---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 20-F

[   ] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)
OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934or [X] ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended: May 31, 2011or
[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 or [   ] SHELL COMPANY REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:0-31092

MEDICURE INC.(Exact name of registrant as specified in its charter)

Canada
  (Jurisdiction of incorporation or organization)

2 - 1250 Waverley Street, Winnipeg, Manitoba, Canada R3T
6C6(Address of principal executive offices)

Dr. Albert D. Friesen, Tel: (204) 487-7412, Fax: (204)
488-98232 - 1250 Waverley Street, Winnipeg, Manitoba, Canada R3T
6C6(Name, Telephone, E-mail and/or Facsimile number and
Address of Company Contact Person)

Securities registered or to be registered pursuant to Section
12(b) of the Act: None

Securities registered or to be registered pursuant to Section
12(g) of the Act:

Common Shares, without par value(Title
of Class)

Securities for which there is a reporting obligation pursuant to
Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the
issuers classes of capital or common stock as of the close of the period
covered by the annual report:

At May 31, 2011 the registrant had 130,307,552 common shares
  issued and outstanding

---

2

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

If this report is an annual or transition report, indicate by
check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934. Yes [  
]    No [X]

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. **Yes [X]   
 No [   ]**

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

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act. (Check one):

|Large Accelerated Filer **[  
      ]** | Accelerated Filer
      **[   ]** | Non-Accelerated Filer
      **[X]**
|--------------------------------------- | --------------------------------- | -----------------------------------

Indicate by check mark which basis of accounting the registrant
has used to prepare the financial statements included in this filing:

|US GAAP **[   ]** | International Financial
      Reporting        | Other[X]
|----------------- | ---------------------------------------------- | --------
|                  | Standards as issued by the
      International |         
|                  | Accounting Standards
      Board **[   ]**     |         

If Other has been checked in response to the previous
question, indicate by check mark which financial statement item the registrant
has elected to follow: **Item 17 [X]     Item 18
[   ]**

If this is an annual report, indicate by check mark whether the
registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act).
Yes [   ]    No[X]

As of May 31, 2011, the rate for Canadian dollars was US $0.9688
for CND $1.00.

---

3

TABLE OF CONTENTS

|GLOSSARY
      OF TERMS                                             | 5 
|------------------------------------------------------------------- | --
|                                                                    |   
|FORWARD
      LOOKING STATEMENTS                                    | 5 
|                                                                    |   
|PART
      I                                                        | 8 
|                                                                    |   
|ITEM
      1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS | 8 
|A.
      Directors and Senior Management                            | 8 
|B.
      Advisers                                                   | 8 
|C.
      Auditors                                                   | 8 
|                                                                    |   
|ITEM
      2. OFFER STATISTICS AND EXPECTED TIMETABLE               | 8 
|                                                                    |   
|ITEM
      3. KEY INFORMATION                                       | 8 
|A.
      Selected Financial Data                                    | 8 
|B.
      Capitalization and Indebtedness                            | 11
|C.
      Reasons for the Offer and Use of Proceeds                  | 11
|D.
      Risk Factors                                               | 11
|                                                                    |   
|ITEM
      4. INFORMATION ON THE COMPANY                            | 23
|A.
      History and Development of the Company                     | 23
|B.
      Business Overview                                          | 24
|C.
      Organizational Structure                                   | 29
|D.
      Property, Plants and Equipment                             | 29
|                                                                    |   
|ITEM
      4A. UNRESOLVED STAFF COMMENTS                            | 29
|                                                                    |   
|ITEM
      5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS          | 30
|A.
      Operating Results                                          | 33
|B.
      Liquidity and Capital Resources                            | 37
|C.
      Research and Development, Patents and Licenses, Etc.       | 37
|D.
      Trend Information                                          | 41
|E.
      Off-balance Sheet Arrangements                             | 41
|F.
      Contractual Obligations                                    | 42
|                                                                    |   
|ITEM
      6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES            | 43
|A.
      Directors and Senior Management                            | 43
|B.
      Compensation                                               | 46
|C.
      Board Practices                                            | 46
|D.
      Employees                                                  | 53
|E.
      Share Ownership                                            | 53
|                                                                    |   
|ITEM
      7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS     | 55
|A.
      Major Shareholders                                         | 55
|B.
      Related Party Transactions                                 | 56
|C.
      Interests of Experts and Counsel                           | 57
|                                                                    |   
|ITEM
      8. FINANCIAL INFORMATION                                 | 57
|A.
      Consolidated Statements or Other Financial Information     | 57
|                                                                    |   
|ITEM
      9. THE OFFERING AND LISTING                              | 58
|A.
      Listing Details                                            | 58
|C.
      Markets                                                    | 59
|                                                                    |   
|ITEM
      10. ADDITIONAL INFORMATION                               | 59

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4

|A.
      Share Capital                                                                          | 59    
|----------------------------------------------------------------------------------------------- | ------
|B.
      Memorandum and Articles of Association                                                 | 59    
|C.
      Material Contracts                                                                     | 63    
|D.
      Exchange Controls                                                                      | 63    
|E.
      Taxation                                                                               | 64    
|F.
      Dividends and Paying Agents                                                            | 72    
|G.
      Statement by Experts                                                                   | 73    
|H.
      Documents on Display                                                                   | 73    
|I.
      Subsidiary Information                                                                 | 73    
|                                                                                                |       
|ITEM
      11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                       | 73    
|                                                                                                |       
|ITEM
      12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                           | 73    
|                                                                                                |       
|ITEM
      13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                                  | 73    
|                                                                                                |       
|ITEM
      14. MATERIAL MODIFICATIONS TO THE RIGHTS OF CURITY HOLDERS AND USE
      OF PROCEEDS | 74    
|                                                                                                |       
|ITEM
      15. CONTROLS AND PROCEDURES                                                          | 74    
|                                                                                                |       
|ITEM
      16. RESERVED                                                                         | 75    
|                                                                                                |       
|ITEM
      16A. AUDIT COMMITTEE FINANCIAL EXPERT                                                | 76    
|                                                                                                |       
|ITEM
      16B. CODE OF ETHICS                                                                  | 76    
|                                                                                                |       
|ITEM
      16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES                                          | 76    
|                                                                                                |       
|ITEM
    16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                        | **77**
|                                                                                                |       
|ITEM
      16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
      PURCHASERS    | 77    
|                                                                                                |       
|PART
      III                                                                                  | 78    
|                                                                                                |       
|ITEM
      17. FINANCIAL STATEMENTS                                                             | 78    
|                                                                                                |       
|ITEM
      18. FINANCIAL STATEMENTS                                                             | 79    
|                                                                                                |       
|ITEM
      19. EXHIBITS                                                                         | 79    
|                                                                                                |       
|Exhibit 12.1  Certification of CEO
      pursuant to Section 302                               |       
|                                                                                                |       
|Exhibit 12.2  Certification of CFO
      pursuant to Section 302                               |       
|                                                                                                |       
|Exhibit 13.1  Certification of CEO and
      CFO                                               |       
|                                                                                                |       
|Exhibit 23.1  Consent of Independent Registered Pubic Accounting Firm                          |       

---

5

GLOSSARY OF TERMS

The following words and phrases shall have the meanings set
forth below:

"angina"means chest pain;

"angioplasty"means an operation to repair a damaged
blood vessel or unblock an artery;

CABGmeans coronary artery bypass graft;

"FDA"means the United States Food and Drug
Administration;

"ischemia" means the lack of blood flow;

"myocardial infarction" means scarring and death to
portions of the heart wall;

"myocardial ischemia" means blockages to
  parts of the heart muscle;

"TPD" means the Canadian Therapeutic Products
Directorate, formerly the Canadian Health Protection Branch;

As used in this annual report, the Corporation or Company
refers to Medicure Inc., the Company resulting from the amalgamation of
Medicure Inc. and Lariat Capital Inc., and Medicure refers to Medicure Inc.
prior to its amalgamation with Lariat Capital Inc. unless otherwise indicated,
all references to dollar amounts in this annual report are to Canadian dollars.

FORWARD LOOKING STATEMENTS

Medicure Inc. cautions readers that certain important factors
(including without limitation those set forth in this Form 20-F) may affect the
Companys actual results in the future and could cause such results to differ
materially from any forward-looking statements that may be deemed to have been
made in this Form 20-F annual report, or that are otherwise made by or on behalf
of the Company. This Annual Report contains forward-looking statements and
information which may not be based on historical fact, which may be identified
by the words believes, may, plan, will, estimate, continue,
anticipates, intends, expects, and similar expressions and the negative of
such expressions. Such forward looking statements include, without limitation,
statements regarding:

- intention to sell and market its acute care cardiovascular drug,
  AGGRASTAT®(tirofiban hydrochloride) in the United States and its
  territories through the Company's U.S. subsidiary, Medicure Pharma Inc.;
- intention to develop and implement clinical, regulatory and other plans to
  generate an increase in the value of AGGRASTAT®;
- intention to develop TARDOXALTMfor neurological disorders;
- intention to investigate and advance certain other product opportunities;
- intention to obtain regulatory approval for the Company's products;
- expectations with respect to the cost of the testing and commercialization
  of the Company's products;

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6

- sales and marketing strategy;
- anticipated sources of revenue;
- intentions regarding the protection of the Company's intellectual property;
- business strategy; and
- intention with respect to dividends.

Such forward-looking statements and information involve a
number of assumptions as well as known and unknown risks, uncertainties and
other factors that may cause the actual results, events or developments to be
materially different from any future results, events or developments expressed
or implied by such forward-looking statements and information including, without
limitation:

- general business and economic conditions;
- the impact of changes in Canadian-US dollar and other foreign exchange
  rates on the Company's revenues, costs and results;
- the timing of the receipt of regulatory and governmental approvals for the
  Company's research and development projects;
- the ability of the Company to continue as a going concern;
- the availability of financing for the Company's commercial operations
  and/or research and development projects, or the availability of financing on
  reasonable terms;
- results of current and future clinical trials;
- the uncertainties associated with the acceptance and demand for new
  products;
- clinical trials not being unreasonably delayed and expenses not increasing
  substantially;
- government regulation not imposing requirements that significantly increase
  expenses or that delay or impede the Company's ability to bring new products
  to market;
- the Company's ability to attract and retain skilled staff;
- inaccuracies and deficiencies in the scientific understanding of the
  interaction and effects of pharmaceutical treatments when administered to
  humans;
- market competition;
- tax benefits and tax rates; and
- the Company's ongoing relations with its employees and with its business
  partners.

---

7

These factors should be considered carefully and readers are
cautioned not to place undue reliance on such forward-looking statements and
information. The Company disclaims any obligation to update any such factors or
to publicly announce the result of any revisions to any of the forward-looking
statements and information contained herein to reflect future results, events or
developments, except as otherwise required by applicable law. Additional risks
and uncertainties relating to the Company and its business can be found in the
Risk Factors section of this Annual Report.

---

8

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
ADVISERS

A. Directors and Senior Management

Not applicable

B. Advisers

Not applicable

C. Auditors

Not applicable

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable

ITEM 3. KEY INFORMATION

A. Selected Financial Data

The selected financial data of the Company as at May 31, 2011
and 2010 and for the fiscal years ended May 31, 2011, 2010 and 2009 was
extracted from the audited consolidated financial statements of the Company
included in this annual report on Form 20-F. The information contained in the
selected financial data is qualified in its entirety by reference to the more
detailed consolidated financial statements and related notes included in Item 17
- Financial Statements, and should be read in conjunction with such financial
statements and with the information appearing in Item 5 - Operating and
Financial Review and Prospects. The selected financial data as at May 31, 2009,
2008 and 2007 and for the fiscal years ended May 31, 2008 and 2007 was extracted
from the audited financial statements of the Company not included in this annual
report. Reference is made to Note 17 of the consolidated financial statements of
the Company included herein for a discussion of the material measurement
differences between Canadian GAAP and U.S. GAAP, and their effect on the
Companys financial statements. Except where otherwise indicated, all amounts
are presented in accordance with Canadian GAAP.

To date, the Company has not generated sufficient cash flow
from operations to fund ongoing operational requirements, debt service
obligations and cash commitments. The Company has financed its operations
principally through the net revenue received from the sale of
AGGRASTAT®, sale of its equity securities, the issue of warrants and
stock options, interest on excess funds held and the issuance of debt. As at May
31, 2011 the Company had significant debt servicing obligations that it did not
have the ability to repay without refinancing or restructuring and the Company
was in default of the terms of its long-term debt financing obligations. Under
an event of default, the lender could have exercised its security rights under
the agreement, and accordingly the long-term debt obligation has been classified
as a current liability as at May 31, 2011 as described in Note 8 to the
accompanying financial statements. On July 18, 2011, the long-term debt was
settled as described in Note 16 to the accompanying financial statements. The
Companys future operations are dependent upon its ability to maintain or grow
sales of AGGRASTAT®, and/or secure additional capital, which may not be
available under favourable terms, should these objectives not be achieved, the
Company will have to consider additional strategic alternatives which may
include, among other strategies, asset divestitures and/or monetization of
certain intangibles.

---

9

Under Canadian Generally Accepted Accounting Principles (in
Canadian dollars):

Balance Sheet Data
    
    May 31,
    
    
    May 31,
    
    
    May 31,
    
    
    May 31,
    
    
    May 31,2011
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007(as at period end)
    
    $
    
    
    $
    
    
    $
    
    
    $
    
    
    $Current Assets
    
    1,824,625
    
    
    1,489,440
    
    
    3,519,609
    
    
    14,402,736
    
    
    35,827,187Property and Equipment
    
    50,996
    
    
    68,752
    
    
    93,532
    
    
    132,887
    
    
    196,521Intangible Assets
    
    3,298,286
    
    
    4,414,882
    
    
    5,936,819
    
    
    8,353,610
    
    
    23,412,131Other Assets
    
    -
    
    
    -
    
    
    -
    
    
    11,916,000
    
    
    349,963Total Assets
    
    5,173,907
    
    
    5,973,074
    
    
    9,549,960
    
    
    34,805,233
    
    
    59,785,802Total Liabilities
    
    32,067,612
    
    
    30,929,727
    
    
    29,096,919
    
    
    41,361,393
    
    
    25,479,333Net Assets / (Deficiency)
    
    (26,893,705
    )
    
    (24,956,653
    )
    
    (19,546,959
    )
    
    (6,556,160
    )
    
    34,306,469Capital Stock, Warrants and Contributed Surplus
    
    129,202,210
    
    
    129,125,153
    
    
    129,002,341
    
    
    128,677,313
    
    
    112,137,421Deficit
    
    (156,095,915
    )
    
    (154,081,806
    )
    
    (148,549,300
    )
    
    (135,233,473
    )
    
    (77,830,952
    )Statement of Operations (for the fiscal
      year ended on)Product Sales
    
    3,628,274
    
    
    3,317,073
    
    
    4,792,513
    
    
    2,247,129
    
    
    5,944,730Interest and Other
    
    473
    
    
    4,913
    
    
    255,713
    
    
    1,149,574
    
    
    1,590,801IncomeLoss from Continuing Operations
    
    (2,014,109
    )
    
    (5,532,506
    )
    
    (13,315,827
    )
    
    (57,402,521
    )
    
    (31,703,386
    )Net Loss for the Period
    
    (2,014,109
    )
    
    (5,532,506
    )
    
    (13,315,827
    )
    
    (57,402,521
    )
    
    (31,703,386
    )Basic and Diluted Loss per Share Weighted-Average
    
    (0.02
    )
    
    (0.04
    )
    
    (0.10
    )
    
    (0.46
    )
    
    (0.30
    )Number of Common Shares Outstanding
    
    130,307,552
    
    
    130,307,552
    
    
    130,307,552
    
    
    125,476,086
    
    
    104,879,404


---

10

Under U.S. Generally Accepted Accounting Principles (in
Canadian dollars):

Balance Sheet Data
    
    May 31,
    
    
    May 31,
    
    
    May 31,
    
    
    May 31,
    
    
    May 31,2011
    
    
    2010
    
    
    200$9
    
    
    2008
    
    
    2007(as at Period end)
    
    $
    
    
    $
    
    
    
    
    
    $
    
    
    $Current Assets
    
    1,824,625
    
    
    1,489,440
    
    
    3,519,609
    
    
    14,402,736
    
    
    35,827,187Property and Equipment
    
    50,996
    
    
    68,752
    
    
    93,532
    
    
    132,887
    
    
    196,521Intangible Assets
    
    3,011,909
    
    
    3,845,916
    
    
    4,676,656
    
    
    5,510,661
    
    
    20,078,862Other Assets
    
    1,751,482
    
    
    2,014,801
    
    
    2,250,518
    
    
    14,470,081
    
    
    349,963Total Assets
    
    6,639,012
    
    
    7,418,909
    
    
    10,540,315
    
    
    34,516,365
    
    
    56,452,533Total Liabilities
    
    33,829,691
    
    
    32,982,499
    
    
    31,347,086
    
    
    43,915,123
    
    
    25,479,333Net Assets / (deficiency)
    
    (27,190,679
    )
    
    (25,563,590
    )
    
    (20,806,771
    )
    
    (9,398,758
    )
    
    30,973,200Capital Stock, warrants and Contributed Surplus
    
    136,381,144
    
    
    136,304,087
    
    
    145,246,995
    
    
    144,921,967
    
    
    128,382,255Deficit
    
    (163,571,823
    )
    
    (161,867,677
    )
    
    (166,053,766
    )
    
    (154,320,725
    )
    
    (97,409,055
    )Statement of OperationsProduct Sales
    
    3,628,274
    
    
    3,317,073
    
    
    4,792,513
    
    
    2,247,129
    
    
    5,944,730Interest and Other Income
    
    473
    
    
    4,913
    
    
    255,713
    
    
    1,149,574
    
    
    1,590,801Loss from Continuing Operations
    
    (1,704,146
    )
    
    (4,772,309
    )
    
    (11,733,041
    )
    
    (56,911,670
    )
    
    (32,114,817
    )Net Loss for the Period
    
    (1,704,146
    )
    
    (4,772,309
    )
    
    (11,733,041
    )
    
    (56,911,670
    )
    
    (32,114,817
    )Basic and Diluted Loss per Share
    
    (0.01
    )
    
    (0.04
    )
    
    (0.09
    )
    
    (0.45
    )
    
    (0.31
    )Weighted-Average Number of Common Shares Outstanding
    
    130,307,552
    
    
    130,307,552
    
    
    130,307,552
    
    
    125,476,086
    
    
    104,879,404


Dividends

No cash dividends have been declared nor are any intended to be
declared. The Company is not subject to legal restrictions respecting the
payment of dividends except that they may not be paid if the Company is, or
would after the payment be, insolvent. Dividend policy will be based on the
Company's cash resources and needs and it is anticipated that all available cash
will be required to further the Companys research and development activities
for the foreseeable future.

Exchange Rates

Unless otherwise indicated, all reference to dollar amounts are
to Canadian dollars. The following table sets out the exchange rates for one
Canadian dollar expressed in terms of one U.S. dollar for the periods indicated.
Rates of exchange are obtained from the Bank of Canada and believed by the
Registrant to approximate closely the noon buying rates in New York City for
cable transfers as certified for customs purposes by the Federal Reserve Bank in
New York.

May 31, 2011
    May 31, 2010
    May 31, 2009
    May 31, 2008
    May 31, 2007Period End
    0.9688
    0.9583
    0.9160
    1.0070
    0.9349Average
    0.9679
    0.9403
    0.8645
    0.9857
    0.8798


---

11

September
    August
    July
    June
    May
    April
    March2011
    2011
    2011
    2011
    2011
    2011
    2011(Sep. 1- 21)High for Period(1)
    1.0271
    1.0452
    1.0630
    1.0390
    1.0582
    1.0582
    1.0340Low for Period(1)
    0.9941
    1.0031
    1.0288
    1.0093
    1.0187
    1.0286
    1.0093


Notes: (1) Figures are extracted from daily exchange rates

As of September 21, 2011 the exchange rate to convert one
Canadian dollar into one U.S. dollar was 1.0059.

B. Capitalization and Indebtedness

Not applicable

C. Reasons for the Offer and Use of Proceeds

Not applicable

D. Risk Factors

The Companys business entails significant risks. In addition
to the usual risks associated with a business, the following is a general
description of certain significant risk factors which are applicable to the
Company.

Going concern risk

The accompanying consolidated financial statements have been
prepared on a going concern basis in accordance with Canadian generally accepted
accounting principles. The going concern basis of presentation assumes that the
Company will continue in operation for the foreseeable future and be able to
realize its assets and discharge its liabilities and commitments in the normal
course of business. There is significant doubt about the appropriateness of the
use of the going concern assumption because the Company has experienced
operating losses since incorporation.

The Company has experienced a loss of $2,014,109 for the year
ending May 31, 2011, and has accumulated a deficit of $156,095,915 as at May 31,
2011. The Companys future operations are dependent upon its ability to maintain
or grow sales of AGGRASTAT®, and/or secure additional capital, which may not be
available under favourable terms. Should these objectives not be achieved, the
Company will have to consider additional strategic alternatives which may
include, among other strategies, asset divestitures and/or monetization of
certain intangibles.

As at May 31, 2011 the Company had significant debt servicing
obligations that it did not have the ability to repay without refinancing or
restructuring and the Company was in default of the terms of its long-term debt
financing obligations. Under an event of default, the lender could have
exercised its security rights under the agreement, and accordingly the long-term
debt obligation has been classified as a current liability as at May 31, 2011
and 2010 as described in note 8 of the audited consolidated financial statements
for the year ended May 31, 2011. On July 18, 2011, the long-term debt was
settled as described in Note 16 of the audited consolidated financial statements
for the year ended May 31, 2011.

---

12

The financial statements do not reflect adjustments that would
be necessary if the going concern assumption were not appropriate. If the going
concern basis was not appropriate for these financial statements, then
adjustments would be necessary to the carrying value of assets and liabilities,
the reported revenues and expenses, and the balance sheet classifications used.

Prior to the acquisition of
AGGRASTAT®, the Company had no products in commercial
production or use. As such, the Company was considered to be a development-stage
enterprise for accounting purposes prior to the acquisition. The Company expects
to continue to incur losses and may never achieve profitability, which in turn
may harm its future operating performance and may cause the market price of its
stock to decline.

With the exception of AGGRASTAT®, the Companys
products are in the development stage and accordingly, its business operations
are subject to all of the risks inherent in the establishment and maintenance of
a developing business enterprise, such as those related to competition and
viable operations management.

The Company has incurred net losses every year since inception
in 1997. The Company incurred net losses of $2,014,109 for the year ended May
31, 2011, $5,532,506 for the year ended May 31, 2010, $13,315,827 for the year
ended May 31, 2009, $57,402,521 for the year ended May 31, 2008, and $31,703,386
for the year ended May 31, 2007.

The long-term profitability of the Companys operations is
uncertain, and may never occur. The Companys long-term profitability will be
directly related to its ability to develop a commercially viable drug product or
products. This in turn depends on numerous factors, including the following:

| | a) | the success of the Companys research and development
      activities, including its drug discovery, preclinical and clinical
      development programs;                              
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | b) | obtaining Canadian and United States regulatory approvals
      to market any of its lead products;                                                                                     
| | c) | the ability to contract for the manufacture of the
      Companys products according to schedule and within budget, given that it
      has no experience in large scale manufacturing;
| | d) | the ability to develop, implement and maintain
      appropriate systems and structures to market and operate within applicable
      regulatory, industry and legal guidelines;        
| | e) | the ability to successfully prosecute and defend its
      patents and other intellectual property; and                                                                                 
| | f) | the ability to successfully market the Companys products
      including AGGRASTAT®(tirofiban hydrochloride), given that it
      has limited resources.                               

If the Company does achieve profitability, it may not be able
to sustain or increase profitability in the future.

The Company may be exposed to short-term liquidity risk.

To a certain extent the Company relies on trade credit, as well
as cash from term debt and equity issues to provide the necessary short-term
financing to conduct the Companys research and development activities as well
as its commercial operations. Should suppliers and other creditors decline to
extend short-term credit to the Company in the future, it may have a material
adverse effect on the Companys business prospects, financial results and
financial condition.

---

13

Despite current indebtedness levels, the Company may still
be able to incur substantially more debt. This could further exacerbate the
risks associated with the Companys substantial leverage.

Despite current indebtedness levels, the Company may still be
able to incur substantial additional indebtedness in the future. As at May 31,
2011 the Company had significant debt servicing obligations that it did not have
the ability to repay without refinancing or restructuring and the Company was in
default of the terms of its long-term debt financing obligations. Under an event
of default, the lender could have exercised its security rights under the
agreement, and accordingly the long-term debt obligation has been classified as
a current liability as at May 31, 2011 and 2010 as described in note 8 of the
audited consolidated financial statements for the year ended May 31, 2011. On
July 18, 2011, the long-term debt was settled as described in Note 16 of the
audited consolidated financial statements for the year ended May 31, 2011.

The Company may never receive regulatory approval in Canada,
the United States or abroad for any of its products in development. Therefore,
the Company may not be able to sell any therapeutic products currently under
development.

The Companys failure to obtain necessary regulatory approvals
to fully market its current and future development stage products in one or more
significant markets may adversely affect its business, financial condition and
results of operations. The process involved in obtaining regulatory approval
from the competent authorities to market therapeutic products is long and costly
and may delay product development. The approval to market a product may be
applicable to a limited extent only or it may be refused entirely.

With the exception of AGGRASTAT®, all of the
Companys products are currently in the research and development stages. The
Company may never have another commercially viable drug product approved for
marketing. To obtain regulatory approvals for its products and to achieve
commercial success, human clinical trials must demonstrate that the products are
safe for human use and that they show efficacy. Unsatisfactory results obtained
from a particular study or clinical trial relating to one or more of the
Companys products may cause the Company to reduce or abandon its commitment to
that program.

If the Company fails to successfully complete its clinical
trials, it will not obtain approval from the U.S. Food and Drug Administration
(FDA) and other international regulatory agencies, to market its leading
products. Regulatory approvals also may be subject to conditions that could
limit the market its products can be sold in or make either products more
difficult or expensive to sell than anticipated. Also, regulatory approvals may
be revoked at any time for various reasons, including for failure to comply with
regulatory requirements or poor performance of its products in terms of safety
and effectiveness.

The Companys business, financial condition and results of
operations may be adversely affected if it fails to obtain regulatory approvals
in Canada, the United States and abroad to market and its products or any
current or future drug products, including any limitations imposed on the
marketing of such products.

The Company may not be able to hire or retain the qualified
scientific, technical and management personnel it requires.

The Companys business prospects and operations depend on the
continued contributions of certain of the Companys executive officers and other
key management and technical personnel, certain of whom would be difficult to
replace.

---

14

The Company subsidiary, Medicure International, Inc., has a
contract with CanAm Bioresearch Inc. (CanAm) to perform for it a significant
amount of its research and development activities. Because of the specialized
scientific nature of the Companys business, the loss of services of CanAm may
require the Company to attract and retain replacement qualified scientific,
technical and management personnel. Competition in the biotechnology industry
for such personnel is intense and the Company may not be able to hire or retain
a sufficient number of qualified personnel, which may compromise the pace and
success of its research and development activities.

Also, certain of the Companys management personnel are
officers and/or directors of other companies, some publicly-traded, and will
only devote part of their time to the Company. Although subsequent to May 31,
2011, the Company purchased key person insurance for Dr. Albert Friesen, Chief
Executive Officer, the Company does not have key person insurance in effect in
the event of a loss of any management, scientific or other key personnel. The
loss of the services of one or more of the Companys current executive officers
or key personnel or the inability to continue to attract qualified personnel
could have a material adverse effect on the Companys business prospects,
financial results and financial condition.

The Company faces substantial technological competition from
many biotechnology and pharmaceutical companies with much greater resources, and
it may not be able to effectively compete.

Technological and scientific competition in the pharmaceutical
and biotechnology industry is intense. The Company competes with other companies
in Canada, the United States and abroad to develop products designed to treat
similar conditions. Many of these other companies have substantially greater
financial, technical and scientific research and development resources,
manufacturing and production and sales and marketing capabilities than the
Company. Small companies may also prove to be significant competitors,
particularly through collaborative arrangements with large pharmaceutical and
biotechnology companies. Developments by other companies may adversely affect
the competitiveness of the Companys products or technologies or the commitment
of its research and marketing collaborators to its programs or even render its
products obsolete.

The pharmaceutical and biotechnology industry is characterized
by extensive drug discovery and drug research efforts and rapid technological
and scientific change. Competition can be expected to increase as technological
advances are made and commercial applications for biopharmaceutical products
increase. The Companys competitors may use different technologies or approaches
to develop products similar to the products which it is developing, or may
develop new or enhanced products or processes that may be more effective, less
expensive, safer or more readily available before or after the Company obtains
approval of its products. The Company may not be able to successfully compete
with its competitors or their products and, if it is unable to do so, the
Companys business, financial condition and results of operations may suffer.

The Company may be unable to establish collaborative and
commercial relationships with third parties.

The Companys success will depend partly on its ability to
enter into and to maintain various arrangements with corporate partners,
licensors, licensees and others for the research, development, clinical trials,
manufacturing, marketing, sales and commercialization of its products. These
relationships will be crucial to the Companys intention to license to or
contract with larger, international pharmaceutical companies the manufacturing,
marketing, sales and distribution of any products it may commercialize for
production. There can be no assurance that any licensing or other agreements
will be established on favourable terms, if at all. The failure to
establish successful collaborative arrangements may negatively impact the
Companys ability to develop and commercialize its products, and may adversely
affect its business, financial condition and results of operations.

---

15

The Company has licensed certain technologies relating to
products under development and may enter into future licensing agreements. The
Companys current licensing agreements contain provisions allowing the licensors
to terminate such agreements if it becomes insolvent or breach the terms and
conditions of the licensing agreements without rectifying such event of default
in accordance with the agreement terms.

The Company is currently dependent on its remaining
inventory of its sole commercial product, AGGRASTAT®and does
not have in place a qualified supplier of raw material used in the manufacture
of AGGRASTAT®.

Subsequent to May 31, 2011, the Companys subsidiary, Medicure
International, Inc., acquired a significant quantity of the raw material used in
the manufacture of AGGRASTAT®and terminated its supply contract with
its sole supplier of the raw material for AGGRASTAT®. In addition,
Medicure International, Inc. sold drug substance from inventory on hand to a
third party as described in Note 16 of the audited consolidated financial
statements for the year ended May 31, 2011. The Companys subsidiary, Medicure
Pharma, Inc., also has a third party manufacturer of the final product
AGGRASTAT®and that supply arrangement is due to expire on July 1,
2012. If the supply of raw material or the manufacturing agreement for
AGGRASTAT® is terminated or interrupted, or if the Company and its
subsidiaries are unable to establish new or maintain existing third party
manufacturers, or if the inventories of AGGRASTAT® currently held are
contaminated or otherwise lost, and the Company was unable to obtain a
replacement supplier or manufacturer, it could have a material adverse effect on
the Companys business prospects, financial results and financial condition.

The Company may fail to obtain acceptable prices or
appropriate reimbursement for its products and its ability to successfully
commercialize its products may be impaired as a result.

Government and insurance reimbursements for healthcare
expenditures play an important role for all healthcare providers, including
physicians, medical device companies, drug companies, medical supply companies,
and companies, such as the Company, that plan to offer various products in the
United States and other countries in the future. The Companys ability to earn
sufficient returns on its products will depend in part on the extent to which
reimbursement for the costs of such products, related therapies and related
treatments will be available from government health administration authorities,
private health coverage insurers, managed care organizations, and other
organizations. In the United States, the Companys ability to have its products
and related treatments and therapies eligible for Medicare or private insurance
reimbursement will be an important factor in determining the ultimate success of
its products. If, for any reason, Medicare or the insurance companies decline to
provide reimbursement for the Companys products and related treatments, the
Companys ability to commercialize its products would be adversely affected.
There can be no assurance that the Companys products and related treatments
will be eligible for reimbursement.

There has been a trend toward declining government and private
insurance expenditures for many healthcare items. Third-party payers are
increasingly challenging the price of medical products and services.

If purchasers or users of the Companys products and related
treatments are not able to obtain appropriate reimbursement for the cost of
using such products and related treatments, they may forgo or reduce such use.
Even if the Companys products and related treatments are approved for
reimbursement by Medicare and private insurers, of which there can be no assurance, the
amount of reimbursement may be reduced at times, or even eliminated. This would
have a material adverse effect on the Companys business, financial condition,
and results of operations.

---

16

Significant uncertainty exists as to the reimbursement status
of newly approved healthcare products, and there can be no assurance that
adequate third-party coverage will be available.

The Company does not have manufacturing experience and has
limited marketing resources and may never be able to successfully manufacture or
market certain of its products.

The Company has no experience in commercial manufacturing and
has limited resources for marketing or selling its products. The Company may
never be able to successfully manufacture and market certain of its products. If
any other of its products are approved for sale, the Company intends to contract
with and rely on third parties to manufacture, and possible to market and sell
its products. Accordingly, the quality, timing and ultimately the commercial
success of such products may be outside of the Companys control. Failure of or
delay by a third party manufacturer of the Companys products to comply with
good manufacturing practices or similar quality control regulations or satisfy
regulatory inspections may have a material adverse effect on its future
prospects. Failure of or delay by a third party in the marketing or selling of
the Companys products or failure of the Company to successfully market and sell
such products likewise may have a material adverse effect on its future
prospects.

The Company has limited product liability insurance and may
not be able to obtain adequate product liability insurance in the future.

The sale and use of the Companys commercial and development
products , and the conduct of clinical studies involving human subjects, may
entail product and professional liability risks, which are inherent in the
testing, production, marketing and sale of new drugs to humans. While the
Company has taken, and will continue to take, what it believes are appropriate
precautions, there can be no assurance that it will avoid significant liability
exposure. Although the Company currently carries product liability insurance for
clinical trials, there can be no assurance that it has sufficient coverage, or
can in the future obtain sufficient coverage at a reasonable cost. An inability
to obtain insurance on economically feasible terms or to otherwise protect
against potential product liability claims could inhibit or prevent the
commercialization of products developed by the Company. The obligation to pay
any product liability claim or recall a product may have a material adverse
effect on its business, financial condition and future prospects. In addition,
even if a product liability claim is not successful, adverse publicity and the
time and expense of defending such a claim may significantly interfere with the
Companys business.

If the Company is unable to successfully protect its
proprietary rights, its competitive position will be adversely affected.

The Companys success will depend partly on its ability to
obtain and protect its patents and protect its proprietary rights in unpatented
trade secrets.

The Company owns or jointly owns numerous patents from the
United States Patent Office and other jurisdictions. The Company has additional
pending United States patent applications along with applications pending in
other jurisdictions. The Companys pending and any future patent applications
may not be accepted by the United States Patent and Trademark Office or any
other jurisdiction in which applications may be filed. Also, processes or
products that may be developed by the Company in the future may not be
patentable.

---

17

The patent protection afforded to biotechnology and
pharmaceutical companies is uncertain and involves many complex legal,
scientific and factual questions. There is no clear law or policy involving the
degree of protection afforded under patents. As a result, the scope of patents
issued to the Company may not successfully prevent third parties from developing
similar or competitive products. Competitors may develop similar or competitive
products that do not conflict with the Companys patents. Litigation may be
commenced by the Company to prevent infringement of its patents. Litigation may
also commence against the Company to challenge its patents that, if successful,
may result in the narrowing or invalidating of such patents. It is not possible
to predict how any patent litigation will affect the Companys efforts to
develop, manufacture or market its products. However, the cost of litigation to
prevent infringement or uphold the validity of any patents issued to the Company
may be significant, in which case its business, financial condition and results
of operations may suffer. Patents provide protection for only a limited period
of time, and much of such time can occur well before commercialization
commences.

Disclosure and use of the Companys proprietary rights in
unpatented trade secrets not otherwise protected by patents are generally
controlled by written agreements. However, such agreements will not provide the
Company with adequate protection if they are not honoured, others independently
develop an equivalent technology, disputes arise concerning the ownership of
intellectual property, or its trade secrets are disclosed improperly. To the
extent that consultants or other research collaborators use intellectual
property owned by others in their work with the Company, disputes may also arise
as to the rights to related or resulting know-how or inventions.

Others could claim that the Company infringes on their
proprietary rights, which may result in costly, complex and time consuming
litigation.

The Companys success will depend partly on its ability to
operate without infringing upon the patents and other proprietary rights of
third parties. The Company is not currently aware that any of its products or
processes infringes the proprietary rights of third parties. However, despite
its best efforts, the Company may be sued for infringing on the patent or other
proprietary rights of third parties at any time in the future.

Such litigation, with or without merit, is time-consuming and
costly and may significantly impact the Companys financial condition and
results of operations, even if it prevails. If the Company does not prevail, it
may be required to stop the infringing activity or enter into a royalty or
licensing agreement, in addition to any damages it may have to pay. The Company
may not be able to obtain such a license or the terms of the royalty or license
may be burdensome for it, which may significantly impair the Companys ability
to market its products and adversely affect its business, financial condition
and results of operations.

The Company is subject to stringent governmental regulation,
in the future may become subject to additional regulations and if it is unable
to comply, its business may be materially harmed.

Biotechnology, medical device, and pharmaceutical companies
operate in a high-risk regulatory environment. The FDA and other national health
agencies can be very slow to approve a product and can also withhold product
approvals. In addition, these health agencies also oversee many other medical
product operations, such as research and development, manufacturing, and testing
and safety regulation of medical products. As a result, regulatory risk is
normally higher than in other industry sectors.

The Company is or may become subject to various federal,
provincial, state and local laws, regulations and recommendations. The Company
is subject to various laws and regulations in Canada, relating to product emissions, use and disposal of hazardous or toxic
chemicals or potentially hazardous substances, infectious disease agents and
other materials, and laboratory and manufacturing practices used in connection
with its research and development activities. If the Company fails to comply
with these regulations, it may be fined or suffer other consequences that could
materially affect its business, financial condition or results of operations.

---

18

The pharmaceutical sales and marketing industry within which
the Company operates is a complex legal and regulatory environment. The failure
to comply with applicable laws, rules and regulations may result in civil and
criminal legal proceedings. As those rules and regulations change or as
governmental interpretation of those rules and regulations evolve, prior conduct
may be called into question. The Company may become subject of federal and/or
state governmental investigations into pricing, marketing, and reimbursement of
its prescription drug product. Any such investigation could result in related
restitution or civil litigation on behalf of the federal or state governments,
as well as related proceedings initiated against the Company by or on behalf of
consumers and private payers. Such proceedings may result in trebling of damages
awarded or fines in respect of each violation of law. Criminal proceedings may
also be initiated against the Company. Any of these consequences could
materially and adversely affect the Companys financial results.

The Company is unable to predict the extent of future
government regulations or industry standards. However, it should be assumed that
government regulations or standards will increase in the future. New regulations
or standards may result in increased costs, including costs for obtaining
permits, delays or fines resulting from loss of permits or failure to comply
with regulations.

The Companys products may not gain market acceptance, and
as a result it may be unable to generate significant revenues.

Except with respect to AGGRASTAT®, the Company does
not currently have the required clinical data and results to successfully market
its product candidates in any jurisdiction; future clinical or preclinical
results may be negative or insufficient to allow it to successfully market any
of its product candidates; and obtaining needed data and results may take longer
than planned, and may not be obtained at all.

Even if the Companys products are approved for sale, they may
not be successful in the marketplace. Market acceptance of any of the Companys
products will depend on a number of factors, including demonstration of clinical
effectiveness and safety; the potential advantages of its products over
alternative treatments; the availability of acceptable pricing and adequate
third-party reimbursement; and the effectiveness of marketing and distribution
methods for the products. Providers, payors or patients may not accept the
Companys products, even if they prove to be safe and effective and are approved
for marketing by the FDA and other national regulatory authorities. The Company
anticipates that it will take many years before its initial products may be sold
commercially. If the Companys products do not gain market acceptance among
physicians, patients, and others in the medical community, its ability to
generate significant revenues from its products would be limited.

The Company may not achieve its projected development goals
in the time frames it announces and expects.

The Company sets goals for and may from time to time make
public statements regarding timing of the accomplishment of objectives material
to its success, such as the commencement and completion of clinical trials,
anticipated regulatory approval dates, and timing of product launch. The actual
timing of these events can vary dramatically due to factors such as delays or
failures in the Companys clinical trials, the uncertainties inherent in the
regulatory approval process, and delays in achieving product development,
manufacturing or marketing milestones necessary to commercialize its products.
There can be no assurance that the Companys clinical trials will be
completed, that it will make regulatory submissions or receive regulatory
approvals as planned, or that it will be able to adhere to its current schedule
for the scale-up of manufacturing and launch of any of its products. If the
Company fails to achieve one or more of these milestones as planned, that could
materially affect its business, financial condition or results of operations and
the price of its common shares could decline.

---

19

The Companys business involves the use of hazardous
material, which requires it to comply with environmental regulations.

The Companys research and development processes and commercial
activities may involve the controlled storage, use, and disposal of hazardous
materials and hazardous biological materials. The Company is subject to laws and
regulations governing the use, manufacture, storage, handling, and disposal of
such materials and certain waste products. Although the Company believes that
its safety procedures for handling and disposing of such materials comply with
the standards prescribed by such laws and regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated. In
the event of such an accident, the Company could be held liable for any damages
that result, and any such liability could exceed its resources. There can be no
assurance that the Company will not be required to incur significant costs to
comply with current or future environmental laws and regulations, or that its
business, financial condition, and results of operations will not be materially
or adversely affected by current or future environmental laws or regulations.

The Companys insurance may not provide adequate coverage with
respect to environmental matters.

Environmental regulation could have a material adverse
effect on the results of the Companys operations and its financial position.

The Company is subject to a broad range of environmental
regulations imposed by federal, state, provincial, and local governmental
authorities. Such environmental regulation relates to, among other things, the
handling and storage of hazardous materials, the disposal of waste, and the
discharge of contaminants into the environment. Although the Company believes
that it is in material compliance with applicable environmental regulation, as a
result of the potential existence of unknown environmental issues and frequent
changes to environmental regulation and the interpretation and enforcement
thereof, there can be no assurance that compliance with environmental regulation
or obligations imposed thereunder will not have a material adverse effect on the
Company in the future.

The Company is exposed to foreign exchange movements since
the majority of its debt financing and its commercial sales operations are
denominated in U.S. currency.

The majority of the Companys sales revenues and a substantial
portion of its selling, general and administrative expenses are denominated in
U.S. dollars. The Company does not utilize derivatives, such as foreign currency
forward contracts and futures contracts, to manage its exposure to currency risk
and as a result a change in the value of the Canadian dollar against the U.S.
dollar could have a negative impact on the Companys business prospects,
financial results and financial condition. As well, at May 31, 2011, the Company
had US$47.2 million of future debt service obligations (minimum payments), which
was subsequently settled.

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20

The Company may need to raise additional capital through the
sale of its securities, resulting in dilution to its existing shareholders. Such
funds may not be available, or may not be available on reasonable terms,
adversely affecting the Companys operations.

The Company has limited financial resources and has financed
much of its operations through the sale of securities, primarily common shares.
The Company has significant on-going cash expenses and limited ability to
generate cash from operations. To meet its on-going cash needs the Company may
need to continue its reliance on the sale of such securities for future
financing, resulting in dilution to its existing shareholders. The Companys
long-term capital requirements may be notably significant and will depend on
many factors, including continued scientific progress in its product discovery
and development program, progress in the maintenance and expansion of its sales
and marketing capabilities, progress in its pre-clinical and clinical evaluation
of products and product candidates, time and expense associated with filing,
prosecuting and enforcing its patent claims and costs associated with obtaining
regulatory approvals. In order to meet such capital requirements, the Company
will consider contract fees, collaborative research and development
arrangements, public financing or additional private financing (including the
issuance of additional equity securities) to fund all or a part of particular
programs.

The Companys business, financial condition and results of
operations will depend on its ability to obtain additional financing which may
not be available under favourable terms, if at all. The Companys ability to
arrange such financing in the future will depend in part upon the prevailing
capital market conditions as well as its business performance. Where additional
financing is available, the Company may be required to obtain approval for the
Companys shareholders. Such approval may not be provided.

If its capital resources are exhausted and adequate funds are
not available, the Company may have to reduce substantially or eliminate
expenditures for research and development, testing, production and marketing of
its proposed products, or obtain funds through arrangements with corporate
partners that require it to relinquish rights to certain of its technologies or
products.

Future issuance of the Companys common shares will result
in dilution to its existing shareholders. Additionally, future sales of the
Companys common shares into the public market may lower the market price which
may result in losses to its shareholders.

As of May 31, 2011, the Company had 130,307,552, common shares
issued and outstanding. A further 2,322,192 common shares are issuable upon
exercise of outstanding stock options and another 9,358,521 common shares are
issuable upon exercise of share purchase warrants, all of which may be exercised
in the future resulting in dilution to the Companys shareholders. The Companys
stock option plan allows for the issuance of stock options to purchase up to a
maximum of 10% of the outstanding common shares at any time.

On July 18, 2011, the Company issued 52,640,043 shares and
12,542,000 stock options in conjunction with transactions announced on that date
as described in Note 16 to the audited consolidated financial statements for the
year ended May 31, 2011.

Sales of substantial amounts of the Companys common shares
into the public market, or even the perception by the market that such sales may
occur, may lower the market price of its common shares.

The Companys common shares may experience extreme price and
volume volatility which may result in losses to its shareholders.

On May 31, 2011, the Companys common shares closed at a price
of CDN$0.02 on the NEX board of the TSX Venture Exchange (NEX). For the period
from June 1, 2010 to May 31, 2011, the high and low trading prices of the Companys common shares were CDN$0.03
and CDN$0.005, respectively, with a total trading volume of 27,386,211 shares.
The Companys shares were delisted from Amex on July 3, 2008 and from the TSX on
March 26, 2010.

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21

Daily trading volume on the TSX of the Companys common shares
for the period from June 1, 2010 to May 31, 2011 has fluctuated, with a high of
2,023,365 shares and a low of nilshares, averaging approximately 107,941
shares. Accordingly, the trading price of the Companys common shares may be
subject to wide fluctuations in response to a variety of factors including
announcement of material events by the Company, such as the status of required
regulatory approvals for its products, competition by new products or new
innovations, fluctuations in its operating results, general and
industry-specific economic conditions and developments pertaining to patent and
proprietary rights. The trading price of the Companys common shares may be
subject to wide fluctuations in response to a variety of factors and/or
announcements concerning such factors, including:

- actual or anticipated period-to-period fluctuations in financial results;
- litigation or threat of litigation;
- failure to achieve, or changes in, financial estimates of individual
  investors and/or by securities analysts;
- new or existing products or services or technological innovations by the
  Company or its competitors;
- comments or opinions by securities analysts or major shareholders;
- conditions or trends in the pharmaceutical, biotechnology and life science
  industries;
- significant acquisitions, strategic partnerships, joint ventures or capital
  commitments;
- results of, and developments in, the Companys research and development
  efforts, including results and adequacy of, and developments in, its clinical
  trials and applications for regulatory approval;
- additions or departures of key personnel;
- sales of the Companys common shares, including by holders of the notes on
  conversion or repayment by the Company in common shares;
- economic and other external factors or disasters or crises;
- limited daily trading volume; and
- developments regarding the Companys patents or other intellectual property
  or that of its competitors.

In addition, the securities markets in the United States and
Canada have recently experienced a high level of price and volume volatility,
and the market price of securities of biotechnology companies have experienced
wide fluctuations in price which have not necessarily been related to the
operating performance, underlying asset values or prospects of such
companies.

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22

There may not be an active, liquid market for the Companys
common shares.

On March 26, 2010, the Companys common shares were delisted
from the TSX due to the Companys current inability to meet continued listing
requirements. On March 29, 2010, the Companys common shares commenced trading
on the NEX board of the TSX Venture Exchange under the symbol MPH.H. The
transfer in stock exchange listing to the NEX was designed to ensure continuous
trading and continued liquidity for the Companys shareholders.

The Companys shares ceased trading on the Amex effective July
3, 2008.

There is no guarantee that an active trading market for the
Companys common shares will be maintained on the NEX. Investors may not be able
to sell their shares quickly or at the latest market price if trading in its
common shares is not active.

If there are substantial sales of the Companys common
shares, the market price of its common shares could decline.

Sales of substantial numbers of the Companys common shares
could cause a decline in the market price of its common shares. Any sales by
existing shareholders or holders of options or warrants may have an adverse
effect on the Companys ability to raise capital and may adversely affect the
market price of its common shares.

The Company has no history of paying dividends, does not
intend to pay dividends in the foreseeable future and may never pay dividends.

Since incorporation, the Company has not paid any cash or other
dividends on its common shares and does not expect to pay such dividends in the
foreseeable future as all available funds will be invested to finance the growth
of its business. The Company will need to achieve profitability prior to any
dividends being declared, which may never happen.

If the Company is classified as a passive foreign
investment Company for United States income tax purposes, it could have
significant and adverse tax consequences to United States holders of its common
shares.

The Company does not believe that it was a passive foreign
investment Company for the taxable year ended May 31, 2011, and does not expect
that it will be a passive foreign investment Company (PFIC) for the taxable
year ending May 31, 2012. (See more detailed discussion in Item 10 E  Taxation)
However, there can be no assurance that the IRS will not challenge the
determination made by the Company concerning its passive foreign investment
Company status or that the Company will not be a passive foreign investment
Company for the current taxable year or any subsequent taxable year.
Accordingly, although the Company expects that it may be a QFC for the taxable
year ending May 31, 2012, there can be no assurances that the IRS will not
challenge the determination made by the Company concerning its QFC status, that
the Company will be a QFC for the taxable year ending May 31, 2012 or any
subsequent taxable year, or that the Company will be able to certify that it is
a QFC in accordance with the certification procedures issued by the Treasury and
the IRS.

The Companys classification as a PFIC could have significant
  and adverse tax consequences for United States holders of its common shares.

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23

The Company has adopted a shareholder rights plan.

The Company has adopted a shareholder rights plan. The
provisions of such plan could make it more difficult for a third party to
acquire a majority of the Companys outstanding common shares, the effect of
which may be to deprive the Companys shareholders of a control premium that
might otherwise be realized in connection with an acquisition of its common
shares.

Risks associated with Material weaknesses within the
Companys financial reporting and review process

In connection with its review of the Companys internal control
over financial Reporting, the Company has identified material weaknesses with
the Companys financial reporting and review process, involving the preparation
and review of the reconciliation from Canadian GAAP to United States GAAP, the
accounting and reporting for complex transactions due limited staff and the
resignation of the Companys Chief Financial Officer subsequent to year-end
resulting in procedures over the year-end close process not operating
effectively. Based on such determination, the Companys management concluded
that the Companys internal control over financial reporting was not effective
as of May 31, 2011. The Company either plans to ensure adequate personnel are
available with the necessary training and expertise or rely on an external third
party to provide this control. In addition, the Company appointed a new Chief
Financial Officer on September 22, 2011. Any failure to remediate the material
weaknesses, to implement the required new or improved control, or difficulties
encountered in the implementation, could cause the Company to fail to meet its
reporting obligations on a timely basis or result in material misstatements in
the annual or interim financial statements. Inadequate internal control over
financial reporting could also cause investors to lose confidence in the
Companys reported financial information, which could cause the Companys stock
price to decline.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

On December 22, 1999, the Company was formed by the
amalgamation of Medicure Inc. with Lariat Capital Inc. pursuant to the
provisions of the Business Companys Act (Alberta). The Company was
continued from Alberta to the federal jurisdiction by Certificate of Continuance
issued pursuant to the provisions of the Canada Business Companys Acton
February 23, 2000.

The Companys current legal and commercial name is Medicure
Inc. and its current registered office is 30th Floor, 360 Main
Street, Winnipeg, Manitoba, Canada, R3C 4G1, Phone (204) 487-7412. The Companys
head office is located at 2-1250 Waverley Street, Winnipeg, Manitoba, Canada,
R3T 6C6.

In August 2006, the Company acquired the U.S. rights to its
first commercial product, AGGRASTAT® Injection (tirofiban
hydrochloride) in the United States and its territories (Puerto Rico, Virgin
Islands and Guam) for US$19,000,000.

In September 2007, the Company monetized a percentage of its
current and potential future commercial revenues by entering into a debt
financing agreement with Birmingham Associates Ltd. (Birmingham), an affiliate
of Elliott Associates, L.P. (Elliott) for proceeds of US$25 million (See Item 5
B  Liquidity and Capital Resources).

In February 2008, the Company announced that its pivotal Phase
III MEND-CABG II clinical trials with MC-1 did not meet the primary endpoint and
as a result was not sufficient to support the filings. As a result, the Company
announced a restructuring plan that resulted in the organization reducing its
head count by approximately 50 employees and full-time consultants.
The restructuring and downsizing in March 2008 conserved capital for ongoing
operations.

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In fiscal 2009, the Company continued to focus on the sale and
marketing of AGGRASTAT® and on focusing its research and development
activities on the development of TARDOXALTM, for Tardive Dyskinesia,
and MC-1 for chronic cardiovascular disorders, and exploring further cost
savings measures. All these initiatives were initiated due to the restructuring
plan announced towards the end of fiscal 2008. These activities assisted in
further reducing the Companys use of capital, in particular its investment in
research and development programs but have moved forward certain programs on a
limited and focused fashion such as the Phase II clinical study of
TARDOXALTM for the treatment of Tardive Dyskinesia.

Since that time and up until the current date, further
organizational charges have been undertaken to further reduce expenses and find
operational efficiencies. The Companys ability to continue in operation for the
foreseeable future remains dependent upon the effective execution of its
business development and strategic plans, and on maintaining adequate working
capital, whether by means of financing, debt, revenue and further cost control
measures. As at May 31, 2011 the Company had significant debt servicing
obligations that it did not have the ability to repay without refinancing or
restructuring and the Company was in default of the terms of its long-term debt
financing obligations. Under an event of default, the lender could have
exercised its security rights under the agreement, and accordingly the long-term
debt obligation has been classified as a current liability as at May 31, 2011.
On July 18, 2011, the Company settled its long-term debt to Birmingham in
exchange for; i) $4,750,000 in cash; ii) 32,640,043 common shares of the
Company; and iii) a royalty on future AGGRASTAT® sales until 2023.
The royalty is based on four percent of the first $2,000,000 of quarterly
AGGRASTAT® sales and increases on sales exceeding that amount.

B. Business Overview

Plan of OperationMedicure is a specialty
pharmaceutical company engaged in the research, clinical development and
commercialization of human therapeutics. The Companys primary operating focus
is on the sale and marketing of its acute care cardiovascular drug,
AGGRASTAT® (tirofiban hydrochloride) owned by its subsidiary,
Medicure International, Inc. and distributed in the United States and its
territories through the Companys U.S. subsidiary, Medicure Pharma, Inc. The
Companys research and development program is focused on developing new plans
related to AGGRASTAT® and, secondly, on the clinical development of
TARDOXALTM for neurological disorders. The Company also continues to
explore certain other product opportunities.

Strategic changes made over the past year, coupled with focused
capital conservation efforts, have assisted the Company in reducing its use of
capital. The Company's ability to continue in operation for the foreseeable
future remains dependent upon the effective execution of its business
development and strategic plans. The Company estimates it has sufficient working
capital and revenue to fund ongoing operations. On July 18, 2011, the Company
settled its existing long-term debt.

The ongoing focus of the Company and its primary asset of
interest is AGGRASTAT® (tirofiban HCl). In parallel with the
Companys ongoing commitment to support the product, its valued customers and
the continuing efforts of the commercial organization, the Company is in the
process of developing and implementing a new regulatory, brand and life cycle
management strategy for AGGRASTAT®. The objective of this effort is
to further expand AGGRASTAT®s share of, the US $400 million
glycoprotein IIb/IIIa (GP IIb/IIIa) inhibitor market. GP llb/lla inhibitors are
injectable platelet inhibitors used to treat acute coronary syndromes and
related conditions and procedures.

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Recent Developments

- Sale of inventory:On July 6, 2011, the Company entered into
  an agreement with Iroko Cardio, LLC ("Iroko") to advance AGGRASTAT® in each of
  Medicure and Iroko's respective territories. Iroko owns rights to AGGRASTAT®
  outside of the Company's territory. Under the terms of the agreement, the
  Company transferred to Iroko AGGRASTAT® drug substance from inventory on hand
  and the rights to purchase additional quantities from a third party. In turn,
  Iroko paid Medicure International Inc. US$1,059,000 on July 6, 2011 and will
  pay an additional US$850,000 on or before November 1, 2011, subject to certain
  conditions. In addition, Iroko made available to the Company certain
  analytical methods for testing of AGGRASTAT® drug product and provided the
  Company the option to obtain certain data used by Iroko to obtain changes to
  the approved use of AGGRASTAT® in Europe. If the Company exercises its option
  to obtain the data and is successful in getting changes to the approved use of
  AGGRASTAT® in the United States, Iroko will be entitled to receive a royalty
  of up to US$3.5 million on future AGGRASTAT® sales based on a percentage of
  sales.
- Debt settlement and related transactions:On July 18, 2011,
  the Company settled its long-term debt to Birmingham Associates Ltd. in
  exchange for; i) $4,750,000 in cash; ii) 32,640,043 common shares of the
  Company; and iii) a royalty on future AGGRASTAT®sales until 2023.
  The royalty is based on four percent of the first $2,000,000 of quarterly
  AGGRASTAT®sales and increases on sales exceeding that
  amount.In addition, the Company borrowed $5,000,000 from the
  Government of Manitoba, under the Manitoba Industrial Opportunities Program.
  The loan bears interest annually at the crown company borrowing rate and
  matures on July 1, 2016. The loan repayment schedule is interest only for the
  first 24 months, with blended principal and interest payments made monthly
  thereafter until maturity. The loan is secured by the Company's assets and
  guaranteed by the Companys Chief Executive Officer, and entities controlled
  by the Chief Executive Officer. The Company issued 20,000,000 common shares of
  the Company in consideration for this guarantee to the Companys Chief
  Executive Officer and entities controlled by the Chief Executive Officer. The
  Company relied on the financial hardship exemption from the minority approval
  requirement of Multilateral Instrument (MI) 61-101. Specifically, pursuant to
  MI 61-101, minority approval is not required for a related party transaction
  in the event of financial hardship in specified
  circumstances.Additionally, the Company renewed its consulting
  agreement with its Chief Executive Officer for a term of five years, at a rate
  of $180,000 annually.
- Stock options:On July 18, 2011, the Company issued
  12,542,000 stock options under the Company's approved stock option plan to
  employees and consultants of the Company, including the chief executive
  officer and chief operating officer, at an exercise price of $0.10 per common
  share. The options vest immediately and expire after ten years.

Commercial:

In fiscal 2007, the Company acquired the U.S. rights to its
first commercial product, AGGRASTAT® Injection (tirofiban
hydrochloride), in the United States and its territories (Puerto Rico, Virgin
Islands, and Guam). AGGRASTAT®, a glycoprotein GP IIb/IIIa
receptor antagonist, is used for the treatment of acute coronary syndrome (ACS)
including unstable angina, which is characterized by chest pain when one is at
rest, and non-Q-wave myocardial infarction (MI). The Company continues to
support the product through its home office and a small, dedicated field force
of cardiovascular specialists employed under the Companys US subsidiary,
Medicure Pharma Inc.

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Net revenue from the sale of AGGRASTAT® for the year
ended May 31, 2011 increased 9% over the net revenue for the year ended May 31,
2010. All of the Companys sales are denominated in US dollars. The increase is
attributable to an increase in wholesale purchasing of AGGRASTAT®, a
reduction in hospital discounts and fluctuations in foreign currency exchange
rates. Although wholesale purchasing generally reflects hospital demand, it is
also subject to fluctuations attributed to wholesaler inventory adjustments.

Going forward and contingent on sufficient finances being
available, the Company plans to explore opportunities to further expand revenue
through strategic investments related to AGGRASTAT® and the
acquisition of other niche products that fit the commercial organization.

Research and Development:

The Companys primary ongoing research and development activity
is the development and implementation of a new regulatory, brand and life cycle
management strategy for AGGRASTAT®. The extent to which the Company
is able to invest in this plan is dependent upon the availability of sufficient
finances.

The Companys primary, non-AGGRASTAT® research and
development activity is TARDOXALTM for the treatment of Tardive
Dyskinesia ("TD"). This program evolved from Medicures extensive clinical
experience with MC-1, a naturally occurring small molecule, for cardiovascular
conditions. A modest amount of capital is being used for an ongoing Phase II
clinical study of TARDOXALTM. The Company is interested in
out-licensing its library of small molecule antithrombotic drugs.

The following table summarizes the Companys research and
development programs, their therapeutic focus and their stage of development.

Product Candidate
    Therapeutic focus
    Stage of DevelopmentAGGRASTAT®
    Acute Cardiology
    Phase III/IV - planningTARDOXALTM
    TD/Neurological indications
    Phase II - enrolling patientsMC-45308
    Thrombosis reduction
    Discovery - pursuing partnership


The TARDOXALTM program benefits from over 10 years
of work that Medicure invested in the advancement of this compound, including
extensive human clinical testing in unrelated cardiovascular conditions and
other pre-clinical, formulation, manufacturing and safety research and
development. The Company believes the information and physical assets resulting
from this activity are a valuable asset that will reduce costs and also speed
development of this molecule for application to TD.

The development of MC-1 for cardiovascular conditions is not
listed in the table above as these initiatives have been placed on hold.

The Company intends to pursue a license or development
partnership for TARDOXALTM with a large pharmaceutical company. Such
a partnership may provide funding and other resources for further clinical trials and commercialization. While the Company has had
informal discussions with potential partners, no formal agreement, or letter of
intent, has been entered into by the Company as of the date hereof.

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The Companys library of novel therapeutics includes a series
of small molecule dual acting anticoagulant/antiplatelet compounds (including
the preclinical lead compound MC-45308) which may be useful in treating venous
and arterial thrombosis. These compounds, which have shown activity in venous
and arterial models of thrombosis, provide a basis for further research,
optimization and preclinical development.

Medicures library of novel therapeutics includes a series of
small molecule dual acting anticoagulant/antiplatelet compounds (including the
preclinical lead, MC-45308) which may be useful in treating venous and arterial
thrombosis. These compounds, which have shown activity in venous and arterial
models of thrombosis, provide a basis for further research, optimization and
preclinical development. The Company is interested in out-licensing its library
of small molecule anti thrombotic drugs.

The Company may from time to time evaluate other product
opportunities for potential license with the objective of further broadening its
product and patent portfolio.

Potential New Products in Development Stage

One of the Companys primary focuses is the clinical
development and commercialization of its lead research product,
TARDOXALTM (pyridoxal 5-phosphate) for TD. TD is a serious movement
disorder which results from long-term treatment with antipsychotic medications.
At present there is no treatment available for TD in the US.
TARDOXALTMs potential for treatment of TD is supported by its
biological mechanism of action and by preliminary clinical studies which
indicated efficacy of a related compound in treatment of TD.

Until 2008, the Company had been focused on the development of
its then lead product MC-1 as a cardioprotective treatment in reducing damage to
the heart associated with acute ischemic and reperfusion injury (MEND-1 Phase-II
study). Due to lack of resources and the inability to demonstrate efficacy in
the Companys Phase III study, MEND-CABG II, this development program was placed
on hold. This product also has potential to provide other chronic cardiovascular
benefits to patients with hyperlipidemia, hperglycemia and hypertension. The
Company has clinical data and intellectual property related to some of these
potential applications and is interested in advancing these applications through
a partnership with another pharmaceutical company. However, at this time
sufficient resources are not available to pursue these applications. MC-1 is the
same chemical compound being developed for TD under the name
TARDOXALTM.

In research and development conducted prior to fiscal 2009, the
Company developed a novel series of small molecule dual acting
anticoagulant/antiplatelet compounds which may be useful in treating venous and
arterial thrombosis.

The Company seeks to establish a licensing arrangement or
R&D collaboration to advance these compounds to human clinical studies when
sufficient financial resources are available to do so.

As at May 31, 2011, the Company had numerous issued United
States patents (see Item 5  Operating and Financial Review and Prospects  C.
Research and Development, Patents and Licenses, Etc. below).

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Competitors Current Products

The only commercial product the corporation currently has,
being AGGRASTAT®, which is owned by the Companys subsidiary,
Medicure International, Inc., and is sold in the United States of America
through the Companys subsidiary, Medicure Pharma, Inc.

AGGRASTAT® competes in a market segment commonly
referred to as the anti-thrombotic market (treatments to remove or prevent
formation of blood clots). More specifically, AGGRASTAT®is one of a
handful of antiplatelet drugs which affect thrombus (blood clot) formation by
preventing the aggregation of platelets in the blood stream. Of the different
classes of antiplatelet drugs, AGGRASTAT® is a representative of the
glycoprotein IIB/IIIA inhibitors drug class. There are three of these agents
approved for use, including abciximab (ReoPro®), eptifibatide
(Integrilin®), and tirofiban (Aggrastat®). Of the two
directly competing agents, AGGRASTAT® is most closely comparable to
Integrilin® as they are both highly potent, small molecule drugs that
have reversible antiplatelet effects.

Competitors Products in Development

At present the Company is not aware of any other glycoprotein
IIb/IIIa inhibitors in clinical development. However, the utilization of its
drug may be affected by the continued advancement of new antithrombotic and
antiplatelet agents, including the recently approved agents, ticagrelor
(Brilinta®) and prasugrel (Effient®). The potential future
launch of generic versions of AGGRASTAT® and/or of other competitive
drugs is also expected to impact utilization of the Companys drug. Many
companies, including large pharmaceutical and biotechnology companies, are
conducting development of products that are intended to address the same or a
similar medical need. Many of these companies have much larger financial and
other resources than the Company does, including those related to research and
development, manufacturing, and sales and marketing. The Company also faces
competition in recruiting scientific personnel from colleges, universities,
agencies, and research organizations who seek patent protection and licensing
agreements for the technologies they develop.

Competitive Strategy and Position

The Company is primarily focusing on:

|1. | Maintaining and Growing AGGRASTAT®sales in the United States. The present market for the
      class of drug GP IIb/IIIa, of which AGGRASTAT®is one of three
      in the USA market, is approximately $400 million per year (2010). At
      present AGGRASTAT®has ≤ 2% of this market. AGGRASTAT®is recommended by the AHA and ACC Guidelines as one of the three GP
      IIb/IIIa drugs to be used for the treatment of ACS. AGGRASTAT®has been shown, in several clinical trials, to reduce mortality
      and/or morbidity (myocardial infarction) post ACS by as much as
  40%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|2. | The development and implementation of a new
      regulatory, brand and clinical strategy for
      AGGRASTAT®:As stated previously, the
      Companys primary ongoing Research and Development activity is the
      development and implementation of a new regulatory, brand and life cycle
      management strategy for AGGRASTAT®. One important aspect of the
      strategy is the Companys efforts to expand and modify the product label.
      Any such change is dependent upon review and approval by the FDA and may
      necessitate substantial regulatory filing fees. Clinical development
      activities would also require substantial financial resources to conduct.
      While the Company believes that it will be able to finalize a relatively
      low cost clinical, product and regulatory strategy, it requires additional
      resources to implement all aspects of this plan. Until such resources
      become available, the Company is working to advance this program with the
      modest capital investment that it can make from its available cash
      resources.

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|3. | The development of TARDOXALTMfor Tardive Dyskinesia and other neurological indications.The Company is focusing initially on these markets because of
      preclinical and clinical evidence supporting the products safety and
      potential efficacy in these applications.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

It is the Companys intention to secure a partnership with a
large pharmaceutical company for commercialization of TARDOXALTM or
other agents from its product pipeline. Such a partnership would provide funding
for clinical development, add experience to the product development process and
provide market positioning expertise. While the Company has had informal
discussions with potential partners in this regard, no formal agreement or
letter of intent has been entered into by the Company as of the date hereof.

C. Organizational Structure

Medicure International, Inc., a wholly owned subsidiary of the
Company, was incorporated pursuant to the laws of Barbados, West Indies, on May
23, 2000. Medicure International Inc.s registered office is located at
Whitepark House, White Park Road, Bridgetown, Barbados. Medicure International
Inc.s head office is located at 2nd Street, Holetown, St. James, Barbados.

Medicure Pharma Inc., a wholly owned subsidiary of the Company,
was incorporated pursuant to the laws of the State of Delaware, United States of
America, on September 30, 2005. Medicure Pharma Inc.s registered office is 2711
Centerville Road, Suite 400, Wilmington, Delaware, 19808. Medicure Pharma Inc.s
head office is located at 500 Atrium Drive, Somerset, NJ, 08873.

American Cardio Therapeutics Inc., a Company that is 49% owned
by Medicure Pharma Inc., was incorporated pursuant to the laws of the State of
Delaware, United States of America, on September 30, 2005. American Cardio
Therapeutics Inc.s registered office is 2711 Centerville Road, Suite 400,
Wilmington, Delaware, 19808. As at May 31, 2011, American Cardio Therapeutics
Inc. had no activity and it is the Companys intention that American Cardio
Therapeutics Inc. will be wound up.

Medicure Europe Limited, a wholly owned subsidiary of the
Company, was incorporated pursuant to the laws of the United Kingdom, on May 19,
2006. Medicure Europe Limited ceased operations on August 4, 2009.

D. Property, Plants and Equipment

Office Space

Included in connection with the business and administration
services agreemententered into with Genesys Venture Inc. (see F.
Contractual Obligations), the Company has use of approximately 750 square feet
of office space as part of its business services contract with a related party.
The office is located in Winnipeg, Manitoba, Canada.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable

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ITEM 5. OPERATING AND FINANCIAL REVIEW AND
PROSPECTS

This section contains forward-looking statements involving
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a result of
certain factors, including those set forth under part Item 3 - Key Information -
D. Risk Factors. The following discussion of the financial condition, changes in
financial conditions and results of operations of the Company for the years
ended May 31, 2011, May 31, 2010 and May 31, 2009 should be read in conjunction
with the consolidated financial statements of the Company. The Companys
consolidated financial statements are presented in Canadian dollars and have
been prepared in accordance with Canadian generally accepted accounting
principles (GAAP) included under Item 17 to this annual report. Material
measurement differences between Canadian and U.S. GAAP, as applicable to the
Company, are set forth in note 17 to the consolidated financial statements of
the Company included herein.

Critical Accounting Estimates

The Companys consolidated financial statements are prepared in
accordance with Canadian generally accepted accounting principles (Canadian
GAAP). A reconciliation in accordance with Item 17 of Form 20-F of adjustments
required to present in accordance with United States generally accepted
accounting principles (US GAAP) is described in note 17 to the audited
consolidated financial statements for the year ended May 31, 2011. These
accounting principles require management to make certain estimates and
assumptions. Management believes that the estimates and assumptions upon which
the Company relies are reasonable based upon information available at the time
these estimates and assumptions are made. Actual results could differ from these
estimates. Future estimates and assumptions may lead to different judgments than
those applied in the preparation of these consolidated financial statements.
Areas of significant estimates include revenue recognition, research and
development costs, clinical trial expenses, the assessment of net recoverable
value of intangible assets, income taxes, stock-based compensation and
accounting for warrants.

Going concern assumption and continuity of
operationsThe accompanying consolidated financial statements have been
prepared on a going concern basis in accordance with Canadian generally accepted
accounting principles. The going concern basis of presentation assumes that the
Company will continue in operation for the foreseeable future and be able to
realize its assets and discharge its liabilities and commitments in the normal
course of business. There is significant doubt about the appropriateness of the
use of the going concern assumption because the Company has experienced
operating losses since incorporation.

The Company has experienced a loss of $2,014,109 for the year
ending May 31, 2011, and has accumulated a deficit of $156,095,915 as at May 31,
2011. The Companys future operations are dependent upon its ability to maintain
or grow sales of AGGRASTAT®, and/or secure additional funds, which may not be
available under favourable terms, should these objectives not be achieved, the
Company will have to consider additional strategic alternatives which may
include, among other strategies, asset divestitures and/or monetization of
certain intangibles.

As at May 31, 2011 the Company had significant debt servicing
obligations that it did not have the ability to repay without refinancing or
restructuring and the Company was in default of the terms of its long-term debt
financing obligations. Under an event of default, the lender could have
exercised its security rights under the agreement, and accordingly the long-term
debt obligation has been classified as a current liability as at May 31, 2011
and 2010 as described in note 8 of the audited consolidated financial statements
for the year ended May 31, 2011. On July 18, 2011, the long-term debt was
settled as described in Note 16 of the audited consolidated financial statements
for the year ended May 31, 2011.

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The financial statements do not reflect adjustments that would
be necessary if the going concern assumption were not appropriate. If the going
concern basis was not appropriate for these financial statements, then
adjustments would be necessary to the carrying value of assets and liabilities,
the reported revenues and expenses, and the balance sheet classifications used.

Revenue recognitionThe Company recognizes product
revenue when substantially all of the risks and rewards of ownership have
transferred to the customer and collection is reasonably assured. Revenue is
recognized upon product delivery, and when no significant contractual
obligations remain. As is common practice in the pharmaceutical industry, the
Companys sales are made to pharmaceutical wholesalers for further distribution
to end consumers.

Net sales reflect a reduction of gross sales at the time of
initial sales recognition for estimated wholesaler chargebacks, discounts,
allowances for product returns, and other rebates (product sales allowances).
Wholesaler management decisions to increase or decrease their inventory of
AGGRASTAT® may result in sales of AGGRASTAT® to
wholesalers that do not track directly with demand for the product at hospitals.
In determining the amounts for these allowances and accruals, the Company uses
estimates. Through reports provided by the Companys wholesalers and other third
party external information, management estimates customer and wholesaler
inventory levels, sales trends and hospital demand. Management uses this
information along with such factors as: historical experience and average
contractual chargeback rates to estimate product sales allowances. Third-party
data is subject to inherent limitations of estimates due to the reliance on
information from external sources, as this information may itself rely on
certain estimates.

Research and development costsAll costs of research
activities are expensed in the period in which they are incurred. Development
costs are charged as an expense in the period incurred unless a development
project meets stringent criteria for cost deferral and amortization. The Company
assesses whether these costs have met the relevant criteria for deferral and
amortization at each reporting date. No development costs have been deferred to
date.

Clinical trial expensesClinical trial expenses are
a component of the Companys research and development costs. These expenses
include fees paid to contract research organizations, clinical sites, and other
organizations who conduct development activities on the Companys behalf. The
amount of clinical trial expenses recognized in a period related to clinical
agreements are based on estimates of the work performed using an accrual basis
of accounting. These estimates incorporate factors such as patient enrolment,
services provided, contractual terms, and prior experience with similar
contracts.

Intangible assetsCosts incurred in obtaining
patents are capitalized and amortized commencing upon issuance on a
straight-line basis over the remaining legal life of the respective patents,
being approximately twenty years, or their economic life, if shorter. The cost
of servicing the Companys patents is expensed as incurred. Intangible assets
are recorded at acquisition cost and are amortized on a straight-line basis
based on the following estimated useful lives:

Technology license
    8 yearsPatents
    5-20 yearsTrademark
    10 yearsCustomer list
    10 years


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The Company determines the estimated useful life of intangible
assets based on a number of factors, including: legal, regulatory or contractual
limitations; known technological advances; anticipated demand; and the existence
or absence of competition. A significant change in any of these factors could
require a revision of the expected useful life of the intangible asset, which
could have a material impact on the Companys results of operations through an
increase to amortization.

On a regular basis, management reviews the valuation of
intangible assets taking into consideration any events and circumstances which
may impair their recoverable value including expected cash flows, the potential
benefit the Company expects to derive from the costs incurred to date and the
Companys ongoing development plans. A change in any of these assumptions could
produce a different fair value, which could have a material impact on the
Companys results of operations.

Income TaxesThe Company follows the asset and
liability method of accounting for income taxes. Under this method, future
income tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Future income
tax assets and liabilities are measured using enacted or substantively enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
future tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the date of substantive enactment. Given the
Companys history of net losses, the Company is of the opinion that it is more
likely than not that these tax assets will not be realized in the foreseeable
future and therefore, a full valuation allowance has been recorded against these
income tax assets. As a result, no future income tax assets or liabilities are
recorded on the Companys balance sheets.

Stock-based compensationThe Company has a stock
option plan for its directors, management, employees, and consultants.
Compensation expense is recorded for stock options issued to employees and non
employees using the fair value method. The Company must calculate the fair value
of stock options issued and amortize the fair value to stock compensation
expense over the vesting period, and adjust the amortization for stock option
forfeitures and cancellations. The Company uses the Black-Scholes model to
calculate the fair value of stock options issued which requires that certain
assumptions including the expected life of the option and expected volatility of
the stock be estimated at the time that the options are issued. The Company
amortizes the fair value using the accelerated method over the vesting period of
the options, generally a period of three years. The factors included in the
Black-Scholes model are reasonably likely to change from period to period due to
changes in the Companys stock price and external factors, as further stock
options are issued and as adjustments are made to previous calculations for
unvested stock option forfeitures and cancellations.

The stock-based compensation recorded by the Company is a
critical accounting estimate because of the value of compensation recorded, the
volume of the Companys stock option activity, and the many assumptions that are
required to be made to calculate the compensation expense. The Black-Scholes
model is not the only permitted model to calculate the fair value of stock
options. A different model, such as the binomial model, as well as any changes
to the assumptions made may result in a different stock compensation expense
calculation. For the year ended May 31, 2011, the Company recorded stock-based
compensation of $77,057 (May 31, 2010 - $122,812).

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33

A. Operating Results

General

The Company has concentrated primarily on research and
development and has yet to and may never derive any revenues from its clinical
products. The Company has a limited operating history and its prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered with the establishment of a business in a highly competitive
industry, characterized by frequent new product introductions.

Year Ended May 31, 2011 Compared to the Year Ended May 31,
2010

Net product sales for fiscal 2011 were $3,628,000, compared to
$3,317,000 in fiscal 2010. The Company currently sells AGGRASTAT® to
drug wholesalers. These wholesalers subsequently sell AGGRASTAT® to
the hospitals where health care providers administer the drug to patients.
Wholesaler management decisions to increase or decrease their inventory of
AGGRASTAT® may result in sales of AGGRASTAT® to
wholesalers that do not track directly with demand for the product at hospitals.
All of the Companys sales are denominated in US dollars. The increase compared
to fiscal 2010 is attributable to an increase in wholesale purchasing of
AGGRASTAT®, a reduction in hospital discounts and fluctuations in
foreign currency exchange rates. Although wholesale purchasing generally
reflects hospital demand, it is also subject to fluctuations attributed to
wholesaler inventory adjustments.

Cost of goods sold represents direct product costs associated
with AGGRASTAT® including and write-downs for obsolete inventory.
Amortization of the related acquired AGGRASTAT® intangible assets is
separately discussed below.

Cost of goods sold, excluding amortization, for fiscal 2011
were $674,000 compared to $572,000 in fiscal 2010. The Company has a minimum
purchase commitment for the manufacturing of AGGRASTAT® and as a
result has recorded a $0.1 million charge to recognize this commitment. For the
year ended May 31, 2011, increases to cost of goods sold are the result of
increases in net sales of AGGRASTAT® and the write-off of expired inventory
during 2011.

Total Selling, general, and administrative expenditures for
fiscal 2011 were $2,818,000, compared to $4,475,000 in fiscal 2010. Selling,
general, and administrative expenditures related to AGGRASTAT® were
$1,657,000 in fiscal 2011, compared to $3,277,000 in fiscal 2010. Selling,
general and administrative expenses include salaries and related costs for those
employees not directly involved in research and development. The expenditures
are required to support sales and marketing efforts of AGGRASTAT® and
ongoing business development and corporate stewardship activities. The balance
also includes professional fees such as legal, audit, investor and public
relations.

Selling, general and administrative expenditures -
AGGRASTAT® decreased during the year ended May 31, 2011 as compared
to same period in the prior year mainly due to :

- The Company payroll costs were lower during the period, attributable to
  management's efforts to reduce operating costs;
- The average US exchange rate for the period was lower than the in the
  comparable periods of 2010 resulting in a decrease in selling, general and
  administrative expenditures; and
- Overall the Companys selling, general and administrative expenditures
  related to AGGRASTAT® are lower in many areas as a result of the cost
  curtailment program.

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34

Selling, general and administrative expenditures  Other
decreased during the year ended May 31, 2011 as compared to same period in the
prior year mainly due to:

- Overall the Companys selling, general and administrative expenditures 
  other are lower in many areas as a result of the cost curtailment program.
  Significant reductions are noted in payroll, rent, and insurance;
- During fiscal 2011, the Company has incurred an increase of legal and
  professional fees related to ongoing discussions with the Company's secured
  lender.

Net research and development expenditures for fiscal 2011 were
$205,000, compared to $393,000 in fiscal 2010. Research and development
expenditures include costs associated with the Companys clinical development
and preclinical programs including salaries, research centred costs and
monitoring costs. The Company expenses all research and development costs. The
decrease in research and development expenditures, for the year ended May 31,
2011 as compared to the same period in fiscal 2010 is due to reductions in the
modest funds allocated by the Company to advance its TARDOXALTM
clinical trial. As a result of the decline in research and development
activities, there were not any investment tax credit recoveries during fiscal
2011. In fiscal 2010, investment tax credit recoveries totalled $0.3 million.

The Companys Impairment of Intangibles assets for fiscal 2011
were $280,000, compared to $769,000 in fiscal 2010. Intangible assets are
reviewed for impairment on an ongoing basis whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. Based on
this review certain patents were deemed not significant to the Companys
commercial and research operations and a decision was made to surrender certain
issued patents and withdraw certain applications under review. The majority of
these patents were in the review stage in numerous countries. As a result,
impairment charges of $280,235 were recorded to write off the carrying value of
certain specific patents.

It is important to note that historical patterns of impairment
charges cannot be taken as an indication of future impairments. The amount and
timing of impairments and write-downs may vary substantially from period to
period depending on the business and research activities being undertaken at any
one time and changes in the Company's commercial strategy.

Amortization for the year ended May 31, 2011 was $899,000,
compared to $919,000 in fiscal 2010. For the year ended May 31, 2011,
amortization decreased as compared to the prior year as a result of the
write-down in intangibles in the third and fourth quarters of fiscal 2010. The
majority of amortization expense in both periods relates to the amortization of
AGGRASTAT® intangible assets.

Interest expense for fiscal 2011 was $3,122,000, compared to
$3,280,000 in fiscal 2010. The decrease in interest expense for the year ended
May 31, 2011 as compared to the prior fiscal year is primarily due to the
increase in the strength of the Canadian dollar as compared to the US dollar.

The net foreign exchange gain for the year ended May 31, 2011
was $2,355,000, compared to a net foreign exchange gain of $1,247,000 in fiscal
2010. The net foreign exchange gain during the year ended May 31, 2011 changed
by $1.11 million due to a weakening of the U.S. dollar relative to the Canadian
dollar in the quarter. Foreign exchange gain represents changes in the Canadian
dollar value of foreign currency denominated operating accounts and long-term
debt in response to changes in the value of the Canadian dollar relative to US
dollar. The value of the Canadian dollar relative to the US dollar increased
over the period, with exchange rates moving from 1.046 as at May 31, 2010 to
0.969 as at May 31, 2011, which resulted in a foreign exchange gain of $2.4
million for the period. In the prior year, the value of the Canadian dollar as compared to the US dollar strengthened, with
exchange rate equal to 1.092 as at May 31, 2009 moving to 1.046 as at May 31,
2010, which resulted in a foreign exchange gain of $1.25 million for the prior
year.

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35

For the year ended May 31, 2011, the Company recorded a
consolidated net loss of $2,014,000 or $0.02 per share compared to a
consolidated net loss of $5,533,000 or $0.04 per share for the year ended May
31, 2010. As discussed above the main factors contributing to the decrease in
the loss as compared to 2010 fiscal year were the increases in wholesale
AGGRASTAT®, sales and the Company's cost curtailment program whereby
operating costs (exclusive of debt servicing requirements and costs related to
restructuring of debt as discussed above) have been reduced.

The weighted average number of common shares outstanding used
to calculate basic and diluted loss per share was 130,507,552 for the years
ended May 31, 2011 and 2010.

Year Ended May 31, 2010 Compared to the Year Ended May 31,
2009

Net product sales for fiscal 2010 were $3,317,000, compared to
$4,793,000 in fiscal 2009. The Company sells AGGRASTAT® to drug
wholesalers. These wholesalers subsequently sell AGGRASTAT® to the
hospitals where health care providers administer the drug to patients.
Wholesaler management decisions to increase or decrease their inventory of
AGGRASTAT® may result in sales of AGGRASTAT® to
wholesalers that do not track directly with demand for the product at hospitals.
The decline is attributable to fluctuations in foreign currency exchange rates
and an increase in wholesaler purchasing in advance of a price increase
introduced during the 3rd quarter of 2009. Since then, wholesale purchasing has
more closely reflected hospital demand with modest fluctuations attributing to
wholesaler inventory adjustments.

Cost of goods sold represents direct product costs associated
with AGGRASTAT® including and write-downs for obsolete inventory.
Amortization of the related acquired AGGRASTAT® intangible assets is
separately discussed below.

Cost of goods sold, excluding amortization, for fiscal 2010
were $572,000 compared to $377,000 in fiscal 2009. The Company has a minimum
purchase commitment for the manufacturing of AGGRASTAT® and as a
result has recorded a $0.3 million charge to recognize this commitment. The
increase is partially offset by direct costs linked to lower sales volume during
the year ended May 31, 2010 as compared to of 2009.

Total Selling, general, and administrative expenditures for
fiscal 2010 were $4,475,000, compared to $9,255,000 in fiscal 2009. Selling,
general, and administrative expenditures related to AGGRASTAT® were
$3,277,000 in fiscal 2010, compared to $6,598,000 in fiscal 2009. Selling,
general, and administrative expenditures for AGGRASTAT® are primarily
related to field selling expenses, product promotion costs and administrative
expenses. The appreciation of the US dollar compared the Canadian dollar
favourably impacted our expenditures which complimented Managements cost
curtailment program implemented since the beginning of the fiscal year. Other
selling, general, and administrative expenditures in fiscal 2010 decreased to
$1,198,000 from $2,657,000 in fiscal 2009 mainly due to Managements cost
curtailment program, as well as a one-time provision against research advances
recorded in fiscal 2009. These reductions were offset by professional and
advisory fee related to ongoing discussions with the Companys secured
lender.

Net Research and development expenditures for fiscal 2010 were
$393,000, compared to $23,000 in fiscal 2009. The increase in research and
development expenditures as compared to fiscal 2009 is due to the Company continuing with its Phase II clinical study
TARDOXALTM on a cost conservative basis until such time as the
Companys financial condition improves. In 2009, the Company recovered
approximately $800,000 in research and development expenses as a result of
negotiations and support from clinical partners and service providers for costs
incurred in 2008. This recovery was applied against existing 2009 expenditures.

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36

The Companys Impairment of Intangibles assets decreased from
$1,756,000 in fiscal 2009 to $769,000 in fiscal 2010. During fiscal 2009 the
Company had initiated a review of all outstanding patents as part of its ongoing
cost curtailment program. Intangible assets are reviewed for impairment on an
ongoing basis whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Based on this review certain patents
were deemed not significant to the Companys commercial and research operations
and a decision was made to surrender issued patents and withdraw applications
under review. The majority of these patents were in the review stage in numerous
countries. As a result, an impairment charge of $1.0 million was recorded to
write off the carrying value of these specific patents.

It is important to note that historical patterns of impairment
charges cannot be taken as an indication of future impairments. The amount and
timing of impairments and write-downs may vary substantially from period to
period depending on the business and research activities being undertaken at any
one time and changes in the Company's commercial strategy.

Amortization for the year ended May 31, 2010 was $919,000,
compared to $939,000 in fiscal 2009. The majority of amortization expense in
both periods relates the amortization of AGGRASTAT® intangibles. The
amortization was lower in fiscal 2010 due to the write-down of the intangibles
in fiscal 2009 and 2010.

Interest and other income for the year ended May 31, 2010 was
$5,000, compared to $256,000 in fiscal 2009. The decrease in interest and other
income in fiscal 2010 is the result of lower cash and cash equivalents balance
and lower interest rates as compared to the prior fiscal year.

Interest expense for fiscal 2010 was $3,280,000, compared to
$4,945,000 in fiscal 2009. The decrease in interest expense for the year ended
May 31, 2010 as compared to fiscal 2009 is primarily due to the repayment of the
term loan facility during the second quarter of 2009.

The net foreign exchange gain for the year ended May 31, 2010
was $1,247,000, compared to a net foreign exchange loss of $1,636,000 in fiscal
2009. The net foreign exchange gain during the year ended May 31, 2010 changed
by $2.88 million due to a weakening of the U.S. dollar relative to the Canadian
dollar in the year. Foreign exchange loss represents changes in the Canadian
dollar value of foreign currency denominated operating accounts and long-term
debt in response to changes in the value of the Canadian dollar relative to US
dollar. The value of the Canadian dollar relative to the US dollar increased
over the period, with exchange rates moving from $1.095 as at May 31, 2009 to
$1.046 as at May 31, 2010, which resulted in a foreign exchange gain of $1.2
million for the year. In the prior year, the value of the Canadian dollar
decreased, with exchange rates moving from $0.994 as at May 31, 2008 to $1.092
as at May 31, 2009, which resulted in a foreign exchange loss of $1.64 million
for the prior year.

For the year ended May 31, 2010, the Company recorded a
consolidated net loss of $5,532,000 or $0.04 per share compared to a
consolidated net loss of $13,316,000 or $0.10 per share for the year ended May
31, 2009. As discussed above the main factors contributing to the decrease in
the loss as compared to the 2009 fiscal year resulted from the cost curtailment
program whereby normal operating costs (exclusive of debt servicing requirements
and costs related to restructuring of debt as discussed above) have been brought
in line with revenues. Savings were offset by decreases in wholesale
AGGRASTAT® sales.

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37

The weighted average number of common shares outstanding used
to calculate basic and diluted loss per share was 130,507,552 for the years
ended May 31, 2010 and 2009.

B. Liquidity and Capital Resources

Since the Companys inception, it has financed operations
primarily from net revenue received from the sale of AGGRASTAT®, sale
of its equity securities, the issue of warrants and stock options, interest on
excess funds held and the issuance of debt.

Cash provided by (used in) operating activities for the year
ended May 31, 2011 increased $1,930,288 to $444,479 compared to ($1,452,809) for
2010 primarily due to improved operating results in the Companys
AGGRASTAT® operations and lower overall expenditures as a result of
the cost curtailment program.

Investing and financing activities for the year ended May 31,
2011 and 2010 were insignificant.

At May 31, 2011 the Company had cash totaling $750,184 compared
to $371,262 as of May 31, 2010. As at May 31, 2011, the Company had a working
capital deficiency of $30.2 million compared to $29.4 million at May 31, 2010.
Fluctuations in working capital are mainly due to increases in accrued interest
on long-term debt and use of funds to support operations and changes in foreign
currency exchange rates.

The Corporation has long-term debt at May 31, 2011 of US$25.0
million recorded in its financial statements relating to the Birmingham debt
described in Note 8 of the Company's consolidated financial statements for the
year ended May 31, 2011. Interest is accrued based on an annual effective
interest rate of 13.3% . The minimum annual debt obligations are disclosed under
Contractual Obligations.

At May 31, 2011, the Company has accrued US$7.8 million
(CDN$7.6 million) in debt service obligations. Of this amount, US$1,739,659 was
originally due July 15, 2009; US$180,811 was originally due October 15, 2009;
US$195,550 was originally due January 15, 2010; US$160,359 was originally due
April 15, 2010; US$2,063,280 was originally due on July 15, 2010, US$168,085 was
originally due October 15, 2010, US$167,025 was originally due January 15, 2011,
US$258,703 was originally due April 15, 2011, and US$2,906,188 was originally
due on July 15, 2011. As described in the "Recent Developments" section of this
annual report, the Company settled its long-term on July 18, 2011.

The total number of common shares issued and outstanding at May
31, 2011 and 2010 was 130,307,552.

C. Research and Development, Patents and Licenses, Etc.

Research and Development

The Companys primary ongoing research and development activity
is the development and implementation of a new regulatory, brand and life cycle
management strategy for AGGRASTAT®. The extent to which the Company is able to
invest in this plan is dependant upon the availability of sufficient finances.

The Companys primary, non-AGGRASTAT® research and
development activity is TARDOXALTM for the treatment of Tardive
Dyskinesia ("TD"). This program evolved from Medicures extensive clinical
experience with MC-1, a naturally occurring small molecule, for cardiovascular
conditions. A modest amount of capital is being used for an ongoing Phase II
clinical study of TARDOXALTM. The Company is interested in
out-licensing its library of small molecule anti thrombotic drugs.

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38

The TARDOXALTM program benefits from over 10 years
of work that Medicure invested in the advancement of this compound, including
extensive human clinical testing in unrelated cardiovascular conditions and
other pre-clinical, formulation, manufacturing and safety research and
development. The Company believes the information and physical assets resulting
from this activity are a valuable asset that will reduce costs and also speed
development of this molecule for application to TD.

The Company intends to pursue a license or development
partnership for TARDOXALTM with a large pharmaceutical company. Such
a partnership may provide funding and other resources for further clinical
trials and commercialization. While the Company has had informal discussions
with potential partners, no formal agreement, or letter of intent, has been
entered into by the Company as of the date hereof.

Medicures library of novel therapeutics includes a series of
small molecule dual acting anticoagulant/antiplatelet compounds (including the
preclinical lead, MC-45308) which may be useful in treating venous and arterial
thrombosis. These compounds, which have shown activity in venous and arterial
models of thrombosis, provide a basis for further research, optimization and
preclinical development. The Company is interested in out-licensing its library
of small molecule anti thrombotic drugs.

The Company may from time to time evaluate other product
opportunities for potential license with the objective of further broadening its
product and patent portfolio.

As outlined in Item 17, Company-sponsored research and
development net expenditures for fiscal 2011 were $205,000 (2010 - $393,000;
2008 - $23,000). During fiscal 2009, the Company, and with the support of our
clinical partners and service providers, was able to secure a recovery on
certain research and development costs incurred in fiscal 2008 of approximately
$970,000.

Patents and Licenses

The Company has 24 issued patents, 23 from the United States
Patent Office and one patent from New Zealand providing protection for
AGGRASTAT® and certain uses of MC-1 and related compounds in
treatment of cardiovascular diseases and other compounds for the use in
cardiovascular disease. The Company will continue to file patents to extend
protection of MC-1 and for new compounds in development. The patents currently
issued to the Company are as follows:

Patent Number
    Issue Date
      Title5,292,756
    March 8, 1994
    Novel Sulfonamide Fibrinogen
      Receptor Antagonists5,733,919
    March 31, 1998
    Compositions for Inhibiting
      Platelet Aggregation5,965,581
    October 12, 1999
    Compositions for Inhibiting
      Platelet Aggregation5,972,967
    October 26, 1999
    Compositions for Inhibiting
      Platelet Aggregation5,978,698
    November 2, 1999
    Angioplasty Procedure Using
      Nonionic Contrast Media6,043,259
    March 28, 2000
    Treatment of Cardiovascular and
      Related Pathologies6,051,587
    April 18, 2000
    Treatment of Age Related
      Hypertension6,136,794
    October 24, 2000
    Platelet Aggregation Inhibition
      Using Low Molecular Weight Heparin in Combination with a GP IIb/IIIa
      Antagonist6,339,085
    January 15, 2002
    Prodrugs of MC1


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39

6,417,204
    July 9, 2002
    5-AZA Analogues6,538,112
    March 25, 2003
    Anticoagulant Test6,770,660
    August 3, 2004
    Method for Inhibiting Platelet
      Aggregation6,780,997
    August 24, 2004
    Cardioprotective Phosphonates and
      Malonates6,861,439
    March 1, 2005
    Treatment of Cerebrovascular
      Disease6,867,215
    March 15, 2005
    Cardioprotective Phosphonates and
      Malonates6,897,228
    May 24, 2005
    Pyridoxine and Pyridoxal
      Analogues: Cardiovascular Therapeutics7,105,673
    September 12, 2006
    Cardioprotective Phosphonates and
      Malonates7,132,430
    November 7, 2006
    Treatment of Cardiovascular and
      Related Pathologies7,148,233
    December 12, 2006
    Treatment of Cardiovascular and
      Related Pathologies7,375,112
    May 20, 2008
    Compounds and Methods for
      Reducing Triglyceride Levels7,425,570
    September 16, 2008
    Pyridoxine and Pyridoxal
      Analogues: New Uses7,442,689
    October 28, 2008
    Cardioprotective Phosphonates and
      Malonates7,812,037
    October 12, 2010
    Dual antiplatelet/anticoagulant
      pyridoxine analogs548,346
    May 13, 2010
    Combination therapies employing a
      composition comprising a HMG CoA reductase inhibitor and a vitamin B6
      related compound


Patents 6,043,259, 6,051,587, and 6,339,085 are jointly owned
by the Company and the University of Manitoba. Pursuant to a Licence Agreement
dated August 18, 1997, an Assignment Agreement dated September 26, 1997, an
updated License Agreement dated August 30, 1999 and a newly revised version
executed November 24, 2006, which supersedes all previous versions, (the
Licence Agreement) the University of Manitoba licensed the exclusive
worldwide use of the patents and the MC-1 technology to the Company. Pursuant to
the License Agreement, the Company has agreed to pay the University of Manitoba
a royalty payment of up to 3% of net sales from any cardiovascular product
derived from the MC-1 technology. The License Agreement was originally signed on
August 30, 1999 and subsequently amended on November 24, 2006 and shall
terminate if a patent or patents, domestic or foreign, are obtained prior to
commercialization of a Licensed Product, the expiration date of the last to
expire of any patents covered by the Patent Rights.

The MC-1 technology is derived from work done by employees of
the Company and by two employees of the University of Manitoba, Dr. Naranjan
Dhalla and Dr. Krishnamurti Dakshinamurti, Professor Emeritus, Department of
Biochemistry.

Patents 5,292,756, 5,733,919, 5,965,581, 5,972,967, 5,978,698,
6,136,794, 6,538,112 and 6,770,660 were purchased by the Company from MGI GP,
INC. (a Delaware corporation doing business as MGI PHARMA and its Affiliate,
Artery, LLC). Pursuant to an Asset Purchase Agreement dated August 8, 2006, MGI
GP, INC. sold the exclusive use of the patents to the Company in the specified
territory (the United States of America including the Commonwealth of Puerto
Rico; Guam; and the United States Virgin Islands). Pursuant to the Asset
Purchase Agreement the Company agreed to pay MGI GP, INC. a one-time fee for the
procurement of the acquired assets. The Asset Purchase Agreement was executed
August 8, 2006.

There are 13 pending patent applications, including 4 filed
with the United States Patent Office as either regular or provisional
applications. Certain of these are owned by the Company by virtue of their inventorship, in whole or in part, by employees of the Company
and, subsequent to June 1, 2000, by CanAm Bioresearch Inc.

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40

Much of the work, including some of the research methods, that
is important to the success of the Companys business is germane to the industry
and may not be patentable. For this reason all employees, contracted researchers
and consultants are bound by non-disclosure agreements.

Given that the patent applications for these technologies
involve complex legal, scientific and factual questions, there can be no
assurance that patent applications relating to the technology used by the
Company will result in patents being issued, or that, if issued, the patents
will provide a competitive advantage or will afford protection against
competitors with similar technology, or will not be challenged successfully or
circumvented by competitors.

The Company has filed patents in accordance with the Patent
Cooperation Treaty (the PCT). The PCT is a multilateral treaty that was
concluded in Washington in 1970 and entered into force in 1978. It is
administered by the International Bureau of the World Intellectual Property
Organization (the WIPO), headquartered in Geneva, Switzerland. The PCT
facilitates the obtaining of protection for inventions where such protection is
sought in any or all of the PCT contracting states (total of 104 at July 1999).
It provides for the filing of one patent application (the international
application), with effect in several contracting states, instead of filing
several separate national and/or regional patent applications. At the present
time, an international application may include designation for regional patents
in respect of contracting states party to any of the following regional patent
treaties: The Protocol on Patents and Industrial Designs within the framework of
the African Regional Industrial Property Organization, the Eurasian Patent
Convention, the European Patent Convention, and the Agreement Establishing the
African Intellectual Property Organization. The PCT does not eliminate the
necessity of prosecuting the international application in the national phase of
processing before the national or regional offices, but it does facilitate such
prosecution in several important respects by virtue of the procedures carried
out first on all international applications during the international phase of
processing under the PCT. The formalities check, the international search and
(optionally) the international preliminary examination carried out during the
international phase, as well as the automatic deferral of national processing
which is entailed; give the applicant more time and a better basis for deciding
whether and in what countries to further pursue the application. Further
information may be obtained from the official WIPO internet website
(http://www.wipo.int).

On June 1, 2000 the Company entered into the Medicure
International Licensing Agreement whereby it licensed the world-wide development
and marketing rights for MC-1, except for Canada, to its wholly owned
subsidiary, Medicure International, Inc. As consideration for the grant of the
license, Medicure International, Inc. agreed to pay the Company a fee of $1.00
upon the completion of specified milestones in the development process, together
with a variable royalty of 7% to 9% of net sales of MC-1 (if any sales are ever
in fact made). The term of the Medicure International Licensing Agreement will
expire on the date of expiration of the last to expire patent on MC-1, or in the
absence of any such patent, on the 10th anniversary of the date of the first
commercial sale of MC-1 in the country where it was last introduced (if it is
ever so introduced). The Medicure International Licensing Agreement may be
terminated under a number of circumstances and, in any event, by either party at
any time by providing the other with at least 90 days prior written notice of
its intention to terminate the Medicure International Licensing Agreement.

Medicure International, Inc. subsequently entered into a
development agreement with CanAm on June 1, 2000 to perform research and
development of MC-1 and other compounds at cost, plus a reasonable mark-up not
to exceed ten percent of any amount invoiced. The parties to the development
agreements have agreed that the aggregate amount of all invoiced expenditures
shall not exceed $30,000,000 over the term of each agreement. The term of the CanAm development
agreement is to expire on the completion of all research and development
activities by CanAm and the written acknowledgment by CanAm and Medicure
International, Inc. that no further research projects will be undertaken.

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41

The development agreements may be terminated under a number of
circumstances and, in any event, by Medicure International, Inc. at any time by
providing CanAm with at least 30 days prior written notice of its intention to
terminate, or by CanAm at any time by providing Medicure International, Inc.,
with at least 90 days prior written notice of its intention to terminate the
development agreement.

The agreements provide that all confidential information
developed or made known during the course of the relationship with the Company
is to be kept confidential except in specific circumstances.

D. Trend Information

Net revenue from the sale of AGGRASTAT® for fiscal
2011 increased 9% over the net revenue for the in fiscal 2010. All of the
Companys sales are denominated in US dollars. The increase is attributable to
an increase in wholesale purchasing of AGGRASTAT®, a reduction in
hospital discounts and fluctuations in foreign currency exchange rates. Although
wholesale purchasing generally reflects hospital demand, it is also subject to
fluctuations attributed to wholesaler inventory adjustments.

The Company is not aware of any other trends, uncertainties,
demands, commitments or events which are reasonably likely to have a material
effect upon the Companys net sales or revenues, income from continuing
operations, profitability, liquidity or capital resources, or that would cause
reported financial information not necessarily to be indicative of future
operating results or financial condition except the potential effect the
following items may or may not have:

Subsequent to year end the Company settled its long-term debt
to Birmingham Associates Ltd. in exchange for; i) $4,750,000 in cash; ii)
32,640,043 common shares of the Company; and iii) a royalty on future
AGGRASTAT® sales until 2023. The royalty is based on four percent of
the first $2,000,000 of quarterly AGGRASTAT®sales and increases on
sales exceeding that amount.

E. Off-balance Sheet Arrangements

As of May 31, 2011 the Company does not have any off-balance
sheet arrangements, other than those disclosed below.

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42

F. Contractual Obligations

The following tables set forth the Companys contractual
obligations as of May 31, 2011:

Contractual Obligations Payment Due By Period(in thousands of CDN$)
      Total
      2012
      2013
      2014
      2015
      2016
      ThereafterLong-term debt obligations1
      $43,995
      $3,798
      $4,253
      $4,764
      $5,335
      $5,976
      $19,869Purchase Agreement commitments2
      823
      759
      64
      -
      -
      -
      -Management services agreement commitments3
      180
      180
      -
      -
      -
      -
      -Total
      $44,998
      $4,737
      $4,317
      $4,764
      $5,335
      $5,976
      $19,869


Debt obligations reflect the minimum annual payments under the
debt financing agreement. In addition to the contractual obligations disclosed
above, the Company and its wholly-owned subsidiaries, have ongoing research and
development agreements with third parties in the ordinary course of business.
These agreements include the research and development of AGGRASTAT®,
TARDOXALTM as well as other product opportunities.

In addition, as at May 31, 2011, the Company has committed to
fund up to a maximum of $3,000,000 in research and development activities under
a development agreement with a contract research organization. The timing of
expenditures and payments is largely at the discretion of the Company and

______________________________________

|1 | In September 2007, the Company entered into a debt
      financing agreement with Birmingham Associates Ltd. (Birmingham), an
      affiliate of Elliott Associates, L.P. (Elliott) for a US$25 million
      up-front cash payment. Under the terms of the agreement, Birmingham will
      receive a payment based on a percentage of AGGRASTAT® net sales.
      Birmingham is entitled to a return of 20 percent on the first US$15
      million in AGGRASTAT® revenues, 17.5 percent on the next US$10 million, 15
      percent on the next US$5 million and 5 percent thereafter, subject to an
      escalating minimum annual return, until May 31, 2020. The minimum annual
      returns start at US$2.5 million in 2008 and escalate to US$6.9 million in
      2017. The total minimum payments over the life of the agreement aggregate
      to US$49.7 million. Additional information can be found in the Company's
      Annual Report on Form 20-F for the year ended May 31, 2011, which can be
      obtained on SEDAR (www.sedar.com).
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  | Birmingham also received the option to convert its rights
      based on AGGRASTAT® to MC-1 within six months after MC-1s
      commercialization, if achieved. The exact percentage of AGGRASTAT® or MC-1
      revenue that Birmingham would have received was tiered and declined as
      certain revenue levels were to be achieved. Upon conversion to MC-1,
      Birmingham would have been entitled to a return of 10 percent on the first
      US$35 million in MC-1 revenues, 5 percent on the next US$40 million in
      MC-1 revenues and 3 percent thereafter. Birmingham would have also
      received a minimum annual return of US$2.6 Million on MC-1 net sales, if
      approved until May 31, 2020. Birmingham would have received payments based
      on MC-1 revenues until December 31, 2024, unless a novel patent is
      obtained for MC-1, which could extend the period of payments.                                                                                                                                      
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  | During the 30 day period following the date on which the
      U.S. Food and Drug Administration shall have first approved MC-1 for sale
      to the public, the Company could have elected to terminate AGGRASTAT® or
      MC-1 Debt Payment rights with the payment, prior to the end of such 30 day
      period of US$70 Million to Birmingham. In addition, upon the approval of
      MC-1 for a second indication, the Company could have once again elect to
      terminate AGGRASTAT® or MC-1 Debt Payment rights with the payment, prior
      to the end of such 30 day period of US$120 Million to
Birmingham.                                                                                                                                                                                                                                                                                                                                                                                                                                
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  | With the settlement of the Birmingham long-term debt on
      July 18, 2011, all associated commitments and obligations were cancelled.
      Under the debt settlement Birmingham is entitled to a royalty on future
      AGGRASTAT® sales until 2023.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2 | The Company has entered into manufacturing and supply
      agreements to purchase a minimum quantity of AGGRASTAT® from a third
      party.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3 | Effective October 1, 2009, the Company entered into a
      business and administration services agreement with Genesys Venture Inc.
      (GVI), a company controlled by the Chief Executive Officer, under which
      the Company is committed to pay $25,000 per month or $300,000 per annum.
      On October 1, 2010, an amendment was made to the agreement thereby
      reducing the fees to $15,000 per month, or $180,000 per year effective
      November 1, 2010. The agreement shall be automatically renewed for
      succeeding terms of one year on terms to be mutually agreed upon by the
      parties. The Company may terminate this agreement at any time upon 60 days
      written notice.                                                                                                                                                                                                                                                                                                                                        

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43

the agreement may be terminated at any time provided thirty
(30) days notice is provided. Accordingly, no obligations are included in the
above table in relation to this agreement.

The Company periodically enters into research agreements with
third parties that include indemnification provisions customary in the industry.
These guarantees generally require the Company to compensate the other party for
certain damages and costs incurred as a result of claims arising from research
and development activities undertaken on behalf of the Company. In some cases,
the maximum potential amount of future payments that could be required under
these indemnification provisions could be unlimited. These indemnification
provisions generally survive termination of the underlying agreement. The nature
of the indemnification obligations prevents the Company from making a reasonable
estimate of the maximum potential amount it could be required to pay.
Historically, the Company has not made any indemnification payments under such
agreements and no amount has been accrued in the accompanying financial
statements with respect to these indemnification obligations.

The Company has granted a 3% royalty to the University of
Manitoba based on future commercial net sales of MC-1 for cardiovascular uses.
To date, no royalties are due and/or payable and, given these development
programs have been placed on hold, the Company does not anticipate any such
royalties to be paid. Such royalty does not apply to the sale of
TARDOXALTM.

The above commitments exclude any royalty obligations to
Birmingham in excess of minimum annual payments pursuant to the debt financing
agreement. With the settlement of the Birmingham long-term debt on July 18,
2011, these royalties were cancelled. Under the debt settlement Birmingham is
entitled to a royalty on future AGGRASTAT® sales until 2023. The
royalty is based on four percent of the first $2,000,000 of quarterly
AGGRASTAT® sales and increases on sales exceeding that amount.

In addition, as part of a transaction on July 6, 2011, Iroko
made available to the Company certain analytical methods for testing of
AGGRASTAT® in Europe. If the company exercises its option to obtain
the data and is successful in getting changes to the approved use of
AGGRASTAT® in the United States, Iroko will be entitled to receive a
royalty of up to US$3.5 million on future AGGRASTAT® sales based on a
percentage of sales.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND
EMPLOYEES

A. Directors and Senior Management

Directors and Senior Management

The members of the board of directors and senior officers of
the Company including a brief biography of each are as follows:

Dr. Albert D. Friesen, Winnipeg, Manitoba, Canada -
Director, Chairman and Chief Executive Officer

The founder of Medicure Inc., Dr. Friesen holds a Ph.D. in
protein chemistry from the University of Manitoba. Dr. Friesen played a key role
in founding several health industry companies including Rh Pharmaceuticals
(acquired by Cangene Inc.), ABI Biotechnology (acquired by Apotex Inc.),
Viventia Biotech Inc., Genesys Pharma Inc. and KAM Scientific Inc. Dr. Friesen
has experience in the establishment of pharmaceutical production facilities and
has also managed and initiated the research and clinical development of several
pharmaceutical candidates. Dr. Friesen is a founder of the Industrial
Biotechnology Association of Canada (IBAC) and past Chairman of its board of
directors and former member of the Industrial Advisory Committee to the
Biotechnology Research Institute in Montreal. In addition to his role with the Company, Dr. Friesen is currently
the President and Chairman of Genesys Venture Inc., a biotech incubator, based
in Winnipeg. Dr. Friesen provides his services to the Company through A.D.
Friesen Enterprises Ltd., his private consulting corporation. Date of birth is
May 19, 1947

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44

Dr. Arnold Naimark, Winnipeg, Manitoba, Canada -
Director

Dr. Arnold Naimark, O.C., O.M., M.D., L.L.D., F.R.C.P.(C),
F.R.S.C, FCAHS,. has had a distinguished career in biomedical research, medicine
and higher education. He is President Emeritus and Dean of Medicine Emeritus and
Professor of Medicine and Physiology at the University of Manitoba. He is
currently Director of the Centre for the Advancement of Medicine, and Chair of
Health Canadas Ministerial Science Advisory Board and Chairman of Genome
Prairie. Dr. Naimark serves on the Research Council of the Canadian Institute
for Advanced Research, the National Statistics Council of Canada, as a Member of
the CancerCare Manitoba Board, and on the International Advisory Committee on
Research of the Alberta Cancer Board, Research Institute. He is Vice-Chair of
CancerCare Manitoba, the Manitoba Health Research Council and the Audit
Committee of Statistics Canada. He served as the founding Chairman of the North
Portage Development Corporation, the Canadian Health Services Research
Foundation and the Canadian Biotechnology Advisory Committee, and as a Director
of the Robarts Research Institute. He has served as President of several
academic bodies including, the Canadian Physiological Society, the Canadian
Society for Clinical Investigation, the Association of Canadian Medical
Colleges, the Association of Universities and Colleges of Canada and as Chairman
of the Association of Commonwealth Universities. Dr. Naimark is an Officer of
the Order of Canada, a Member of the Order of Manitoba and a Fellow of the Royal
College of Physicians and Surgeons of Canada, the Royal Society of Canada, and
the Canadian Academy of Health Sciences. He is recipient of the G. Malcolm Brown
Award of the Royal College of Physicians and Surgeons and Medical Research
Council of Canada, the Osler Award, the Distinguished Service Award of Ben
Gurion University, the Symons Award of the Association of Commonwealth
Universities; and of honorary doctorates from Mount Allison University and the
University of Toronto, and of several other awards and distinctions related to
his professional, academic and civic activities. Date of birth is August 24,
1933.

Gerald P. McDole, Mississauga, Ontario, Canada, MBA 
Director

Mr. McDole is currently a director of several Canadian
healthcare companies. Mr. McDole is Past President of AstraZeneca Canada Inc. He
was named President and CEO of AstraZeneca Canada Inc.'s pharmaceutical
operations in 1999 and immediately led the merger of Astra Pharma and Zeneca
Pharma Inc. Prior to this, Mr. McDole was president and CEO of Astra Pharma
Inc., a position he assumed in 1985 after having served as Executive
Vice-President. Mr. McDole is a member of the Canadian Healthcare Marketing Hall
of Fame, and has been recognized by Canadian Healthcare Manager Magazine with
the Who's Who in Healthcare Award in the pharmaceutical category. In recognition
of Mr. McDole's outstanding contributions to the biotech and pharmaceutical
industries, the University of Manitoba recently established The Gerry McDole
Fellowship in Health Policy and Economic Growth. Mr. McDole holds a Bachelor of
Science and a Certificate of Business Management from the University of
Manitoba, an MBA from Simon Fraser University, and a Business Administration
diploma from the University of Toronto. Date of birth is January 25, 1940.

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45

Peter Quick, Mill Neck, New York, USA - Director

Mr. Quick currently serves on the Board of Directors for Fund
for the Poor, the Board of Governors of St. Francis Hospital on Long Island, and
the National Selection Committee for the Jefferson Scholars Program of the
University of Virginia. Mr. Quick is past President and CEO of Quick &
Reilly, Inc. and a former President of the American Stock Exchange. Mr. Quick
has also served on the Board of Governors of the Chicago Stock Exchange and as
Chairman of the Midwest Securities Trust Company. Mr. Quick received a
bachelor's degree in engineering from the University of Virginia and attended
Stanford University's Graduate School of Petroleum Engineering. He was a
lieutenant in the United States Navy, and served four years active duty. Date of
birth is February 11, 1956.

Dawson Reimer, MAES  President and Chief Operating Officer

Dawson Reimer proceeded from a Master's Degree in Economic
Development, University of Waterloo to be employed as a full-time consultant to
the Federal Department of Western Diversification. In this capacity, he
conducted entrepreneurship training and developed a business start-up training
program. Beginning in 1996, he served as Business Development/Investor Relations
with Genesys Pharma Inc. He was also project coordinator for the establishment
of the Company's new research and pharmaceutical production facility. In 1997,
he began conducting business activities for Genesys Venture Inc., a biotech
business incubator, where he has assisted numerous biotechnology ventures in
developing business plans, obtaining financing, and developing intellectual
property protection. In this capacity, Mr. Reimer became actively involved in
the Company at its inception and has been directly employed by the Company since
2001. Mr. Reimer is a son-in-law of Dr. Albert D. Friesen, Director, President,
Chairman and Chief Executive Officer. Date of birth is May 7, 1971.

James Kinley, CA  Chief Financial Officer

James has acted as The Companys Chief Financial Officer since
September 2011. His services are provided to the Company through a Management
Services Agreement with Genesys Venture Inc. (GVI). Previous to his time at
GVI and the Company, he was Manager, Financial Reporting at Manitoba Telecom
Services Inc. and was involved in all aspects of financial reporting, including
publicly filed documents such as their financial statements. James is a
Chartered Accountant and holds a Bachelor of Commerce (Hons.) degree from the
University of Manitoba. Date of birth is July 9, 1978.

Management

Dr. Albert D. Friesen - Chairman, Chief Executive Officer
and Director: Dr. Friesen directs the overall business management of the
Company (see Directors and Senior Management under this item).

Dawson Reimer - President and Chief Operating Officer:
Subject to the direction of the Chief Executive Officer, Mr. Reimer has general
charge of the Corporations day to day business activities with a primary focus
on its commercial direction, including the advancement and management of new and
existing pharmaceutical products. (See Directors and Senior Management under
this item)

James Kinley, CA - Chief Financial Officer: Mr. Kinley
is responsible for the Companys financial management and accounting practices
(see Directors and Senior Management under this item).

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46

B. Compensation

No compensation of any kind was paid to the directors, and
executive officers of the Company during the year ended May 31, 2011, except for
the accrual for unpaid board compensation described below and stock-based
compensation described in Item 6(E) below and as follows:

On October 1, 2001, a compensation agreement was entered into
between the Company and A.D. Friesen Enterprises Ltd., a corporation owned by
Dr. Friesen and subsequently amended on October 1, 2003, October 1, 2005,
October 1, 2006, and October 1, 2007. For the year ended May 31, 2011, the
Company paid A.D. Friesen Enterprises Ltd., $201,000 in consulting compensation,
including taxable benefits. Dr. Friesen is eligible for an annual bonus, if
certain objectives of the Company are met, as determined by the Board of
Directors.

Dawson Reimer serves the Company as President and Chief
Operating Officer and received a salary of $161,000 payable in equal
semi-monthly instalments in fiscal 2011.

During the year ended May 31, 2011, the Company paid directors
a total of Nil (Year ended May 31, 2010: Nil; Year ended May 31, 2009: Nil; Year
ended May 31, 2008: Nil; Year ended May 31, 2007: Nil) for consulting fees.

The Company has agreed to provide its independent directors
$2,000 for each quarterly board meeting they personally attend ($1,000 via
telephone), and $1,500 for each quarterly executive compensation, nominating and
corporate governance committee meeting or audit and finance committee meeting
they attend.

For fiscal 2011 and prior, due to the Companys current
financial position, the board had offered and committed not to request, and has
therefore not received, any compensation for their services as independent
directors. As at May 31, 2011, the Company had accrued director compensation of
$295,000 relating to the independent directors service as directors prior to
May 31, 2011.

The Company does not provide any cash compensation for its
directors who are also officers of the Company for their services as directors.

No pension, retirement fund and other similar benefits have
been set aside for the officers and directors of the Company.

C. Board Practices

The Board of Directors presently consists of four directors who
were elected at the Companys annual general meeting of the shareholders held on
November 29, 2010. Each director holds office until the next annual general
meeting of the Company or until his successor is elected or appointed, unless
his office is earlier vacated in accordance with the Articles of the Company, or
with the provisions of the Canada Business Companys Act. Dr. Albert D.
Friesen has served as a director of the Company since September 1997. Dr. Arnold
Naimark has served as a director of the Company since March 2000. Gerald McDole
has served as a director of the Company since January 2004. Peter Quick has
served as a director of the Company since November 2005.

Audit and Finance CommitteePursuant to
Section 171 of the Canada Business Companys Act (the Act), the
Company is required to have an Audit Committee. As at the date hereof, the Audit
and Finance Committee is comprised of three independent directors: Gerald McDole
(Chair), Dr. Arnold Naimark, and Peter Quick. The relevant experience of each member is described above. (See Item 6.
Directors, Senior Management and Employees) Section 171(1) of the Act requires
the directors of a reporting corporation to elect from among their number a
committee composed of not fewer than three directors, of whom a majority must
not be officers or employees of the corporation or an affiliate of the
corporation. Section 171(3) of the Act provides that, before financial
statements are approved by the directors, they must be submitted to the audit
committee for review. Section 171(4) of the Act provides that the auditor must
be given notice of, and has the right to appear before and to be heard at, every
meeting of the audit committee, and must appear before the audit committee when
requested to do so by the committee. Finally, section 171(5) of the Act provides
that on the request of the auditor, the audit committee must convene a meeting
of the audit committee to consider any matters the auditor believes should be
brought to the attention of the directors or members.

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47

Under the Sarbanes-Oxley Act of 2002, the independent auditor
of a public Company is prohibited from performing certain non-audit services.
The Audit and Finance Committee has adopted procedures and policies for the
pre-approval of non-audit services, as described in the audit committee charter.

AUDIT AND FINANCE COMMITTEE CHARTER

GENERAL FUNCTIONS, AUTHORITY, AND ROLE

The purpose of the Audit and Finance Committee is to oversee
the accounting and financial reporting processes of the Company and the audits
of its financial statements, and thereby assist the Board in monitoring (1) the
integrity of the financial statements of the Company, (2) compliance by the
Company with ethical policies and legal and regulatory requirements related to
financial reporting, (3) the appointment, compensation, qualifications,
independence and performance of the Companys internal and external auditors,
(4) the performance of the Company's independent auditors, and (5) performance
of the Company's internal controls and financial reporting process.

The Audit and Finance Committee has the power to conduct or
authorize investigations into any matters within its scope of responsibilities,
with full access to all books, records, facilities and personnel of the Company,
its auditors and its legal advisors. In connection with such investigations or
otherwise in the course of fulfilling its responsibilities under this charter,
the Audit and Finance Committee has the authority to independently retain
special legal, accounting, or other consultants to advise it, and may request
any officer or employee of the Company, its independent legal counsel or
independent auditor to attend a meeting of the Audit and Finance Committee or to
meet with any members of, or consultants to, the Audit and Finance Committee.
The Audit and Finance Committee has the power to create specific sub-committees
with all of the power to conduct or authorize investigations into any matters
within the scope of the mandate of the sub-committee, with full access to all
books, records, facilities and personnel of the Company, its auditors and its
legal advisors.

The Company's independent auditor is ultimately accountable to
the Board of Directors and to the Audit and Finance Committee, who, as
representatives of the Company's shareholders, have the authority and
responsibility to evaluate the independent auditor, appoint and replace the
independent auditor, and to determine appropriate compensation for the
independent auditor. In the course of fulfilling its specific responsibilities
hereunder, the Audit and Finance Committee must maintain free and open
communication between the Company's independent auditors, Board of Directors and
Company management. The responsibilities of a member of the Audit and Finance
Committee are in addition to such member's duties as a member of the Board of
Directors.

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48

While the Audit and Finance Committee has the responsibilities
and powers set forth in this charter, it is not the duty of the Audit and
Finance Committee to plan or conduct audits or to determine that the Company's
financial statements are complete, accurate, and in accordance with generally
accepted accounting principles. This is the responsibility of management and the
independent auditor. Nor is it the duty of the Audit and Finance Committee to
conduct investigations, to resolve disagreements, if any, between management and
the independent auditor or to assure compliance with laws and regulations and
the Companys Code of Ethics. Any responsibilities that the Audit and Finance
Committee has the power to act upon, may be recommended to the Board to act
upon.

MEMBERSHIP

The membership of the Audit and Finance Committee will be as
follows:

The Committee shall consist of a minimum of three members of
the Board of Directors, appointed from time to time, each of whom is
affirmatively confirmed as independent by the Board of Directors, with such
affirmation disclosed in the Company's annual Information Circular.

The Board will elect, by a majority vote, one member as
chairperson.

The members of the Audit and Finance Committee will meet all
independence and financial literacy requirements of The American Stock Exchange,
The Toronto Stock Exchange, Rule 10A-3 of the Securities Exchange Act of 1934,
as amended, Multilateral Instrument 52-110 and the requirements of such other
securities exchange or quotations system or regulatory agency as may from time
to time apply to the Company.

A member of the Audit and Finance Committee may not, other than
in his or her capacity as a member of the Audit and Finance Committee, the Board
of Directors, or any other Board committee, accept any consulting, advisory, or
other compensatory fee from the Company, and may not be an affiliated person of
the Company or any subsidiary thereof.

RESPONSIBILITIES

The responsibilities of the Audit and Finance Committee shall
be as follows:

Frequency of Meetings

Meet quarterly or more often as may be deemed necessary or
appropriate in its judgment, either in person or telephonically.

The Audit and Finance Committee will meet with the independent
auditor at least quarterly, either in person or telephonically.

Reporting Responsibilities

Provide to the Board of Directors proper Committee minutes.

Report Committee actions to the Board of Directors with such
recommendations as the Committee may deem appropriate.

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49

Charter Evaluation

Annually review and reassess the adequacy of this Charter and
recommend any proposed changes to the Board of Directors for approval.

Whistleblower Mechanism

Adopt and review annually a procedure through which employees
and others can anonymously inform the Audit and Finance Committee regarding any
concerns about the Company's accounting, internal accounting controls or
auditing matters. The procedure shall include responding to and the retention
of, any such complaints.

Legal Responsibilities

Perform such functions as may be assigned by law, by the
Company's certificate of incorporation, memorandum, articles or similar
documents, or by the Board of Directors.

INDEPENDENT AUDITOR

Nominations

Nominates annually the independent auditor to be proposed for
shareholder approval.

Compensation and Evaluation

Approve the compensation of the independent auditor, evaluate
the performance of the independent auditor and, if so determined by the
Committee, replace the independent auditor.

Pre-approve all related party transactions, which are
transactions or loans between the Company and a related party involving goods,
services, or tangible or intangible assets that are (1) material to the Company
or the related party, or (2) unusual in their nature or conditions. A related
party includes an affiliate, major shareholder, officer, other key management
personnel or director of the Company, a Company controlled by any of those
parties or a family member of any of those parties.

Engagement Procedures for Audit and Non-audit Services

Approve in advance all audit services to be provided by the
independent auditor. Establish policies and procedures that establish a
requirement for approval in advance of the engagement of the independent auditor
to provide permitted non-audit services and to prohibit the engagement of the
independent auditor for any activities or services not permitted by any of the
Canadian provincial securities commissions, the SEC or any securities exchange
on which the Company's shares are traded including any of the following ten
types of non-audit services:

Bookkeeping or other services related to accounting records or
financial statements of the Company;

Financial information systems design and
  implementation consulting services;

Appraisal or valuation services, fairness
  opinions, or contributions-in-kind reports;

Actuarial services;

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50

Internal audit outsourcing services;

Any management or human resources function;

Broker, dealer, investment advisor, or investment banking
services;

Legal services;

Expert services related to the auditing service; and

Any other service the Board of Directors determines is not permitted.

Hiring Practices

Ensure that no individual who is, or in the past 3 years has
been, affiliated with or employed by a present or former auditor of the Company
or an affiliate, is hired by the Company as a senior officer until at least 3
years after the end of either the affiliation or the auditing relationship.

Independence Test

Take reasonable steps to confirm the independence of the
independent auditor, which shall annually include:

Ensuring receipt from the independent auditor of a formal
written statement delineating all relationships between the independent auditor
and the Company, consistent with the Independence Standards Board Standard No. 1
and related Canadian regulatory body standards;

Considering and discussing with the independent auditor any
relationships or services provided to the Company, including non-audit services,
that may impact the objectivity and independence of the independent auditor; and

As necessary, taking, or recommending that the Board of
Directors take, appropriate action to oversee the independence of the
independent auditor and evaluate whether it is appropriate to rotate the
independent auditor on a regular basis.

Audit and Finance Committee Meetings

Notify the independent auditor of every Audit and Finance
Committee meeting and permit the independent auditor to appear and speak at
those meetings.

At the request of the independent auditor, convene a meeting of
the Audit and Finance Committee to consider matters the auditor believes should
be brought to the attention of the directors or shareholders.

Keep minutes of its meetings and report to the Board for
approval of any actions taken or recommendations made.

Restrictions

Confirm with management and the independent auditor that no
restrictions are placed on the scope of the auditors' review and examination of
the Company's accounts.

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51

OTHER PROFESSIONAL CONSULTING SERVICES

Engagement Review

As necessary, consider with management the rationale and
selection criteria for engaging professional consulting services firms.

Ultimate authority and responsibility to select, evaluate and
approve professional consulting services engagements.

AUDIT AND REVIEW PROCESS AND RESULTS

Scope

Consider, in consultation with the independent auditor, the
audit scope, staffing and planning of the independent auditor.

Review Process and Results

Consider and review with the independent auditor the matters
required to be discussed by Statement on Auditing Standards No. 61, as the same
may be modified or supplemented from time to time.

Review and discuss with management and the independent auditor
at the completion of annual and quarterly examinations:

The Company's audited and unaudited financial statements and
related notes;

The Company's MD&A and news releases related to financial
  results;

The independent auditor's audit of the financial statements and its
  report thereon;

Any significant changes required in the independent auditor's
  audit plan;

The appropriateness of the presentation of any non-GAAP related
  financial information;

Any serious difficulties or disputes with management
encountered during the course of the audit; and

Other matters related to the conduct of the audit, which are to
be communicated to the Audit and Finance Committee under generally accepted
auditing standards.

Review the management letter delivered by the independent
auditor in connection with the audit.

Following such review and discussion, if so determined by the
Committee, recommend to the Board that the annual financial statements be
included in the Company's annual report.

Review, discuss with management and approve annual and interim
quarterly financial statements prior to public disclosure. The chairperson of
the Audit and Finance Committee may represent the entire Audit and Finance
Committee for purposes of this review.

Review and discuss with management and the independent auditor
the adequacy of the Company's internal accounting and financial controls that
management and the Board of Directors have established and the effectiveness of those systems, and inquire of
management and the independent auditor about significant financial risks or
exposures and the steps management has taken to minimize such risks to the
Company.

---

52

Meet separately with the independent auditor and management, as
necessary or appropriate, to discuss any matters that the Audit and Finance
Committee or any of these groups believe should be discussed privately with the
Audit and Finance Committee.

Review and discuss with management and the independent auditor
the accounting policies which may be viewed as critical, including all
alternative treatments for financial information within generally accepted
accounting principles that have been discussed with management, and review and
discuss any significant changes in the accounting policies of the Company and
industry accounting and regulatory financial reporting proposals that may have a
significant impact on the Company's financial reports.

Review with management and the independent auditor the effect
of regulatory and accounting initiatives as well as off-balance sheet
structures, if any, on the Company's financial statements.

Review with management and the independent auditor any
correspondence with regulators or governmental agencies and any employee
complaints or published reports which raise material issues regarding the
Company's financial statements or accounting policies.

Review with the Company's General Counsel legal matters that
may have a material impact on the financial statements, the Company's financial
compliance policies and any material reports or inquiries received from
regulators or governmental agencies related to financial matters.

SECURITIES REGULATORY FILINGS

Review filings with the Canadian provincial securities
commissions and the SEC and other published documents containing the Company's
financial statements.

Review, with management and the independent auditor, prior to
filing with regulatory bodies, the interim quarterly financial reports
(including related notes and MD&A) at the completion of any review
engagement or other examination. The chairperson of the Audit and Finance
Committee may represent the entire Audit and Finance Committee for purposes of
this review.

RISK ASSESSMENT

Meet periodically with management to review the Company's major
financial risk exposures and the steps management has taken to monitor and
control such exposures.

Assess risk areas and policies to manage risk including,
without limitation, environmental risk, insurance coverage and other areas as
determined by the Board of Directors from time to time.

Review and discuss with management, and approve changes to, the
Company's Corporate Treasury Policy.

ADOPTION OF AUDIT AND FINANCE COMMITTEE CHARTER

This charter was originally adopted by the Board of Directors
on August 23, 2004 and is reviewed and amended as necessary on an annual basis.

---

53

Executive Compensation, Nominating and Corporate
Governance Committee

The Executive Compensation, Nominating and Corporate Governance
Committee is responsible for determining the compensation of executive officers
of the Company. The current members of the Committee are Dr. Arnold Naimark
(Chair), Gerald McDole and Peter Quick, none of whom is a current or former
executive officer of the Company. The Committee meets at least once a year.

The Committee has developed a policy to govern the Company's
approach to corporate governance issues and provides a forum for concerns of
individual directors about matters not easily or readily discussed in a full
board meeting, e.g., the performance of management. The Committee ensures there
is a clear definition and separation of the responsibilities of the Board, the
Committees of the Board, the Chief Executive Officer and other management
employees. It also ensures there is a process in place for the orientation and
education of new directors and for continuing education of the Board. The
Committee also assesses the effectiveness of the Board and its committees on an
ongoing ad hoc basis. It also reviews at least annually the Company's
responsiveness to environmental impact, health and safety and other regulatory
standards.

The Committee reviews the objectives, performance and
compensation of the Chief Executive Officer at least annually and makes
recommendations to the Board for change. The Committee makes recommendations
based upon the Chief Executive Officers suggestions regarding the salaries and
incentive compensation for senior officers of the Company. The Committee also
reviews significant changes to compensation, benefits and human resources
policies and compliance with current human resource management practices, such
as pay equity, performance review and staff development. The Committee is
responsible for reviewing and recommending changes to the compensation of
directors as necessary.

The charter of the Executive Compensation, Nominating and
Corporate Governance Committee can be found on the Companys website at
www.medicure.com.

D. Employees

In addition to the individuals disclosed in Section A.
Directors and Senior Management of this item, the Company has 4 employees.

E. Share Ownership

With respect to the persons referred to above in Section B,
Compensation, the following table discloses the number of shares (each share
possessing identical voting rights), stock options held and percent of the
shares outstanding held by those persons at May 31, 2011.

Title of Class
    Identity of Person or
      Group
    Amount Owned
    
    
    Percentage of ClassCommon shares
    Dr. Albert D.
      Friesen(1)(2)(3)
    9,621,699
    (1)
    
    7.38
    %Common shares
    Dr. Arnold Naimark
    Nil
    
    
    NilCommon shares
    Gerald P. McDole
    10,000
    
    
    0.01
    %Common shares
    Peter Quick
    Nil
    
    
    NilCommon shares
    James Kinley
    Nil
    
    
    NilCommon shares
    Dawson Reimer
    289,735
    
    
    0.22
    %


---

54

|(1) | Dr. Albert D. Friesen holds 2,837,500 shares personally
      or in an RRSP, a Canadian individual retirement plan. The rest of the
      shares are held by ADF Family Holding Corp., his wife Mrs. Leona M.
      Friesen, and CentreStone Ventures Limited Partnership Fund (the Fund).
      Dr. Friesen is the General Partner of the Fund.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | On July 18, 2011, the Company issued 20,000,000 common
      shares of the Company to Dr. Albert D. Friesen and entities controlled by
      Dr. Albert D. Friesen for consideration relating to the guarantee of a
      loan obtained subsequent to May 31, 2011, as described in Note 16 to the
      accompanying financial statements.       
|(3) | Additionally, Dr. Albert D. Friesen purchased an
      additional 200,000 shares subsequent to May 31, 2011 on the open
      market.                                                                                                                                                                                                             

Incentive Stock Options

The following table discloses the stock options beneficially
held by the aforementioned persons, as of May 31, 2011. The stock options are
for shares of Common Stock of the Company.

Name of Person
    Number of
      Shares Subject to Issuance
    Exercise Price
      per Share
    Expiry DateDr. Albert D. Friesen
    150,000 150,000
    $1.65 $1.63
    December 6, 2015 October 14, 2016Dr. Arnold Naimark
    35,000 110,000 50,000
      10,000
    $1.65 $0.98 $0.04
      $0.04
    December 6, 2015 December 11, 2017
      September 3, 2018 April 16, 2019Gerald P. McDole
    75,000 10,000 50,000
      10,000
    $1.65 $0.98 $0.04
      $0.04
    December 6, 2015 December 11, 2017
      September 3, 2018 April 16, 2019Peter Quick
    100,000 50,000 10,000
      50,000 10,000
    $1.65 $1.54 $0.98
      $0.04 $0.04
    December 6, 2015 January 16, 2017
      December 11, 2017 September 3, 2018 April 16, 2019James Kinley
    nil
    n/a
    n/aDawson Reimer
    65,000 100,000 100,000
    $1.65 $1.63 $0.03
    December 6, 2015 October 14, 2016
      November 10, 2018


The Company has established an Incentive Stock Option Plan (the
Plan) for its directors, key officers, employees and consultants. Options
granted pursuant to the Plan will not exceed a term of ten years and are granted
at an option price and on other terms which the directors determine is necessary
to achieve the goal of the Plan and in accordance with regulatory requirements,
including those of the TSX Venture Exchange. Each option entitles the holder
thereof to purchase one (1) Common Share of the Company on the terms set forth
in the Plan and in such purchasers specific stock option agreement. The option
price may be at a discount to market price, which discount will not, in any
event, exceed that permitted by any stock exchange on which the Companys Common
Shares are listed for trading.

---

55

The number of Common Shares allocated to the Plan, the exercise
period for the options (not to exceed five years), and the vesting provisions
for the options will be determined by the board of directors of the Company from
time to time. The aggregate number of shares reserved for issuance under the
Plan, together with any other employee stock option plans, options for services
and employee stock purchase plans, will not exceed 10% of the issued and
outstanding Common Shares.

The Common Shares issued pursuant to the exercise of options,
when fully paid for by a participant, are not included in the calculation of
Common Shares allocated to or within the Plan. Should a participant cease to be
eligible due to the loss of corporate office (being that of an officer or
director) or employment, the option shall cease for varying periods not
exceeding 90 days. Loss of eligibility for consultants is regulated by specific
rules imposed by the directors when the option is granted to the appropriate
consultant. The Plan also provides that estates of deceased participants can
exercise their options for a period not exceeding one year following death.

On July 18, 2011, the Company issued 12,542,000 stock options
under the Company's approved stock option plan to employees and consultants of
the Company, including the chief executive officer and chief operating officer,
at an exercise price of $0.10 per common share. The options vested immediately
and expire after ten years.

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY
TRANSACTIONS

A. Major Shareholders

As of May 31, 2011, the following table sets forth the
beneficial ownership of the Company's common shares by each person known by the
Company to own beneficially more than 5% of the issued and outstanding common
shares of the Company. Information as to shares beneficially owned, directly or
indirectly, by each nominee or over which each nominee exercises control or
direction, not being within the knowledge of the Company, has been furnished by
the respective nominees individually. CDS & Company, Toronto, Ontario is a
clearing house that owns approximately 76,483,337 (58.7%) of common shares of
the Company on behalf of beneficial owners. The Company does not know the
majority of the ultimate beneficial owners of these common shares.

|Title of Class | Identity of Person or Group                            | Amount Owned | Percentage of
      Class
|-------------- | ------------------------------------------------------ | ------------ | -------------------------
|               |                                                        |              |                          
|Common shares  | Dr. Albert D.
      Friesen(2)(3)(4)Winnipeg, Manitoba | 9,621,699(1) | 7.38%                    
|Common shares  | Dr. Lars Hoie London, England                          | 20,018,230   | 15.36%                   

Notes:

|(1) | Amount of shares as of May 31, 2011.                                                                                                                                                                                                                                                                                                       
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Dr. Albert Friesen holds 2,837,500 shares personally or
      in an RRSP. The rest of the shares are held by ADF Family Holding Corp.,
      his wife Mrs. Leona M. Friesen, and the Fund.                                                                                                                                                 
|(3) | On July 18, 2011, the Company issued 20,000,000 common
      shares of the Company to Dr. Albert D. Friesen and entities controlled by
      Dr. Albert D. Friesen for consideration relating to the guarantee of a
      loan obtained subsequent to May 31, 2011, as described in Note 16 to the
      accompanying financial statements.
|(4) | Additionally, Dr. Albert D. Friesen purchased an
      additional 200,000 shares subsequent to May 31, 2011 on the open
      market.                                                                                                                                                                                                      

---

56

As of April 27, 2009, there were approximately 6,860
shareholders of record worldwide. As of this date there were approximately 1,602
shareholders of record in the United States holding a total of 24,906,240 common
shares of the Company.

To the best of the Company's knowledge, it is not owned or
controlled, directly or indirectly, by another Company, by any foreign
government or by any other natural or legal person severally or jointly.

As of May 31, 2011, the total number of issued and outstanding
common shares of the Company beneficially owned by the directors and executive
officers of the Company as a group was 10,940,499 (or 8.40% of common shares).

To the best of the Company's knowledge, there are no
arrangements, the operation of which at a subsequent date will result in a
change in control of the Company.

The major shareholders do not have any special voting rights.

B. Related Party Transactions

Other than as set forth below, management of the Company is not
aware of any material interest, direct or indirect, of any director or officer
of the Company, any person beneficially owning, directly or indirectly, more
than 10% of the Companys voting securities, or any associate or affiliate of
any such person in any transaction within the last three years or in any
proposed transaction which in either case has materially affected or will
materially affect the Company or its subsidiaries.

On October 1, 2001, a two-year consulting contract was entered
into with A.D. Friesen Enterprises Ltd., a corporation owned by Dr. Friesen.
This agreement, which was subsequently amended on February 1, 2002, paid A.D.
Friesen Enterprises Ltd. an annual salary of $150,000 payable in monthly
instalments. On October 1, 2003 a new two year consulting contract was entered
into with A.D. Friesen Enterprises Ltd. for an annual salary of $175,000. On
October 1, 2005, a one-year consulting contract was entered into with A.D.
Friesen Enterprises Ltd. for an annual salary of $200,000. On October 1, 2006, a
two-year consulting contract was entered into with A.D. Friesen Enterprises Ltd.
for an annual salary of $250,000. On October 1, 2007, a consulting contract was
entered into with A.D. Friesen Enterprises Ltd. for an annual salary of
$275,000. The consulting contract expired on December 31, 2008. During the year
ended May 31, 2008, the Company paid a total of $272,249 to A.D. Friesen
Enterprises Ltd. This salary is reviewed annually by the Board. Dr. Friesen is
also eligible for grants of incentive stock options and bonuses, if certain
objectives between the Board and Dr. Friesen are met, as determined by the
Board. During the year ended May 31, 2011, the Company paid a total of $201,000
to A.D. Friesen Enterprises Ltd. During the year ended May 31, 2010 the Company
paid a total of $281,000 to A.D. Friesen Enterprises Ltd. During the year ended
May 31, 2009, the Company paid a total of $281,000 to A.D. Friesen Enterprises
Ltd.

Dr. Friesen, a director, the Chairman, the President and the
Chief Executive Officer of the Company also owns a leasing company, Waverley
Business and Science Centre Inc. (1200 Waverley Street, Winnipeg) which entered
into a lease with the Company as of March 1, 2002. The lease agreement was
subsequently amended on March 15, 2005. Pursuant to this agreement, the Company
leased approximately 4,000 square feet of office space from Waverley Business
and Science Centre Inc. for minimum annual rental payments of $44,264, with
additional overhead payable under the lease dependant on usage. The lease
terminated effective October 31, 2010. Also in October 2010, the Company entered
into a lease with South Waverley Business and Science Centre Inc. (1250 Waverley
Street, Winnipeg), which is a leasing company also owned by Dr. Friesen.
Pursuant to this agreement, as at May 31, 2011, the Company has leased
approximately 750 scquare feet of office space. During the fiscal year 2011,
$17,671 was paid for base and additional rent. During fiscal 2010, $45,477 was paid
for base and additional rent. During fiscal 2009, $69,012 was paid for base and
additional rent.

---

57

Dr. Friesen, a director, the Chairman, the President and the
Chief Executive Officer of the Company is also the majority shareholder in a
management service company, Genesys Venture Inc. which entered into a management
service agreement with the Company as of October 1, 2010. The Chief Financial
Officer's services, intellectual property management, accounting, payroll, human
resources, and information technology are provided pursuant to this agreement.
During fiscal 2011 $225,000 was paid in accordance with the terms of this
agreement.

Dr. Friesen, a director, the Chairman, the President and the
Chief Executive Officer of the Company also owns a clinical research
organization, GVI Clinical Development Solutions Inc. (GVI CDS) which entered
into the following clinical research contracts with the Company;

|Nature of Agreement                           | Effective Date | Terms                                                                                                      
|--------------------------------------------- | -------------- | -----------------------------------------------------------------------------------------------------------
|Regulatory affairs support                    | June 22, 2009  | Services provided
      as needed.                                                                         
|Pharmacovigilance and medical affairs support | August 1, 2009 | Monthly retainer of $4,000, plus
      hourly charges for pharmacovigilance services outside base services.
|Quality assurance support                     | June 1, 2010   | Services provided
      as needed.                                                                         
|AGGRASTAT®clinical trial management           | May 1, 2010    | Services provided for on an
      hourly fee basis under terms of the contract.                            

During the fiscal 2011, $169,762 was paid to GVI CDS.

C. Interests of Experts and Counsel

Not applicable

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements or Other Financial Information

Financial Statements

Included in Item 17 hereto are the consolidated financial
statements of the Company for the years ended May 31, 2011, 2010 and 2009. The
consolidated financial statements including related notes are accompanied by the
report of the Companys independent registered public accounting firm, KPMG LLP.

Legal Proceedings

There are no legal or arbitration proceedings, including those
relating to bankruptcy, receivership or similar proceedings and those involving
any third party, which may have, or have had in the recent past, significant
effects on the Companys financial position or profitability. There are no
significant legal proceedings to which the Company is a party, nor to the best
of the knowledge of the Companys management are any legal proceedings
contemplated.

---

58

Dividend Policy

The Company has not paid dividends in the past and it has no
present intention of paying dividends on its shares as it anticipates that all
available funds will be invested to finance the growth of its business. The
directors of the Company will determine if and when dividends should be declared
and paid in the future based upon the Companys financial position at the
relevant time. All of the Companys Shares are entitled to an equal share of any
dividends declared and paid.

ITEM 9. THE OFFERING AND LISTING

A. Listing Details

The Company's common shares are listed and traded on NEX board
of the TSX Venture Exchange (NEX) under the symbol MPH.H. Prior to March 26,
2010, The Companys shares traded on the Toronto Stock Exchange. The historical
trading data for the common shares of the Company on the above-mentioned
exchanges is set out below.

TSX/NEX
    TSX/NEX
    Amex(1)
    Amex(1)Fiscal Period/Year Ended
    High ($)
    Low ($)
    High ($US)
    Low($US)May 31, 2011
    0.03
    0.005
    (2)
    (2)May 31, 2010
    0.06
    0.01
    (2)
    (2)May 31, 2009
    0.06
    0.02
    (2)
    (2)May 31, 2008
    1.70
    0.06
    1.64
    0.05May 31, 2007
    1.88
    1.10
    1.70
    0.91Fiscal Quarter EndedMay 31, 2011
    0.03
    0.005February 28, 2011
    0.02
    0.01November 30, 2010
    0.02
    0.01August 31, 2010
    0.025
    0,01May 31, 2010
    0.04
    0.02February 28, 2010
    0.06
    0.02November 30, 2009
    0.05
    0.01August 30, 2009
    0.02
    0.01MonthAugust 2011
    0.045
    0.03July 2011
    0.075
    0.02June 2011
    0.03
    0.015May 2011
    0.03
    0.005April 2011
    0.015
    0.005March 2011
    0.015
    0.01


Note:

|(1) | The Company commenced trading on the American Stock
      Exchange on February 17, 2004.
|--- | ----------------------------------------------------------------------------------------
|(2) | The Company ceased trading on the American Stock Exchange
      on July 3, 2008.        

---

59

C. Markets

The Company's common shares commenced trading on the Toronto
Stock Exchange on March 15, 2002 and on the American Stock Exchange on February
17, 2004. The Companys shares ceased trading on the Amex effective July 3, 2008
and transferred from the Toronto Stock Exchange to the NEX board of the TSX
Venture Exchange on March 26, 2010.

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable

B. Memorandum and Articles of Association

1.    Objects and Purposes of the Company

The Memorandum of the Company places no restrictions upon the
Companys objects and purposes.

2.    Directors

Under applicable Canadian law, the directors and officers of
the Company, in exercising their powers and discharging their duties, must act
honestly and in good faith with a view to the best interests of the Company. The
directors and officers must also exercise the care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances.

Section 4.14 of By-Law No.1 of the Company (the By-Law)
provides that a director shall not be disqualified by reason of his office from
contracting with the Company or a subsidiary thereof. Subject to the provisions
of the Canada Business Companys Act(the Act), a director shall not by
reason only of his office be accountable to the Company or its shareholders for
any profit or gain realized from a contract or transaction in which he has an
interest. Such contract or transaction shall not be voidable by reason only of
such interest, or by reason only of the presence of a director so interested at
a meeting, or by reason only of his presence being counted in determining a
quorum at a meeting of the directors at which such a contract or transaction is
approved, provided that a declaration and disclosure of such interest shall have
been made at the time and in the manner prescribed by section 120 of the Act,
and the director so interested shall have refrained from voting as a director on
the resolution approving the contract or transaction (except as permitted by the
Act) and such contract shall have been reasonable and fair to the Company and
shall have been approved by the directors or shareholders of the Company as
required by section 120 of the Act.

Section 4.01 of the By-Law states that the exact number of
directors to form the board shall be determined from time to time by the
directors of the Company entitled to vote at regular meetings. A quorum of the
board shall be a majority of the board. No business shall be transacted at a
meeting unless a quorum is present.

Section 3.01 of the By-Law states that the board may, without
the authorization of the shareholders:

|i)  | borrow money upon the credit of the Company;                                                                                                                                                  
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ii) | issue, reissue, sell or pledge debt obligations of the
      Company, including bonds, debentures, notes or other evidences of
      indebtedness or guarantees, whether secured or
unsecured;

---

60

|iii) | subject to section 44 of the Act, give a guarantee on
      behalf of the Company to secure performance of an obligation of any
      person; and                                                  
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|iv)  | mortgage, hypothecate, pledge or otherwise create a
      security interest in all or any property of the Company, owned or
      subsequently acquired, to secure any obligation of the
  Company.

The borrowing powers of the directors can be varied by amending
the By-Law of the Company.

There is no provision in the By-Law imposing a requirement for
retirement or non-retirement of directors under an age limit requirement.

Section 4.02 states that a director need not be a shareholder
to be qualified as a director.

3.    Shares

The Articles of the Company provide that the Company is
authorized to issue an unlimited number of shares designated as Common Shares,
Class A Common Shares and Preferred Shares. Except for meetings at which only
holders of another specified class or series of shares of the Company are
entitled to vote separately as a class or series, each holder of the Common and
Class A shares is entitled to receive notice of, to attend and to vote at all
meetings of the shareholders of the Company. Subject to the rights, privileges,
restrictions and conditions attached to any other class of shares of the
Company, the holders of the Common and Class A shares are also entitled to
receive dividends if, as and when declared by the directors of the Company and
are entitled to share equally in the remaining property of the Company upon
liquidation, dissolution or winding-up of the Company.

The Preferred Shares may from time to time be issued in one or
more series and, subject to the following provisions, and subject to the sending
of articles of amendment in respect thereof, the directors may fix from time to
time and before issue a series of Preferred Shares, the number of shares which
are to comprise that series and the designation, rights, privileges,
restrictions and conditions to be attached to that series of Preferred Shares
including, without limiting the generality of the foregoing, the rate or amount
of dividends or the method of calculating dividends, the dates of payment of
dividends, the redemption, purchase and/or conversion, and any sinking fund or
other provisions.

The Preferred Shares of each series shall, with respect to the
payment of dividends and the distribution of assets or return of capital in the
event of liquidation, dissolution or winding-up of the Company, whether
voluntary or involuntary, or any other return of capital or distribution of the
assets of the Company among its shareholders for the purpose of winding-up its
affairs, rank on a parity with the Preferred Shares of every other series and be
entitled to preference over the Common and Class A Common Shares and over any
other shares of the Company ranking junior to the Preferred Shares. The
Preferred Shares of any series may also be given other preferences, not
inconsistent with these articles, over the Common Shares and Class A Common
Shares and any other shares of the Company ranking junior to the Preferred
Shares of a series as may be fixed in accordance with terms outlined above.

If any cumulative dividends or amounts payable on the return of
capital in respect of a series of Preferred Shares are not paid in full, all
series of Preferred Shares shall participate rateably in respect of accumulated
dividends and return of capital.

Unless the directors otherwise determine in the articles of
amendment designating a series of Preferred Shares, the holder of each share or
a series of Preferred Shares shall not, as such, be entitled to receive notice
of or vote at any meeting of shareholders, except as otherwise specifically
provided in the Act.

---

61

4.    Rights of Shareholders

Under the Act, shareholders of the Company are entitled to
examine, during its usual business hours, the Companys articles and by-laws,
notices of directors and change of directors, any unanimous shareholder
agreements, the minutes of meetings and resolutions of shareholders and the list
of shareholders.

Shareholders of the Company may obtain a list of shareholders
upon payment of a reasonable fee and sending an affidavit to the Company or its
transfer agent stating, among other things, that the list of shareholders will
not be used by any person except in connection with an effort to influence the
voting of shareholders of the Company, an offer to acquire shares of the Company
or any other matter relating to the affairs of the Company.

Under the Act, shareholders of the Company may apply to a court
having jurisdiction directing an investigation to be made of the Company. If it
appears to the court that the formation, business or affairs of the Company were
conducted for fraudulent or unlawful purposes, or that the powers of the
directors were exercised in a manner that is oppressive or unfairly disregards
the interests of the shareholders, the court may order an investigation to be
made of the Company.

To change the rights of holders of stock, where such rights are
  attached to an issued class or series of shares, requires the consent by a separate
  resolution of the holders of the class or series of shares, as the case may
  be, requiring a majority of two-thirds of the votes cast.

The Company is organized under the laws of Canada. The majority
of the Companys directors, officers, and affiliates of the Company, as well as
the experts named in this registration statement, are residents of Canada and,
to the best of the Companys knowledge, all or a substantial portion of their
assets and all of the Companys assets are located outside of the United States.
As a result, it may be difficult for shareholders of the Company in the United
States to effect service of process on the Company or these persons above within
the United States, or to realize in the United States upon judgments rendered
against the Company or such persons. Additionally, a shareholder of the Company
should not assume that the courts of Canada (i) would enforce judgments of U.S.
courts obtained in actions against the Company or such persons predicated upon
the civil liability provisions of the U.S. federal securities laws or other laws
of the United States, or (ii) would enforce, in original actions, liabilities
against the Company or such persons predicated upon the U.S. federal securities
laws or other laws of the United States.

Laws in the United States and judgments of U.S. courts would
generally be enforced by a court of Canada unless such laws or judgments are
contrary to public policy in Canada, are or arise from foreign penal laws or
laws that deal with taxation or the taking of property by a foreign government
and are not in compliance with applicable laws in Canada regarding the
limitation of actions. Further, a judgment obtained in a U.S. court would
generally be recognized by a court of Canada, except under the following
examples:

|i)   | the judgment was rendered in a U.S. court that had no
      jurisdiction according to applicable laws in Canada;                                                                                                                                                                                                      
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ii)  | the judgment was subject to ordinary remedy (appeal,
      judicial review and any other judicial proceeding which renders the
      judgment not final, conclusive or enforceable under the laws of the
      applicable state) or not final, conclusive or enforceable under the laws
      of the applicable state;
|iii) | the judgment was obtained by fraud or in any manner
      contrary to natural justice or rendered in contravention of fundamental
      principles of procedure; and                                                                                                                                                  
|iv)  | a dispute between the same parties, based on the same
      subject matter has given rise to a judgment rendered in a court of Canada
      or has been decided in a third country and the judgment meets the
      necessary conditions for recognition in a court of
  Canada.                                      

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62

5.    Meetings

Subject to the provisions of the Act, the annual general
meeting of the shareholders shall be on such date in each year as the board of
directors may determine, and a special meeting of the shareholders may be
convened at any time by order of the President or by the board on their own
motion or on the requisition of shareholders as provided for in the Act. Notice
of the time and place of each meeting of shareholders shall be given not less
than 21 days nor more than 60 days before the date of the meeting to each
director and shareholder. A meeting of shareholders may be held without notice
at any time and at any place provided a waiver of notice is obtained in
accordance with section 136 of the Act. The quorum for the transaction of
business at meetings of the shareholders shall consist of not less than one (1)
shareholder present or represented by proxy and holding in all not less than
five (5%) percent of the issued capital of the Company carrying voting rights.
At any meeting of shareholders, every person shall be entitled to vote who, at
the time of the taking of a vote (or, if there is a record date for voting, at
the close of business on such record date) is entered in the register of
shareholders as the holder of one or more shares carrying the right to vote at
such meeting, subject to the provisions of the Act.

6.    Ownership of Securities

There are no limitations on the right to own securities,
imposed by foreign law or by the By-Law or other constituent document of the
Company.

7.    Change in Control of Company

No provision of the Companys articles of association, charter
or By-Law would have the effect of delaying, deferring, or preventing a change
in control of the Company, and operate only with respect to a merger,
acquisition or corporate restructuring of the Company or any of its
subsidiaries. The Company does have a shareholder rights plan as outlined in
Item 3.D  Risk Factors.

8.    Ownership Threshold

The Manitoba and Ontario Securities Acts provide that a
person that has direct or indirect beneficial ownership of, control or direction
over, or a combination of direct or indirect beneficial ownership of, and
control or direction over, securities of the issuer carrying more than 10% of
the voting rights attached to all the issuer's outstanding voting securities
must, within 10 days of becoming an "insider", file an insider report in the
required form effective the date on which the person became an insider,
disclosing any direct or indirect beneficial ownership of, or control or
direction over, securities of the reporting issuer. The Manitoba and Ontario
Securities Acts also provide for the filing of a report by an "insider"
of a reporting issuer who acquires or transfers securities of the issuer. This
insider report must be filed within 5 days after the change takes place.

The U.S. rules governing the ownership threshold above which
shareholder ownership must be disclosed are more stringent than those discussed
above. Section 13 of the Exchange Act imposes reporting requirements on persons
who acquire beneficial ownership (as such term is defined in the Rule 13d-3
under the Exchange Act) of more than 5 per cent of a class of an equity security
registered under Section 12 of the Exchange Act. In general, such persons must
file, within 10 days after such acquisition, a report of beneficial ownership
with the Securities and Exchange Commission containing the information
prescribed by the regulations under Section 13 of the Exchange Act. This
information is also required to be sent to the issuer of the securities and to
each exchange where the securities are traded.

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63

C. Material Contracts

The following are the material contracts of the Company, other
than those mentioned elsewhere in this Form, to which the Company or any member
of the group is a party, for the two years immediately preceding publication of
this registration statement.

| | a) | Management services agreement with Genesys Venture Inc.,
      dated October 1, 2010.                        
| | -- | -------------------------------------------------------------------------------------------------------------
| |    |                                                                                                              
| | b) | Debt settlement agreement between Birmingham Associates
      Ltd. And the Company dated July 18, 2011.      
| |    |                                                                                                              
| | c) | Royalty and guarantee agreement between Birmingham
      Associates Ltd. And the Company dated July 18,
2011.

D. Exchange Controls

There is no law or government decree of regulation in Canada
that restricts the export or import of capital, or that affects the remittance
of dividends, interest or other payments to a non-resident holder of Common
Shares, other than withholding tax requirements. See "Item 7 Taxation."

There is no limitation imposed by Canadian law or by the
articles or other charter documents of the Company on the right of a
non-resident to hold or vote the Common Shares or the Class A common shares of
the Company, other than as provided in the Investment Canada Act, as amended
(the "Investment Act").

The Investment Act generally prohibits implementation of a
reviewable investment by an individual, government or agency thereof,
corporation, partnership, trust or joint venture that is a "non-Canadian" as
defined in the Investment Act (a "non-Canadian"), unless, after review the
Minister responsible for the Investment Act is satisfied that the investment is
likely to be of net benefit to Canada. If an investment by a non-Canadian is not
a reviewable investment, it nevertheless requires the filing of a short notice
which may be given at any time up to 30 days after the implementation of the
investment.

An investment in Common Shares of the Company by a non-Canadian
that is a "WTO investor" (an individual or other entity that is a national of,
or has the right of permanent residence in, a member of the World Trade
Organization, current members of which include the European Community, Germany,
Japan, Mexico, the United Kingdom and the United States, or a WTO
investor-controlled entity, as defined in the Investment Act) would be
reviewable under the Investment Act if it were an investment to acquire direct
control, through a purchase of assets or voting interests, of the Company and
the value of the assets of the Company equalled or exceeded $184 million, the
threshold established for 1999, as indicated on the financial statements of the
Company for its fiscal year immediately preceding the implementation of the
investment. In subsequent years, such threshold amount may be increased or
decreased in accordance with the provisions of the Investment Act.

An investment in Common Shares of the Company by a
non-Canadian, other than a WTO investor, would be reviewable under the
Investment Act if it were an investment to acquire direct control of the Company
and the value of the assets were $5.0 million or more, as indicated on the
financial statements of the Company for its fiscal year immediately preceding
the implementation of the investment.

A non-Canadian, whether a WTO investor or otherwise, would
acquire control of the Company for the purposes of the Investment Act if he, she
or it acquired a majority of the Common Shares of the Company or acquired all or
substantially all of the assets used in conjunction with the Company's business.
The acquisition of less than a majority, but one-third or more of
the Common Shares of the Company, would be presumed to be an acquisition of
control of the Company unless it could be established that the Company was not
controlled in fact by the acquirer through the ownership of the Common
Shares.

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64

The Investment Act would not apply to certain transactions in
relation to Common Shares of the Company, including:

| | (a) | an acquisition of Common Shares of the Company by any
      person if the acquisition were made in the ordinary course of that
      person's business as a trader or dealer in securities;                                                                                               
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                           
| | (b) | an acquisition of control of the Company in connection
      with the realization of security granted for a loan or other financial
      assistance and not for any purpose related to the provisions of the
      Investment Act; and                                                   
| |     |                                                                                                                                                                                                                                                                                           
| | (c) | an acquisition of control of the Company by reason of an
      amalgamation, merger, consolidation or corporate reorganization following
      which the ultimate direct or indirect control in fact of the Company,
      through the ownership of voting interests, remains
  unchanged.

E. Taxation

U.S. Federal Income Tax Consequences

The following is a summary of the anticipated material U.S.
federal income tax consequences to a U.S. Holder (as defined below) arising from
and relating to the acquisition, ownership, and disposition of common shares of
(Common Shares).

This summary is for general information purposes only and does
not purport to be a complete analysis or listing of all potential U.S. federal
income tax consequences that may apply to a U.S. Holder as a result of the
acquisition, ownership, and disposition of Common Shares. In addition, this
summary does not take into account the individual facts and circumstances of any
particular U.S. Holder that may affect the U.S. federal income tax consequences
of the acquisition, ownership, and disposition of Common Shares. Accordingly,
this summary is not intended to be, and should not be construed as, legal or
U.S. federal income tax advice with respect to any U.S. Holder. Each U.S. Holder
should consult its own financial advisor, legal counsel, or accountant regarding
the U.S. federal income, U.S. state and local, and foreign tax consequences of
the acquisition, ownership, and disposition of Common Shares.

Scope of this Summary

Authorities

This summary is based on the Internal Revenue Code of 1986, as
amended (the Code), Treasury Regulations (whether final, temporary, or
proposed), published rulings of the Internal Revenue Service (the IRS),
published administrative positions of the IRS, the Convention Between Canada and
the United States of America with Respect to Taxes on Income and on Capital,
signed September 26, 1980, as amended (the Canada-U.S. Tax Convention), and
U.S. court decisions that are applicable and, in each case, as in effect and
available, as of the date of this Annual Report. Any of the authorities on which
this summary is based could be changed in a material and adverse manner at any
time, and any such change could be applied on a retroactive basis. This summary
does not discuss the potential effects, whether adverse or beneficial, of any
proposed legislation that, if enacted, could be applied on a retroactive basis.

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65

U.S. Holders

For purposes of this summary, a U.S. Holder is a beneficial
owner of Common Shares that, for U.S. federal income tax purposes, is (a) an
individual who is a citizen or resident of the U.S., (b) a corporation, or any
other entity classified as a corporation for U.S. federal income tax purposes,
that is created or organized in or under the laws of the U.S. or any state in
the U.S., including the District of Columbia, (c) an estate if the income of
such estate is subject to U.S. federal income tax regardless of the source of
such income, or (d) a trust if (i) such trust has validly elected to be treated
as a U.S. person for U.S. federal income tax purposes or (ii) a U.S. court is
able to exercise primary supervision over the administration of such trust and
one or more U.S. persons have the authority to control all substantial decisions
of such trust.

Non-U.S. Holders

For purposes of this summary, a non-U.S. Holder is a
beneficial owner of Common Shares other than a U.S. Holder. This summary does
not address the U.S. federal income tax consequences of the acquisition,
ownership, and disposition of Common Shares to non-U.S. Holders. Accordingly, a
non-U.S. Holder should consult its own financial advisor, legal counsel, or
accountant regarding the U.S. federal income, U.S. state and local, and foreign
tax consequences (including the potential application of and operation of any
tax treaties) of the acquisition, ownership, and disposition of Common Shares.

U.S. Holders Subject to Special U.S. Federal Income Tax
Rules Not Addressed

This summary does not address the U.S. federal income tax
consequences of the acquisition, ownership, and disposition of Common Shares to
U.S. Holders that are subject to special provisions under the Code, including
the following U.S. Holders: (a) U.S. Holders that are tax-exempt organizations,
qualified retirement plans, individual retirement accounts, or other
tax-deferred accounts; (b) U.S. Holders that are financial institutions,
insurance companies, real estate investment trusts, or regulated investment
companies; (c) U.S. Holders that are dealers in securities or currencies or U.S.
Holders that are traders in securities that elect to apply a mark-to-market
accounting method; (d) U.S. Holders that have a functional currency other than
the U.S. dollar; (e) U.S. Holders that are liable for the alternative minimum
tax under the Code; (f) U.S. Holders that own Common Shares as part of a
straddle, hedging transaction, conversion transaction, constructive sale, or
other arrangement involving more than one position; (g) U.S. Holders that
acquired Common Shares in connection with the exercise of employee stock options
or otherwise as compensation for services; (h) U.S. Holders that hold Common
Shares other than as a capital asset within the meaning of Section 1221 of the
Code; (i) U.S. Holders who are U.S. expatriates or former long-term residents of
the United States.; or (j) U.S. Holders that own (directly, indirectly, or by
attribution) 10% or more of the total combined voting power of the outstanding
shares of the Company. U.S. Holders that are subject to special provisions under
the Code, including U.S. Holders described immediately above, should consult
their own financial advisor, legal counsel or accountant regarding the U.S.
federal income, U.S. state and local, and foreign tax consequences of the
acquisition, ownership, and disposition of Common Shares.

If an entity that is classified as a partnership (or
pass-through entity) for U.S. federal income tax purposes holds Common Shares,
the U.S. federal income tax consequences to such partnership (or pass-through
entity) and the partners of such partnership (or owners of such pass-through
entity) generally will depend on the activities of the partnership (or
pass-through entity) and the status of such partners (or owners). Partners of
entities that are classified as partnerships (or owners of pass-through
entities) for U.S. federal income tax purposes should consult their own
financial advisor, legal counsel or accountant regarding the U.S. federal income
tax consequences of the acquisition, ownership, and disposition of Common
Shares.

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66

Tax Consequences Other than U.S. Federal Income Tax Consequences
  Not Addressed

This summary does not address the U.S. state and local, U.S.
federal estate and gift, or foreign tax consequences to U.S. Holders of the
acquisition, ownership, and disposition of Common Shares. Each U.S. Holder
should consult its own financial advisor, legal counsel, or accountant regarding
the U.S. state and local, U.S. federal estate and gift, and foreign tax
consequences of the acquisition, ownership, and disposition of Common Shares.
(See TaxationCanadian Federal Income Tax Consequences above).

U.S. Federal Income Tax Consequences of the Acquisition,
Ownership, and Disposition of Common Shares

Distributions on Common Shares

General Taxation of Distributions

A U.S. Holder that receives a distribution, including a
constructive distribution, with respect to the Common Shares will be required to
include the amount of such distribution in gross income as a dividend (without
reduction for any Canadian income tax withheld from such distribution) to the
extent of the current or accumulated earnings and profits of the Company. To
the extent that a distribution exceeds the current and accumulated earnings and
profits of the Company, such distribution will be treated (a) first, as a
tax-free return of capital to the extent of a U.S. Holders tax basis in the
Common Shares and, (b) thereafter, as gain from the sale or exchange of such
Common Shares. (See more detailed discussion at Disposition of Common Shares
below).

Reduced Tax Rates for Certain Dividends

For taxable years beginning before January 1, 2011, a dividend
paid by the Company generally will be taxed at the preferential tax rates
applicable to long-term capital gains if (a) the Company is a qualified foreign
corporation (as defined below), (b) the U.S. Holder receiving such dividend is
an individual, estate, or trust, and (c) such dividend is paid on Common Shares
that have been held by such U.S. Holder for at least 61 days during the 121-day
period beginning 60 days before the ex-dividend date. The Company generally
will be a qualified foreign corporation under Section 1(h)(11) of the Code (a
QFC) if (a) the Company is eligible for the benefits of the Canada-U.S. Tax
Convention, or (b) the Common Shares are readily tradable on an established
securities market in the U.S. However, even if the Company satisfies one or more
of such requirements, the Company will not be treated as a QFC if the Company is
a passive foreign investment Company (as defined below) for the taxable year
during which the Company pays a dividend or for the preceding taxable year.

As discussed below, the Company does not believe that it was a
passive foreign investment Company for the taxable year ended May 31, 2010,
and does not expect that it will be a passive foreign investment Company for
the taxable year ending May 31, 2011. (See more detailed discussion at
Additional Rules that May Apply to U.S. Holders below). However, there can be
no assurance that the IRS will not challenge the determination made by the
Company concerning its passive foreign investment Company status or that the
Company will not be a passive foreign investment Company for the current
taxable year or any subsequent taxable year. Accordingly, although the Company
expects that it may be a QFC for the taxable year ending May 31, 2011, there can
be no assurances that the IRS will not challenge the determination made by the
Company concerning its QFC status, that the Company will be a QFC for the
taxable year ending May 31, 2011 or any subsequent taxable year, or that the
Company will be able to certify that it is a QFC in accordance with the
certification procedures issued by the Treasury and the IRS.

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67

If the Company is not a QFC, a dividend paid by the Company to
a U.S. Holder, including a U.S. Holder that is an individual, estate, or trust,
generally will be taxed at ordinary income tax rates (and not at the
preferential tax rates applicable to long-term capital gains). The dividend
rules are complex, and each U.S. Holder should consult its own financial
advisor, legal counsel, or accountant regarding the dividend rules.

Distributions Paid in Foreign
Currency

The amount of a distribution paid to a U.S. Holder in foreign
currency generally will be equal to the U.S. dollar value of such distribution
based on the exchange rate applicable on the date of receipt. A U.S. Holder that
does not convert foreign currency received as a distribution into U.S. dollars
on the date of receipt generally will have a tax basis in such foreign currency
equal to the U.S. dollar value of such foreign currency on the date of receipt.
Such a U.S. Holder generally will recognize ordinary income or loss on the
subsequent sale or other taxable disposition of such foreign currency (including
an exchange for U.S. dollars).

Dividends Received Deduction

Dividends paid on the Common Shares generally will not be
eligible for the dividends received deduction. The availability of the
dividends received deduction is subject to complex limitations that are beyond
the scope of this discussion, and a U.S. Holder that is a corporation should
consult its own financial advisor, legal counsel, or accountant regarding the
dividends received deduction.

Disposition of Common Shares

A U.S. Holder will recognize gain or loss on the sale or other
taxable disposition of Common Shares in an amount equal to the difference, if
any, between (a) the amount of cash plus the fair market value of any property
received and (b) such U.S. Holders tax basis in the Common Shares sold or
otherwise disposed of. Any such gain or loss generally will be capital gain or
loss, which will be long-term capital gain or loss if the Common Shares are held
for more than one year. Gain or loss recognized by a U.S. Holder on the sale or
other taxable disposition of Common Shares generally will be treated as U.S.
source for purposes of applying the U.S. foreign tax credit rules unless the
gain is subject to tax in Canada and resourced as foreign source under the
U.S.-Canada Tax Convention and the U.S. Holder elects to treat such gain as
foreign source.

Preferential tax rates apply to long-term capital gains of a
U.S. Holder that is an individual, estate, or trust. There are currently no
preferential tax rates for long-term capital gains of a U.S. Holder that is a
corporation. Deductions for capital losses are subject to significant
limitations under the Code.

The amount realized on a sale or other disposition of Common
Shares for an amount in foreign currency will generally be the U.S. dollar value
of this amount on the date of sale or disposition. On the settlement date, the
U.S. Holder will recognize U.S. source foreign currency gain or loss (taxable as
ordinary income or loss) equal to the difference (if any) between the U.S.
dollar value of the amount received based on the exchange rates in effect on the
date of sale or other disposition and the settlement date.

Foreign Tax Credit

A U.S. Holder that pays (whether directly or through
withholding) Canadian income tax with respect to dividends paid on the Common
Shares generally will be entitled, at the election of such U.S. Holder, to
receive either a deduction or a credit for such Canadian income tax paid.
Generally, a credit will reduce a U.S. Holders U.S. federal income tax liability on a
dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holders income
subject to U.S. federal income tax. This election is made on a year-by-year
basis and applies to all foreign taxes paid (whether directly or through
withholding) by a U.S. Holder during a year.

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68

Complex limitations apply to the foreign tax credit, including
the general limitation that the credit cannot exceed the proportionate share of
a U.S. Holders U.S. federal income tax liability that such U.S. Holders
foreign source taxable income bears to such U.S. Holders worldwide taxable
income. In applying this limitation, a U.S. Holders various items of income and
deduction must be classified, under complex rules, as either foreign source or
U.S. source. In addition, this limitation is calculated separately with
respect to specific categories of income. Dividends paid by the Company
generally will constitute foreign source income and generally will be
categorized as passive income. The foreign tax credit rules are complex, and
each U.S. Holder should consult its own financial advisor, legal counsel, or
accountant regarding the foreign tax credit rules.

Information Reporting; Backup Withholding Tax

Payments made within the U.S., or by a U.S. payor or U.S.
middleman, of dividends on, or proceeds arising from the sale or other taxable
disposition of, Common Shares generally will be subject to information reporting
and backup withholding tax, at the rate of 28%, if a U.S. Holder (a) fails to
furnish such U.S. Holders correct U.S. taxpayer identification number
(generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification
number, (c) is notified by the IRS that such U.S. Holder has previously failed
to properly report items subject to backup withholding tax, or (d) fails to
certify, under penalty of perjury, that such U.S. Holder has furnished its
correct U.S. taxpayer identification number and that the IRS has not notified
such U.S. Holder that it is subject to backup withholding tax. However, U.S.
Holders that are corporations generally are excluded from these information
reporting and backup withholding tax rules. Any amounts withheld under the U.S.
backup withholding tax rules will be allowed as a credit against a U.S. Holders
U.S. federal income tax liability, if any, or will be refunded, if such U.S.
Holder furnishes required information to the IRS. Each U.S. Holder should
consult its own financial advisor, legal counsel, or accountant regarding the
information reporting and backup withholding tax rules.

Additional Rules that May Apply to U.S. Holders

If the Company is a passive foreign investment Company (as
defined below), the preceding sections of this summary may not describe the U.S.
federal income tax consequences to U.S. Holders of the acquisition, ownership,
and disposition of Common Shares.

Passive Foreign Investment Company

The Company generally will be a passive foreign investment
Company under Section 1297 of the Code (a PFIC) if, for a taxable year, (a)
75% or more of the gross income of the Company for such taxable year is passive
income or (b) 50% or more of the assets held by the Company either produce
passive income or are held for the production of passive income, based on the
fair market value of such assets (or on the adjusted tax basis of such assets,
if the Company is not publicly traded and either is a controlled foreign
corporation or makes an election). Passive income includes, for example,
dividends, interest, certain rents and royalties, certain gains from the sale of
stock and securities, and certain gains from commodities transactions.

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69

For purposes of the PFIC income test and asset test described
above, if the Company owns, directly or indirectly, 25% or more of the total
value of the outstanding shares of another foreign corporation, the Company will
be treated as if it (a) held a proportionate share of the assets of such other
foreign corporation and (b) received directly a proportionate share of the
income of such other foreign corporation. In addition, for purposes of the PFIC
income test and asset test described above, passive income does not include
any interest, dividends, rents, or royalties that are received or accrued by the
Company from a related person (as defined in Section 954(d)(3) of the Code),
to the extent such items are properly allocable to the income of such related
person that is not passive income.

In addition, if the Company is a PFIC and owns shares of
another foreign corporation that also is a PFIC, under certain indirect
ownership rules, a disposition of the shares of such other foreign corporation
or a distribution received from such other foreign corporation generally will be
treated as an indirect disposition by a U.S. Holder or an indirect distribution
received by a U.S. Holder, subject to the rules of Section 1291 of the Code
discussed below. To the extent that gain recognized on the actual disposition by
a U.S. Holder of Common shares or income recognized by a U.S. Holder on an
actual distribution received on Common Shares was previously subject to U.S.
federal income tax under these indirect ownership rules, such amount generally
should not be subject to U.S. federal income tax.

If the Company is a PFIC, the U.S. federal income tax
consequences to a U.S. Holder of the acquisition, ownership, and disposition of
Common Shares will depend on whether such U.S. Holder makes an election to treat
the Company as a qualified electing fund or QEF under Section 1295 of the
Code (a QEF Election) or a mark-to-market election under Section 1296 of the
Code (a Mark-to-Market Election). A U.S. Holder that does not make either a
QEF Election or a Mark-to-Market Election will be referred to in this summary as
a Non-Electing U.S. Holder.

Under Section 1291 of the Code, any gain recognized on the sale
or other taxable disposition of Common Shares, and any excess distribution (as
defined in Section 1291(b) of the Code) paid on the Common Shares, must be
ratably allocated to each day in a Non-Electing U.S. Holders holding period for
the Common Shares. The amount of any such gain or excess distribution allocated
to prior years of such Non-Electing U.S. Holders holding period for the Common
Shares generally will be subject to U.S. federal income tax at the highest tax
applicable to ordinary income in each such prior year. A Non-Electing U.S.
Holder will be required to pay interest on the resulting tax liability for each
such prior year, calculated as if such tax liability had been due in each such
prior year.

A U.S. Holder that makes a QEF Election generally will not be
subject to the rules of Section 1291 of the Code discussed above. However, a
U.S. Holder that makes a QEF Election generally will be subject to U.S. federal
income tax on such U.S. Holders pro rata share of (a) the net capital gain of
the Company, which will be taxed as long-term capital gain to such U.S. Holder,
and (b) and the ordinary earnings of the Company, which will be taxed as
ordinary income to such U.S. Holder. A U.S. Holder that makes a QEF Election
will be subject to U.S. federal income tax on such amounts for each taxable year
in which the Company is a PFIC, regardless of whether such amounts are actually
distributed to such U.S. Holder by the Company.

A U.S. Holder that makes a Mark-to-Market Election generally
will not be subject to the rules of Section 1291 of the Code discussed above. A
U.S. Holder may make a Mark-to-Market Election only if the Common Shares are
marketable stock (as defined in Section 1296(e) of the Code). A U.S. Holder
that makes a Mark-to-Market Election will include in gross income, for each
taxable year in which the Company is a PFIC, an amount equal to the excess, if
any, of (a) the fair market value of the Common Shares as of the close of such
taxable year over (b) such U.S. Holders tax basis in such Common Shares. A U.S.
Holder that makes a Mark-to-Market Election will, subject to certain
limitations, be allowed a deduction in an amount equal to the excess, if any, of
(a) such U.S. Holders adjusted tax basis in the Common Shares over (b) the fair market value of such Common
Shares as of the close of such taxable year.

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70

The Company does not believe that it was a PFIC for the taxable
year ended May 31, 2010, and, based on current operations and financial
projections, does not expect that it will be a PFIC for the taxable year ending
May 31, 2011. The determination of whether the Company was, or will be, a PFIC
for a taxable year depends, in part, on the application of complex U.S. federal
income tax rules, which are subject to differing interpretations. In addition,
whether the Company will be a PFIC for the taxable year ending May 31, 2009 and
each subsequent taxable year depends on the assets and income of the Company
over the course of each such taxable year and, as a result, cannot be predicted
with certainty as of the date of this Annual Report. Accordingly, there can be
no assurance that the IRS will not challenge the determination made by the
Company concerning its PFIC status or that the Company was not, or will not be,
a PFIC for any taxable year.

The PFIC rules are complex, and each U.S. Holder should consult
its own financial advisor, legal counsel, or accountant regarding the PFIC rules
and how the PFIC rules may affect the U.S. federal income tax consequences of
the acquisition, ownership, and disposition of Common Shares.

Canadian Federal Income Tax Considerations for United States
Residents

The following, as of the date hereof, is a summary of the
principal Canadian federal income tax considerations generally applicable to the
holding and disposition of Common Shares by a holder, (a) who for the purposes
of the Income Tax Act (Canada) (the Tax Act) at all relevant times, is not
resident, or deemed to be resident in Canada, deals at arms length and is not
affiliated with the Company for the purpose of the Tax Act, holds the Common
Shares as capital property and does not use or hold, and is not deemed to use or
hold, the Common Shares in the course of carrying on, or otherwise in connection
with, a business in Canada, and (b) who, for the purposes of the Canada -
United States Income Tax Convention(the Convention) at all relevant
times, is a resident of the United States, has never been a resident of Canada,
has not held or used (and does not hold or use) Common Shares in connection with
a permanent establishment or fixed base in Canada, and who otherwise qualifies
for the full benefits of the Convention. Common Shares will generally be
considered to be capital property to a holder unless such shares are held in the
course of carrying on a business, or in an adventure or concern in the nature of
trade. Holders who meet all the criteria in clauses (a) and (b) are referred to
herein as a U.S. Holder or U.S. Holders and this summary only addresses the
tax considerations to such U.S. Holders. The summary does not deal with special
situations, such as the particular circumstances of traders or dealers, limited
liability companies, tax exempt entities, insurers or financial institutions.
Such holders should consult their own tax advisors.

This summary is based upon the current provisions of the Tax
Act, the regulations thereunder in force at the date hereof (Regulations), all
specific proposals to amend the Tax Act and Regulations publicly announced by or
on behalf of the Minister of Finance (Canada) prior to the date hereof and the
current provisions of the Convention and the current administrative practices of
the Canada Revenue Agency published in writing prior to the date hereof. This
summary does not otherwise take into account or anticipate any changes in law or
administrative practices whether by legislative, governmental or judicial
decision or action, nor does it take into account tax laws of any province or
territory of Canada or of the United States or of any other jurisdiction outside
Canada.

For the purposes of the Tax Act, all amounts relating to the
acquisition, holding or disposition of the Common Shares must be converted into
Canadian dollars based on the relevant exchange rate applicable thereto.

---

71

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
U.S. Holder and no representation with respect to the federal income tax
consequences to any particular U.S. Holder or prospective U.S. Holder is made.
The tax liability of a U.S. Holder will depend on the holders particular
circumstances. Accordingly, U.S. Holders should consult with their own tax
advisors for advice with respect to their own particular circumstances.

Dividends

Amounts paid or credited or deemed to be paid or credited to a
U.S. Holder as, on account or in lieu of payment, or in satisfaction of,
dividends on Common Shares will be subject to Canadian withholding tax on the
gross amount of the dividends. Under the Convention, the rate of Canadian
withholding tax on dividends paid or credited by the Company to a U.S. Holder
that beneficially owns such dividends is generally 15% unless the beneficial
owner is a Company which owns at least 10% of the voting stock of the Company at
that time in which case the rate of Canadian withholding tax is reduced to 5%.

Dispositions

A U.S. Holder will generally not be subject to tax under the
Tax Act on any capital gain realized on a disposition of Common Shares, unless
the shares constitute taxable Canadian property to the U.S. Holder at the time
of disposition and the U.S. Holder is not entitled to relief under the
Convention. Generally, Common Shares will not constitute taxable Canadian
property to a U.S. Holder provided that such shares are listed on a designated
stock exchange (which currently includes the NEX at the time of the disposition
and, during the 60-month period immediately preceding the disposition, the U.S.
Holder, persons with whom the U.S. Holder does not deal at arms length, or the
U.S. Holder together with such persons has not owned 25% or more of the issued
shares of any series or class of the Companys capital stock.

If the Common Shares constitute taxable Canadian property to a
particular U.S. Holder, any capital gain arising on their disposition may be
exempt from Canadian tax under the Convention if at the time of disposition the
Common Shares do not derive their value principally from real property situated
in Canada.

Canadian Federal Income Tax Consequences

The following is a summary of the principal Canadian federal
income tax considerations, as of the date hereof, generally applicable to
Security holders who deal at arm's length with the Company, who, for purposes of
the Income Tax Act (Canada) (the "Canadian Tax Act") and any applicable tax
treaty or convention, have not been and will not be resident or deemed to be
resident in Canada at any time while they have held shares of the Company, to
whom such shares are capital property, and to whom such shares are not "taxable
Canadian property" (as defined in the Canadian Tax Act). This summary does not
apply to a non-resident insurer.

Generally, shares of the Company will be considered to be
capital property to a holder thereof provided that the holder does not use such
shares in the course of carrying on a business or has not acquired them in one
or more transactions considered to be an adventure in the nature of trade. All
security holders should consult their own tax advisors as to whether, as a
matter of fact, they hold shares of the Company as capital property for the
purposes of the Canadian Tax Act.

---

72

Under the current provisions of the Canadian Tax Act, as
modified by the Proposed Amendments (see below), one-half of capital gains
(taxable capital gains) must be included in computing the income of a holder
in the year of disposition. One-half of capital losses (allowable capital
losses) may generally be deducted against taxable capital gains for the year
of disposition subject to and in accordance with the provisions of the Canadian
Tax Act.

Allowable capital losses in excess of a holders taxable
capital gains of a taxation year may generally be carried back three years and
carried forward indefinitely for deduction against taxable capital gains
realized in those years, to the extent and under circumstances permitted under
the Canadian Tax Act.

This discussion takes into account specific proposals to amend
the Canadian Tax Act and the regulations thereunder publicly announced by or on
behalf of the Minister of Finance (Canada) prior to the date hereof (the
"Proposed Amendments") and assumes that all such Proposed Amendments will be
enacted in their present form. No assurances can be given that the Proposed
Amendments will be enacted in the form proposed, if at all; however the Canadian
federal income tax considerations generally applicable to security holders
described herein will not be different in a material adverse way if the Proposed
Amendments are not enacted.

Except for the foregoing, this discussion does not take into
account or anticipate any changes in law, whether by legislative, administrative
or judicial decision or action, nor does it take into account provincial,
territorial or foreign income tax legislation or considerations, which may
differ from the Canadian federal income tax considerations described herein.

Generally, shares of the Company will not be taxable Canadian
property at a particular time provided that such shares are listed on a
prescribed stock exchange (which exchanges currently include the Toronto Stock
Exchange), the holder does not use or hold, and is not deemed to use or hold,
the shares of the Company in connection with carrying on a business in Canada
and the holder, persons with whom such holder does not deal at arm's length, or
the holder and such persons, have not owned (or had under option) 25% or more of
the issued shares of any class or series of the capital stock of the Company at
any time within five years preceding the particular time.

A holder of shares of the Company that are not taxable Canadian
property will not be subject to tax under the Canadian Tax Act on the sale or
other disposition of shares.

While intended to address all material Canadian Federal
Income Tax considerations, this summary is for general information purposes
only, and is not intended to be, nor should it be construed to be, legal or tax
advice to any holder or prospective holder of common shares. No opinion was
requested by the Company, or is provided by its legal counsel and/or auditors.
Additionally, this summary does not consider the effects of United States
federal, state, local or foreign income tax consequences.

Accordingly, holders and prospective holders of common
shares should consult their own tax advisors about the consequences of
purchasing, owning, and disposing of common shares of the Company.

F. Dividends and Paying Agents

Not applicable

---

73

G. Statement by Experts

Not applicable

H. Documents on Display

The documents described herein may be inspected at the head
office of Company at 2  1250 Waverley Street, Winnipeg, Manitoba, Canada R3T
6C6, during normal business hours.

I. Subsidiary Information

Not applicable

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
  MARKET RISK

INTEREST RATE RISK

The primary objective of the Companys investment activities is
to preserve principal by maximizing the income the Company receives from such
activities without significantly increasing risk. Securities that the Company
invests in are generally highly liquid short-term investments such as term
deposits with terms to maturity of less than one year.

Due to the short-term nature of these investments, the Company
believes there is no material exposure to interest rate risk arising from such
investments and accordingly, no quantitative tabular disclosure is required.

FOREIGN EXCHANGE RISK

The Companys primary currency of operations is the Canadian
dollar. However, the Company has expenditures and holds investments denominated
in a foreign currency. In fiscal 2011, it is estimated that approximately 85% of
the Companys expenditures were denominated in a foreign currency, primarily
being the US dollar and 100% of the Companys product revenues were denominated
in the US dollar. To date the Company has not entered into any future or forward
contracts, or other derivative instruments, for either hedging or speculative
purposes, to mitigate the impact of foreign exchange fluctuations on these
costs, revenues or on U.S. dollar denominated debt. A 10% change in foreign
exchange rates for fiscal 2011 would have impacted loss for the year by 10%.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND
DELINQUENCIES

Not applicable

---

74

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
  HOLDERS ANDUSE OF PROCEEDS

Not applicable

ITEM 15. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Companys disclosure controls and procedures (DCP), as
such term is defined in Rules 13(a)-13(e) and 15(d)-15(e) of the Exchange Act
are designed to provide reasonable assurance that all relevant information is
communicated to senior management, including the Chief Executive Officer (CEO)
and the Chief Financial Officer (CFO), to allow timely decisions regarding
required disclosure. We carried out an evaluation, under the supervision and
with the participation of our management, including our CEO and CFO. Based on
this evaluation these officers concluded that as of the end of the period
covered by this Annual Report on Form 20-F, our disclosure controls and
procedures were not effective to ensure that the information required to be
disclosed by our company in reports it files or submits under the Exchange Act
is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the Securities and Exchange Commission.
These disclosure controls and procedures include controls and procedures
designed to ensure that such information is accumulated and communicated to the
Companys management, including our companys principal executive officer and
principal financial officer, to allow timely decisions regarding required
disclosure. The conclusion that the disclosure controls and procedures were not
effective was due to the presence of material weaknesses in internal control
over financial reporting as identified below under the heading Internal
Controls over Financial Reporting Procedures Management anticipates that such
disclosure controls and procedures will not be effective until the material
weaknesses are remediated.

Managements Annual Report on Internal Control over
Financial Reporting

The management of the Company is responsible for establishing
and maintaining adequate internal controls over financial reporting (as defined
in Rule 13a-15(f) under the Exchange Act). The Companys internal control system
was designed to provide reasonable assurance to the Companys management and the
board of directors regarding the reliability of financial reporting and
preparation and fair presentation of published financial statements for external
purposes in accordance with GAAP. Internal control over financial reporting
includes those policies and procedures that:

| | 1. | pertain to the maintenance of records that in reasonable
      detail accurately and fairly reflect the transactions and dispositions of
      the assets of the Company;                                                                                                                                                      
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                
| | 2. | provide reasonable assurance that transactions are
      recorded as necessary to permit preparation of financial statements in
      accordance with GAAP, and that receipts and expenditures of the Company
      are being made only in accordance with authorizations of management and
      directors of the Company; and
| |    |                                                                                                                                                                                                                                                                                                                                
| | 3. | provide reasonable assurance regarding prevention or
      timely detection of unauthorized acquisition, use or disposition of the
      Companys assets that could have a material effect on the financial
      statements.                                                                                                 

All internal control systems, no matter how well designed, have
inherent limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree of compliance
with the policies or procedures may deteriorate.

---

75

Under the supervision and with the participation of our
management, including our CEO and CFO, we conducted an evaluation of the design
and operation of internal control over financial reporting as of May 31, 2011,
based on the framework set forth in Internal Control  Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO). Based on this evaluation, management concluded that the Companys ICFR
was not effective as at May 31, 2011 due to the following material
weaknesses:

| | 1. | The Company did not maintain sufficient personnel with an
      appropriate level of technical accounting knowledge, experience, and
      training in the application of United States GAAP to allow for the
      independent preparation and review of the reconciliation from Canadian
      GAAP to United States GAAP as disclosed in Note 17 to the annual financial
      statements.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                              
| | 2. | Due to the limited number of staff and the inability to
      attract outside expert advice on a cost effective basis, there is a risk
      of material misstatements related to the accounting and reporting for
      complex transactions.                                                                                                                                               
| |    |                                                                                                                                                                                                                                                                                                                                                                                              
| | 3. | Due to the resignation of the Chief Financial Officer
      subsequent to year-end, procedures over the year end close process,
      including detailed reviews and verification of inputs related to the
      analysis and reconciliation of accounts and schedules supporting financial
      statements amounts and notes were not operating
  effectively.                             

These control deficiencies, resulted in adjustments to the
Companys consolidated financial statements prior to their issuance and creates
a reasonable possibility that a material misstatement of the annual financial
statements would not have been prevented or detected in a timely manner.

Attestation Report of the Registered Public Accounting
Firm

This annual report does not include an attestation report of
the Company's registered public accounting firm regarding internal control over
financial reporting. Management's report is not subject to attestation by the
Company's registered public accounting firm pursuant to rules of the Securities
and Exchange Commission that permit the Company to provide only management's
report in this annual report.

Changes in Internal Control over Financial Reporting and
Planned Remediation Activities

There have been no changes in the Company's internal controls
identified in connection with the evaluation described in the preceding
paragraph that occurred during the period covered by this Annual Report on Form
20-F which have materially affected, or are reasonably likely to materially
affect, the Company's internal controls over financial reporting.

Other than the appointment of a new Chief Financial Officer on
September 22, 2011, no other remediation activities have been undertaken in
fiscal 2012. Due to resource constraints and the present stage of the Companys
development, including the Companys focus on its capital restructuring, the
Company does not have sufficient size and scale to warrant the hiring of
additional staff to correct these material weaknesses at this time.

ITEM 16. RESERVED

Not applicable

---

76

ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT

As of May 31, 2011, Mr. Gerald McDole, a non-employee director,
was a member of the audit committee of the Company. The board of directors of
the Company has determined that Mr. McDole (i) qualifies as an audit committee
financial expert pursuant to Items 16A(b) and (c) of Form 20-F and (ii) is
independent as defined by Rule 121A of the NYSE Amex Company Guide and Rule
10A-3 of the Exchange Act. In addition, all members of the audit committee are
considered financially literate under applicable Canadian laws.

ITEM 16B. CODE OF ETHICS

On August 23, 2004, the Company adopted a written Code of
Business Conduct and Ethics (Code of Ethics) that applies to the Companys
principal executive officer, principal financial officer and to all its other
employees. These standards are a guide to help ensure that all of the Companys
employees live up to high ethical standards. A copy of the Code of Ethics is
maintained on the Companys website at www.medicure.com.

The Company intends to disclose any amendment to or waiver from
any provision in the Code of Ethics, that has occurred during the past fiscal
year and that applies to the principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions, either in its Exchange Act annual report or on the Companys
Internet website.

ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

In accordance with the requirements of the Sarbanes-Oxley Act
of 2002 and the Audit Committees charter, all audit and audit-related work and
all non-audit work performed by the chartered accountants, KPMG LLP, is approved
in advance by the Audit Committee, including the proposed fees for such work.
The Audit Committee is informed of each service actually rendered that was
approved through its pre-approval process.

(a) Audit fees
    2011
    2010$109,000
    $87,500


Audit fees consist of fees billed for the audit of the
Companys annual financial statements.

(b) Audit-related fees
    2011
    2010$-
    $8,900


Audit-related fees consist of fees billed for accounting
consultations and services associated with the issuance of securities filings
and prospectuses.

(c) Tax fees - No compensation was paid to KPMG for tax
compliance, tax advice and tax planning in fiscal 2011 or 2010.

(d) All other fees
    2011
    2010$-
    $-


(e) Audit Committees Pre-approval Policies

All KPMG services and fees are approved by the Audit Committee.

---

77

ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
COMMITTEES

Not applicable

ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER
AND AFFILIATEDPURCHASERS

Not applicable

---

78

PART III

ITEM 17. FINANCIAL STATEMENTS

The consolidated financial statements were prepared in
accordance with Canadian GAAP and are presented in Canadian dollars. There are
material measurement differences between United States and Canadian GAAP. A
reconciliation of the consolidated financial statements to United States GAAP is
set forth in Note 17 of the notes to the consolidated financial statements.

The consolidated financial statements are in the following
order:

| | 1. | Report of Independent Registered Public Accounting
  Firm;         
| | -- | -------------------------------------------------------------------
| | 2. | Consolidated Balance Sheets;                                       
| | 3. | Consolidated Statements of Operations and Comprehensive
      loss;
| | 4. | Consolidated Statements of Shareholders Equity
      (Deficiency) 
| | 5. | Consolidated Statements of Cash Flows; and                         
| | 6. | Notes to Consolidated Financial
  Statements.                      

---

Consolidated Financial Statements
  (Expressed in Canadian
  Dollars)

MEDICURE INC.

Year ended May 31, 2011

---

MANAGEMENT REPORT

The accompanying financial statements have been prepared by
  management and approved by the Board of Directors of Medicure Inc. (the
  "Company"). Management is responsible for the information and representations
  contained in these financial statements.

These financial statements have been prepared in accordance
  with Canadian generally accepted accounting principles. The significant
  accounting policies, which management believes are appropriate for the Company,
  are described in note 2 to these financial statements. The Company maintains a
  system of internal control and processes intended to provide assurance that
  assets are safeguarded and to assist in preparation of relevant and reliable
  financial information.

The Board of Directors is responsible for reviewing and
  approving these financial statements and overseeing management's performance of
  its financial reporting responsibilities. An Audit Committee of three
  non-management Directors is appointed by the Board. The Audit Committee reviews
  the financial statements, audit process and financial reporting with management
  and with the external auditors and reports to the Board of Directors prior to
  the approval of the audited consolidated financial statements for
  publication.

KPMG LLP, the Company's external auditors, who are appointed by
  the shareholders, audited the financial statements in accordance with Canadian
  generally accepted auditing standards to enable them to express to the
  shareholders their opinion on these financial statements. Their report
  follows.

|/s/ Albert Friesen    |  | /s/ James Kinley       
|--------------------- |  | -----------------------
|                      |  |                        
|Dr. Albert D. Friesen |  | Mr. James F. Kinley CA 
|President & CEO       |  | Chief Financial Officer

---

| | KPMG LLP                       | Telephone | (204) 957-1770
| | ------------------------------ | --------- | --------------
| | Chartered Accountants          | Fax       | (204) 957-0808
| | Suite 2000  One Lombard Place | Internet  | www.kpmg.ca   
| | Winnipeg MB R3B 0X3            |           |               
| | Canada                         |           |               

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders of Medicure Inc.

We have audited the accompanying consolidated balance sheets of
  Medicure Inc. and subsidiaries as at May 31, 2011 and May 31, 2010 and the
  related consolidated statements of operations and comprehensive loss,
  shareholders deficiency and cash flows for each of the years in the three-year
  period ended May 31, 2011. These consolidated financial statements are the
  responsibility of Medicure Inc.s management. Our responsibility is to express
  an opinion on these consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the consolidated financial
  position of Medicure Inc. and subsidiaries as at May 31, 2011 and May 31, 2010
  and their consolidated results of operations and their consolidated cash flows
  for each of the years in the three-year period ended May 31, 2011 in conformity
  with Canadian generally accepted accounting principles.

The accompanying consolidated financial statements have been
  prepared assuming that Medicure Inc. will continue as a going concern. As
  discussed in note 1 to the consolidated financial statements, Medicure Inc. has
  experienced operating losses since incorporation that raises significant doubt
  about its ability to continue as a going concern. Managements plans in regard
  to this matter are also described in note 1. The consolidated financial
  statements do not include any adjustments that might result from the outcome of
  this uncertainty.

Chartered Accountants

September 27, 2011 
  Winnipeg, Canada

| | KPMG LLP, is a Canadian limited
      liability partnership and a member firm of the KPMG | 
| | ----------------------------------------------------------------------------------------- | 
| | network of independent member firms
      affiliated with KPMG International Cooperative  | 
| | (KPMG International), a Swiss entity.                                                   | 
| | KPMG Canada provides services to KPMG
      LLP                                           | 

---

|MEDICURE INC.                  
|-------------------------------
|Consolidated Balance Sheets    
|(Expressed in Canadian dollars)
|May 31, 2011 and 2010          
|                               

|                                                  |   | 2011         |   |   | 2010         |  
|------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                  |   |              |   |   |              |  
|                                                  |   |              |   |   |              |  
|                                                  |   |              |   |   |              |  
|Assets                                            |   |              |   |   |              |  
|Current assets:                                   |   |              |   |   |              |  
|Cash and
      cash equivalents                   | $ | 750,184      |   | $ | 371,262      |  
|Accounts receivable (Note
      4)                |   | 365,490      |   |   | 390,923      |  
|Inventories (Note 5)                              |   | 460,886      |   |   | 550,975      |  
|Prepaid expenses                                  |   | 248,065      |   |   | 176,280      |  
|                                                  |   |              |   |   |              |  
|                                                  |   | 1,824,625    |   |   | 1,489,440    |  
|                                                  |   |              |   |   |              |  
|Property and equipment (Note 6)                   |   | 50,996       |   |   | 68,752       |  
|Intangible assets (Note 7)                        |   | 3,298,286    |   |   | 4,414,882    |  
|                                                  |   |              |   |   |              |  
|                                                  | $ | 5,173,907    |   | $ | 5,973,074    |  
|                                                  |   |              |   |   |              |  
|                                                  |   |              |   |   |              |  
|                                                  |   |              |   |   |              |  
|Liabilities and Shareholders' Deficiency          |   |              |   |   |              |  
|Current liabilities:                              |   |              |   |   |              |  
|Accounts
      payable and accrued liabilities    | $ | 1,729,517    |   | $ | 1,320,185    |  
|Accrued interest on
      long-term debt (Note 8) |   | 7,869,577    |   |   | 5,469,343    |  
|Long-term debt (Note 8)                           |   | 22,468,518   |   |   | 24,140,199   |  
|                                                  |   |              |   |   |              |  
|                                                  |   | 32,067,612   |   |   | 30,929,727   |  
|                                                  |   |              |   |   |              |  
|Shareholders' deficiency:                         |   |              |   |   |              |  
|Capital stock (Note 9(b))                         |   | 116,014,623  |   |   | 116,014,623  |  
|Warrants
      (Note 9(d))                        |   | 5,010,222    |   |   | 9,065,720    |  
|Contributed surplus                               |   | 8,177,365    |   |   | 4,044,810    |  
|Deficit                                           |   | (156,095,915 | ) |   | (154,081,806 | )
|                                                  |   |              |   |   |              |  
|                                                  |   | (26,893,705  | ) |   | (24,956,653  | )
|Nature of operations and going concern (Note 1)   |   |              |   |   |              |  
|Commitments and contingencies (Note 11)           |   |              |   |   |              |  
|Subsequent events
      (Notes 8, 9 and 16)       |   |              |   |   |              |  
|                                                  |   |              |   |   |              |  
|                                                  | $ | 5,173,907    |   | $ | 5,973,074    |  

On behalf of the Board:

| | "Dr. Albert D. Friesen" | "Mr. Gerald McDole"
| | ----------------------- | -------------------
| | Director                | Director           

See accompanying notes to consolidated financial statements.

- F-1 -

---

|MEDICURE INC.                                                     
|------------------------------------------------------------------
|Consolidated Statements of Operations and Comprehensive
      Loss
|(Expressed in Canadian dollars)                                   
|Years ended May 31, 2011, 2010 and 2009                           
|                                                                  

|                                                                                                  |   | 2011        |   |   | 2010        |   |   | 2009        |  
|------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
|                                                                                                  |   |             |   |   |             |   |   |             |  
|Revenue:                                                                                          |   |             |   |   |             |   |   |             |  
|Product sales, net                                                                                | $ | 3,628,274   |   | $ | 3,317,073   |   | $ | 4,792,513   |  
|                                                                                                  |   |             |   |   |             |   |   |             |  
|Expenses:                                                                                         |   |             |   |   |             |   |   |             |  
|Cost of
      goods sold, excluding amortization (Note 5)                                         |   | 673,522     |   |   | 571,688     |   |   | 377,079     |  
|Selling, general and
      administrative (Note 12)                                               |   | 2,818,159   |   |   | 4,474,825   |   |   | 9,255,219   |  
|Research
      and development (Note 11(a))                                                       |   | 204,690     |   |   | 393,385     |   |   | 22,706      |  
|Investment tax credits                                                                            |   | -           |   |   | (306,692    | ) |   | (565,932    | )
|Write-down of fixed and intangible assets                                                         |   | 280,235     |   |   | 769,335     |   |   | 1,755,955   |  
|Amortization                                                                                      |   | 898,931     |   |   | 919,215     |   |   | 938,733     |  
|                                                                                                  |   |             |   |   |             |   |   |             |  
|                                                                                                  |   | 4,875,537   |   |   | 6,821,756   |   |   | 11,783,760  |  
|                                                                                                  |   |             |   |   |             |   |   |             |  
|Loss before the
      undernoted                                                                  |   | (1,247,263  | ) |   | (3,504,683  | ) |   | (6,991,247  | )
|                                                                                                  |   |             |   |   |             |   |   |             |  
|Other expenses (income):                                                                          |   |             |   |   |             |   |   |             |  
|Interest
      and other income                                                                   |   | (473        | ) |   | (4,913      | ) |   | (255,713    | )
|Interest expense                                                                                  |   | 3,122,364   |   |   | 3,279,608   |   |   | 4,944,682   |  
|Foreign exchange (gain) loss,
      net                                                           |   | (2,355,045  | ) |   | (1,246,872  | ) |   | 1,635,611   |  
|                                                                                                  |   |             |   |   |             |   |   |             |  
|                                                                                                  |   | 766,846     |   |   | 2,027,823   |   |   | 6,324,580   |  
|                                                                                                  |   |             |   |   |             |   |   |             |  
|Loss and comprehensive loss                                                                       | $ | (2,014,109  | ) | $ | (5,532,506  | ) | $ | (13,315,827 | )
|                                                                                                  |   |             |   |   |             |   |   |             |  
|Basic and diluted loss per share                                                                  | $ | (0.02       | ) | $ | (0.04       | ) | $ | (0.10       | )
|Weighted average
      number of common shares used in computing basic and diluted loss per share |   | 130,307,552 |   |   | 130,307,552 |   |   | 130,307,552 |  

See accompanying notes to consolidated financial statements.

- F-2 -

---

|MEDICURE INC.                                      
|---------------------------------------------------
|Consolidated Statements of Shareholders' Deficiency
|(Expressed in Canadian dollars)                    
|Years ended May 31, 2011, 2010 and 2009            
|                                                   

|                                               |   | 2011         |   |   | 2010         |   |   | 2009         |  
|---------------------------------------------- | - | ------------ | - | - | ------------ | - | - | ------------ | -
|                                               |   |              |   |   |              |   |   |              |  
|Capital stock:                                 |   |              |   |   |              |   |   |              |  
|Balance, beginning of year                     | $ | 116,014,623  |   | $ | 116,014,623  |   | $ | 116,014,623  |  
|Balance,
      end of year                     |   | 116,014,623  |   |   | 116,014,623  |   |   | 116,014,623  |  
|Warrants:                                      |   |              |   |   |              |   |   |              |  
|Balance,
      beginning of year               |   | 9,065,720    |   |   | 9,065,720    |   |   | 9,094,635    |  
|Warrants expired during year                   |   | (4,055,498   | ) |   | -            |   |   | (28,915      | )
|Balance,
      end of year                     |   | 5,010,222    |   |   | 9,065,720    |   |   | 9,065,720    |  
|Contributed surplus:                           |   |              |   |   |              |   |   |              |  
|Balance,
      beginning of year               |   | 4,044,810    |   |   | 3,921,998    |   |   | 3,568,055    |  
|Stock-based compensation                       |   | 77,057       |   |   | 122,812      |   |   | 325,028      |  
|Warrants expired during year                   |   | 4,055,498    |   |   | -            |   |   | 28,915       |  
|Balance, end of year                           |   | 8,177,365    |   |   | 4,044,810    |   |   | 3,921,998    |  
|Deficit:                                       |   |              |   |   |              |   |   |              |  
|Balance, beginning of
      year               |   | (154,081,806 | ) |   | (148,549,300 | ) |   | (135,233,473 | )
|Loss and comprehensive loss
      for the year |   | (2,014,109   | ) |   | (5,532,506   | ) |   | (13,315,827  | )
|Balance, end of year                           |   | (156,095,915 | ) |   | (154,081,806 | ) |   | (148,549,300 | )
|Shareholders' deficiency                       | $ | (26,893,705  | ) | $ | (24,956,653  | ) | $ | (19,546,959  | )

See accompanying notes to consolidated financial statements.

- F-3 -

---

|MEDICURE INC.                          
|---------------------------------------
|Consolidated Statement of Cash Flows   
|(Expressed in Canadian dollars)        
|Years ended May 31, 2011, 2010 and 2009
|                                       

|                                                                    |   | 2011       |   |   | 2010       |   |   | 2009        |  
|------------------------------------------------------------------- | - | ---------- | - | - | ---------- | - | - | ----------- | -
|                                                                    |   |            |   |   |            |   |   |             |  
|                                                                    |   |            |   |   |            |   |   |             |  
|Cash provided by (used in):                                         |   |            |   |   |            |   |   |             |  
|Operating activities:                                               |   |            |   |   |            |   |   |             |  
|Loss and comprehensive loss
      for the year                      | $ | (2,014,109 | ) | $ | (5,532,506 | ) | $ | (13,315,827 | )
|Adjustments for:                                                    |   |            |   |   |            |   |   |             |  
|Amortization of property and equipment                              |   | 20,243     |   |   | 22,969     |   |   | 42,907      |  
|Amortization of
      intangible assets                             |   | 878,688    |   |   | 896,244    |   |   | 895,826     |  
|Amortization of deferred debt issue expense                         |   | 200,675    |   |   | 198,192    |   |   | 383,445     |  
|Accretion on long-term
      debt                                   |   | -          |   |   | 285,818    |   |   | 426,521     |  
|Stock-based compensation                                            |   | 77,057     |   |   | 122,812    |   |   | 325,028     |  
|Write-down of inventory                                             |   | 292,950    |   |   | -          |   |   | 92,985      |  
|Write-down of property and equipment                                |   | -          |   |   | 4,041      |   |   | -           |  
|Write-down of intangible
      assets                               |   | 280,235    |   |   | 765,294    |   |   | 1,755,955   |  
|Unrealized foreign exchange (gain) loss                             |   | (1,818,613 | ) |   | (1,372,970 | ) |   | 1,657,142   |  
|Change in the following:                                            |   |            |   |   |            |   |   |             |  
|Accounts
      receivable                                           |   | 25,433     |   |   | 160,774    |   |   | 332,646     |  
|Inventories                                                         |   | (202,861   | ) |   | 80,328     |   |   | (407,929    | )
|Prepaid
      expenses                                              |   | (71,785    | ) |   | 181,604    |   |   | 739,220     |  
|Research advance                                                    |   | -          |   |   | -          |   |   | 200,000     |  
|Accounts
      payable and accrued liabilities                      |   | 409,332    |   |   | (192,192   | ) |   | (4,338,798  | )
|Accrued interest on long-term debt                                  |   | 2,400,234  |   |   | 2,926,783  |   |   | 792,740     |  
|                                                                    |   |            |   |   |            |   |   |             |  
|Cash flows from
      (used in) operating activities                |   | 477,479    |   |   | (1,452,809 | ) |   | (10,418,139 | )
|                                                                    |   |            |   |   |            |   |   |             |  
|Investing activities:                                               |   |            |   |   |            |   |   |             |  
|Acquisition of property and
      equipment                         |   | (2,487     | ) |   | (2,230     | ) |   | (3,552      | )
|Acquisition of intangible assets                                    |   | (42,327    | ) |   | (139,601   | ) |   | (234,990    | )
|                                                                    |   |            |   |   |            |   |   |             |  
|Cash flows used
      in investing activities                       |   | (44,814    | ) |   | (141,831   | ) |   | (238,542    | )
|                                                                    |   |            |   |   |            |   |   |             |  
|Financing activities:                                               |   |            |   |   |            |   |   |             |  
|Repayments of long-term debt                                        |   | -          |   |   | -          |   |   | (14,454,000 | )
|Cash
      released from restriction                                |   | -          |   |   | -          |   |   | 14,454,000  |  
|                                                                    |   |            |   |   |            |   |   |             |  
|Cash flows used
      in financing activities                       |   | -          |   |   | -          |   |   | -           |  
|                                                                    |   |            |   |   |            |   |   |             |  
|Foreign exchange
      gain (loss) on cash held in foreign currency |   | (53,743    | ) |   | (12,823    | ) |   | 730,476     |  
|                                                                    |   |            |   |   |            |   |   |             |  
|Increase (decrease) in cash and cash equivalents                    |   | 378,922    |   |   | (1,607,463 | ) |   | (9,926,205  | )
|Cash and cash equivalents, beginning of year                        |   | 371,262    |   |   | 1,978,725  |   |   | 11,904,930  |  
|                                                                    |   |            |   |   |            |   |   |             |  
|Cash and cash equivalents, end of year                              | $ | 750,184    |   | $ | 371,262    |   |   | 1,978,725   |  
|                                                                    |   |            |   |   |            |   |   |             |  
|                                                                    |   |            |   |   |            |   |   |             |  
|Supplementary information:                                          |   |            |   |   |            |   |   |             |  
|Cash transactions:                                                  |   |            |   |   |            |   |   |             |  
|Interest paid                                                       | $ | -          |   | $ | -          |   | $ | 3,341,975   |  
|Interest received                                                   |   | 527        |   |   | 14,350     |   |   | 542,761     |  

See accompanying notes to consolidated financial statements.

- F-4 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|1. | Nature of operations and going concern:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Medicure Inc. (the Company) is a biopharmaceutical
      company engaged in the research, development and commercialization of
      human therapeutics. Through its subsidiary Medicure International Inc.,
      the Company has rights to the commercial product, AGGRASTAT®Injection (tirofiban hydrochloride) in the United States and its
      territories (Puerto Rico, U. S. Virgin Islands, and Guam).
      AGGRASTAT®, a glycoprotein GP IIb/IIIa receptor antagonist, is
      used for the treatment of acute coronary syndrome (ACS) including unstable
      angina, which is characterized by chest pain when one is at rest, and
      non-Q-wave myocardial infarction.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company's primary ongoing research and development
      activity is the development and implementation of a new regulatory, brand
      and life cycle management strategy for AGGRASTAT®. The
      Company's primary, non-AGGRASTAT®research and development
      activity is TARDOXALTMfor the treatment of Tardive Dyskinesia
      (TD). This program evolved from the Company's extensive clinical
      experience with MC-1, a naturally occurring small molecule, for new
      chronic medical conditions. The Company is also pursuing licensing
      opportunities for its library of small molecule anti thrombotic
      drugs.                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | These consolidated financial statements have been
      prepared on a going concern basis in accordance with Canadian generally
      accepted accounting principles. The going concern basis of presentation
      assumes that the Company will continue in operation for the foreseeable
      future and be able to realize its assets and discharge its liabilities and
      commitments in the normal course of business. There is significant doubt
      about the appropriateness of the use of the going concern assumption
      because the Company has experienced operating losses since
      incorporation.                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company has experienced a loss of $2,014,109 for the
      year ending May 31, 2011, and has accumulated a deficit of $156,095,915 as
      at May 31, 2011. The Company's future operations are dependent upon its
      ability to maintain or grow sales of AGGRASTAT®, and/or secure additional
      capital, which may not be available under favourable terms. Should these
      objectives not be achieved, the Company will have to consider additional
      strategic alternatives which may include, among other strategies, asset
      divestitures and/or monetization of certain intangibles.                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | As at May 31, 2011 the Company had significant debt
      servicing obligations that it did not have the ability to repay without
      refinancing or restructuring and the Company was in default of the terms
      of its long-term debt financing obligations. Under an event of default,
      the lender could have exercised its security rights under the agreement,
      and accordingly the long-term debt obligation has been classified as a
      current liability as at May 31, 2011 and 2010 as described in note 8. On
      July 18, 2011, the long-term debt was settled as described in Note
      16.                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The ability of the Company to continue as a going concern
      and to realize the carrying value of its assets and discharge its
      liabilities when due is dependent on many factors, including, but not
      limited to the actions taken or planned, some of which are described
      above, which are intended to mitigate the adverse conditions and events
      which raise doubt about the validity of the going concern assumption used
      in preparing these financial statements. There is no certainty that these
      and other strategies will be sufficient to permit the Company to continue
      as a going concern.                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The financial statements do not reflect adjustments that
      would be necessary if the going concern assumption were not appropriate.
      If the going concern basis was not appropriate for these financial
      statements, then adjustments would be necessary to the carrying value of
      assets and liabilities, the reported revenues and expenses, and the
      balance sheet classifications used.                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|2. | Significant accounting policies:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | (a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

- F-5 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|2. | Significant accounting policies
      (continued):
|-- | --------------------------------------------------

| | (a) | Basis of presentation (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | These financial statements have been prepared on a
      consolidated basis to include the accounts of the Company and its
      wholly-owned subsidiaries, Medicure International Inc., Medicure Pharma
      Inc., and Medicure Europe Limited. All significant inter-company
      transactions and balances have been eliminated.                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (b) | Revenue recognition:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company recognizes product revenue when substantially
      all of the risks and rewards of ownership have transferred to the customer
      and collection is reasonably assured. Revenue is recognized upon product
      delivery, and when no significant contractual obligations remain. Net
      sales reflect a reduction of gross sales at the time of initial sales
      recognition for estimated wholesaler chargebacks, discounts, allowances
      for product returns, and other rebates. Interest income is recognized as
      earned.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (c) | Inventories:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Inventories of raw materials and packaging materials are
      valued at the lower of cost and net realizable value. Inventories of
      finished goods are valued at the lower of cost and net realizable value.
      Cost is determined under the first- in, first-out method.                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (d) | Cash and cash equivalents:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Cash and cash equivalents include cash on hand and
      balances with banks, as well as highly liquid term deposits and commercial
      paper. The Company considers all highly liquid term deposits and
      commercial paper with terms to maturity when acquired of three months or
      less to be cash equivalents.                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (e) | Property and equipment:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Property and equipment are stated at cost. Amortization
      is recorded over the estimated useful life of the assets at the following
      rates:                                                                                                                                                                                                                                                                                                                                                                                                        

Asset
      Basis
      Annual rateComputer equipment
      Straight-line
      25%Furniture, fixtures and equipment
      Diminishing balance
      20% to 25%Leasehold improvements
      Straight-line
      20%


| | (f) | Intangible assets:                                                                                                                                                                                                                                                                                                                  
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                     
| |     | Costs incurred in obtaining patents are capitalized and
      amortized upon issuance on a straight-line basis over the remaining legal
      life of the respective patents, being approximately twenty years, or their
      economic life, if shorter. The cost of servicing the Company's patents is
      expensed as incurred.
| |     |                                                                                                                                                                                                                                                                                                                                     
| |     | Intangible assets are recorded at acquisition cost and
      are amortized on a straight-line basis based on the following estimated
      useful lives:                                                                                                                                                                            

Patents
      5 - 20 yearsTrademark
      10 yearsTechnology license
      8 yearsCustomer list
      10
        years


- F-6 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|2. | Significant accounting policies
      (continued):
|-- | --------------------------------------------------

| | (g) | Deferred debt issue expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Costs incurred to obtain financing are deferred and
      amortized over the term of the associated debt using the effective
      interest method. Amortization is a non-cash charge to interest
      expense.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (h) | Impairment of long-lived assets:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The carrying amount of long-lived assets which includes
      property and equipment and intangible assets to be held and used is
      reviewed for impairment on an ongoing basis whenever events or changes in
      circumstances indicate that the carrying amount may not be recoverable. An
      impairment is recognized when the carrying amount of an asset to be held
      and used exceeds the projected undiscounted future net cash flows expected
      from its use and disposal, and is measured as the amount by which the
      carrying amount of the asset exceeds its fair value.                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (i) | Stock-based compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The Company has a stock option plan [note 9(c)] for its
      directors, management, employees and consultants. The Company uses the
      fair value method of accounting for stock options granted. The fair value
      of the options is expensed over their vesting period. The Company
      estimates forfeitures for each grant and incorporates this estimate into
      the calculation of compensation cost recorded each period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (j) | Government assistance and investment tax
      credits:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Government assistance toward current expenses is recorded
      as a reduction of the related expenses in the period the expenses are
      incurred. Government assistance towards property and equipment is deducted
      from the cost of the related property and equipment. The benefits of
      investment tax credits for scientific research and experimental
      development expenditures (SR&ED) incurred directly by the Company are
      recognized in the period the qualifying expenditure is made, providing
      there is reasonable assurance of recoverability. SR&ED investment tax
      credits receivable are recorded at their net realizable value.                                                                                                                                                                                                                                                                                               
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (k) | Research and development:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | All costs of research activities are expensed in the
      period in which they are incurred. Development costs are charged as an
      expense in the period incurred unless a development project meets criteria
      for cost deferral and amortization. No development costs have been
      deferred to date. Tangible and intangible assets acquired for use in
      research and development projects are accounted for as described in note
      2(e) and (f).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (l) | Clinical trial expenses:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | Clinical trial expenses are a component of the Company's
      research and development costs. These expenses include fees paid to
      contract research organizations, clinical sites, and other organizations
      who conduct development activities on the Company's behalf. The amount of
      clinical trial expenses recognized in a period related to clinical
      agreements are based on estimates of the work performed using an accrual
      basis of accounting. These estimates incorporate factors such as patient
      enrolment, services provided, contractual terms, and prior experience with
      similar contracts.                                                                                                                                                                                                                                                                                                                              
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | (m) | Income taxes:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |     | The Company follows the asset and liability method of
      accounting for income taxes. Under this method, future income tax assets
      and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement carrying
      amounts of existing assets and liabilities and their respective tax bases.
      Future income tax assets and liabilities are measured using enacted or
      substantively enacted tax rates expected to apply to taxable income in the
      years in which those temporary differences are expected to be recovered or
      settled. The effect on future tax assets and liabilities of a change in
      tax rates is recognized in income in the period that includes the date of
      substantive enactment. When realization of future income tax assets does
      not meet the more likely than not criterion, a valuation allowance is
      provided for the difference.

- F-7 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|2. | Significant accounting policies
      (continued):
|-- | --------------------------------------------------

| | (n) | Earnings (loss) per share:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Basic earnings (loss) per share is computed using the
      weighted average number of shares outstanding during the year including
      contingently issuable shares where the contingency has been resolved. The
      treasury stock method requires that diluted per share amounts be
      calculated as if all the common share equivalents, such as options and
      warrants where the average market price for the period exceeds the
      exercise price, had been exercised at the beginning of the reporting
      period or at the date of issue, if later, and that the funds obtained
      thereby were used to purchase common shares of the Company at the average
      trading price of the common shares during the period. For all periods
      presented, all common share equivalents have been excluded from the
      calculation of dilutive loss per share as their effect is anti-
      dilutive.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (o) | Foreign currency translation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Current assets and current liabilities in foreign
      currencies have been translated into Canadian dollars at the rates of
      exchange in effect at the balance sheet date. Income and expense
      transactions are translated at actual rates of exchange during the year.
      Exchange gains and losses are included in loss for the period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The operations of the Company's foreign subsidiaries are
      considered to be integrated foreign operations and, accordingly, are
      converted to Canadian dollars using the temporal method. Under this
      method, monetary assets and liabilities are translated at the rate of
      exchange prevailing at the balance sheet date, non-monetary assets and
      liabilities are translated at the rate in effect when the assets were
      acquired or liabilities were assumed and items included in the statements
      of operations at the average exchange rates in effect at the date of such
      transactions with resulting exchange gains or losses included in the
      determination of earnings.                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (p) | Use of estimates:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | The preparation of financial statements requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities, the disclosure of contingent assets and
      liabilities at the date of the financial statements and the reported
      amounts of revenues and expenses during the year. Estimates are used when
      accounting for items and matters such as revenue recognition and
      allowances for estimated returns and other rebates, inventory provisions,
      estimated useful lives of intangible assets and property and equipment,
      impairment assessments, taxes and related valuation allowances and
      provisions, share-based compensation, contingencies, and fair values
      assigned to warrants issued in connection with share and debt issuances.
      Actual results could differ from those estimates.                           
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (q) | Financial instruments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Financial assets and financial liabilities, including
      derivatives are initially recognized at fair value. Subsequent measurement
      is determined by the classification of each financial asset and liability.
      The fair value of financial assets designated as held-for-trading is
      determined based on quoted prices in active markets for identical assets,
      per Level I of the fair value hierarchy. When the carrying value of a
      financial asset exceeds its fair value on a basis that is other than
      temporary, the carrying value is reduced to the fair value. The Company
      has designated its financial instruments as follows:                                                                                                                                                                                                                                                 
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | Transaction costs that are directly attributable to the
      acquisition or issuance of financial assets or liabilities not classified
      as held-for-trading are accounted for as part of the respective asset or
      liability's carrying value at inception and amortized over the expected
      life of the financial instrument using the effective interest
      method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

- F-8 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|2. | Significant accounting policies
      (continued):
|-- | --------------------------------------------------

| | (r) | Recent accounting pronouncements not yet
      adopted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | In January 2009, the Canadian Institute of Charter
      Accountants (CICA) issued Handbook Section 1582, Business Combinations,
      Section 1601, Consolidated Financial Statements, and Section 1602,
      Non-controlling Interests. These Sections apply to interim and annual
      financial statements relating to fiscal years beginning on or after
      January 1, 2011. Earlier adoption is permitted as of the beginning of a
      fiscal year. An entity adopting Section 1582 also must adopt Sections 1601
      and 1602 at the same time.                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     | Section 1582 requires business acquisitions to be
      measured at fair value on the acquisition date, acquisition-related costs
      to be expensed, gains from bargain purchases to be recorded in net
      earnings, and expands the definition of a business. Section 1601
      establishes standards for the preparation of consolidated financial
      statements and Section 1602 requires that non-controlling interest be
      presented as part of equity and that transactions between the Company and
      the non-controlling interests be reported as equity transactions. Section
      1582 will apply to any business combinations following June 1,
      2011.

|3. | Convergence to International Financial Reporting
      Standards ("IFRS"):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | In 2006, the Canadian Accounting Standards Board (AcSB)
      published a new strategic plan that significantly affects financial
      reporting requirements for Canadian companies. The AcSB's strategic plan
      outlined the convergence of Canadian GAAP with IFRS over a five-year
      transitional period. In February 2008, the AcSB announced that 2011 is the
      changeover date for publicly-listed companies to use IFRS, replacing
      Canada's own GAAP. The date is for interim and annual financial statements
      relating to fiscal years beginning on or after January 1, 2011. The
      Company's first year end under IFRS will be May 31, 2012. The transition
      date for the Company will be June 1, 2011 and will require restatement for
      comparative purposes of amounts reported by the Company for the year ended
      May 31, 2011. The Company is in the process of determining the impact of
      adoption of IFRS on its financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4. | Accounts receivable:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                           |   | May 31, 2011 |  |   | May 31, 2010 | 
| | ------------------------- | - | ------------ |  | - | ------------ | 
| |                           |   |              |  |   |              | 
| | Trade accounts receivable | $ | 353,473      |  | $ | 375,228      | 
| | Interest receivable       |   | -            |  |   | 54           | 
| | Other                     |   | 12,017       |  |   | 15,641       | 
| |                           |   |              |  |   |              | 
| |                           | $ | 365,490      |  | $ | 390,923      | 

As at May 31, 2011, the trade accounts
  receivable consists of amounts owing from three customers which represent
  approximately 100 percent (May 31, 2010 - 90 percent) of trade accounts
  receivable.

- F-9 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|5. | Inventories:
|-- | ------------

| |                                       |   | May 31, 2011 |  |   | May 31, 2010 | 
| | ------------------------------------- | - | ------------ |  | - | ------------ | 
| | Raw materials and packaging materials | $ | 74,902       |  | $ | 120,035      | 
| | Finished goods                        |   | 385,984      |  |   | 430,940      | 
| |                                       | $ | 460,886      |  | $ | 550,975      | 

During the year ending May 31, 2011,
  the Company wrote-off unusable inventory of $292,950 (May 31, 2010 - nil, May
  31,2009 - $92,985). Inventory expensed as part of cost of goods sold during the
  year ended May 31, 2011 was $268,572 (May 31, 2010 - $218,702, May 31, 2009 -
  $279,872).

|6. | Property and
      equipment:
|-- | -----------------------------

| |                                         |   |         |  |   | Accumulated  |  |   | Net book | 
| | --------------------------------------- | - | ------- |  | - | ------------ |  | - | -------- | 
| | May 31, 2011                            |   | Cost    |  |   | amortization |  |   | value    | 
| |                                         |   |         |  |   |              |  |   |          | 
| | Computer equipment                      | $ | 37,916  |  | $ | 22,145       |  | $ | 15,771   | 
| | Furniture,
      fixtures and equipment |   | 136,851 |  |   | 101,626      |  |   | 35,225   | 
| |                                         |   |         |  |   |              |  |   |          | 
| |                                         | $ | 174,767 |  | $ | 123,771      |  | $ | 50,996   | 

| |                                         |   |         |  |   | Accumulated  |  |   | Net book | 
| | --------------------------------------- | - | ------- |  | - | ------------ |  | - | -------- | 
| | May 31, 2010                            |   | Cost    |  |   | amortization |  |   | value    | 
| |                                         |   |         |  |   |              |  |   |          | 
| | Computer equipment                      | $ | 36,377  |  | $ | 13,704       |  | $ | 22,673   | 
| | Furniture,
      fixtures and equipment |   | 136,429 |  |   | 90,350       |  |   | 46,079   | 
| |                                         |   |         |  |   |              |  |   |          | 
| |                                         | $ | 172,806 |  | $ | 104,054      |  | $ | 68,752   | 

Included in general and administration
  expenses is a gain on sale of property and equipment of nil (2010 - $7,193, 2009
  -nil) and the Company also recorded a write-down of property and equipment of
  nil (2010 - $4,041, 2009 - nil).

- F-10 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|7. | Intangible assets:
|-- | ------------------

| |               |   | Cost,
      net of |  |   | Accumulated  |  |   | Net book  | 
| | ------------- | - | ------------------ |  | - | ------------ |  | - | --------- | 
| | May 31, 2011  |   | impairments        |  |   | amortization |  |   | value     | 
| |               |   |                    |  |   |              |  |   |           | 
| | Patents       | $ | 8,555,292          |  | $ | 5,971,585    |  | $ | 2,583,707 | 
| | Trademarks    |   | 1,534,440          |  |   | 927,048      |  |   | 607,392   | 
| | Customer list |   | 270,784            |  |   | 163,597      |  |   | 107,187   | 
| |               |   |                    |  |   |              |  |   |           | 
| |               | $ | 10,360,516         |  | $ | 7,062,230    |  | $ | 3,298,286 | 

| |               |   | Cost,
      net of |  |   | Accumulated  |  |   | Net book  | 
| | ------------- | - | ------------------ |  | - | ------------ |  | - | --------- | 
| | May 31, 2010  |   | impairments        |  |   | amortization |  |   | value     | 
| |               |   |                    |  |   |              |  |   |           | 
| | Patents       | $ | 8,872,044          |  | $ | 5,304,021    |  | $ | 3,568,023 | 
| | Trademarks    |   | 1,534,440          |  |   | 814,610      |  |   | 719,830   | 
| | Customer list |   | 270,784            |  |   | 143,755      |  |   | 127,029   | 
| |               |   |                    |  |   |              |  |   |           | 
| |               | $ | 10,677,268         |  | $ | 6,262,386    |  | $ | 4,414,882 | 

As part of its ongoing review of all
  intellectual property, the Company recorded an impairment write-down during the
  year ended May 31, 2011 of $280,235 (May 31, 2010 - $765,294, May 31, 2009 -
  $1,755,955). The Company also reviewed the remaining intangible assets for
  impairments as at May 31, 2011 and has determined no further write-downs were
  necessary.

As described in Note 8, certain
  intangible assets are pledged as security against long-term debt.

|8. | Long-term debt:
|-- | ---------------

| |                                         |   | May 31, 2011 |   |   | May 31, 2010 |  
| | --------------------------------------- | - | ------------ | - | - | ------------ | -
| | Birmingham long-term debt               | $ | 22,468,518   |   | $ | 24,140,199   |  
| | Current portion of
      long-term debt |   | (22,468,518  | ) |   | (24,140,199  | )
| |                                         | $ | -            |   | $ | -            |  

Principal repayments to maturity by
  fiscal year are as follows:

| | 2012                                                                                  | $ | 804,775    |  
| | ------------------------------------------------------------------------------------- | - | ---------- | -
| | 2013                                                                                  |   | 1,681,668  |  
| | 2014                                                                                  |   | 2,412,141  |  
| | 2015                                                                                  |   | 3,292,062  |  
| | 2016                                                                                  |   | 4,347,266  |  
| | Thereafter                                                                            |   | 11,682,088 |  
| |                                                                                       |   |            |  
| |                                                                                       |   | 24,220,000 |  
| | Less deferred debt issue expenses (net of accumulated
      amortization of $760,512) |   | (1,751,482 | )
| |                                                                                       |   |            |  
| |                                                                                       | $ | 22,468,518 |  

On July 18, 2011, the Company settled
  the above long-term debt as described in Note 16.

- F-11 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|8. | Long-term debt (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In September 2007, the Company entered into a debt
      financing agreement with Birmingham Associates Ltd. (Birmingham), an
      affiliate of Elliott Associates, L.P. (Elliott) for proceeds of US$25
      million. Under the terms of the agreement, Birmingham receives payments
      based on a percentage of AGGRASTAT®net sales. Birmingham is
      entitled to a return of 20 percent on the first US$15 million in
      AGGRASTAT®revenues, 17.5 percent on the next US$10 million, 15
      percent on the next US$5 million and 5 percent thereafter, subject to an
      escalating minimum annual return, until May 31, 2020. The minimum annual
      payments start at US$2.5 million in 2008 and escalate to US$6.9 million in
      2017. The total minimum payments over the life of the agreement in
      aggregate are US$49.7 million. The annual minimum payments are reflected
      in the effective interest rate calculation of the debt.                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | As at May 31, 2011, the Company was in default of the
      terms of its debt financing obligations. The portion of the minimum
      payments that are past due included in the accrued interest on long-term
      debt is $4,804,788, or US$4,933,471 (May 31, 2010 - $4,540,151 or
      US$4,339,659). Of this amount, US$1,739,659 was originally due July 15,
      2009; US$180,811 was originally due October 15, 2009; US$195,550 was
      originally due January 15, 2010; US$160,359 was originally due April 15,
      2010; US$2,063,280 was originally due on July 15, 2010, US$168,085 was
      originally due October 15, 2010, US$167,025 was originally due January 15,
      2011, and US$258,703 was originally due April 15, 2011. The debt agreement
      contains no express provisions to accelerate debt payments in an event of
      default, however under the agreement the lender can exercise its security
      rights at any time while in default. Accordingly, for financial reporting
      purposes, based on the guidance in "EIC-59 Long Term Debt With Covenant
      Violations", the outstanding long term debt of US$25 million that is in
      default has been classified as a current liability as at May 31, 2011 and
      2010 (Note 1).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | As disclosed in (Note 9(d)), the Company issued 1,000,000
      warrants associated with the debt financing agreement. The warrants were
      valued at fair value of $809,344 at the date of issuance using the
      Black-Scholes option pricing model. The warrants have been recorded in
      shareholders' equity and the Company recorded a long-term debt liability
      of $24,213,256. The Company also incurred debt issuance costs of
      $1,727,902, which it has recorded as a discount on the debt. The imputed
      effective interest rate is 13.3 percent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Birmingham has the option to convert its rights based on
      AGGRASTAT®to MC-1 (products that contains pyridoxal 5'-
      phosphate (P5P)) within six months after MC-1's commercialization, if
      achieved. Upon conversion to MC-1, Birmingham would be entitled to a
      return of 10 percent on the first US$35 million in MC-1 revenues, 5
      percent on the next US$40 million in MC-1 revenues and 3 percent
      thereafter, subject to a minimum annual return of US$2.6 million until May
      31, 2020. Birmingham would receive payments based on MC-1 revenues until
      December 31, 2024, unless a novel patent is obtained for MC-1, which could
      extend the period of payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Birmingham's participation rights are secured by a first
      security interest in the intellectual property rights of the Company in
      AGGRASTAT®and MC-1 (subject to certain specified MC-1 lien
      release terms), the proceeds derived from the commercialization of
      AGGRASTAT®and MC-1 (including without limitation any royalties
      receivable derived from any licensing of AGGRASTAT®and MC-1 to
      any third party and accounts receivable from the sale of AGGRASTAT®and MC-1 products), all intellectual, proprietary and other rights
      (including without limitation to contractual promotion and licensing
      rights and benefits) associated with, or derived from, AGGRASTAT®and MC-1, as well as shares in Medicure Pharma Inc. and Medicure
      International Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | During the 30 day period following the date on which the
      U.S. Food and Drug Administration shall have first approved MC-1 for sale
      to the public, the Company may elect to terminate AGGRASTAT®or
      MC-1 Debt Payment rights with the payment, prior to the end of such 30 day
      period, of US$70 million to Birmingham.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In addition, upon the approval of MC-1 for a second
      indication, the Company may once again elect to terminate AGGRASTAT®or MC-1 debt payment rights with the payment, prior to the end of
      such 30 day period, of US$120 million to Birmingham. The termination
      options represent an embedded derivative as defined in CICA Handbook
      Section 3855, Financial Instruments - Recognition and Measurement. As of
      May 31, 2011, the estimated fair value of the termination options is
      nil.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

- F-12 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|9. | Capital stock:
|-- | --------------
|   |               
|   | (a)           
|   |               
|   |               
|   |               
|   | (b)           
|   |               
|   |               

| |                             |  | Number of Common Shares |  |   | Amount      | 
| | --------------------------- |  | ----------------------- |  | - | ----------- | 
| | Balance, May 31, 2009       |  | 130,307,552             |  | $ | 116,014,623 | 
| | Balance, May 31,
      2010 |  | 130,307,552             |  | $ | 116,014,623 | 
| | Balance, May 31, 2011       |  | 130,307,552             |  | $ | 116,014,623 | 

| | (c) | Options:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | The Company has a stock option plan which is administered
      by the Board of Directors of the Company with stock options granted to
      directors, management, employees and consultants as a form of
      compensation. The number of common shares reserved for issuance of stock
      options is limited to a maximum of ten percent of the outstanding common
      shares of the Company at any time. The stock options generally are subject
      to vesting over a period up to three years and have a maximum term of ten
      years.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     | Changes in the number of options outstanding during the
      year ended May 31, 2011 and 2010 are as
      follows:                                                                                                                                                                                                                                                                                                                                                                                                                                  

| |                                          |  |            |   |   | May 31, 2011 |  |  |            |   |   | May 31, 2010 | 
| | ---------------------------------------- |  | ---------- | - | - | ------------ |  |  | ---------- | - | - | ------------ | 
| |                                          |  |            |   |   |              |  |  |            |   |   |              | 
| |                                          |  |            |   |   | Weighted     |  |  |            |   |   | Weighted     | 
| |                                          |  |            |   |   | average      |  |  |            |   |   | average      | 
| |                                          |  |            |   |   | exercise     |  |  |            |   |   | exercise     | 
| |                                          |  | Shares     |   |   | price        |  |  | Shares     |   |   | price        | 
| |                                          |  |            |   |   |              |  |  |            |   |   |              | 
| | Balance, beginning of period             |  | 5,032,192  |   | $ | 0.71         |  |  | 7,272,807  |   | $ | 0.57         | 
| | Forfeited,
      cancelled or expired    |  | (2,710,000 | ) |   | 0.64         |  |  | (2,240,615 | ) |   | 0.26         | 
| |                                          |  |            |   |   |              |  |  |            |   |   |              | 
| | Balance, end of
      period             |  | 2,322,192  |   | $ | 0.74         |  |  | 5,032,192  |   | $ | 0.71         | 
| |                                          |  |            |   |   |              |  |  |            |   |   |              | 
| | Options
      exercisable, end of period |  | 2,322,192  |   | $ | 0.74         |  |  | 4,311,349  |   | $ | 0.74         | 

- F-13 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|9. | Capital stock (continued):
|-- | --------------------------
|   |                           
|   | (c)                       
|   |                           
|   |                           

Weighted
        average
      Options
        outstandingRange of
      Number
      remaining
      weighted average
      Numberexercise prices
      outstanding
      contractual life
      exercise price
      exercisable$0.03 - $0.50
      1,080,000
      7.29 years
      $0.05
      1,080,000$0.51 - $1.00
      470,025
      6.52 years
      $0.85
      470,025$1.01 - $1.68
      772,167
      4.88 years
      $1.63
      772,167$0.03 - $1.68
      2,322,192
      6.33 years
      $0.74
      2,322,192


The compensation expense related to
  stock options granted in previous periods under the stock option plan for the
  year ended May 31, 2011 was $77,057 (2010 - $122,812, 2009 - $325,028).

The compensation expense was
  determined based on the fair value of the options at the date of measurement
  using the Black-Scholes option pricing model. There were no stock options
  granted during the years ended May 31, 2011 and 2010.

| | (d) | Warrants:
| | --- | ---------

Changes in the number of warrants
  outstanding during years ended May 31, 2011, 2010 and 2009 are as follows:

ExerciseIssue
      
      Original
      
      
      price
      
      
      May 31,
      
      
      Granted
      
      
      May 31,
      
      
      Granted
      
      
      May 31,(Expiry date)
      
      granted
      
      
      per
        share
      
      
      2009
      
      
      (Expired)
      
      
      2010
      
      
      (Expired)
      
      
      20112,602,750 units (August 19, 2010)
      
      2,602,750
      
      $
      1.18
      
      
      2,602,750
      
      
      -
      
      
      2,602,750
      
      
      (2,602,750
      )
      
      -4,000,000 units (May 9, 2011)
      
      4,000,000
      
      
      USD $2.10
      
      
      4,000,000
      
      
      -
      
      
      4,000,000
      
      
      (4,000,000
      )
      
      -3,984,608 units (December 22, 2011)
      
      3,984,608
      
      
      USD $1.70
      
      
      3,984,608
      
      
      -
      
      
      3,984,608
      
      
      -
      
      
      3,984,6081,000,000 units (December 31, 2016)
      
      1,000,000
      
      
      USD $1.26
      
      
      1,000,000
      
      
      -
      
      
      1,000,000
      
      
      -
      
      
      1,000,0004,373,913 units (October 5, 2012)
      
      4,373,913
      
      
      USD $1.50
      
      
      4,373,913
      
      
      -
      
      
      4,373,913
      
      
      -
      
      
      4,373,913


The warrants, with the exception of
  the warrants expiring on December 31, 2016, were issued together with common
  shares either under prospectus offerings or private placements with the net
  proceeds allocated to common shares and warrants based on their relative fair
  values using the Black-Scholes model. The warrants expiring on December 31, 2016
  were issued with the debt financing agreement in September 2007, as disclosed in
  note 8.

The warrants expiring on December 22,
  2011, October 5, 2012, and December 31, 2016 may be exercised, upon certain
  conditions being met, on a cashless basis based on a formula described in the
  warrant agreements.

- F-14 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|9.  | Capital stock (continued):                                                     
|--- | -------------------------------------------------------------------------------
|    |                                                                                
|    | (e)                                                                            
|    |                                                                                
|    |                                                                                
|    |                                                                                
|10. | Income taxes:                                                                  
|    |                                                                                
|    | Significant components of the Company's future tax assets
      are as follows:

| |                                                        |   | 2011        |   |   | 2010        |  
| | ------------------------------------------------------ | - | ----------- | - | - | ----------- | -
| |                                                        |   |             |   |   |             |  
| | Future tax assets:                                     |   |             |   |   |             |  
| | Non-capital loss carry-forwards                        | $ | 7,008,000   |   | $ | 5,984,000   |  
| | Scientific
      research and experimental development |   | 3,793,000   |   |   | 3,793,000   |  
| | Share issue costs                                      |   | 99,000      |   |   | 249,000     |  
| | Other                                                  |   | 701,000     |   |   | 737,000     |  
| |                                                        |   |             |   |   |             |  
| |                                                        |   | 11,601,000  |   |   | 10,763,000  |  
| | less: Valuation
      allowance                        |   | (11,601,000 | ) |   | (10,763,000 | )
| |                                                        |   |             |   |   |             |  
| |                                                        | $ | -           |   | $ | -           |  

The reconciliation of the Canadian
  statutory rate to the income tax provision is as follows:

2011
      
      
      2010
      
      
      2009Loss for the year:Canadian
      $
      1,564,488
      
      $
      1,250,420
      
      $
      3,777,652Foreign
      
      449,621
      
      
      4,282,086
      
      
      9,538,175$
      2,014,109
      
      $
      5,532,506
      
      $
      13,315,827Canadian federal and provincial income taxes at 27.00%
        (2010 - 27.00%; 2009 - 27.00%)
      $
      544,000
      
      $
      1,494,000
      
      $
      3,595,000Permanent differences and other items
      
      (42,000
      )
      
      59,000
      
      
      (64,000
      )Foreign tax rate in foreign jurisdiction
      
      (120,000
      )
      
      (932,000
      )
      
      (2,256,000
      )Change in valuation allowance
      
      (838,000
      )
      
      (662,000
      )
      
      (759,000
      )Other
      
      456,000
      
      
      41,000
      
      
      (516,000
      )$
      -
      
      $
      -
      
      $
      -


The foreign tax rate differential is
  the difference between the Canadian federal and provincial statutory income tax
  rate and the tax rates in Barbados (2.5 percent) and the United States (38
  percent) that are applicable to losses incurred by the Company's wholly-owned
  subsidiaries, Medicure International Inc. and Medicure Pharma Inc.

- F-15 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|**10.** | Income taxes (continued):
|------- | -------------------------

| | At May 31, 2011, the Company has the following
      available for application in future years:
| | -----------------------------------------------------------------------------------------------
| |                                                                                                
| |                                                                                                
| |                                                                                                

|11. | Commitments and
      contingencies:
|--- | ------------------------------------

| | (a) | Commitments:                                                                                                                                                                                             
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                          
| |     | As at May 31, 2011 and in the normal course of business
      the Company has obligations to make future payments, representing
      contracts and other commitments that are known and
      committed.

| |                                                                           |   | Purchase    | 
| | ------------------------------------------------------------------------- | - | ----------- | 
| |                                                                           |   | agreement   | 
| |                                                                           |   | commitments | 
| |                                                                           |   |             | 
| | Contractual obligations payment due by
      fiscal period ending May 31: |   |             | 
| | 2012                                                                      |   | 759,000     | 
| | 2013                                                                      |   | 64,000      | 
| |                                                                           |   |             | 
| |                                                                           | $ | 823,000     | 

The Company entered into manufacturing
  and supply agreements, as amended, to purchase a minimum quantity of
  AGGRASTAT®from a third party totaling a minimum of $823,000 or
  US$849,000 (based on current pricing) over the term of the agreement, which
  expires in fiscal 2013.

In addition, as described in note 8
  the Company has entered into a debt financing agreement for a US$25 million
  upfront cash payment. The minimum annual payments start at US$2.5 million in
  2008 and escalate to US$6.9 million in 2017 and continue until May 31, 2020. The
  cumulative minimum annual payments (from 2008 to 2020) under the agreement in
  aggregate are US$49.7 million. On July 18, 2011, the Company settled its
  long-term as described in Note 16.

Effective October 1, 2009, the Company
  entered into a business and administration services agreement with Genesys
  Venture Inc. (GVI), a company controlled by the Chief Executive Officer (Note
  12) under which the Company committed to pay $25,000 per month or $300,000 per
  annum. On October 1, 2010, an amendment was made to the agreement thereby
  reducing the fees to $15,000 per month, or $180,000 per year effective November
  1, 2010. The agreement shall be automatically renewed for succeeding terms of
  one year on terms to be mutually agreed upon by the parties. The Company may
  terminate this agreement at any time upon 60 days written notice.

In addition to the contractual
  obligations disclosed above, the Company and its wholly-owned subsidiaries have
  ongoing research and development agreements with third parties in the ordinary
  course of business.

Contracts with contract research
  organizations (CROs) are payable over the terms of the trials and timing of
  payments is largely dependent on various milestones being met, such as the
  number of patients recruited, number of monitoring visits conducted, the
  completion of certain data management activities, trial completion, and other
  trial-related activities. As at May 31, 2011, the Company has committed to fund
  a further $3,000,000 research and development activities under development
  agreements with CROs. The timing of expenditures and payments is largely at the
  discretion of the Company and the agreements may be terminated at any time
  provided 30 days notice is provided.

- F-16 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|11. | Commitments and contingencies
      (continued):                                                                                                                                                                                                                                                                                                                                                                 
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | (b)                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | (c)                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | (d)                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|12. | Related party transactions:                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Related parties consist of certain officers and
      shareholders, companies with significant influence, and companies in which
      certain directors, officers, or shareholders have interests. These
      transactions are in the normal course of operations and are measured at
      the exchange amount, which is the amount of consideration established and
      agreed upon by the related parties.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                  
|    | Related party transactions incurred during the years
      ended May 31, 2011, 2010 and 2009 are as
      follows:                                                                                                                                                                                                                                                                                               

| |                                      |  | 2011    |  |  | 2010    |  |  | 2009    | 
| | ------------------------------------ |  | ------- |  |  | ------- |  |  | ------- | 
| |                                      |  |         |  |  |         |  |  |         | 
| | Rent                                 |  | 17,671  |  |  | 45,477  |  |  | 69,012  | 
| | Business and administrative services |  | 426,000 |  |  | 431,000 |  |  | 281,000 | 
| | Clinical research services           |  | 169,762 |  |  | 88,918  |  |  | -       | 

In accordance with the above noted
  contract (Note 11(a)), the Chief Financial Officer's services are provided
  through a consulting agreement with GVI. In addition, intellectual property,
  accounting, payroll, human resources and information technology services are
  provided to the Company through the GVI agreement.

Also, included in business and
  administrative service are amounts paid to the Chief Executive Officer. On July
  18, 2011, the Company renewed its consulting agreement with its Chief Executive
  Officer for a term of five years, at a rate of $180,000 annually.

Clinical research services are provided
  through a consulting agreement with GVI Clinical Development Solutions ("GVI
  CDS"), a company controlled by the Chief Executive Officer. Pharmacovigilance
  and safety, regulatory support, quality control and clinical support are
  provided to the Company through the GVI CDS agreement.

On July 18, 2011, the Company issued
  20,000,000 common shares of the Company to the Chief Executive Officer of the
  Company and entities controlled by the Chief Executive Officer for consideration
  relating to the guarantee of a loan obtained subsequent to May 31, 2011, as
  described in Note 16.

- F-17 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|13. | Financial instruments:                                                
|--- | ----------------------------------------------------------------------
|    |                                                                       
|    | The Company has classified its financial instruments as
      follows:

| |                                                                              |  | May 31, 2011 |  |  | May 31, 2010 | 
| | ---------------------------------------------------------------------------- |  | ------------ |  |  | ------------ | 
| |                                                                              |  |              |  |  |              | 
| | Financial assets:                                                            |  |              |  |  |              | 
| | Cash and cash equivalents
      (held-for-trading)                           |  | 750,184      |  |  | 371,262      | 
| | Accounts receivable (loans and
      receivables)                            |  | 365,490      |  |  | 390,923      | 
| |                                                                              |  |              |  |  |              | 
| |                                                                              |  | 1,115,674    |  |  | 762,185      | 
| |                                                                              |  |              |  |  |              | 
| | Financial liabilities:                                                       |  |              |  |  |              | 
| | Accounts payable and accrued
      liabilities (other financial liabilities) |  | 1,729,517    |  |  | 1,320,185    | 
| | Accrued interest
      on long-term debt (other financial liabilities)       |  | 7,869,577    |  |  | 5,469,343    | 
| | Long-term debt (other financial liabilities)                                 |  | 22,468,518   |  |  | 24,140,199   | 
| |                                                                              |  |              |  |  |              | 
| |                                                                              |  | 32,067,612   |  |  | 30,929,727   | 

The Company has determined that the
  carrying values of its short-term financial assets and liabilities, including
  cash, accounts receivable and accounts payable and accrued liabilities,
  approximates their fair value because of the relatively short periods to
  maturity of these instruments. Management cannot reasonably estimate the fair
  value of the long term debt and the associated accrued interest on long-term
  debt due to the financial condition of the Company (note 1) and the underlying
  terms and conditions of the debt agreement (note 8). Subsequent to May 31, 2011,
  the Company settled its long-term debt as described in Note 16. The Company has
  not entered into future or forward contracts as at May 31, 2011.

The Company's financial instruments are
  exposed to certain financial risks, including credit risk, liquidity and market
  risk.

| | (a) | Credit risk:                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Credit risk is the risk of financial loss to the Company
      if a partner or counterparty to a financial instrument fails to meet its
      contractual obligation and arises principally from the Company's cash and
      cash equivalents, and accounts receivable. The carrying amounts of the
      financial assets represents the maximum credit exposure.                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company limits its exposure to credit risk on cash
      and cash equivalents by placing these financial instruments with
      high-credit quality financial institutions.                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The Company is subject to a concentration of credit risk
      related to its accounts receivable as amounts are owing primarily from
      three customers. At May 31, 2011, the outstanding accounts receivable were
      within normal payment terms and the Company had recorded no allowance for
      doubtful accounts.                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | (b) | Liquidity risk:                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | Liquidity risk is the risk that the Company will not be
      able to meet its financial obligations as they come due. The Company
      manages its liquidity risk by continuously monitoring forecasted and
      actual cash flows, as well as anticipated investing and financing
      activities and to ensure, as far as possible, that it will have sufficient
      liquidity to meet its liabilities when due and to fund future
      operations.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | The majority of the Company's accounts payable and
      accrued liabilities are due within the current operating period. For
      long-term debt repayments see Note 8.                                                                                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |     | On July 18, 2011, the Company settled its long-term as
      described in Note 16.                                                                                                                                                                                                                                                                                                                                                                          

- F-18 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|13. | Financial instruments (continued):
|--- | ----------------------------------
|    |                                   
|    | (c)                               
|    |                                   
|    |                                   
|    |                                   
|    |                                   
|    |                                   
|    |                                   
|    |                                   
|    |                                   

| | (Expressed in USD $)                     |   | May 31, 2011 |   |   | May 31, 2010 |  
| | ---------------------------------------- | - | ------------ | - | - | ------------ | -
| |                                          |   |              |   |   |              |  
| | Cash and cash equivalents                | $ | 694,351      |   | $ | 256,883      |  
| | Accounts receivable                      |   | 362,235      |   |   | 344,406      |  
| | Accounts payable and accrued liabilities |   | (673,066     | ) |   | (972,472     | )
| | Accrued interest on long-term debt       |   | (8,123,015   | ) |   | (5,227,817   | )
| | Long term debt                           |   | (25,000,000  | ) |   | (25,000,000  | )
| |                                          |   |              |   |   |              |  
| |                                          | $ | (32,739,495  | ) | $ | (30,599,000  | )

| |      | Based on the above net exposures as at May 31, 2011,
      assuming that all other variables remain constant, a 5 percent
      appreciation or deterioration of the Canadian dollar against the U.S.
      dollar would result in a corresponding decrease or increase of
      approximately $1,600,000 (May 31, 2010 - $1,600,000, May 31, 2009 -
      $1,500,000) in the Company's net loss.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                  
| | (ii) | Interest rate risk:                                                                                                                                                                                                                                                                                                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | Interest rate risk is the risk that the future cash flows
      of a financial instrument will fluctuate because of changes in market
      interest rates.                                                                                                                                                                                                                                      
| |      |                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | The Company is exposed to interest rate risk arising
      primarily from fluctuations in interest rates on its cash and cash
      equivalents.                                                                                                                                                                                                                                                 
| |      |                                                                                                                                                                                                                                                                                                                                                                                                  
| |      | An increase in 100 basis points in interest rates during
      the year ended May 31, 2011, with all other variables held constant, would
      have decreased the net loss by approximately $2,900 (May 31, 2010 -
      $2,300, May 31, 2009 - $13,000). The Birmingham debt has been excluded due
      to the nature of the interest payments as described in Note
      8.                  

- F-19 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|14. | Management of capital:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company's objectives when managing capital are to
      safeguard the Company's ability to continue as a going concern (note 1)
      and to provide capital to pursue the development and commercialization of
      its products.                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | In the management of capital, the Company includes cash
      and cash equivalents, long-term debt, capital stock, stock options,
      warrants and contributed surplus.                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company manages its capital structure and makes
      adjustments to it in light of economic conditions. The Company, upon
      approval from its Board of Directors, will balance its overall capital
      structure through new share issuances, granting of stock options, the
      issue of debt or by undertaking other activities as deemed appropriate
      under the specific circumstance. The Company's overall strategy with
      respect to capital risk management remains unchanged for the year ended
      May 31, 2011.                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|15. | Segmented information:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | The Company operates in one business segment, the
      biopharmaceutical industry. Substantially all of the Company's assets and
      operations are located in three locations; Canada, the United States and
      Barbados. During the year ended May 31, 2011, 100 percent of product
      revenues were generated from sales of AGGRASTAT®in the United
      States, which was to seven customers. Customer A accounted for 32 percent,
      Customer B accounted for 31 percent, Customer C accounted for 26 percent,
      and the remaining four customers accounted for 11 percent of
      revenues.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    | Property and equipment and intangible assets are located
      in the following countries:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

| |               |   | May 31, 2011 |  |   | May 31, 2010 | 
| | ------------- | - | ------------ |  | - | ------------ | 
| |               |   |              |  |   |              | 
| | Canada        | $ | 32,218       |  | $ | 40,871       | 
| | Barbados      |   | 3,284,196    |  |   | 4,397,819    | 
| | United States |   | 32,868       |  |   | 44,944       | 

|16. | Subsequent events:
|--- | ------------------
|    |                   
|    | (a)               
|    |                   
|    |                   

- F-20 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|16. | Subsequent events (continued):                                                                                                                                                                                                                                               
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                              
|    | (b)                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                              
|    | (c)                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                              
|17. | Reconciliation of generally accepted accounting
      principles:                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                              
|    | The Company prepares its consolidated financial
      statements in accordance with Canadian GAAP, the measurement principles of
      which, as applied in these consolidated financial statements, conform in
      all material respects with U.S. GAAP except as follows:
|    |                                                                                                                                                                                                                                                                              
|    | (a)                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                              

- F-21 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|17. | Reconciliation of generally accepted accounting
      principles (continued):
|--- | -----------------------------------------------------------------------------
|    |                                                                              
|    | (b)                                                                          
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    | (c)                                                                          
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              

- F-22 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|17. | Reconciliation of generally accepted accounting
      principles (continued):
|--- | -----------------------------------------------------------------------------

| | (d) | Summary:                                                                                                                                    
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                             
| |     | The impact of the measurement differences to U.S. GAAP on
      the consolidated statements of operations and deficit are as
      follows::

| |                                             |   | 2011        |   |   | 2010        |   |   | 2009        |  
| | ------------------------------------------- | - | ----------- | - | - | ----------- | - | - | ----------- | -
| |                                             |   |             |   |   |             |   |   |             |  
| | Loss for the period, Canadian GAAP          | $ | (2,014,109  | ) | $ | (5,532,506  | ) | $ | (13,315,827 | )
| | Adjustments for the following:              |   |             |   |   |             |   |   |             |  
| | Intangible assets                           |   | (42,387     | ) |   | (139,601    | ) |   | (234,990    | )
| | Amortization of intangible assets           |   | 44,741      |   |   | 65,153      |   |   | 61,821      |  
| | Impairment of
      intangible assets       |   | 280,235     |   |   | 765,294     |   |   | 1,755,955   |  
| | Change in fair value of warrants            |   | 27,374      |   |   | 69,351      |   |   | -           |  
| |                                             |   |             |   |   |             |   |   |             |  
| |                                             | $ | (1,704,146  | ) | $ | (4,772,309  | ) | $ | (11,733,041 | )
| |                                             |   |             |   |   |             |   |   |             |  
| | Basic and diluted loss per share, U.S. GAAP | $ | (0.01       | ) | $ | (0.04       | ) | $ | (0.09       | )
| | Weighted average number of common shares    |   | 130,307,552 |   |   | 130,307,552 |   |   | 130,307,552 |  

The impact of the measurement
  differences to U.S. GAAP would result in the consolidated statements of cash
  flow items as follows:

| |                      |   | 2011    |   |   | 2010       |   |   | 2009        |  
| | -------------------- | - | ------- | - | - | ---------- | - | - | ----------- | -
| |                      |   |         |   |   |            |   |   |             |  
| | Operating activities | $ | 435,152 |   | $ | (1,592,410 | ) | $ | (10,653,129 | )
| | Investing activities |   | (2,487  | ) |   | (2,230     | ) |   | (3,552      | )
| | Financing activities |   | -       |   |   | -          |   |   | -           |  

The impact of the measurement
  differences to U.S. GAAP described above would result in the consolidated
  balance sheet items as follows:

| |                                       |   | May 31, 2011 |   |   | May 31, 2010 |  
| | ------------------------------------- | - | ------------ | - | - | ------------ | -
| |                                       |   |              |   |   |              |  
| | Deferred debt issue expenses          | $ | 1,751,482    |   | $ | 2,014,801    |  
| | Long-term debt                        |   | 24,220,000   |   |   | 26,155,000   |  
| | Warrant liability                     |   | 10,597       |   |   | 37,971       |  
| | Intangible assets                     |   | 3,011,909    |   |   | 3,845,916    |  
| | Capital stock and contributed surplus |   | 136,381,144  |   |   | 136,304,087  |  
| | Deficit                               |   | (163,571,823 | ) |   | (161,867,677 | )

- F-23 -

---

|MEDICURE INC.                                 
|----------------------------------------------
|Notes to the Consolidated Financial Statements
|(Expressed in Canadian dollars)               
|Years ended May 31, 2011, 2010 and 2009       
|                                              

|17. | Reconciliation of generally accepted accounting
      principles (continued):
|--- | -----------------------------------------------------------------------------
|    |                                                                              
|    | (e)                                                                          
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              
|    |                                                                              

- F-24 -

---

79

Other Schedules

Information required pursuant to Schedule 21.12 -04 of
Regulation S-X has been disclosed on page 6. See Item 3A  Selected Financial
Information.

Information required pursuant to Schedule 21.12 -09 of
Regulation S-X is not applicable.

ITEM 18. FINANCIAL STATEMENTS

Not applicable.

ITEM 19. EXHIBITS

| | Number | Exhibit                                                                                                                                                                                                                                                  
| | ------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                          
| | 1.     | Articles of Incorporation
      and Bylaws:                                                                                                                                                                                                              
| |        |                                                                                                                                                                                                                                                          
| | 1.1    | Medicures Articles of
      Incorporation dated September 15, 1997 [1];                                                                                                                                                                                 
| | 1.2    | Lariats Articles of Incorporation dated June 3, 1997
      [1];                                                                                                                                                                                         
| | 1.3    | Medicures Certificate of Continuance from Manitoba to
      Alberta dated December 3, 1999 [1];                                                                                                                                                         
| | 1.4    | Certificate of Amalgamation for Medicure and Lariat dated
      December 22, 1999 [1];                                                                                                                                                                   
| | 1.5    | Medicures Certificate of Continuance from Alberta to
      Canada dated February 23, 2000[1];                                                                                                                                                           
| | 1.6    | Amended Certificate of Continuance and Articles of
    Continuance dated February 20, 2003 [3];                                                                                                                                                          
| | 1.7    | Bylaws [5];                                                                                                                                                                                                                                              
| | 1.8    | Bylaw No. 2 **                                                                                                                                                                                                                                           
| |        |                                                                                                                                                                                                                                                          
| | 4.     | Material Contracts and Agreements:                                                                                                                                                                                                                       
| |        |                                                                                                                                                                                                                                                          
| | 4.1    | Transfer Agency Agreement between Montreal Trust Company
      of Canada and the Company dated as of January 26, 2000, whereby Montreal
      Trust Company of Canada agreed to act as transfer agent and registrar with
      respect to the Shares [1];
| |        |                                                                                                                                                                                                                                                          
| | 4.2    | Medicure International Licensing Agreement between the
      Company and Medicure International Inc. dated June 1, 2000, wherein the
      Company granted Medicure International, Inc. a license with regard to
      certain intellectual property [1];
| |        |                                                                                                                                                                                                                                                          
| | 4.3    | Development Agreement between Medicure International,
      Inc. and CanAm Bioresearch Inc. dated June 1, 2000, wherein CanAm
      Bioresearch Inc. agreed to conduct research and development activities for
      Medicure International, Inc. [1];   
| |        |                                                                                                                                                                                                                                                          
| | 4.4    | Amendment to the Consulting Services Agreement dated
      February 1, 2002 between A.D. Friesen Enterprises Ltd. and the Company
      whereby consulting services will be provided to the Company by Dr. Albert
      D. Friesen [2];                  
| |        |                                                                                                                                                                                                                                                          
| | 4.5    | Stock Option Plan approved February 4, 2002 [3];                                                                                                                                                                                                         
| |        |                                                                                                                                                                                                                                                          
| | 4.5    | Amendment dated March 1, 2002 to the Development
      Agreement between Medicure International, Inc. and CanAm Bioresearch Inc.
[5];                                                                                                                    

---

80

| | 4.7  | Amendment dated August 7, 2003 to the Development
      Agreement between Medicure International, Inc. and CanAm Bioresearch Inc.
      [3];                                                                                                                                                                                 
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.8  | Amendment to the Consulting Services Agreement dated
      October 1, 2003 between A.D. Friesen Enterprises Ltd. and the Company
      whereby consulting services will be provided to the Company by Dr. Albert
      D. Friesen [4];                                                                                       
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.9  | Employment Agreement with Dawson Reimer dated October 1,
      2001 [4];                                                                                                                                                                                                                                                     
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.10 | Amendment to Employment Agreement dated April 5, 2005
      between A.D. Friesen Enterprises Ltd. and the Company [5];                                                                                                                                                                                                       
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.11 | Amendment to Employment Agreement dated April 5, 2005
      between Dawson Reimer and the Company [5];                                                                                                                                                                                                                       
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.12 | Amendment to Employment Agreement dated April 5, 2005
      between Derek Reimer and the Company [5];                                                                                                                                                                                                                        
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.13 | Amendment dated July 8, 2005 to the Development Agreement
      between Medicure International, Inc. and CanAm Bioresearch Inc.
  [5];                                                                                                                                                                                       
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.14 | Amendment to Employment Agreement dated October 1, 2005
      between A.D. Friesen Enterprises Ltd. and the Company [6];                                                                                                                                                                                                     
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.15 | Amendment to Development Agreement dated June 1, 2000
      between CanAm Bioresearch Inc. and Medicure International, Inc. dated July
      4, 2006 [6];                                                                                                                                                                    
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.16 | Amended Stock Option Plan approved October 25, 2005
      [6];                                                                                                                                                                                                                                                               
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.17 | Amendment to Employment Agreement dated October 1, 2006
      between A.D. Friesen Enterprises Ltd. and the Company [7];                                                                                                                                                                                                     
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.18 | Amended License Agreement between Medicure and the
      University of Manitoba dated November 24, 2006, originally dated August
      30, 1999, wherein the University of Manitoba granted to Medicure an
      exclusive license with regard to certain intellectual property (the U of
      M Licensing Agreement) [7];
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.19 | Amendment to Employment Agreement dated October 1, 2007
      between A.D. Friesen Enterprises Ltd. and the Company [8];                                                                                                                                                                                                     
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.20 | Amended Stock Option Plan approved October 2, 2007 as
      filed on October 9, 2007 Form S-8 #333-146574                                                                                                                                                                                                                    
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.21 | Employment Agreement with Dwayne Henley June 10, 2008
      [8]                                                                                                                                                                                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.22 | Debt financing agreement between Birmingham Associates
      Ltd. and the Company dated September 17, 2007 [8].                                                                                                                                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                              
| | 4.23 | Business and administration services agreement between
      Genesys Venture Inc. and the Company dated October 1,
  2010.                                                                                                                                                                                                   

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81

| | 4.24 | Master services agreement between GVI
        Clinical Development Solutions Inc. and the Company dated June 9, 2009.                                    
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                          
| | 4.25 | Debt settlement agreement between Birmingham
        Associates Ltd. And the Company dated July 18, 2011.                                                
| |      |                                                                                                                                                          
| | 4.26 | Royalty and guarantee agreement between
        Birmingham Associates Ltd. And the Company dated July 18, 2011.                                          
| |      |                                                                                                                                                          
| | 11.  | Code of Ethics [4].                                                                                                                                      
| |      |                                                                                                                                                          
| | 12.1 | Certification
        of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 **.                                                               
| |      |                                                                                                                                                          
| | 12.2 | Certification
        of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 **.                                                               
| |      |                                                                                                                                                          
| | 13.1 | Certification
        of CEO and CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant
        to Section 906 of the Sarbanes-Oxley Act of 2002 **.
| |      |                                                                                                                                                          
| |      | [1] Herein incorporated
        by reference as previously included in the Companys Form 20-F registration
        statement filed on January 30, 2001. 
| |      |                                                                                                                                                          
| |      | [2] Herein incorporated
        by reference as previously included in the Companys Form 20-F annual
        report filed on December 31, 2002.         
| |      |                                                                                                                                                          
| |      | [3] Herein incorporated
        by reference as previously included in the Companys Form 20-F annual
        report filed on October 20, 2003.          
| |      |                                                                                                                                                          
| |      | [4] Herein incorporated
        by reference as previously included in the Companys Form 20-F annual
        report filed on September 15, 2004.        
| |      |                                                                                                                                                          
| |      | [5] Herein incorporated
        by reference as previously included in the Companys Form 20-F annual
        report filed on August 19, 2005.           
| |      |                                                                                                                                                          
| |      | [6] Herein incorporated
        by reference as previously included in the Companys Form 20-F annual
        report filed on August 10, 2006.           
| |      |                                                                                                                                                          
| |      | [7] Herein incorporated
        by reference as previously included in the Companys Form 20-F annual
        report filed on August 22, 2007.           
| |      |                                                                                                                                                          
| |      | [8] Herein incorporated
        by reference as previously included in the Companys Form 20-F annual
        report filed on August 27, 2008.           
| |      |                                                                                                                                                          
| |      | [9] Herein incorporated
        by reference as previously included in the Companys Form 20-F annual
        report filed on September 2, 2009.         
| |      |                                                                                                                                                          
| |      | [10] Herein incorporated
        by reference as previously included in the Companys Form 20-F annual
        report filed on September 28, 2010.       
| |      |                                                                                                                                                          
| | 23.1 | Consent of
        Independent Registered Pubic Accounting Firm **                                                                                       

** Filed Herewith

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82

SIGNATURE PAGE

Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934,the Company certifies that it meets all of the
requirements for filing on Form 20-F and has duly caused this annual report to
be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: September 28, 2011

ON BEHALF OF THE CORPORATION, MEDICURE INC.

per:

/s/ Albert
FriesenAlbert D. Friesen, Ph.D. Chairman, & CEO

---