapeutic products containing a variety of
radioisotopes.
DRAXIMAGE's largest customer, Syncor International Corporation ("Syncor"),
represented 17% of DRAXIS' radiopharmaceutical revenues for the year ended
December 31, 2001 and 4% of DRAXIS' total revenues for the same period.
CONTRACT MANUFACTURING
DPI is a contract manufacturer with capabilities in a broad range of dosage
forms, specializing in liquid and lyophilized (freeze-dried) injectables and
other sterile products. Operating out of a cGMP (i.e., compliant with "current
good manufacturing practices") 242,000 square-foot facility located in Kirkland,
Quebec, DPI manufactures pharmaceutical products for DRAXIMAGE, as well as for
over 15 other pharmaceutical clients in many international jurisdictions. DPI's
two major customers are Warner-Lambert Consumer Healthcare, a Division of Pfizer
Canada Inc. ("Pfizer") and GlaxoSmithKline Inc. ("GSK"), companies that place
high value on solid regulatory compliance and consistent quality manufacturing.
As at December 31, 2001, Pfizer and GSK, together, represented 73% of contract
manufacturing revenues and 45% of DRAXIS' total revenues.
The Corporation's prospects are enhanced by: (i) its differentiated and high
value-added manufacturing capacity--sterile lyophilization; and, (ii) a top-tier
client list. With its expansion of sterile and sterile lyophilized manufacturing
facilities, management believes that DRAXIS will be able to capitalize on the
shortfall of cGMP sterile and sterile lyophilization capacity across North
America. This capacity shortfall has been exacerbated by an increase in FDA
disciplinary action against many competitors and the trend of manufacturing
consolidation and outsourcing among large pharmaceutical companies.
DPI plant operations are organised into four manufacturing areas, supported
by packaging, warehousing and distribution functions:
STERILE LYOPHILIZATION--DRAXIS' highly specialized lyophilization capability
is key to the Corporation's business strategy. Lyophilization is the
preferred dosage form for a broad range of sterile products that are
unstable in liquid form. Lyophilization is a complex process of
freeze-drying where a liquid solution is frozen under vacuum and all water
is removed, leaving behind a stable dry sterile powder that has a relatively
long shelf life and is easily reconstituted into a liquid form prior to use.
Products delivered in a lyophilized dosage form include injectable
pharmaceuticals, vaccines, biotechnology proteins or peptides and diagnostic
products.
OTHER STERILE PRODUCTS--The Sterile Products Department includes preparation
and pharmaceutical areas with manufacturing, filling and inspection rooms
for the production of injectable liquids, topicals and sterile ophthalmic
ointments. Management of the Corporation believes that DPI possesses one of
the most modern facilities of its kind in Canada approved for the
manufacture of sterile prescription pharmaceuticals for Canada, the United
States and other global markets.
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OINTMENTS, CREAMS AND LIQUIDS--The Ointments, Creams and Liquids ("OCL")
Department offers substantial flexibility in production scale. Production
utilises a gravity-fed system and incorporates segregated wash and clean
storage areas for equipment. Fully automatic validated clean-in-place
systems ensure the purity of each customer's product. OCL has four dedicated
packaging lines, the batch capability of which varies from 200 to 18,000
litres.
SOLID DOSAGE--The Solid Dosage Department is comprised of two suites for
granulating powders prior to compression into tablets or caplets and four
isolated compression suites where tablets and caplets of various forms and
sizes are manufactured. The granulation and compression rooms are isolated
and have purpose-built airflow systems to contain powder. Dosage
forms/product types manufactured include tablets in bottles and blisters,
caplets in bottles and blisters, and powders.
The DPI plant also houses packaging facilities capable of accommodating
several product types, including: jars, bottles (glass and plastic), blisters,
creams, ointments, vials and ampoule packages. The packaging department
incorporates a flexible packaging area with several packaging lines for
ointments, creams, tablets (bottles and blisters) and sterile products.
The warehousing and distribution facilities of the DPI plant allow
additional manufacturing flexibility and efficiency. A five-tier pallet-racking
warehouse covers approximately 39,000 square feet of space and has six shipping
and receiving docks. The warehouse has separately locked areas including
refrigeration units that control sensitive raw materials and finished goods.
In July 1999, DPI entered into a five-year manufacturing and supply
agreement with Pfizer covering several non-prescription products for the
Canadian market including, Polysporin-Registered Trademark-,
Sudafed-Registered Trademark-, Actifed-Registered Trademark- and
Zincofax-Registered Trademark-. Manufacturing of these products commenced in
late 1999.
In December 2001, DPI entered into a supply agreement with GSK for the
renewal and expansion of an existing contract manufacturing relationship between
the two companies. The agreement has an initial term to December 31, 2009 and
covers all products currently manufactured by DPI for GSK plus several
additional established, predominantly sterile products marketed by GSK in
multiple international markets. Transfer activities related to the new products
have been under way since early 2001. Commercial production is scheduled to be
phased in during 2002 and 2003 as DPI receives regulatory approvals for
product-specific site transfers.
OTHER COLLABORATION AGREEMENTS
The Company has continuing financial interests associated with its
collaboration agreements with Pfizer Inc. with respect to
Anipryl-Registered Trademark- and GSK with respect to the Spectro-Pharm line of
products. These financial interests are reported within the Corporation's
"Corporate and Other" accounting segment.
Although the Corporation's agreement with respect to
Anipryl-Registered Trademark- represented only 14.5% of the Corporation's
revenues for the year ended December 31, 2001, that agreement has, to date, been
the Corporation's primary source of operating income. In the near term, however,
the Corporation expects to lessen this reliance as it develops a diversified
profits base from its radiopharmaceutical and contract manufacturing segments.
DISCONTINUED OPERATIONS
DRAXIS Pharmaceutica markets and sells in-licensed pharmaceutical products
in Canada and has historically focused primarily on innovative pharmaceutical
products in specialty therapeutic areas where it could leverage its experience
in regulatory affairs, management of clinical trials, interfacing with the
Patented Medicine Prices Review Board, private and public reimbursement, and
pharmaceutical marketing and sales.
In January 2002, the Corporation announced that it had entered into a
binding letter of intent (subject to satisfaction of various conditions) to sell
its Canadian sales and marketing division (DRAXIS Pharmaceutica) to Elan
Corporation, plc ("Elan plc"). On June 4, 2002, the Corporation announced that
it had modified the terms of the proposed sale. Under the modified agreement,
Elan plc will acquire Canadian product rights for
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Zanaflex-Registered Trademark-, Diastat-Registered Trademark-,
Mysoline-Registered Trademark-, Permax-Registered Trademark-,
Eldepryl-Registered Trademark-, Novo-Selegiline, Ziconotide, MYOBLOC-TM-,
Frovatriptan, Levulan Kerastick-Registered Trademark-, Zelapar-TM- and
Zonegran-TM-. The transaction will now exclude the Canadian rights to
Alertec-Registered Trademark-, Hectorol-TM- and Paclitaxel. DRAXIS will receive
a cash payment of $9 million upon closing along with a participating interest
based on Canadian sales of two products included in the transaction. Elan plc
will assume certain liabilities associated with DRAXIS Pharmaceutica.
Commencing with the quarter ended December 31, 2001, DRAXIS Pharmaceutica
has been reported by the Corporation as a discontinued operation. DRAXIS expects
to close the transaction and is continuing negotiations with respect to the
final terms and definitive documentation, including required consents. As a
result, there are no assurances that it will be completed as announced. Should
the proposed transaction not be completed, DRAXIS will continue to manage the
DRAXIS Pharmaceutica division to enhance shareholder value consistent with the
Corporation's strategic focus on its core radiopharmaceutical and specialty
contract manufacturing businesses.
CORPORATE STRATEGY
The Corporation's general business strategy includes:
FOCUSING ON SPECIALTY PHARMACEUTICAL MARKETS IN WHICH THE CORPORATION CAN
DEVELOP AND SUSTAIN COMPETITIVE ADVANTAGE--DRAXIS has refocused its
operations on its two core businesses, radiopharmaceuticals and specialty
contract manufacturing. Both businesses target highly differentiated,
specialized markets which feature high barriers to entry including
regulatory requirements and specialized manufacturing standards.
DEVELOPING NEW PHARMACEUTICAL PRODUCTS AND SERVICES CONSISTENT WITH THE
CORPORATION'S STRENGTHS AND CAPABILITIES--DRAXIS has established a growing
franchise in the highly differentiated radiopharmaceutical segment with a
portfolio of over 40 currently marketed products plus five new products in
development. In addition to its radiopharmaceutical platform, the
Corporation's expanding lyophilization capability positions it to offer new
services to take advantage of growth opportunities in contract
manufacturing.
PURSUING GROWTH OPPORTUNITIES WITH INTERNATIONAL MARKET POTENTIAL--The
Corporation is leveraging its capabilities, experience and regulatory
compliance in radiopharmaceuticals and manufacturing to expand its product
and service offerings in the United States and other international markets.
LEVERAGING ALLIANCES WITH BUSINESS PARTNERS--The Corporation is pursuing
multiple opportunities with new and existing business partners including
Syncor, GSK and Cytogen. Having met the strict quality and service standards
of such partners positions the Corporation to expand on these relationships
in both its radiopharmaceuticals and contract manufacturing businesses.
The Corporation's primary operational focus in 2002 will continue to be on:
(i) improving near-term financial and operational performance of its
radiopharmaceutical and manufacturing businesses through increasing sales of
existing products and services, improving manufacturing efficiency and
effectiveness, and obtaining regulatory approvals; and (ii) securing and
advancing its base for long-term growth through the development of its existing
product pipeline as well as identifying and capitalizing on additional new
business opportunities that are consistent with the Corporation's capabilities
and that contribute to the long-term value of the Corporation.
RECENT DEVELOPMENTS
On March 13, 2002, the Corporation announced that it had received approvals
from the FDA to transfer the production of previously externally manufactured
DRAXIMAGE lyophilized medical imaging products to the DPI manufacturing
facility. By manufacturing the subject products "in-house", the Corporation
anticipates that an additional US$700,000 of manufacturing margins will be
retained by DRAXIS. Management of DRAXIS believes that the Corporation will be
able to produce greater quantities of these products than its external
manufacturer and will therefore be able to meet previously unsatisfied demand
for such products.
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<Page>
On April 2, 2002, DRAXIS announced the launch of a capital investment
program to add a second sterile lyophilization unit, expected to triple DPI's
existing lyophilization capacity. DPI's specialized facility was originally
designed to readily accommodate a second lyophilizer at a cost significantly
less than that of the initial installation with minimal disruption to ongoing
production. Delivery and installation of the second lyophilization unit is
scheduled for December 2002 and the Corporation expects the extra capacity to
come on line for commercial production by early 2004.
On April 30, 2002, the Corporation announced that it had completed expansion
of production capacity for BrachySeed-TM- radioactive brachytherapy implants at
its radiopharmaceutical subsidiary, DRAXIMAGE. DRAXIMAGE installed three new
production lines at its FDA-approved production facility, incorporating 16
robotic assembly units custom-designed to speed production while maintaining
product quality. The addition of the robotic production technology, together
with improvements to process control systems, resulted in a five-fold increase
in production capacity for BrachySeed-TM- I-125 since its introduction one year
earlier.
On May 16, 2002, DRAXIS reported record revenues and profitability for the
first quarter of 2002 ended March 31, 2002. Revenues from continuing operations
for the quarter increased to US$9.96 million, 18% above the US$8.41 million
generated in the first quarter of 2001. Quarterly net income from continuing
operations was US$887,000 or US$0.024 per share, nearly double the US$0.013 per
share reported for the same period in 2001.
On May 30, 2002, the Corporation announced that its palladium-103
brachytherapy implant had been launched for commercial distribution in the
United States through Cytogen.
8
<Page>
SELECTED FINANCIAL INFORMATION
(IN THOUSANDS OF US DOLLARS EXCEPT SHARE RELATED DATA)
(US GAAP)
INCOME STATEMENT DATA
<Table>
<Caption>
FOR THE QUARTERS ENDED MARCH 31, FOR THE YEARS ENDED DECEMBER 31,
(UNAUDITED) (AUDITED)
--------------------------------- ------------------------------------
2002 2001 2001 2000 1999
--------------- --------------- ---------- ---------- ----------
Revenues
Product sales........................ $ 7,862 $ 6,786 $ 26,232 $ 22,019 $ 22,047
Royalty and licensing................ 2,102 1,627 6,752 7,132 2,338
---------- ---------- ---------- ---------- ----------
9,964 8,413 32,984 29,151 24,385
---------- ---------- ---------- ---------- ----------
Expenses
Costs of goods sold.................. 5,805 5,583 21,801 18,237 16,286
Selling, general and
administration..................... 1,877 1,534 6,207 7,385 7,219
Research and development............. 463 220 1,279 1,027 748
Depreciation and amortization........ 672 582 2,436 2,318 1,823
Restructuring charges................ -- -- -- 434 --
---------- ---------- ---------- ---------- ----------
8,817 7,919 31,723 29,401 26,076
---------- ---------- ---------- ---------- ----------
Operating income (loss)................ 1,147 494 1,261 (250) (1,691)
Interest expense, net.................. (51) (37) (25) (637) (919)
Other income........................... -- -- -- 411 1,819
Income taxes........................... 259 86 2,890 (330) 99
Minority interest...................... 50 90 286 338 --
---------- ---------- ---------- ---------- ----------
Income (loss) from continuing
operations before cumulative effect
of accounting change(1).............. 887 461 (1,368) 192 (890)
Loss from discontinued operations, net
of taxes............................. (104) (241) (216) (630) (4,580)
Cumulative effect of accounting change,
net of taxes(1)...................... -- -- -- (19,900) --
---------- ---------- ---------- ---------- ----------
Net income (loss)...................... $ 783 $ 220 $ (1,584) $ (20,338) $ (5,470)
========== ========== ========== ========== ==========
Basic and diluted income (loss)
per share
from continuing operations before
cumulative effect of accounting
change(1).......................... $ 0.024 $ 0.013 $ (0.04) $ 0.01 $ (0.03)
from discontinued operations......... (0.003) (0.007) 0.00 (0.02) (0.13)
cumulative effect of accounting
change(1).......................... -- -- -- (0.55) --
---------- ---------- ---------- ---------- ----------
$ 0.021 $ 0.006 $ (0.04) $ (0.56) $ (0.16)
========== ========== ========== ========== ==========
Weighted average number common shares
outstanding
Basic................................ 36,729,775 36,565,102 36,587,794 36,324,199 33,825,654
Diluted.............................. 37,249,490 36,593,592 36,610,927 36,573,574 34,101,058
</Table>
- -------------
(1) Reflects change in accounting policy from January 1, 2001.
9
<Page>
BALANCE SHEET DATA
<Table>
<Caption>
AS AT MARCH 31, AS AT DECEMBER 31,
(UNAUDITED) (AUDITED)
------------------------- ------------------------------
2002 2001 2001 2000 1999
----------- ----------- -------- -------- --------
Cash and cash equivalents.................. $ 3,042 $ 2,014 $ 5,602 $ 4,420 $ 2,016
Total assets............................... $64,487 $64,017 $64,360 $67,307 $60,647
Long-term debt (including current
portion)................................. $ 9,737 $ 9,166 $ 8,060 $ 9,890 $14,476
Shareholders' equity....................... $18,251 $20,587 $16,878 $20,808 $38,116
</Table>
QUARTERLY INCOME STATEMENT DATA
<Table>
<Caption>
FOR THE QUARTERS ENDED,
(UNAUDITED)
--------------------------------------------------------------------------------------------------
2002 2001 2000
-------- ------------------------------------------ ------------------------------------------
MAR. 31 MAR. 31 JUN. 30 SEPT. 30 DEC. 31 MAR. 31 JUN. 30 SEPT. 30 DEC. 31
-------- -------- -------- --------- -------- -------- -------- --------- --------
Revenues............. $9,964 $8,413 $ 8,071 $7,868 $8,632 $ 6,880 $7,836 $ 6,236 $ 8,199
Net income (loss).... $ 783 $ 220 $(2,676) $ 259 $ 613 $(19,667) $ 167 $ (420) $ (418)
Net income (loss)
per share.......... $0.021 $0.006 $(0.073) $0.007 $0.017 $ (0.550) $0.005 $(0.012) $(0.011)
</Table>
PRICE RANGE AND TRADING VOLUME
The Common Shares are traded on the TSX and on Nasdaq. The combined volume
of trading and closing price ranges of the Common Shares on the TSX and on
Nasdaq are set forth in the following table for the periods indicated.
<Table>
<Caption>
TSX CLOSING PRICE PER SHARE, NASDAQ CLOSING PRICE PER SHARE,
IN CDN$ IN US$
------------------------------- -------------------------------- TOTAL
TIME PERIOD HIGH LOW VOLUME HIGH LOW VOLUME VOLUME
- ----------- -------- -------- --------- -------- -------- ---------- ----------
June 1 to 13, 2002................ $4.71 $3.94 358,430 $ 3.07 $ 2.52 633,700 992,130
May 2002.......................... $5.52 $4.70 1,556,844 $ 3.60 $ 3.11 2,136,600 3,693,444
April 2002........................ $5.12 $4.31 645,340 $ 3.22 $ 2.70 2,193,400 2,838,740
March 2002........................ $4.68 $3.80 752,666 $ 2.98 $ 2.36 1,424,700 2,177,366
February 2002..................... $4.10 $3.76 477,971 $ 2.57 $ 2.38 779,400 1,257,371
January 2002...................... $4.36 $3.88 490,875 $ 2.71 $ 2.45 1,203,600 1,694,475
Fourth Quarter 2001............... $4.40 $2.56 1,384,650 $ 2.77 $ 1.66 4,176,100 5,560,750
Third Quarter 2001................ $3.62 $2.45 981,113 $ 2.42 $ 1.50 3,234,700 4,215,813
Second Quarter 2001............... $3.65 $2.46 978,453 $ 2.41 $ 1.53 4,828,900 5,807,353
First Quarter 2001................ $3.98 $2.70 936,096 $ 2.63 $ 1.69 3,025,500 3,961,596
Fourth Quarter 2000............... $4.50 $2.76 1,679,692 $ 3.02 $ 1.69 6,291,600 7,971,292
Third Quarter 2000................ $5.20 $3.30 3,298,183 $ 3.63 $ 2.16 16,429,200 19,727,383
Second Quarter 2000............... $4.50 $2.76 2,243,665 $ 3.06 $ 1.75 10,556,800 12,800,465
</Table>
The closing sale price of the Common Shares on the TSX on June 13, 2002, the
last date on which the Common Shares traded on the TSX prior to the date of this
Prospectus, was Cdn$3.98. The closing sale price of the Common Shares on Nasdaq
on June 13, 2002, the last date on which the Common Shares traded Nasdaq prior
to the date of this Prospectus, was US$2.59.
10
<Page>
DETAILS OF THE OFFERING
The Offering consists of 4,220,466 Common Shares at a price per share of
US$2.60. As at March 31, 2002, there were 36,935,434 Common Shares outstanding.
COMMON SHARES
Each Common Share entitles the holder thereof to receive notice of and to
attend all meetings of the shareholders of the Corporation and have one vote for
each Common Share held at all meetings of shareholders. The directors are
elected at each annual meeting of shareholders and do not stand for re-election
at staggered intervals.
Each Common Share participates in any dividend, as and when declared by the
Board of Directors, out of moneys properly applicable to the payment of
dividends, in such amount and in such form as the Board of Directors may from
time to time determine, subject to the rights of the holders of any other class
of shares of the Corporation entitled to receive dividends in priority to or
ratably with the holders of the Common Shares, and all dividends which the Board
of Directors may declare on the Common Shares shall be declared and paid in
equal amounts per share on all Common Shares at the time outstanding.
In the event of the dissolution, liquidation or winding-up of the
Corporation, whether voluntary or involuntary, or any other distribution of
assets of the Corporation among its shareholders for the purpose of winding-up
its affairs, the holders of the Common Shares shall, subject to the rights of
the holders of any other class or shares of the Corporation entitled to receive
the assets of the Corporation upon such distribution in priority to or ratably
with the holders of the Common Shares, be entitled to participate ratably in any
distribution of the assets of the Corporation.
The Corporation is authorized to issue an unlimited number of Common Shares,
an unlimited number of preferred shares (issuable in series), of which none are
issued or outstanding as at the date hereof and an unlimited number of employee
participation shares ("Participation Shares"), of which 2,000,000 have been
issued and 470,000 remain outstanding as at March 31, 2002. Pursuant to the
terms of the Employee Participation Share Purchase Plan, the maximum number of
participation shares issuable pursuant to this plan is 2,000,000.
SELLING SHAREHOLDERS
The following table sets forth certain information concerning the ownership
of Common Shares by the Selling Shareholders who are selling an aggregate of
4,220,466 Common Shares under this Prospectus.
<Table>
<Caption>
BEFORE GIVING EFFECT TO THIS AFTER GIVING EFFECT TO THIS
OFFERING OFFERING
----------------------------- ----------------------------
PERCENTAGE PERCENTAGE
(%) OF (%) OF
NUMBER OF OUTSTANDING NUMBER OF NUMBER OF OUTSTANDING
COMMON SHARES COMMON COMMON COMMON SHARES COMMON
OWNED SHARES(1) SHARES OFFERED OWNED SHARES(1)
-------------- ------------ --------------- -------------- -----------
SELLING SHAREHOLDER
Elan International
Services, Ltd................. 3,043,996 8.2 3,043,996 Nil Nil
Novopharm Limited(2)............ 2,352,940 6.4 1,176,470 1,176,470 3.2
</Table>
- ------------
(1) As at March 31, 2002.
(2) A subsidiary of Teva Pharmaceutical Industries Ltd.
The information as to the number of Common Shares owned by the above-named
Selling Shareholders is not within the Corporation's knowledge and has been
furnished by the respective Selling Shareholders.
11
<Page>
PLAN OF DISTRIBUTION
Under an agreement (the "Underwriting Agreement") dated June 14, 2002
between CIBC World Markets Inc., National Bank Financial Inc. and Ryan,
Beck & Co., LLC, the Corporation and the Selling Shareholders, the Selling
Shareholders have agreed to sell, and the Underwriters have agreed to purchase,
on June 21, 2002, or on such other date as may be agreed, but in any event not
later than July 19, 2002, subject to compliance with all necessary legal
requirements and to the terms and conditions contained in the Underwriting
Agreement, 4,220,466 Common Shares, each at a price of $2.60 per Offered Share,
payable in cash to the Selling Shareholders against delivery of a certificate or
certificates representing such Offered Shares. Pursuant to the terms of the
Underwriting Agreement, the Selling Shareholders have agreed to pay fees to the
Underwriters in the amount of $0.143 per Offered Share in consideration of
services rendered by the Underwriters in connection with the Offering. The
offering price for the Offered Shares was determined by negotiation between the
Selling Shareholders and the Underwriters.
The Corporation has agreed that, for a period of 180 days following the
closing of this Offering, neither it nor its subsidiaries will, nor will it
announce any intention to, directly or indirectly, offer or sell, or enter into
an agreement to offer or sell, any Common Shares or any other securities
convertible into, exchangeable for, or otherwise exercisable into any securities
of the Corporation (except in connection with its stock option plan or any other
securities compensation plan and securities issued upon the exercise of rights
thereunder, and the exercise of currently outstanding convertible securities),
without the prior written consent of CIBC World Markets Inc. In addition, the
Corporation, the directors and officers of the Corporation and the Selling
Shareholders have undertaken in favour of the Underwriters not, without the
prior written consent of CIBC World Markets Inc., to sell, offer, assign,
transfer, encumber, contract to sell, grant an option to purchase, or otherwise
enter into any arrangement (including a monetization arrangement) which has the
effect of transferring all or any of the economic benefits of ownership of any
Common Shares, held by them on the date hereof, or announce during such period
any intention to do so at any time until the date that is 90 days after the
filing of the final prospectus with the securities regulatory authorities in
each province of Canada.
The obligations of the Underwriters under the Underwriting Agreement are
several and may be terminated at their discretion on the basis of their
assessment of the state of the financial markets and may also be terminated upon
the occurrence of certain stated events. The Underwriters are, however,
obligated to take up and pay for all the Offered Shares if any of the Offered
Shares are purchased under the Underwriting Agreement.
Each of the Underwriters that is not registered as a broker-dealer under
section 15 of the United States Securities Exchange Act of 1934, as amended, has
agreed that, in connection with the Offering and subject to certain exceptions,
it will not offer or sell any Offered Shares in, or to persons who are nationals
or residents of, the United States other than through one of its United States
registered broker-dealer affiliates. Similarly, each of the Underwriters has
agreed that it will not sell Offered Shares to residents of a province where it
is not a registrant under the applicable securities laws.
The Offering is being made concurrently in each province of Canada and in
the United States pursuant to the multijurisdictional disclosure system
implemented by securities regulatory authorities in Canada and the United
States.
Pursuant to policy statements of the Ontario Securities Commission and the
Commission des valeurs mobilieres du Quebec, the Underwriters may not,
throughout the period of distribution under this short form prospectus, bid for
or purchase any Common Shares. The foregoing restriction is subject to certain
exceptions, as long as the bid or purchase is not engaged in for the purpose of
creating actual or apparent active trading in or raising the price of such
securities. These exceptions include a bid or purchase permitted under the
by-laws and rules of the TSX relating to market stabilization and passive market
making activities and a bid or purchase made for and on behalf of a customer
where the order was not solicited during the period of distribution. Pursuant to
the first mentioned exception, in connection with this Offering, the
Underwriters may over-allot or effect transactions which stabilize or maintain
the market price of the Common Shares at levels other than those which otherwise
might prevail on the open market. Such transactions, if commenced, may be
discontinued at any time.
12
<Page>
The Corporation and the Selling Shareholders have each agreed to indemnify
the Underwriters in certain circumstances. However, neither the Corporation nor
the Selling Shareholders will have any obligation to indemnify the Underwriters
or any other party in respect of a claim that is based on information provided
by or in respect of the Underwriters.
NBF, which is affiliated with a Canadian chartered bank, has extended credit
facilities to a subsidiary of DRAXIS, namely DPI. Consequently, DRAXIS may be
considered a connected issuer of the Underwriters within the meaning of
applicable securities legislation. NBF has extended a secured credit facility to
DPI due 2008. As of March 31, 2002, approximately $5.1 million was outstanding
under such loan. NBF has also extended a revolving credit facility to DPI to a
maximum amount of $2.2 million. As of March 31, 2002 approximately $2.0 million
was outstanding under such loan. DPI is in compliance with the terms of the
above-reference loans and, other than as described in this short form
prospectus, the financial position of DPI has not changed materially since such
indebtedness was incurred.
USE OF PROCEEDS
The net proceeds to the Selling Shareholders from the sale of the Offered
Shares are estimated to be US$10,369,685 based on a price of US$2.60 per Offered
Share and after deducting the Underwriters' fee. The Corporation will not
receive any proceeds from the sale of the Offered Shares by the Selling
Shareholders.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following description is a general summary of certain material United
States federal income tax consequences of the purchase, ownership and
disposition of the Offered Shares by a "U.S. Holder". As used herein the term
"U.S. Holder" means the following persons who invest in and hold Offered Shares
as capital assets: (i) citizens or residents (as defined for United States
federal income tax purposes) of the United States; (ii) corporations (or other
entities classified as corporations for United States federal income tax
purposes) organized under the laws of the United States or of any state or the
District of Columbia, (iii) an estate whose income is subject to United States
federal income taxation regardless of its source, and (iv) a trust (A) if a
United States court is able to exercise primary supervision over the
administration of the trust and one or more United States persons have the
authority to control all substantial decisions of the trust, or (B) that has
elected to be treated as a United States person under applicable Treasury
regulations and, in each case, who are (a) residents of the United States for
purposes of the Canada-United States Income Tax Convention (1980) (the
"Convention"), (b) whose Common Shares would not, for purposes of the
Convention, be effectively connected with a permanent establishment in Canada
and (c) who otherwise would qualify for the full benefits of the Convention.
This summary is based on the Convention, United States Internal Revenue Code of
1986, as amended (the "Code"), administrative pronouncements, judicial decisions
and existing and proposed Treasury Regulations, changes to any of which
subsequent to the date of this short form prospectus may affect the tax
consequences described herein. It is for general guidance only and does not
address the consequences applicable to certain categories of shareholders
subject to special treatment under the Code, including, but not limited to, tax
exempt organizations, pass through entities, certain financial institutions,
insurance companies, dealers in securities or foreign currencies, traders in
securities electing to mark to market, U.S. persons whose functional currency
(as defined in Section 985 of the Code) is not the U.S. dollar or persons that
own directly, indirectly or by application of the constructive ownership rules
of the Code 10% or more of the Corporation's stock by voting power or by value.
Persons considering the purchase of Offered Shares should consult their tax
advisors with regard to the application of the income tax laws of the United
States and any other taxing jurisdiction to their particular situations.
This summary is of a general nature only and is not intended to be, and
should not be construed to be, legal, business or tax advice to any prospective
investor, and no representation with respect to the tax consequences to any
particular investor is made. Prospective investors should consult their own tax
advisors with respect to the income tax considerations relevant to them, having
regard to their particular circumstances.
13
<Page>
DIVIDENDS
A U.S. Holder generally will realize, to the extent of the Corporation's
current and accumulated earnings and profits (determined in accordance with
United States federal income tax principles), a dividend taxable as ordinary
income on the receipt of distributions on the Offered Shares equal to the
U.S. dollar value of such distributions determined by reference to the exchange
rate on the day they are received by the U.S. Holder (with the value of such
distributions computed before any reduction for any Canadian withholding tax).
Any amount of such distributions treated as dividends generally will not be
eligible for the dividends received deduction available to certain United States
corporate shareholders. To the extent that any such distribution exceeds the
Corporation's current and accumulated earnings and profits, it will be treated
first as a tax-free return of the U.S. Holder's tax basis in the Offered Shares
to the extent thereof, and as a gain from the sale or exchange of such shares
(see "Dispositions" below). U.S. Holders should consult their own tax advisors
regarding the treatment of foreign currency gain or loss, if any, on any
distributions received in Canadian dollars that are subsequently converted into
U.S. dollars. Distributions to a U.S. Holder with respect to the Offered Shares
will be subject to Canadian non-resident withholding tax, which is limited to a
maximum rate of 15% pursuant to the terms of the Convention. Any Canadian
withholding tax paid will not reduce the amount treated as received by the
U.S. Holder for United States federal income tax purposes. However, subject to
limitations imposed by United States law, a U.S. Holder may be eligible to
receive a foreign tax credit for the Canadian withholding tax. Because the
limitations applicable to the foreign tax credit rules are complex,
U.S. Holders should consult their own advisors concerning the implications of
these rules in light of their particular circumstances. U.S. Holders who do not
elect to claim any foreign tax credits may be able to claim an ordinary income
tax deduction for Canadian income tax withheld.
DISPOSITIONS
Upon a sale or exchange of an Offered Share, a U.S. Holder will generally
recognize a capital gain or loss equal to the difference between the amount
realized on such sale or exchange and the tax basis of such Offered Share. Such
gain or loss will be a long-term capital gain or loss if the Offered Share has
been held for more than one year. Such gain or loss generally will be considered
United States source gain or loss for United States foreign tax credit purposes.
Long-term capital gains of non-corporate taxpayers are eligible for reduced
rates of taxation. For both corporate and non-corporate taxpayers, limitations
apply to the deductibility of capital losses.
INFORMATION REPORTING AND BACKUP WITHHOLDING
A U.S. Holder may be subject to United States information reporting with
respect to dividends paid on the Offered Shares and certain payments of proceeds
from the sale or exchange of the Offered Shares, unless such U.S. Holder is a
corporation or comes within certain other exempt categories and, when required,
demonstrates this fact. A U.S. Holder that is subject to United States
information reporting generally will also be subject to United States backup
withholding at the rate of 30% unless such U.S. Holder provides a correct
taxpayer identification number, certifies as to no loss of exemption from backup
withholding and otherwise complies with applicable requirements of the backup
withholding tax rules. The amount of any backup withholding from a payment to a
U.S. Holder will be allowed as a credit against the U.S. Holder's United States
federal income tax liability.
CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
The following summary describes the principal Canadian federal income tax
consequences of the purchase, ownership and disposition of Offered Shares
generally applicable to original purchasers thereof who are residents of the
United States ("US Holders") for the purposes of the Convention, who are not
residents of Canada for the purposes of the Income Tax Act (Canada) (the
"Tax Act"), who hold their Offered Shares as capital property, who deal at arm's
length with the Corporation for the purposes of the Tax Act and who do not use
or hold and are not deemed to use or hold such Offered Shares in connection with
a business carried on in Canada. Offered Shares will generally be considered to
be capital property to a US Holder unless they are held as inventory in the
course of carrying on a business or were acquired in a transaction considered to
be an adventure in the nature of trade. This summary is based upon the current
provisions of the Tax Act, the regulations thereunder, all specific proposals to
amend the Tax Act and regulations thereunder publicly
14
<Page>
announced by or on behalf of the Minister of Finance prior to the date hereof
(the "Proposals") and the provisions of the Convention as in effect on the date
hereof. Other than the Proposals, this summary does not take into account or
anticipate any changes in law, whether by legislative, governmental or judicial
action, nor does it take into account tax laws of any province or territory of
Canada or of any jurisdiction outside Canada. There can be no assurance that the
Proposals will be enacted as proposed or at all.
This summary is of a general nature only and is not intended to be, nor
should it be construed to be, legal or tax advice to any particular US Holder.
Accordingly, US Holders should consult with their own tax advisors for advice
with respect to their own particular circumstances.
DISPOSITIONS
A US Holder will not be subject to tax in Canada on any capital gain
realized on a disposition of Offered Shares, provided that the shares do not
constitute "taxable Canadian property" of the US Holder. Offered Shares will
generally not constitute taxable Canadian property of a US Holder unless, at any
time within the 60-month period immediately preceding the disposition, the US
Holder, persons with whom the US Holder did not deal at arm's length or the US
Holder together with all such persons owned, had an interest in or option in
respect of, 25% or more of the issued shares of any series or class of the
capital stock of the Corporation.
DIVIDENDS
Dividends paid or credited or deemed to be paid or credited to a US Holder
in respect of the Offered Shares will generally be subject to Canadian
withholding tax on the gross amount of the dividends. Under the Convention, the
rate of Canadian withholding tax which would apply on dividends paid by the
Corporation to a US Holder is generally (i) 5% with respect to dividends paid if
the beneficial owner of the dividends is a company which owns at least 10% of
the voting stock of the Corporation, and (ii) 15% in all other cases.
EXCHANGE RATE INFORMATION
In this short form prospectus, references to "Cdn$" are to Canadian dollars
and references to "US$" or "$" are to United States dollars. The U.S. dollar
exchange rate for Canadian dollars, based on the noon buying rate in New York
City for cable transfers payable in Canadian dollars as certified for customs
purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate") on
June 13, 2002, was US$0.6496 = Cdn$1.00. The following table sets forth, for the
fiscal years and dates indicated, certain exchange rate information based on the
Noon Buying Rate.
<Table>
<Caption>
PERIOD END AVERAGE(1) HIGH LOW
---------- ---------- -------- --------
(US$ per Cdn$1.00)
Fiscal 1997................................................. 0.6997 0.7223 0.7489 0.6948
Fiscal 1998................................................. 0.6534 0.6743 0.7105 0.6343
Fiscal 1999................................................. 0.6929 0.6730 0.6929 0.6537
Fiscal 2000................................................. 0.6666 0.6734 0.6973 0.6413
Fiscal 2001................................................. 0.6279 0.6458 0.6695 0.6242
January 1, 2002 to June 13, 2002............................ 0.6496 0.6336 0.6547 0.6199
</Table>
- ------------
(1) The average of exchange rates is based upon Noon Buying Rates on each
business day during the period.
ENFORCEABILITY OF CERTAIN CIVIL LIABILITIES
DRAXIS is incorporated under the federal laws of Canada and most of its
officers and directors, some of the experts, the Selling Shareholders and some
of the Underwriters named in this prospectus may be resident outside of the
United States. All or a substantial portion of the assets of DRAXIS and said
persons may be located outside of the United States. As a result, it may be
difficult for investors to effect service within the United States upon such
persons, or to realize in the United States upon judgments of courts of the
United States predicated upon the civil liability provisions of the
United States federal securities laws.
15
<Page>
The Corporation has been advised by McCarthy Tetrault LLP that there is some
doubt as to the enforceability in Canada by a court in original actions, or in
actions to enforce judgments of United States courts, of civil liabilities
predicated upon United States federal securities laws.
AVAILABLE INFORMATION
In addition to its continuous disclosure obligations under Canadian
provincial securities laws, the Corporation is subject to the informational
requirements of the United States Securities Exchange Act of 1934, as amended,
and in accordance therewith, files reports and other information with the SEC.
Under the multijurisdictional disclosure system adopted by the SEC, such reports
and other information may be prepared in accordance with the disclosure
requirements of Canadian provincial securities laws, which may differ from those
of the United States. Such reports and other information when filed by the
Corporation can be inspected and copied at the public reference facilities
maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such materials also can be obtained from the
Public Reference Section of the SEC, Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, by mail at prescribed rates. The
Commission maintains a web site at http://www.sec.gov that contains certain
reports, proxy and information statements, and other information regarding
registrants, like the Corporation, that file electronically with the SEC.
ADDITIONAL INFORMATION
The Corporation has filed with the SEC a registration statement (which term
includes any amendments thereto) on Form F-10 under the United States Securities
Act of 1933, as amended, with respect to the Offered Shares. This short form
prospectus, which constitutes a part of the registration statement, does not
contain all the information set forth in the registration statement, certain
parts of which are omitted in accordance with the rules and regulations of the
SEC. For further information with respect to the Corporation and the Offered
Shares, reference is made to the registration statement, including the exhibits
thereto. Statements made in this short form prospectus concerning the contents
of any document referred to herein are not necessarily complete. With respect to
each such document filed with the SEC as an exhibit to the registration
statement, reference is made to the exhibit for a more complete description of
the matter involved.
DOCUMENTS FILED AS PART OF THE REGISTRATION STATEMENT
The following documents have been filed with the SEC as part of the
registration statement of which this short form prospectus forms a part:
(i) the documents listed in the first paragraph under "Documents Incorporated by
Reference"; (ii) the consent of Deloitte & Touche LLP, Chartered Accountants;
(iii) the consent of McCarthy Tetrault LLP, Canadian counsel to the Corporation;
(iv) powers of attorney from directors and officers of the Corporation; and
(v) the Underwriting Agreement.
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This short form prospectus includes or incorporates by reference certain
statements that constitute "forward-looking statements" within the meaning of
the United States Private Securities Litigation Reform Act of 1995. All
statements, other than statements of historical fact, included or incorporated
by reference in this short form prospectus that address activities, events or
developments that the Corporation expects or anticipates will or may occur in
the future, including such things as future capital expenditures (including the
amounts and nature thereof), business strategies and measures to implement
strategies, competitive strengths, goals, expansion and growth of its business
and operations, plans and references to the future success of the Corporation
and the companies in which it has equity investments, and other such matters,
are forward-looking statements. These forward-looking statements are based on
certain assumptions and analyses made by the Corporation in light of its
experience and its perception of historical trends, current conditions and
expected future developments, as well as other factors it believes are
appropriate in the circumstances. However, whether actual results and
developments will conform with the expectations and predictions of the
Corporation is subject to a number of risks and uncertainties, including:
(i) the special considerations discussed in this short form prospectus and the
documents incorporated herein by reference; (ii) general economic, market or
business conditions; (iii) the opportunities (or lack thereof) that may be
presented to or pursued by the Corporation and
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the companies in which it has equity investments; (iv) competitive actions by
others; (v) changes in laws or regulations; and (vi) other factors, many of
which are beyond the control of the Corporation and the companies in which it
has equity investments. Consequently, all of the forward-looking statements made
in this short form prospectus and the documents incorporated herein by reference
are qualified by these cautionary statements, and there can be no assurance that
the actual results or developments anticipated by the Corporation will be
realized or, even if substantially realized, that they will have the expected
consequences to, or effects on, the Corporation and the companies in which it
has equity investments.
RISK FACTORS
In this section, the use of the pronouns "us", "our", "we" and similar terms
mean the Corporation.
The following list of factors may not be exhaustive, as we operate in a
rapidly changing business, and new risk factors emerge from time to time. We
cannot predict such risk factors, nor can we assess the impact, if any, of such
risk factors on our business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those projected
in any forward-looking statements. Accordingly, we do not, and nor should
shareholders of the Corporation or purchasers of Offered Shares, rely on
forward-looking statements as a prediction of actual results.
THE COMMON SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. IN ADDITION
TO THE OTHER INFORMATION IN THIS PROSPECTUS AND IN THE DOCUMENTS INCORPORATED BY
REFERENCE HEREIN, THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN
EVALUATING THE CORPORATION AND ITS BUSINESS BEFORE PURCHASING THE COMMON SHARES.
IF ANY OF THE RISKS DESCRIBED BELOW OCCURS, THE BUSINESS, RESULTS OF OPERATIONS
AND FINANCIAL CONDITION OF THE CORPORATION COULD BE MATERIALLY ADVERSELY
AFFECTED. IN SUCH CASE, THE PRICE OF THE COMMON SHARES COULD DECLINE, AND ALL OR
PART OF AN INVESTMENT IN THE COMMON SHARES OFFERED HEREBY MAY BE LOST.
WE MAY NOT BE ABLE TO GET TIMELY REGULATORY APPROVAL FOR OUR PRODUCTS
Preclinical studies and clinical trials, as well as the manufacturing and
marketing of our existing and potential products, are subject to extensive
regulation by the Health Products and Food Branch of Health Canada ("HPF") and
other authorities in Canada and by numerous federal, state and local government
authorities in the United States, including the FDA. Similar regulatory
requirements exist in Europe and other countries. To the extent we choose to
explore foreign markets, we may rely on foreign licensees to obtain regulatory
approvals in such countries. The commercialization of certain of our products
will be subject to rigorous preclinical and clinical testing and other premarket
approval requirements by the FDA, HPF and similar authorities in other foreign
countries. Any failure or delay by us, our collaborators or licensees to comply
with applicable requirements or obtain regulatory approvals for our products
could adversely affect the marketing of products developed or licensed by us and
our ability to receive product or royalty revenue.
The regulatory process, which includes preclinical studies and clinical
trials of each compound to establish its safety and efficacy, takes many years
and requires the expenditure of substantial resources. Moreover, if regulatory
approval of the drug is granted, such approval may entail limitations on the
indicated uses for which it may be marketed. Failure to comply with applicable
regulatory requirements can, among other things, result in suspension of
regulatory approvals, product recalls, seizure of products, operating
restrictions and criminal prosecution. Further, government policy may change,
and additional government regulations may be established that could prevent or
delay regulatory approvals for our products. In addition, a marketed drug and
its manufacturer are subject to continual review. Later discovery of previously
unknown problems with the product or manufacturer may result in restrictions on
such product or manufacturer, including withdrawal of the product from the
market.
We manufacture, or expect to manufacture, many active pharmaceutical
ingredients and advanced pharmaceutical intermediates that are used in our
customers' drug products. The final drug products in which the pharmaceutical
ingredients and advanced pharmaceutical intermediates are used, however, are
subject to regulation for safety and efficacy by the FDA, HPF and other
jurisdictions, as the case may be. Such products must be approved by such
agencies before they can be commercially marketed. The process of obtaining
regulatory clearance for marketing is uncertain, costly and time consuming. We
cannot predict how long the necessary regulatory approvals will take or whether
our customers will ever obtain such approval for their
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products. To the extent that our customers do not obtain the necessary
regulatory approvals for marketing new products, our product sales could be
adversely affected.
WE MAY NOT BE ABLE TO OBTAIN AND ENFORCE EFFECTIVE PATENTS TO PROTECT OUR
PROPRIETARY RIGHTS FROM USE BY COMPETITORS, AND THE PATENTS OF OTHER PARTIES
COULD REQUIRE US TO STOP OR TO ACQUIRE A LICENSE FOR CONDUCTING CERTAIN BUSINESS
ACTIVITIES, AND OUR COMPETITIVE POSITION AND PROFITABILITY COULD SUFFER AS A
RESULT
Our success will depend, in part, on our ability to obtain, enforce and
maintain patent protection for our technology in Canada, the United States and
other countries. We cannot assure you that patents will issue from any pending
applications or that claims now or in the future, if any, allowed under issued
patents will be sufficiently broad to protect our technology. In addition, no
assurance can be given that any patents issued to or licensed by us will not be
challenged, invalidated, infringed or circumvented, or that the rights granted
thereunder will provide continuing competitive advantages to us. Our competitor
Ceva Sante Animale is opposing issued patents relating to our product
Anipryl-Registered Trademark- in Europe; we are defending ourselves vigorously
in this opposition. The patent positions of pharmaceutical and biotechnology
firms, including us, are generally uncertain and involve complex legal and
factual questions. In addition, we do not know whether any of our current
research endeavors will result in the issuance of patents in Canada, the United
States, or elsewhere, or if any patents already issued will provide significant
proprietary protection or will be circumvented or invalidated. Since patent
applications are maintained in secrecy for at least 18 months from the date of
filing, and since publication of discoveries in the scientific or patent
literature tends to lag behind actual discoveries by several months, we cannot
be certain that we were the first to create inventions claimed by pending patent
applications or that we were the first to file patent applications for such
inventions. Certain patents related to our products have expired. Loss of patent
protection could lead to generic competition for these products, and others in
the future, which would materially and adversely affect the financial prospects
for these products and, to a lesser extent, the Corporation.
Our commercial success will also depend in part on our not infringing
patents or proprietary rights of others and not breaching the licenses granted
to us. The degree of patent protection afforded to pharmaceutical or
biotechnological inventions around the world is uncertain and varies
significantly between different countries. There can be no assurance that we
will be able to obtain a license to any third-party technology or patents that
we may require to conduct our business or that such technology or patents can be
licensed at a reasonable cost. Failure by us or our collaborators to obtain a
license to any technology or patents that we may need to commercialize our
technologies or products may result in delays in marketing our proposed products
or the inability to proceed with the development, manufacture or sale of
products requiring such licenses and may have a material adverse effect on us.
We have been required to, and may continue to be required to, engage in
litigation and other patent proceedings to enforce patents issued to us, to
defend our right, title and interest to patents related to our products and to
determine the scope and validity of other parties' proprietary rights. These
proceedings can be costly, and if the outcome of any such proceedings is adverse
to us, we could lose the right to sell some of our products or could be required
to pay damages.
We also rely on unpatented trade secrets, improvements and know-how to
develop and maintain our competitive position, which we seek to protect, in
part, by confidentiality agreements with our corporate partners, collaborators,
employees and consultants. These agreements could be breached, and we may not
have adequate remedies for any breach. Further, our trade secrets could
otherwise become known or be independently discovered by competitors.
IF OUR COLLABORATIVE AND COMMERCIAL RELATIONSHIPS WITH THIRD PARTIES ON WHOM WE
RELY ARE UNSUCCESSFUL, OUR BUSINESS MAY SUFFER
To be successful, we must continually establish and maintain strategic
relationships with leaders in a number of biotechnology and pharmaceutical
industry segments. This is critical to success because such relationships enable
us to extend the reach of our products and sales in various jurisdictions,
generate additional revenue and develop and deploy new products in various
marketplaces. Entering into strategic relationships is complicated as
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some of our current and future strategic partners may decide to compete with us
in some or all of the markets or refuse to fulfil or honor their contractual
obligations to us.
We have entered into a number of product in-licensing and out-licensing
arrangements in which our business and financial success is dependent on third
parties. In many of our product in-licensing arrangements, the product licensor
is responsible for developing a body of data upon which we can base a submission
to the HPF, FDA or other regulatory authority. The interests of the other party
to each of these agreements may not be or remain consistent with our interests,
and our collaborators may not succeed in developing a body of data that can form
the basis of regulatory approval. Should our collaborators fail to develop such
body of data to enable us to obtain the requisite regulatory approvals or
otherwise fail to honor their commitments to us or meet our expectations, our
business, financial condition and results of operations may be materially and
adversely affected. In addition, we cannot control the amount and timing of
resources our collaborators devote to the products to which they have rights or
to the subject matters of our agreements with them generally. The agreements may
be terminated by our collaborators in certain circumstances.
To the extent we enter into product out-licensing arrangements for the
marketing or distribution of our own products with collaborative partners, any
revenues we receive will depend upon the efforts of third parties. There can be
no assurance that any third party will market our products successfully or that
any third-party collaboration will be on terms favorable to us. If any marketing
partner does not market a product successfully, our business might be materially
and adversely affected.
A SIGNIFICANT PORTION OF OUR BUSINESS IS DEPENDENT ON A SMALL NUMBER OF KEY
CUSTOMERS
As at December 31, 2001, DPI's two largest customers represented 73% of
revenues for our contract manufacturing segment and 45% of our total revenues.
DRAXIMAGE's largest customer represented 17% of revenues for our
radiopharmaceuticals segment and 4% of our total revenues for the year ended
December 31, 2001. The termination by any of such customers of their
relationship with us would have a material adverse effect on our business,
financial condition and results of operations.
IF OUR COLLABORATORS, EMPLOYEES, OR CONSULTANTS DISCLOSE OUR CONFIDENTIAL
INFORMATION TO OTHERS DESPITE CONFIDENTIALITY AGREEMENTS IN PLACE, OUR BUSINESS
MAY SUFFER
Our practice is to require our employees, collaborators, consultants and
outside scientific advisors to execute confidentiality agreements upon the
commencement of employment or consulting relationships. These agreements provide
that all confidential information developed or made known to the individual
during the course of the individual's relationship with us is to be kept
confidential and not disclosed to third parties, subject to certain specific
limited exceptions. In the case of employees, the agreements provide that all
inventions conceived by the individual shall be our exclusive property. These
agreements, however, may not provide meaningful protection for our trade secrets
or adequate remedies in the event of unauthorized use or disclosure of such
information.
WE ARE SUBJECT TO REGULATION BY GOVERNMENTS IN MANY JURISDICTIONS AND, IF WE DO
NOT COMPLY WITH HEALTHCARE, MANUFACTURING AND ENVIRONMENTAL REGULATIONS, OUR
EXISTING AND FUTURE OPERATIONS MAY BE CURTAILED, AND WE COULD BE SUBJECT TO
LIABILITY
The HPF, FDA and other governmental regulators have increased requirements
for drug purity and have increased environmental burdens upon the pharmaceutical
industry. Because pharmaceutical drug manufacturing is a highly regulated
industry, requiring significant documentation and validation of manufacturing
processes and quality control assurance prior to approval of the facility to
manufacture a specific drug, there can be considerable transition time between
the initiation of a contract to manufacture a product and the actual initiation
of manufacture of that product. Any lag time in the initiation of a contract to
manufacture product and the actual initiation of manufacture at our facilities
could cause us to lose profits or incur liabilities.
Products manufactured by us will have to comply with the FDA's cGMP and
other FDA, HPF or European guidelines and regulations. Additionally, certain of
our customers may require us to adhere to additional manufacturing standards,
even if not required by the FDA or other regulatory authorities. Compliance with
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cGMP regulations requires manufacturers to expend time, money and effort in
production, and to maintain precise records and quality control to ensure that
the product meets applicable specifications and other requirements. The FDA and
other regulators periodically inspect drug-manufacturing facilities to ensure
compliance with applicable cGMP requirements. If we fail to comply with the cGMP
requirements, we may become subject to possible regulatory action and
manufacturing at the facility could consequently be suspended.
The FDA may also require the submission of any lot of a particular product
for inspection. If the lot product fails to meet the FDA requirements, then the
FDA could take any of the following actions: (i) restrict the release of the
product; (ii) suspend manufacturing of the specific lot of the product;
(iii) order a recall of the lot of the product; or (iv) order a seizure of the
lot of the product.
Canadian and United States federal, state, local and provincial regulations
govern extensively the use, manufacture, storage, handling and disposal of
hazardous material and associated waste products. Although we believe that the
operations at our facilities comply in all material respects with the applicable
environmental laws in Canada and the United States, we cannot completely
eliminate the risk of substantial environmental liabilities. Any failure by us
or any of our subsidiaries to comply with the present or future environmental
laws in Canada, the United States or elsewhere, could result in any of the
following: (i) cessation of portions or all of our or our subsidiaries'
operations; (ii) imposition of fines; (iii) restrictions on our or our
subsidiaries' ability to carry on or expand our operations; (iv) significant
expenditures by us in order to comply with environmental laws and regulations;
or (v) liabilities in excess of our resources. Any of these sanctions could have
a material adverse effect on our business, financial condition and results of
operations.
We have in place facilities and procedures designed to reduce and, to the
extent possible, eliminate the risk of environmental contamination resulting
from the processing of raw materials and, more specifically, from the
radiopharmaceutical business of our subsidiary DRAXIMAGE and the manufacturing
business of our subsidiary DPI. We also have in place a regular maintenance
program to ensure continued compliance with all applicable environmental
regulations.
COMPETITION BY MANUFACTURERS AND MARKETERS OF GENERIC DRUGS MAY REDUCE OUR
REVENUE AND PROFITS
Our brand name drugs face competition from generic drugs, which can have
adverse effects upon sales. We have attempted to mitigate the impact of generic
competition by diversifying our product lines and entering into agreements to
share in the profits from the sales of generic versions of our products.
However, competition from generics could result in lower revenues and margins.
OUR BUSINESS COULD BE HARMED IF THERE WERE A DISPUTE OR DISRUPTION WITH OUR
UNIONIZED EMPLOYEES
Although our subsidiary DPI currently has a good relationship with the
United Food & Commercial Workers International Union, Local 291 (AFL-CIO), there
can be no assurance that future labour difficulties will not arise. Should such
difficulties arise which lead to significant grievance issues and/or a labour
strike, such events might have a material adverse effect on our business.
FACTORS BEYOND OUR CONTROL COULD CAUSE INTERRUPTION IN OUR OPERATIONS, WHICH
WOULD ADVERSELY AFFECT OUR REPUTATION IN THE MARKETPLACE AND OUR RESULTS OF
OPERATIONS
To succeed, we must be able to operate our manufacturing facilities without
interruption. We could suffer an interruption caused by damage from a variety of
sources, many of which are not within our control, including, fire, flood and
other natural disasters, power loss and telecommunication failure, software and
hardware errors, failures or crashes and similar disruptions. Any significant
interruptions in our operations would damage our reputation in the marketplace
and have a negative impact on our results of operations.
ALTHOUGH WE CARRY INSURANCE, A SUCCESSFUL LIABILITY CLAIM COULD NEGATIVELY
IMPACT OUR BUSINESS
The use of any of our unapproved products under development and the sale of
any approved products may expose us to liability claims resulting from the use
of these products. Such claims might be made directly by consumers, healthcare
providers or by pharmaceutical companies or others selling such products. We
currently have liability insurance, but we cannot provide assurance that we will
be able to maintain insurance coverage at a
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reasonable cost or in sufficient amounts to protect us against losses due to
this potential liability. We might not be able to maintain or obtain additional
commercially reasonable product liability insurance for any products approved
for marketing. A successful product liability claim or a series of claims
brought against us could have a material adverse effect on our business,
financial condition or results of operations. Even unsuccessful product
liability claims could result in the expenditure of funds in litigation and the
diversion of management time and resources and could damage our reputation and
impair the marketability of our products.
IF THE MARKET DOES NOT ACCEPT OUR PRODUCTS, OUR BUSINESS COULD BE HARMED
There can be no assurance that any of our products in development or
products recently launched will achieve market acceptance. The degree of market
acceptance will depend upon a number of factors, including the receipt of
regulatory approvals, the establishment and demonstration in the medical
community of the clinical efficacy and safety of the products, the establishment
and demonstration of the potential advantages over existing and new treatment
methods and the reimbursement policies of government and third-party payors.
There can be no assurance that physicians, patients, payors or the medical
community in general will accept and utilize any existing or new products that
may be developed by us.
We anticipate that we will face increased competition in the future as new
products enter the market and advanced technologies become available. There can
be no assurance that existing products or new products developed by our
competitors will not be more effective, or be more effectively marketed and
sold, than any that may be developed or sold by us. Competitive products may
render our products obsolete and uncompetitive prior to recovering research,
development or commercialization expenses incurred with respect to any such
products.
Many of our existing or potential competitors, particularly large
pharmaceutical companies, have substantially greater financial, technical and
human resources than do we. In addition, many of these competitors have
significantly greater experience in undertaking research, preclinical studies
and human clinical trials of new pharmaceutical products, obtaining regulatory
approvals and manufacturing and marketing such products. Accordingly, our
competitors may succeed in commercializing products more rapidly or effectively,
which could have a material adverse effect on our business, financial condition
or results of operations.
FAILURE OF ONE OF OUR CURRENT OR FUTURE CLINICAL TRIALS COULD HAVE A MATERIALLY
NEGATIVE IMPACT ON OUR FUTURE PROSPECTS
The development of new products is subject to a number of significant risks.
Potential products that appear to be promising in various stages of development
may not reach the market for a number of reasons. Such reasons include the
possibilities that the potential product will be found ineffective or unduly
toxic during preclinical or clinical trials, fail to receive necessary
regulatory approvals, be difficult to manufacture on a large scale, be
uneconomical to market or not achieve market acceptance, or be precluded from
commercialization by proprietary rights of third parties. Certain products we
are attempting to develop have never been manufactured on a commercial scale,
and there can be no assurance that such products can be manufactured at a cost
or in a quantity to render such products commercially viable. Production of such
products may require the development of new manufacturing technologies and
expertise. The impact on our business in the event that new manufacturing
technologies and expertise would have to be developed is uncertain. Many of our
potential products will require significant additional research and development
efforts and significant additional preclinical and clinical testing, prior to
any commercial use. There can be no assurance that we will successfully meet any
of these technological challenges, or others that may arise in the course of
development.
Before obtaining regulatory approval for the commercial sale of any product
under development, we must demonstrate through preclinical studies and clinical
trials that the product is safe and efficacious. The results from preclinical
studies and clinical trials may not be totally predictive of results obtained in
larger clinical trials, and there can be no assurance that our or any
collaborators' clinical trials will demonstrate safety and efficacy, achieve
regulatory approvals or result in marketable products. A number of companies in
the biotechnology and pharmaceutical industry have suffered significant setbacks
in advanced clinical trials, even after achieving promising results in earlier
trials. Failure to successfully complete clinical trials on a timely basis could
have an adverse effect on our future business, financial condition and results
of operations.
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OUR PROFIT DEPENDS IN PART ON REIMBURSEMENT POLICIES AND REGULATIONS OF
GOVERNMENT HEALTH ADMINISTRATION AUTHORITIES, PRIVATE HEALTH INSURERS AND OTHER
ORGANIZATIONS
The business and financial condition of pharmaceutical companies will
continue to be affected by the efforts of governments and third-party payors to
contain or reduce the costs of health care through various means. For example,
in certain markets, including Canada, pricing or profitability of prescription
pharmaceuticals is subject to government control. In the United States there
have been, and we expect that there will continue to be, a number of federal and
state proposals to implement similar government controls. In addition, an
increasing emphasis on managed health care in the United States has increased
and will continue to increase the pressure on pharmaceutical pricing. While we
cannot predict whether such legislative or regulatory proposals will be adopted
or the effects such proposals or managed care efforts may have on our business,
the announcement and/or adoption of such proposals or efforts could have a
material adverse effect on our business and financial condition and that of our
current and prospective corporate partners. Accordingly, our ability to
establish strategic alliances may be adversely affected. In addition, in Canada,
the United States and elsewhere, sales of prescription pharmaceutical products
are dependent, in part, on the availability of reimbursement to the consumer
from third-party payors, such as government and private insurance plans.
Third-party payors are increasingly challenging the prices charged for medical
products and services. To the extent we succeed in bringing new products to
market, there can be no assurance that these products will be considered
cost-effective and reimbursement to consumers will be available or will be
sufficient to allow the sale of these products on a competitive basis. The
Patented Medicine Prices Review Board, which monitors and controls prices of
patented drug products marketed in Canada, may assert jurisdiction over our
products under development which may limit the prices that can be charged for
such products. We may not be able to obtain prices for our products under
development that will make them commercially viable.
OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO GROW, AND IF WE ARE UNABLE TO
MANAGE OUR GROWTH EFFECTIVELY, WE MAY INCUR UNEXPECTED EXPENSES AND BE UNABLE TO
MEET OUR CUSTOMERS' REQUIREMENTS
We will need to maintain, expand and upgrade our manufacturing facilities
and operations to execute current commercial obligations to customers, widen our
customer base and increase manufacturing efficiencies as well as to launch a
series of products into the Canadian marketplace over the next few years. We
cannot be certain that our employees, systems, procedures, controls and existing
space will be adequate to support expansion of its operations. Our future
operating results will depend on the ability of our officers and key employees
to manage changing business conditions and to implement and improve our
technical, administrative, financial control and reporting systems and
operational excellence in order to achieve established business objectives. An
unexpectedly large increase in the volume of manufacturing business or the
number of orders placed by customers may require us to expand and further
upgrade our facilities and the technology related to our manufacturing. We may
not be able to project the rate of timing of such increases or customer demands
accurately or to expand and upgrade our facilities and supporting systems and
infrastructure to accommodate such increases. Difficulties in managing any
future growth could have a significant negative impact on our business because
we may incur unexpected expenses and be unable to meet our customers'
requirements.
OUR FINANCIAL RESULTS MAY FLUCTUATE, AND OUR FUTURE REVENUE AND PROFITABILITY
ARE UNCERTAIN
Our ability to achieve and maintain profitability in the foreseeable future
depends on the commercial success of our products and services. Because we will
be launching or are in the process of launching new products in new markets,
revenues are difficult to predict and may fluctuate substantially from period to
period. In addition, product development programs will require substantial
additional investment, including the cost of clinical trials, obtaining
additional regulatory approvals, if necessary, and marketing and sales expenses
associated with potential new product introductions. Our manufacturing facility
will continue to require capital investment in order to maintain, upgrade and
expand its operations. The success of our subsidiaries DRAXIMAGE and DPI will
rely significantly on the ability of both companies to maintain and to increase
substantially their manufacturing capabilities to satisfy customer demand. There
can be no assurance that, or if so when, we will successfully develop, receive
regulatory approvals for, or manufacture or market, any new products for our own
marketing purposes, or for third parties. The research, development, production
and marketing of new products will require the application of considerable
technical and financial resources by us
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and our collaborators, while revenues that are generated by such products, if
successfully developed and marketed, may not be realized for several years. We
may not be able to sustain profitability. We may require external financing to
complete certain aspects of our strategic plan, and external sources of capital
may not be available at an acceptable cost. Should Societe generale de
financement du Quebec ("SGF") divest its interest in DPI, or the shareholder
relationship between us and SGF become strained, there may be a negative effect
on us and our manufacturing facility operations.
IF WE CANNOT ADAPT TO CHANGING TECHNOLOGIES, OUR PRODUCTS AND SERVICES MAY
BECOME OBSOLETE AND OUR BUSINESS COULD SUFFER
Because the biotechnology and pharmaceutical industry is characterized by
rapid technology change and obsolescence, we may be unable to anticipate changes
in our current and potential customer requirements that could make our existing
technology obsolete. Our success will depend, in part, on our ability to
continue to enhance our existing products and services, develop new technology
that addresses the increasing sophistication and varied needs of our respective
customers, license leading technologies and respond to technological advances
and emerging industry standards and practices on a timely and cost-effective
basis. The development of our proprietary technology and investing in certain
niche markets entails significant technical and business risks. We may not be
successful in using our new technologies or exploiting our niche markets
effectively or adapting our businesses to evolving customer requirements or
emerging industry standards.
OUR COMMON SHARE PRICE HAS BEEN, AND IS LIKELY TO CONTINUE TO BE, VOLATILE
The market prices for the securities of pharmaceutical and biotechnology
companies, including ours, have historically been highly volatile, and the
market has, from time to time, experienced significant price and volume
fluctuations that are unrelated to the operating performance of particular
companies. Factors such as fluctuations in our operating results, announcements
of competing technological innovations or new therapeutic products by our
competitors, clinical trial results, governmental regulation, developments in
patent or other proprietary rights, public concern as to the safety of drugs
developed by us or others and general market conditions can have an adverse
effect on the market price of our shares. In particular, the realization of any
of the risks described herein could have a material adverse impact on such
market price. Sales of substantial amounts of our shares in the public market,
or the perception that such sales will occur, could also adversely affect the
market price of our shares and make it more difficult in the future for us to
raise funds through equity offerings.
WE ARE EXPOSED TO EXCHANGE RATE FLUCTUATIONS WHICH COULD NEGATIVELY AFFECT OUR
BUSINESS
A substantial portion of our revenues are now, and are expected to continue
to be, realized in US dollars. Our operating expenses are primarily paid in
Canadian dollars. Fluctuations in the exchange rate between the US dollar and
the Canadian dollar may have a material effect on our results of operations. In
particular, we may be adversely affected by a significant strengthening of the
Canadian dollar against the US dollar. We do not currently use derivative
instruments to hedge our foreign exchange risk and have no plans to do so in the
future.
IF WE LOSE THE SERVICES OF KEY PERSONNEL WE MAY BE UNABLE TO REPLACE THEM, AND
OUR BUSINESS COULD BE NEGATIVELY AFFECTED
Our success depends on the retention of principal members of our management
and scientific staff and on our ability to continue to attract, motivate and
retain additional key personnel. The market for retaining and obtaining such key
personnel is intensely competitive and the loss of the services of key personnel
or the failure to recruit necessary additional personnel could materially and
adversely affect operations and our research and development efforts.
INVESTORS HEREUNDER MAY NOT BE ABLE TO SUCCESSFULLY ENFORCE CIVIL LIABILITIES
AGAINST US, THE UNDERWRITERS OR THE SELLING SHAREHOLDERS
DRAXIS is incorporated under the federal laws of Canada and most of its
officers and directors, some of the experts, the Selling Shareholders and some
of the Underwriters named in this prospectus may be resident
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outside of the United States. All or a substantial portion of the assets of
DRAXIS and said persons may be located outside of the United States.
Consequently, it may be difficult for United States investors to effect service
of process within the United States upon the Corporation or such persons, or to
realize in the United States upon judgments of courts of the United States
predicated upon civil liabilities under the United States Securities Act of
1933, as amended. Investors should not assume that Canadian courts (i) would
enforce judgments of United States courts obtained in actions against the
Corporation or such persons predicated upon the civil liability provisions of
the United States federal securities laws or the securities or "blue sky" laws
of any state within the United States or (ii) would enforce, in original
actions, liabilities against the Corporation or such persons predicated upon the
United States federal securities laws or any such state securities or blue sky
laws.
ALTHOUGH WE CONSIDER THE CORPORATION TO HAVE GOOD DEFENCES TO SUCH ACTIONS,
SHOULD CURRENT LAWSUITS AGAINST US SUCCEED, WE COULD INCUR A SUBSTANTIAL LOSS
While we believe the Corporation has good defences to the Knoll, Innovations
Foundation and University of Toronto proceedings (see "Legal Proceedings"
below), these disputes may not be resolved in our favour. It is possible that a
court or arbitration tribunal may find us to be in breach of certain agreements,
or of infringing validly issued patents of third parties or practising the
intellectual property of others. In that event, in addition to the cost of
defending the underlying proceedings, we may have to pay license fees,
additional royalties and/or damages and may be ordered to assign certain
Anipryl-Registered Trademark--related patents and be prohibited from conducting
certain activities. Under such circumstances, we could incur substantial loss
and our business could be negatively affected.
LEGAL PROCEEDINGS
From time to time, the Corporation becomes involved in legal proceedings and
claims which arise in the ordinary course of business. With the exception of the
two matters described below related to Anipryl-Registered Trademark-, a
companion animal health product, the Corporation considers that the ultimate
liability with respect to any known actions will not materially affect the
business, financial position, results of operations or cash flows of the
Corporation.
In 1998, a Canadian legal proceeding was launched against the Corporation
and Deprenyl Animal Health, Inc. ("DAHI"), a subsidiary of the Corporation which
receives licensing and royalty revenue related to Anipryl-Registered Trademark-,
by a former consultant, Jozsef Knoll, claiming royalty entitlements based on the
net profit from sales of Anipryl-Registered Trademark-. Total damages claimed
are $100 million. The plaintiff also claims entitlement to certain shares of
DAHI. The plaintiff has taken no steps in the last 2 years to move the claim
forward and may not do so. The Corporation believes that it has good defences to
this claim and that it is without merit and has and will continue to vigorously
defend itself.
Since 2000, the Corporation and DAHI have been involved in U.S. and Canadian
legal proceedings with the University of Toronto and the University of Toronto
Innovations Foundation. One dispute relates to the terms of a 1992 license
agreement under which Innovations Foundation is claiming entitlement to a
portion of the consideration earned by DAHI with respect to
Anipryl-Registered Trademark-. The second dispute relates to a 1990 contract
research agreement under which the University of Toronto is claiming a
declaration of ownership and an order for assignment of patents and damages
related to certain Anipryl-Registered Trademark--related intellectual property.
The damages claimed in the proceedings are in the range of Cdn$100 million.
While both claims are at a very preliminary stage and the matters at issue are
factually and legally complex, the Corporation believes that it has good
defences to the claims made by the University of Toronto and the University of
Toronto Innovations Foundation and considers the claims to be without merit and
is vigorously defending itself.
LEGAL MATTERS
Certain legal matters relating to the Offered Shares offered by this short
form prospectus will be passed upon at the date of closing by McCarthy
Tetrault LLP with respect to matters of Canadian law and by Gardner, Carton &
Douglas with respect to matters of United States law on behalf of the
Corporation, by Torys LLP on behalf of the Underwriters, by Cahill Gordon &
Reindel on behalf of Elan and by Blake, Cassels & Graydon LLP on behalf of
Novopharm.
24
<Page>
As of the date hereof, (a) the partners and associates of McCarthy
Tetrault LLP beneficially owned, directly or indirectly, less than 1% of the
outstanding common shares of the Corporation or any of its associates or
affiliates, and (b) the partners and associates of Torys LLP beneficially owned,
directly or indirectly, less than 1% of the outstanding common shares of the
Corporation or any of its associates or affiliates.
AUDITORS, TRANSFER AGENT AND REGISTRAR
The auditors of the Corporation are Deloitte & Touche LLP, Chartered
Accountants, Suite 3000, 1 Place Ville Marie, Montreal, Quebec H3B 4T9. The
transfer agent and registrar for the Common Shares in Canada is Computershare
Trust Corporation of Canada at its principal office in Toronto, Ontario.
25
<Page>
PART II
INFORMATION NOT REQUIRED TO BE
DELIVERED TO OFFEREES OR PURCHASERS
INDEMNIFICATION
Under the Canada Business Corporations Act ("BCA"), the Registrant may
indemnify a present or former director or officer of the Registrant or another
individual who acts or acted at the Registrant's request as a director or
officer, or an individual acting in a similar capacity, of another entity:
(a) against all costs, charges and expenses, including an amount paid to
settle an action or satisfy a judgment, reasonably incurred by the
individual in respect of any civil, criminal, administrative,
investigative or other proceeding in which the individual is involved
because of that association with the Registrant or other entity;
(b) with court approval, against all costs, charges and expenses reasonably
incurred by the individual in connection with an action brought by or on
behalf of the Registrant or other entity to procure a judgment in its
favor, to which the individual is made a party by reason of the
individual's association with the Registrant or other entity; and
(c) in respect of all costs, charges and expenses reasonably incurred by the
individual in connection with the defense of any civil, criminal,
administrative, investigative or other proceeding in which the individual
is involved because of that association with the Registrant or other
entity, if the individual seeking indemnity was not judged by the court
or other competent authority to have committed any fault or omitted to do
anything that the individual ought to have done;
PROVIDED, in all cases, such individual (i) acted honestly and in good faith
with a view to the best interests of the Registrant, or, as the case may be, to
the best interests of the other entity for which the individual acted as
director or officer or in a similar capacity at the Registrant's request; and
(ii) in the case of a criminal or administrative action or proceeding that is
enforced by a monetary penalty, the individual had reasonable grounds for
believing that the individual's conduct was lawful.
Subject to the limitations contained in the BCA, the By-laws of the
Registrant provide that every director or officer of the Registrant, every
former director or officer of the Registrant or a person who acts or acted at
the Registrant's request as a director or officer of a body corporate of which
the Registrant is or was a shareholder or creditor, and his or her heirs and
legal representatives shall, from time to time, be indemnified and saved
harmless by the Registrant from and against all costs, charges and expenses,
including an amount paid to settle an action or satisfy a judgment, reasonably
incurred by him or her in respect of any civil, criminal or administrative
action or proceeding to which he or she is made a party by reason of being or
having been a director or officer of the Registrant or body corporate of which
the Registrant is or was a shareholder if (i) he or she acted honestly and in
good faith and with a view to the best interests of the Registrant, and (ii) in
the case of a criminal or administrative action or proceeding that is enforced
by a monetary penalty, such director or officer had reasonable grounds for
believing that his or her conduct was lawful.
The Registrant maintains insurance for the benefit of its directors and
officers against liability in their respective capacities as directors and
officers. The directors and officers are not required to pay any premium in
respect of the insurance. The policy contains standard industry exclusions and
no claims have been made thereunder to date.
The Underwriting Agreement provides that the Registrant will indemnify the
Underwriters in certain circumstances. The Underwriting Agreement contains
provisions by which the Underwriters agree to indemnify the Registrant, each of
the directors and officers of the Registrant and each person who controls the
Registrant within the meaning of the Securities Act of 1933, as amended (the
"Securities Act") with respect to information furnished by the Underwriters for
use in this Registration Statement.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has
II-1
<Page>
been informed that in the opinion of the U.S. Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is
therefore unenforceable.
EXHIBITS
The following exhibits have been filed as part of the Registration
Statement:
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1 Underwriting Agreement (to be filed by amendment)
4.1 United States Securities and Exchange Commission Form 20-F
(annual information form) of the Corporation dated May 20,
2002 (incorporated herein by reference to the Corporation's
Annual Report on Form 20-F for the year ended December 31,
2001, filed on May 20, 2002 (SEC file no. 0-17434))
4.2 Material change report of the Corporation dated January 24,
2002 (incorporated herein by reference to the Corporation's
Report of Foreign Issuer on Form 6-K filed on May 29, 2002
(SEC file no. 0-17434))
4.3 Audited comparative consolidated financial statements of the
Corporation and the notes thereto for the financial year
ended December 31, 2001 (expressed in US dollars and
presented in accordance with US GAAP), together with the
report of the auditors thereon, found at pages 30
through 47 of the 2001 annual report to shareholders of the
Corporation (incorporated herein by reference to the
Corporation's Annual Report on Form 20-F for the year ended
December 31, 2001, filed on May 20, 2002 (SEC file
no. 0-17434))
4.4 Management's discussion and analysis for the year ended
December 31, 2001 (in relation to financial statements
presented in accordance with US GAAP), included as pages 16
to 28 in the 2001 annual report to shareholders of the
Corporation (incorporated herein by reference to the
Corporation's Report of Foreign Issuer on Form 6-K filed on
May 29, 2002 (SEC file no. 0-17434))
4.5 Audited comparative consolidated financial statements of the
Corporation and the notes thereto for the financial year
ended December 31, 2001 (expressed in US dollars and
presented in accordance with Canadian GAAP), together with
the report of the auditors thereon, found at pages 17 to 39
of the Canadian GAAP Financial Information 2001 Supplement
(incorporated herein by reference to the Corporation's
Report of Foreign Issuer on Form 6-K filed on May 29, 2002
(SEC file no. 0-17434))
4.6 Management's discussion and analysis for the year ended
December 31, 2001 (in relation to financial statements
presented in accordance with Canadian GAAP), included as
pages 1 to 15 in the Canadian GAAP Financial Information
2001 Supplement (incorporated herein by reference to the
Corporation's Report of Foreign Issuer on Form 6-K filed on
May 29, 2002 (SEC file no. 0-17434))
4.7 Unaudited comparative consolidated financial statements of
the Corporation included as pages 14 to 27 of the interim
report to shareholders for the period ended March 31, 2002
(incorporated herein by reference to the Corporation's
Report of Foreign Issuer on Form 6-K filed on May 17, 2002
(SEC file no. 0-17434))
4.8 Management's discussion and analysis included as pages 4
to 13 of the interim report to shareholders for the period
ended March 31, 2002 (incorporated herein by reference to
the Corporation's Report of Foreign Issuer on Form 6-K filed
on May 17, 2002 (SEC file no. 0-17434))
4.9 Management proxy circular of the Corporation dated April 2,
2002 in connection with the 2002 annual meeting of
shareholders of the Corporation, other than the sections
entitled "Executive Compensation -- Report of Compensation
Committee," "Executive Compensation -- Stock Performance
Graph" and "Corporate Governance" (incorporated herein by
reference to the Corporation's Report of Foreign Issuer on
Form 6-K filed on May 29, 2002 (SEC file no. 0-17434))
5.1 Consent of Deloitte & Touche, Chartered Accountants
5.2 Consent of McCarthy Tetrault LLP, Canadian counsel to
Registrant
6.1 Powers of Attorney for persons executing this Registration
Statement (incorporated herein by reference to the
Corporation's Registration Statement on Form F-10 filed on
June 4, 2002 (SEC file no. 333-89750))
</Table>
II-2
<Page>
PART III
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
ITEM 1. UNDERTAKING
The Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to the securities registered pursuant to Form F-10 or to transactions
in said securities.
ITEM 2. CONSENT TO SERVICE OF PROCESS
The Registrant filed with the Commission a written irrevocable consent and
power of attorney on Form F-X on June 4, 2002 (SEC file no. 333-89750).
III-1
<Page>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant certifies
that it has reasonable grounds to believe that it meets all of the requirements
for filing on Form F-10 and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Mississauga, Ontario, Canada on June 14, 2002.
<Table>
DRAXIS HEALTH INC.
By: /s/ MARTIN BARKIN, M.D.
-----------------------------------
Martin Barkin, M.D.
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
</Table>
III-2
<Page>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities indicated on the 14th day of June 2002.
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
/s/ MARTIN BARKIN, M.D. President, Chief Executive Officer,
------------------------------------------- Chief Operating Officer and Director
Martin Barkin, M.D. (Principal Executive Officer)
/s/ JIM A.H. GARNER Senior Vice President, Finance and Chief
------------------------------------------- Financial Officer
Jim A.H. Garner (Principal Financial Officer)
*
------------------------------------------- Controller
Thanh Nguyen
*
------------------------------------------- Chairman and Director
Brian M. King
*
------------------------------------------- Director
Leslie L. Dan
*
------------------------------------------- Vice-Chairman and Director
James P. Doherty
*
------------------------------------------- Director
George M. Darnell
*
------------------------------------------- Director
Samuel Sarick
</Table>
III-3
<Page>
<Table>
<Caption>
SIGNATURE TITLE
--------- -----
*
------------------------------------------- Director
Stewart D. Saxe
*
------------------------------------------- Director
John A. Vivash
/s/ JIM A.H. GARNER
-------------------------------------------
Jim A.H. Garner, as attorney-in-fact, pursuant to a
power of attorney granted in Registration Statement
No. 333-89750 filed on June 4, 2002
</Table>
III-4
<Page>
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933,
the Authorized Representative has signed this Registration Statement, solely in
its capacity as the duly authorized representative of DRAXIS Health Inc. in the
United States, in the City of Chicago, State of Illinois on May 30, 2002.
<Table>
/s/ JEFFREY R. GRAVES
----------------------------------------
CT Corporation System
As Agent for Service for
DRAXIS Health Inc.
(Authorized Representative)
</Table>
III-5
<Page>
EXHIBIT INDEX
<Table>
<Caption>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1 Underwriting Agreement (to be filed by amendment)
4.1 United States Securities and Exchange Commission Form 20-F
(annual information form) of the Corporation dated May 20,
2002 (incorporated herein by reference to the Corporation's
Annual Report on Form 20-F for the year ended December 31,
2001, filed on May 20, 2002 (SEC file no. 0-17434))
4.2 Material change report of the Corporation dated January 24,
2002 (incorporated herein by reference to the Corporation's
Report of Foreign Issuer on Form 6-K filed on May 29, 2002
(SEC file no. 0-17434))
4.3 Audited comparative consolidated financial statements of the
Corporation and the notes thereto for the financial year
ended December 31, 2001 (expressed in US dollars and
presented in accordance with US GAAP), together with the
report of the auditors thereon, found at pages 30
through 47 of the 2001 annual report to shareholders of the
Corporation (incorporated herein by reference to the
Corporation's Annual Report on Form 20-F for the year ended
December 31, 2001, filed on May 20, 2002 (SEC file
no. 0-17434))
4.4 Management's discussion and analysis for the year ended
December 31, 2001 (in relation to financial statements
presented in accordance with US GAAP), included as pages 16
to 28 in the 2001 annual report to shareholders of the
Corporation (incorporated herein by reference to the
Corporation's Report of Foreign Issuer on Form 6-K filed on
May 29, 2002 (SEC file no. 0-17434))
4.5 Audited comparative consolidated financial statements of the
Corporation and the notes thereto for the financial year
ended December 31, 2001 (expressed in US dollars and
presented in accordance with Canadian GAAP), together with
the report of the auditors thereon, found at pages 17 to 39
of the Canadian GAAP Financial Information 2001 Supplement
(incorporated herein by reference to the Corporation's
Report of Foreign Issuer on Form 6-K filed on May 29, 2002
(SEC file no. 0-17434))
4.6 Management's discussion and analysis for the year ended
December 31, 2001 (in relation to financial statements
presented in accordance with Canadian GAAP), included as
pages 1 to 15 in the Canadian GAAP Financial Information
2001 Supplement (incorporated herein by reference to the
Corporation's Report of Foreign Issuer on Form 6-K filed on
May 29, 2002 (SEC file no. 0-17434))
4.7 Unaudited comparative consolidated financial statements of
the Corporation included as pages 14 to 27 of the interim
report to shareholders for the period ended March 31, 2002
(incorporated herein by reference to the Corporation's
Report of Foreign Issuer on Form 6-K filed on May 17, 2002
(SEC file no. 0-17434))
4.8 Management's discussion and analysis included as pages 4
to 13 of the interim report to shareholders for the period
ended March 31, 2002 (incorporated herein by reference to
the Corporation's Report of Foreign Issuer on Form 6-K filed
on May 17, 2002 (SEC file no. 0-17434))
4.9 Management proxy circular of the Corporation dated April 2,
2002 in connection with the 2002 annual meeting of
shareholders of the Corporation, other than the sections
entitled "Executive Compensation -- Report of Compensation
Committee," "Executive Compensation -- Stock Performance
Graph" and "Corporate Governance" (incorporated herein by
reference to the Corporation's Report of Foreign Issuer on
Form 6-K filed on May 29, 2002 (SEC file no. 0-17434))
5.1 Consent of Deloitte & Touche, Chartered Accountants
5.2 Consent of McCarthy Tetrault LLP, Canadian counsel to
Registrant
6.1 Powers of Attorney for persons executing this Registration
Statement (incorporated herein by reference to the
Corporation's Registration Statement on Form F-10 filed on
June 4, 2002 (SEC file no. 333-89750))
</Table>
III-6