united
states

Securities
and Exchange Commission

Washington,
D.C. 20549



FORM 20-F



| |  ̈ | REGISTRATION
                                         STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ---------------------------------------------------------------------------------------------------------------------------------------

or

| | x | ANNUAL
                                         REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | -----------------------------------------------------------------------------------------------------------------------------

For the fiscal year ended: December 31, 2015

or

| |  ̈ | 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) 488-9823

2 - 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 December 31, 2015 the
registrant had 14,445,168 common shares issued and outstanding



Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.



Yes  ̈                  No þ



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 þ



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 þ                  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 þ



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  ̈
|--------- | ---------------------------------------- | -------
|          | Standards as issued by the International |        
|          | Accounting Standards Board þ             |        



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  ̈            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
þ



2







TABLE OF CONTENTS





|GENERAL                                                       | 5 
|------------------------------------------------------------- | --
|                                                              |   
|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                            | 10
|C. Reasons for the Offer and Use of Proceeds                  | 11
|D. Risk Factors                                               | 11
|                                                              |   
|ITEM 4. INFORMATION ON THE COMPANY                            | 26
|A. History and Development of the Company                     | 26
|B. Business Overview                                          | 28
|C. Organizational Structure                                   | 36
|D. Property, Plant and Equipment                              | 37
|                                                              |   
|ITEM 4A. UNRESOLVED STAFF COMMENTS                            | 37
|                                                              |   
|ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS          | 37
|A. Operating Results                                          | 41
|B. Liquidity and Capital Resources                            | 48
|C. Research and Development, Patents and Licenses, Etc.       | 49
|D. Trend Information                                          | 53
|E. Off-balance Sheet Arrangements                             | 54
|F. Contractual Obligations                                    | 54
|G. Safe Harbor                                                | 57
|                                                              |   
|ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES            | 57
|A. Directors and Senior Management                            | 57
|B. Compensation                                               | 60
|C. Board Practices                                            | 61
|D. Employees                                                  | 72
|E. Share Ownership                                            | 72
|                                                              |   
|ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS     | 75
|A. Major Shareholders                                         | 75
|B. Related Party Transactions                                 | 76
|C. Interests of Experts and Counsel                           | 78
|                                                              |   
|ITEM 8. FINANCIAL INFORMATION                                 | 78
|A. Consolidated Statements or Other Financial Information     | 78
|B. Significant Changes                                        | 79
|                                                              |   
|ITEM 9. THE OFFERING AND LISTING                              | 79
|A. Listing Details                                            | 79
|B. Plan of Distribution                                       | 80
|C. Markets                                                    | 80



3









|D. Selling Shareholders                                                               | 80
|------------------------------------------------------------------------------------- | --
|E. Dilution                                                                           | 80
|F. Expenses of the Issue                                                              | 80
|                                                                                      |   
|ITEM 10. ADDITIONAL INFORMATION                                                       | 80
|A. Share Capital                                                                      | 80
|B. Memorandum and Articles of Association                                             | 81
|C. Material Contracts                                                                 | 85
|D. Exchange Controls                                                                  | 85
|E. Taxation                                                                           | 86
|F. Dividends and Paying Agents                                                        | 93
|G. Statement by Experts                                                               | 93
|H. Documents on Display                                                               | 93
|I. Subsidiary Information                                                             | 93
|                                                                                      |   
|ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                   | 94
|                                                                                      |   
|ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                       | 94
|                                                                                      |   
|ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              | 94
|                                                                                      |   
|ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS | 94
|                                                                                      |   
|ITEM 15. CONTROLS AND PROCEDURES                                                      | 95
|                                                                                      |   
|ITEM 16. RESERVED                                                                     | 96
|                                                                                      |   
|ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT                                            | 96
|                                                                                      |   
|ITEM 16B. CODE OF ETHICS                                                              | 96
|                                                                                      |   
|ITEM 16C.  PRINCIPAL ACCOUNTANT FEES AND SERVICES                                     | 97
|                                                                                      |   
|ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES                  | 97
|                                                                                      |   
|ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS      | 97
|                                                                                      |   
|ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT                                | 97
|                                                                                      |   
|ITEM 16G. CORPORATE GOVERNANCE                                                        | 97
|                                                                                      |   
|ITEM 16H.MINE SAFETY DISCLOSURE                                                       | 97
|                                                                                      |   
|PART III                                                                              | 98
|                                                                                      |   
|ITEM 17. FINANCIAL STATEMENTS                                                         | 98
|                                                                                      |   
|ITEM 18. FINANCIAL STATEMENTS                                                         | 98
|                                                                                      |   
|ITEM 19. EXHIBITS                                                                     | 99





4







GENERAL



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. on December 22, 1999 pursuant to the Business Corporations Act (Alberta).



The Company uses the Canadian dollar as
its reporting currency. Unless otherwise indicated, all references to dollar amounts in this Annual Report are to Canadian dollars.
As of December 31, 2015, the rate for Canadian dollars was US $1.00 for CND $1.3840. See
also Item 3 – Key Information for more detailed currency and conversion information.



Except as noted, the information set forth
in this Annual Report is as of March 28, 2016 and all information included in this document should only be considered correct
as of such date.



GLOSSARY OF TERMS



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



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



“Apicore”means any one or more of Apicore LLC, Apicore US LLC, Apicore Inc., Apigen Investments
Limited, and Apicore Pharmaceuticals PVT Ltd., including any of their affiliates and subsidiaries, and if the context requires,
the pharmaceutical manufacturing business carried on by this group of companies;



“Apicore Transaction”
means the transaction occurring on July 3, 2014 whereby the Company acquired a minority interest in Apicore.



“FDA”means the United
States Food and Drug Administration;



“GPIs” means glycoprotein GP IIb/IIIa inhibitors,
which are injectable platelet inhibitors used to treat acute coronary syndromes and related conditions and procedures;



“myocardial infarction”means destruction of heart tissue resulting from obstruction of the blood supply to the heart muscle;



“sNDA” means supplemental new drug application,
which is submitted to the FDA;



“STEMI”
means Segment Elevation Myocardial Infarction, a type of heart attack



“TSX-V”means the TSX
Venture Exchange.



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:



5







| | · | 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 expand or otherwise improve the approved indications and/or dosing information contained
                                         within AGGRASTAT®’s approved prescribing information;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | intention
                                         to increase sales of AGGRASTAT®;
| | - | -----------------------------------------------------------------------------------



| | · | intention
                                         to develop TARDOXALTM for neurological disorders;
| | - | ----------------------------------------------------------------------------------------------------



| | · | intention
                                         to investigate and advance certain other product opportunities, including but not limited
                                         to transdermal formulations of tirofiban or other pharmaceuticals;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | 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;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------



| | · | sales
                                         and marketing strategy;
| | - | ----------------------------------------------------------------------



| | · | anticipated
                                         sources of revenue;
| | - | ------------------------------------------------------------------------



| | · | intentions
                                         regarding the protection of the Company's intellectual property;
| | - | --------------------------------------------------------------------------------------------------------------------



| | · | intention
                                         to identify, negotiate and complete business development transactions (eg. the sale,
                                         purchase, or license of pharmaceutical products or services);
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | expectations
                                         with respect to acquiring additional ownership of Apicore, and/or deriving any material
                                         benefit from the Company’s ownership of Apicore;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | 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;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



6







| | · | 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;
| | - | ---------------------------------------------------------------------------------------------------



| | · | the
                                         Company’s ability, amid circumstances and decisions that are out of the Company’s
                                         control, to maintain adequate supply of product for commercial sale;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | inaccuracies
                                         and deficiencies in the scientific understanding of the interaction and effects of pharmaceutical
                                         treatments when administered to humans;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | market
                                         competition;
| | - | ------------------------------------------------------------



| | · | the
                                         ability of Apicore to successfully operate and/or increase its value;
| | - | ------------------------------------------------------------------------------------------------------------------



| | · | tax
                                         benefits and tax rates; and
| | - | ------------------------------------------------------------------------



| | · | the
                                         Company's ongoing relations with its employees and with its business partners.
| | - | ---------------------------------------------------------------------------------------------------------------------------



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.



7







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 December 31, 2015 and 2014, May 31, 2014 and 2013 and for the fiscal years ended December 31, 2015 and 2014, May 31, 2014
and 2013 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 18 - 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, 2013 and 2012 and for the fiscal year ended May 31, 2012 was extracted from the audited
financial statements of the Company not included in this Annual Report.



The information
provided in the audited consolidated financial statements included in this Annual Report on Form 20-F is prepared in accordance
with International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB).



During the preparation of the Company’s
consolidated financial statements for the seven months ended December 31, 2014, the Company determined that the accounting for
stock-based compensation pertaining to a consulting agreement signed during the year ended May 31, 2014 was interpreted incorrectly
in accordance with IFRS 2 Share-Based Payments for the year ended May 31, 2014. As a result the May 31, 2014 information provided
has been restated to include stock-based compensation expense relating to this consulting agreement.



On November 1, 2012, the Company completed
a consolidation of its outstanding share capital on the basis of one post-consolidation share for every fifteen pre-consolidation
shares. All comparative figures have been adjusted retrospectively.



8







Under International Financial Reporting Standards (in Canadian
dollars):



|Statement of Financial Position Data                          |  | December 31, 2015 |              |   | December 31, 2014 |  |              | May 31, 2014 Restated |  |  | May 31,  2013 |   |  | May 31,  2012 |             
|------------------------------------------------------------- |  | ----------------- | ------------ | - | ----------------- |  | ------------ | --------------------- |  |  | ------------- | - |  | ------------- | ------------
|(as at period end)                                            |  | $                 |              |   | $                 |  |              | $                     |  |  | $             |   |  | $             |             
|                                                              |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|Current Assets                                                |  |                   | 17,448,554   |   |                   |  | 3,874,097    |                       |  |  | 2,153,740     |   |  |               | 1,491,485   
|Property and                                                  |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|Equipment                                                     |  |                   | 230,162      |   |                   |  | 33,161       |                       |  |  | 20,681        |   |  |               | 22,235      
|Intangible Assets                                             |  |                   | 1,411,992    |   |                   |  | 1,096,946    |                       |  |  | 1,433,158     |   |  |               | 1,910,069   
|Other Assets                                                  |  |                   | 2,166,170    |   |                   |  | 1,556,315    |                       |  |  | -             |   |  |               | -           
|Total Assets                                                  |  |                   | 21,256,878   |   |                   |  | 6,560,519    |                       |  |  | 3,607,579     |   |  |               | 3,423,789   
|Current Liabilities                                           |  |                   | 10,352,462   |   |                   |  | 4,377,498    |                       |  |  | 3,022,904     |   |  |               | 3,557,024   
|Non-current Liabilities                                       |  |                   | 6,442,865    |   |                   |  | 6,094,037    |                       |  |  | 6,461,629     |   |  |               | 4,193,446   
|Total Liabilities                                             |  |                   | 16,795,327   |   |                   |  | 10,471,535   |                       |  |  | 9,484,533     |   |  |               | 7,750,470   
|Net Assets /                                                  |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|(Deficiency)                                                  |  |                   | 4,461,551    |   |                   |  | (3,911,016   | )                     |  |  | (5,876,954    | ) |  |               | (4,326,681  
|Capital Stock, Warrants and                                   |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|Contributed Surplus                                           |  |                   | 128,304,590  |   |                   |  | 122,406,511  |                       |  |  | 121,779,707   |   |  |               | 121,482,563 
|Accumulated Other Comprehensive                               |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|Income (Loss)                                                 |  |                   | 1,071,735    |   |                   |  | 298,329      |                       |  |  | 154,791       |   |  |               | 68,112      
|Deficit                                                       |  |                   | (124,947,427 | ) |                   |  | (126,615,856 | )                     |  |  | (127,811,452  | ) |  |               | (125,877,356
|Statement of Net Income (Loss) (for the fiscal year ended on) |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|Product Sales                                                 |  |                   | 22,083,128   |   |                   |  | 5,264,395    |                       |  |  | 5,050,761     |   |  |               | 2,602,700   
|(Loss) Gain on Settlement                                     |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|of Debt                                                       |  |                   | (60,595      | ) |                   |  | -            |                       |  |  | -             |   |  |               | -           
|Net Income (Loss) for                                         |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|the Period                                                    |  |                   | 1,668,429    |   |                   |  | 1,195,596    |                       |  |  | (1,934,096    | ) |  |               | (2,574,304  
|Comprehensive Income (Loss) for the                           |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|Period                                                        |  |                   | 2,474,488    |   |                   |  | 1,339,134    |                       |  |  | (1,647,417    | ) |  |               | (2,609,001  
|Income (Loss)                                                 |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|Per Share                                                     |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|Basic                                                         |  |                   | 0.12         |   |                   |  | 0.10         |                       |  |  | (0.16         | ) |  |               | (0.21       
|Diluted                                                       |  |                   | 0.11         |   |                   |  | 0.09         |                       |  |  | (0.16         | ) |  |               | (0.21       
|Weighted-Average Number of                                    |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|Common Shares                                                 |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|Outstanding                                                   |  |                   |              |   |                   |  |              |                       |  |  |               |   |  |               |             
|Basic                                                         |  |                   | 13,461,609   |   |                   |  | 12,204,827   |                       |  |  | 12,196,745    |   |  |               | 12,196,508  
|Diluted                                                       |  |                   | 15,765,570   |   |                   |  | 13,843,126   |                       |  |  | 12,196,745    |   |  |               | 12,196,508  



9







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. On March 28, 2016, the rate of exchange of the Canadian dollar, based on the daily
noon rate in Canada as published by the Bank of Canada, was US$1.00 = Canadian $1.3184. The exchange rates published by the Bank
of Canada and made available on its website, www.bankofcanada.ca, are nominal quotations — not buying or selling
rates — and are intended for statistical or analytical purposes.



The following tables set out the exchange
rates, based on the daily noon rates in Canada as published by the Bank of Canada for the conversion of Canadian Dollars into
U.S. Dollars.



|                        |  | December 31, 2015 |        |  | December 31, 2014 |  |        | May 31, 2014 |  |  | May 31, 2013 |  |  | May 31, 2012 |       
|----------------------- |  | ----------------- | ------ |  | ----------------- |  | ------ | ------------ |  |  | ------------ |  |  | ------------ | ------
|                        |  |                   |        |  |                   |  |        |              |  |  |              |  |  |              |       
|Period End              |  |                   | 1.3840 |  |                   |  | 1.1601 |              |  |  | 1.0842       |  |  |              | 1.0368
|Average for the Period* |  |                   | 1.2787 |  |                   |  | 1.1083 |              |  |  | 1.0638       |  |  |              | 1.0043
|High for the Period     |  |                   | 1.4004 |  |                   |  | 1.1536 |              |  |  | 1.1279       |  |  |              | 1.0275
|Low for the Period      |  |                   | 1.1680 |  |                   |  | 1.0740 |              |  |  | 1.0137       |  |  |              | 0.9785



| | * | The average rate for each period is the average of the daily noon
                                         rates on the last day of each month during the period.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



|Monthly High and Low Exchange Rate (Canadian Dollar per U.S. Dollar)
|--------------------------------------------------------------------
|                                                                    
|                                                                    
|March 2016                                                          
|February 2016                                                       
|January 2016                                                        
|December 2015                                                       
|November 2015                                                       
|October 2015                                                        
|September 2015                                                      
|August 2015                                                         
|July 2015                                                           
|June 2015                                                           



B. Capitalization and Indebtedness



Not applicable



10







C. Reasons for the Offer and Use of
Proceeds



Not applicable



D. Risk Factors



An investment
in the Company's common shares is highly speculative and subject to a number of risks. Only those persons who can bear the risk
of the entire loss of their investment should participate. An investor should carefully consider the risks described below and
the other information that the Company furnishes to, or files with, the Securities and Exchange Commission and with Canadian securities
regulators before investing in the Company's common shares. The risks described below are not the only ones faced by the Company.
Additional risks that management is unaware of or that the Company currently believes are immaterial may indeed become important
factors that affect the Company's business. If any of the following risks occur, or if others occur, the Company's business, operating
results and financial condition could be seriously harmed and the investor may lose all of his or her investment. The trading
price of the Company’s common shares could decline due to, or independent of, any of the negative results discussed herein.



The fact that the Company only derives
revenue from a single product creates additional risks and uncertainties to shareholders.



Prior to the acquisition of AGGRASTAT®,
during fiscal 2007, 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. Although the Company’s commercial operation has improved, and
the Company is working to further improve, profitability, the Company may incur losses and may never achieve sustained 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 long-term profitability of the Company’s
operations is uncertain, and any profitability may not be sustained. The Company’s long-term profitability will be directly
related to its ability to maintain or expand sales of AGGRASTAT® and to acquire and/or develop other commercially viable drug
products. This in turn depends on numerous factors, including the following:



| | a) | the success of the Company’s
                                         research and development activities;
| | -- | ----------------------------------------------------------------------------------------------------------

| | b) | obtaining regulatory approvals
                                         to market any of its development products;
| | -- | ------------------------------------------------------------------------------------------------------------------

| | c) | the ability to contract for the
                                         manufacture of the Company’s products according to schedule and within budget,
                                         given the Company’s limited experience and lack of internal capabilities for 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 identify, negotiate
                                         and complete business development transactions (eg. the sale, purchase, or license of
                                         pharmaceutical products or services) with third parties;
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | f) | the ability to maintain current
                                         or higher pricing and margins for the Company’s products;
| | -- | ----------------------------------------------------------------------------------------------------------------------------------

| | g) | deriving material value from the
                                         Company’s interest in Apicore;
| | -- | --------------------------------------------------------------------------------------------------------

| | h) | the ability to successfully prosecute
                                         and defend its patents and other intellectual property; and
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------

| | i) | the ability to successfully market
                                         the Company’s products, including AGGRASTAT®, given that it has limited resources.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



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



11







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 operations, term debt and equity issues to provide the necessary short-term financing to
conduct the Company’s research and development activities, to complete business development transactions as desired, and
to maintain or expand its commercial operations as desired. 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.



Under current indebtedness levels the
Company must meet its debt repayment obligations. Additionally, the Company may still be able to incur substantially more debt.
This could further exacerbate the risks associated with the Company’s substantial leverage.



On July 18, 2011, the Company
borrowed $5,000,000 from the Government of Manitoba, under the Manitoba Industrial Opportunities Program, to assist with
settling the Company’s long-term debt at that time. The loan bears interest annually at the crown corporation borrowing
rate plus two percent. The loan was renegotiated effective August 1, 2013 to remain subject to interest-only monthly payments
until August 1, 2015, at which time the monthly payments became blended as to principal and interest, and the maturity date
of the loan was extended from July 1, 2016 to July 1, 2018. The loan is secured by the Company’s assets and guaranteed
by the Chief Executive Officer of the Company and entities controlled by the Chief Executive Officer. The Company must meet
its debt repayment obligations and failure to do so could cause the lender to realize upon its security interest in the
Company’s assets, and to call on the guarantee provided by the Chief Executive Officer and entities controlled by him.
The Company has made all payments to date in relation to this indebtedness,; however, there is no certainty that the Company
will be able to continue servicing the debt.



Despite current indebtedness levels, the
Company may still incur substantial additional indebtedness in the future.



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 maintain
or 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.



12







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



If the Company fails to acquire and
develop additional product candidates or approved products, it will impair the Company’s ability to grow its business and
to increase value for shareholders.



The Company generates product revenue
only from AGGRASTAT®.  A component of the Company’s plan to generate additional revenue is its intention to develop
and/or to acquire or license, and then develop and/or market, additional product candidates or approved products. The success
of this growth strategy depends upon the Company’s ability to identify, select and then to develop, acquire or license pharmaceutical
products that meet the criteria it has established.  Due to the fact the Company has limited financial capacity, significant
indebtedness, and limited value in its equity, relative to other companies in the industry, it has a limited number of product
opportunities to choose from.  Moreover, the Company’s ability to research and develop its own, or other acquired/licensed
products, is limited by the extent of its internal scientific research capabilities. In addition, proposing, negotiating and implementing
an economically viable acquisition or license is a lengthy and complex process. Other companies, including those with substantially
greater financial, marketing and sales resources, may compete with the Company for the acquisition or license of product candidates
and approved products. The Company may not be able to acquire or license the rights to additional product candidates and approved
products on terms that it finds acceptable, or at all. Moreover, the Company may not have the human, technical, financial, manufacturing
and/or clinical resources to successfully develop additional products.



The Company may not receive regulatory
approval in the United States to further expand or otherwise improve the approved indications and/or dosing information contained
within AGGRASTAT®’s prescribing information. Therefore, the Company may not be able to materially increase the sales
of AGGRASTAT®.



In fiscal 2014 the Company was able to
obtain revisions to AGGRASTAT®’s prescribing information and these revisions have had a positive, material impact on
sales of AGGRASTAT®. The Company believes that further revisions to AGGRASTAT®’s prescribing information will put
the Company in a better position to maximize the revenue potential for AGGRASTAT®. To make such changes, the Company may need
to conduct appropriate clinical trials, obtain positive results from those trials, or otherwise provide support in order to obtain
regulatory approval for the proposed indications and dosing regimens. The Company’s failure to obtain additional regulatory
approvals from the FDA to expand or otherwise improve the approved indications and/or dosing information contained within AGGRASTAT®’s
prescribing information may adversely affect its business, financial condition and results of operations. The process involved
in obtaining such regulatory approval is long and costly and may require additional investments that may not be reasonably achievable
by the Company. The regulatory authorities have substantial discretion in the approval process and may refuse to accept any application.
Varying interpretations of the data obtained from pre-clinical and clinical testing could delay, limit or prevent regulatory approval
of a new indication for a product. Furthermore, the approval to modify the prescribing information may be applicable to a limited
extent only or it may be refused entirely.



The current approved
prescribing information for AGGRASTAT® does not have the same therapeutic indications and supporting information as that provided
for in the prescribing information of its competitors. Moreover, the prescribing information does not include all of the dosing
information and therapeutic indications for which a physician may wish to use the product. Although health care professionals
may utilize a product at doses and for indications outside of the approved prescribing information, the Company is prohibited
from promoting such uses.



To obtain regulatory approvals to modify
the prescribing information, the Company must supply sufficient information supporting the safety and efficacy of such uses to
the FDA, which in turn must review and deem this information to be sufficient to modify the label in the agreed upon fashion.
Unsatisfactory or insufficient results obtained from any particular study or clinical trial relating to the Company’s products
may cause the Company to reduce or abandon its efforts to expand or otherwise improve the approved indications and/or dosing information
contained within AGGRASTAT®’s prescribing information.



13







If the Company
does not comply with federal, state and foreign laws and regulations relating to the health care business, it could face substantial
penalties.



The Company and its customers are subject
to extensive regulation by the United States federal government, and the governments of the states in which the business is conducted.
In the United States, the laws that directly or indirectly affect the Company’s ability to operate its business include
the following:

| | · | the Federal Anti-Kickback Law, which prohibits persons
from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in
kind, to induce either the referral of an individual or furnishing or arranging for a good or service for which payment may be
made under federal health care programs such as Medicare and Medicaid;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | other
                                         Medicare laws and regulations that prescribe the requirements for coverage and payment
                                         for services performed by the Company’s customers, including the amount of such
                                         payment;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                         Federal False Claims Act, which imposes civil and criminal liability on individuals and
                                         entities who submit, or cause to be submitted, false or fraudulent claims for payment
                                         to the government;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | the
                                         Federal False Statements Act, which prohibits knowingly and willfully falsifying, concealing
                                         or covering up a material fact or making any materially false statement in connection
                                         with delivery of or payment for health care benefits, items or services; and
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | various
                                         state laws that impose similar requirements and liability with respect to state healthcare
                                         reimbursement and other programs.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



If the Company’s operations are
found to be in violation of any of the laws and regulations described above or any other law or governmental regulation to which
the Company or its customers are or will be subject, the Company may be subject to civil and criminal penalties, damages, fines,
exclusion from the Medicare and Medicaid programs and the curtailment or restructuring of its operations. Similarly, if the Company’s
customers are found to be non-compliant with applicable laws, they may be subject to sanctions, which could also have a negative
impact on the Company. Any penalties, damages, fines, curtailment or restructuring of the Company’s operations would adversely
affect its ability to operate its business and financial results. Any action against the Company for violation of these laws,
even if the Company is able to successfully defend against it, could cause it to incur significant legal expenses, divert management’s
attention from the operation of the business and damage the Company’s reputation.



Due to the fact that a material amount
of the use of AGGRASTAT® is outside of the FDA approved indications contained within AGGRASTAT®’s prescribing information,
the Company may be at a greater risk than would be the case if the product was almost exclusively used within the approved prescribing
information.



AGGRASTAST® competes with a variety
of existing drugs and may compete against other new drugs, which may limit the use of AGGRASTAT® and adversely affect the
Company’s revenue.



Due to the incidence and severity of cardiovascular
diseases, the market for anticoagulant and antiplatelet therapies is large and competition is intense. There are a number of anticoagulant
and antiplatelet drugs recently approved, currently on the market, awaiting regulatory approval or in development. AGGRASTAT®
competes with, or may compete with in the future, these drugs to the extent AGGRASTAT® and any of these drugs are approved
for the same or similar indications.



AGGRASTAT® competes primarily with
other platelet inhibitors, in particular the other GP IIb/IIIa inhibitors, ReoPro (abciximab) (sold by Eli Lilly and Company)
and Integrilin (eptifibatide) (branded drug sold by Merck & Co., Inc., in addition to generic eptifibatide sold by other
companies). It also competes with a number of oral platelet inhibitors, which can be used alone or in conjunction with anticoagulants,
most notably with heparin (sold generically by a number of companies), and with a recently approved injectable platelet inhibitor,
Kengreal (cangrelor) (sold by The Medicines Company, Inc.). In addition, some alternative methods of treatment, such as the use
of Angiomax (bivalirudin) (sold by The Medicines Company, Inc.), also compete with AGGRASTAT®. These competitors are all marketed
by large pharmaceutical companies with significantly more resources and experience than the Company.



14







In the majority
of hospitals in the United States AGGRASTAT® is not available on the hospital formulary and it can be very difficult and time
consuming to have AGGRASTAT® added to formulary for use by health care professionals. In many cases, competing treatment approaches
may have FDA approval for dosing regimens and/or therapeutic indications that are outside of AGGRASTAT®’s approved prescribing
information. The risk of bleeding associated with AGGRASTAT® may cause physicians to choose an alternative therapy. In some
circumstances, AGGRASTAT® competes with other drugs for the use of hospital financial resources. Although AGGRASTAT® is
positioned as a relatively low cost therapy, in certain circumstances, other treatment approaches are lower cost and may for this
reason be preferred by health care professionals, in particular where oral antiplatelet agents are deemed suitable.



The availability of generic treatment options may affect
cost advantage of AGGRASTAT® relative to the generic products.



AGGRASTAT® is a branded pharmaceutical
product for which there is currently no generic alternative available in the Company’s market.  AGGRASTAT®’s
reduced cost relative to other products is one of the advantages being used by the Company to promote and increase sales of AGGRASTAT®.
 Distributors of generic products typically price products significantly below the branded alternative, and these distributors
are always seeking to introduce these generic alternatives of pharmaceuticals.  There is a risk that new generic products
will be introduced that compete with AGGRASTAT® and that their low pricing would reduce AGGRASTAT®’s relative cost
advantage, and therefore negatively impact the maintenance and growth of sales by the Company. Two generic versions of a competing
product, eptifibatide, entered the market in December 2015 and are now competing directly against AGGRASTAT®. Additional generic
competitors are expected to enter the market in the months and years ahead, and it is anticipated that these will result in further
reductions to the price of eptifibatide.



Moreover, due to the recent growth in
sales of AGGRASTAT®, there is increased revenue potential that generic companies will attempt to enter the U.S. market ahead
of the last patent expires for AGGRASTAT®. If this occurs, the Company will have to defend its patent position and market
exclusivity for AGGRASTAT® against larger, better funded and more experienced generic companies. The entry of a generic version
of AGGRASTAT® into the market would have a major negative effect on both the volume and profitability of the Company’s
AGGRASTAT® sales.



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.



The Company’s subsidiary, Medicure
International, Inc., contracts with third parties to perform 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 any one or more of these
parties 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 viability, pace and success of its research and development activities.



15







Also, certain of the Company’s management
personnel are officers and/or directors of other companies and organizations, some publicly-traded, and will only devote part
of their time to the Company. Although the Company has 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 other 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. Most 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. Smaller companies may also prove to be significant competitors, whether acting independently or 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 may depend
to some extent 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 are crucial to the Company’s intention to license to or contract with other pharmaceutical companies
for the manufacturing, marketing, sales and/or distribution of any its current or future products. 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.



The Company is currently dependent
on its remaining inventory of its sole commercial product, AGGRASTAT®and does not have regulatory approvals
in place for a new supplier of raw material used in the manufacture of AGGRASTAT®. In addition, the Company needs to extend
its manufacturing agreement with its final product manufacturer, or find a new finished product manufacturer.



During fiscal 2012, the Company’s
subsidiary, Medicure International, Inc., acquired a significant quantity of the raw material (active pharmaceutical ingredient)
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. Also
during fiscal 2012, Medicure International engaged and initiated work with a contract manufacturing organization to establish
a new source of the raw material for AGGRASTAT®. Although significant progress has been made with the new contract manufacturing
organization, this product is not yet approved for commercial use and additional work, as well as regulatory approvals, is required
to establish the supplier as a new, approved source of the raw material for AGGRASTAT®.



16







The Company’s subsidiary, Medicure
Pharma, Inc., has a third party manufacturer of the final product AGGRASTAT®and that supply arrangement will expire
on October 31, 2017. The Company has initiated and made significant progress towards transitioning to a new manufacturer of final
product, however final product from the new manufacturer is not yet approved for commercial sale by the FDA and additional work
is required. Although the Company believes that the inventory of final product made by the current manufacturer in 2015 will be
sufficient to fulfill commercial demand needs until the new final product manufacturer is established and approved for commercial
sale, this cannot be guaranteed.



If either the supply of raw material or
the final product 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 to obtain regulatory approval for commercial use
of product made by the new raw material manufacturer or the new finished product manufacturer, or if the inventories of AGGRASTAT®
currently held are contaminated, exhausted due to stock-out, or otherwise lost, and the Company is 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. It is important to note that the establishment of new manufacturing sources of pharmaceutical raw material
or finished product takes a prolonged period of time.



If Apicore encounters unanticipated
challenges during the next two years, the Company may be obligated to help fund the resolution of these matters through the purchase
of shares of Apicore.



One aspect of the Apicore Transaction
announced on July 3, 2014, is that Medicure has a contractual obligation to help fund the resolution of certain specified damages
if they are encountered before July 3, 2016. The specified mechanism for Medicure to fulfill this obligation is through the purchase
of a portion of the equity of Apicore at a specified price per share, with such price being a discount to the price paid by Signet
Healthcare for its investment in Apicore pursuant to the Apicore Transaction. This equity purchase obligation is capped, not to
exceed US $5 million, and if such an equity purchase is made, it would result in a pro-rata reduction in the cost of Medicure
acquiring full ownership of Apicore, should Medicure so desire to proceed as contemplated in the Apicore Transaction.



Although the occurrence of any of the
specified damages that would precipitate such a purchase is not anticipated by the Company, there is a risk that it will be required,
and that the specified purchase price would be above the then relevant valuation of Apicore. Moreover, Medicure may not have the
available cash resources to fulfill such an obligation, and may be required to conduct its own equity financing, redirect finances
away from other Company activities, or conduct some other financing activity that would otherwise not have been necessary. In
these and other ways, the equity purchase obligation may have a material negative impact on the Company.



The Company’s minority interest
in Apicore, which was acquired under the Apicore Transaction announced on July 3, 2014, may never bring material benefit to the
Company.



The business of Apicore is that of a manufacturer
of pharmaceutical raw material (active pharmaceutical ingredients) and the development of abbreviated new drug applications. Although
it is part of the same, overall pharmaceutical industry in which the Company is engaged, Apicore’s specific sector and field
of business faces its own unique set of risks and uncertainties, which include, but are not limited to, an intensely competitive
environment, strict and changing government and FDA regulations on drug manufacturers, litigation risks associated with the manufacture
of drugs for human use, high fixed costs of operations, and many of the other risks outlined in more detail herein. Because the
Company is only a minority (<10%) owner of Apicore and the value such ownership interest is not a primary asset of the Company,
this Form 20F does not attempt to identify all of the risks and uncertainties of Apicore. However, it is important for the Company’s
investors and shareholders to understand that (i) the value of the Company’s minority interest in Apicore and, (ii) the
value of the Company’s option to purchase full ownership of Apicore, are each subject to, and could be materially impaired
by, a number of other risks and uncertainties not described in this Form 20F.



17







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,
pharmaceutical companies, medical supply companies, and companies, such as the Company, that offer or plan to offer various products
in the United States and other countries. 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 is and will remain 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, as is the case with AGGRASTAT®, 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.



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 for new products developed or acquired by the Company.



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



The Company has limited 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 development products. If any other of its development products are approved for sale, the
Company intends to contract with and rely on third parties to manufacture, and possibly also to market and sell its products.
Accordingly, the quality, timing and commercial success of such products may be outside of the Company’s control. Failure
of, or delays by, a third party manufacturer to comply with good manufacturing practices or similar quality control regulations
or satisfy regulatory inspections may have a material adverse effect on the Company and its products. Failure of, or delays 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 the Company and its products.



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, entails product and professional
liability risks that are inherent in the testing, production, marketing and sale of pharmaceuticals to humans. While the Company
has taken, and intends to 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, 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 for 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 impact
the Company’s business.



18







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



The patent positions of pharmaceutical
companies are generally uncertain and involve complex legal, scientific and factual issues. The Company’s success depends
significantly on its ability to:



| | · | obtain
                                         and maintain U.S. and foreign patents, including defending those patents against
                                         adverse claims;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | · | secure
                                         patent term extensions for the patents covering its approved products;
| | - | ----------------------------------------------------------------------------------------------------------------------

| | · | protect
                                         trade secrets;
| | - | ---------------------------------------------------------------

| | · | operate
                                         without infringing the proprietary rights of others; and
| | - | ---------------------------------------------------------------------------------------------------------

| | · | prevent
                                         others from infringing its proprietary rights.
| | - | -----------------------------------------------------------------------------------------------



The Company’s success will depend
to a significant degree 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. Errors or ill-advised decisions
by Company staff and/or contracted patent agents may also affect the Company’s ability to obtain or maintain valid patent
protection.



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.



The U.S. Congress is considering
patent reform legislation. In addition, the U.S. Supreme Court has ruled on several patent cases in recent years, either
narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain
situations. This combination of events has created uncertainty with respect to the value of patents, once obtained, and the Company’s
ability to obtain patents in the future. Depending on decisions by the U.S. Congress, the federal courts, and the United
States Patent and Trademark Office, the laws and regulations governing patents could change in unpredictable ways that would weaken
the Company’s ability to obtain new patents or to enforce its existing patents and patents that it might obtain in the future.



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.



19







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.



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 aspects of the Company’s operations,
such as research and development, manufacturing, and testing and safety regulation of 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 and third parties providing manufacturing,
research and/or development services to the Company is subject to various laws and regulations, 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 the activities. If the Company, or its contracted third party,
fails to comply with these regulations, the Company may be fined or suffer other consequences that could materially affect the
Company’s business, financial condition or results of operations.



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.



20







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®,
none of the Company’s products have the required manufacturing approvals or capabilities, clinical data and regulatory approvals
necessary to be marketed in any jurisdiction; future clinical or preclinical results may be negative or insufficient to allow
the Company to successfully market any of its products under development; and obtaining needed data and results may take longer
than planned, and may not be obtained at all.



Even if the Company’s products under
development 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 and commercial 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 related to AGGRASTAT® and/or its
products under development, that are material to the Company’s 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. 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.



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 and the third party service providers conducting manufacturing, research and development for
the Company, are 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.



21







Environmental regulations 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 operates in an industry
that is more susceptible to legal proceedings. The Company may become involved in litigation.



The Company operates in an industry consisting
of firms that are more susceptible to legal proceedings than firms in other industries. This susceptibility is due to several
factors, including but not limited to, the fact that the Company’s shares and those of its competitors are publically traded,
and the uncertainty and complex regulatory environment involved in the development and sale of pharmaceuticals. The Company intends
to vigorously defend such actions if and when they arise. Defense and prosecution of legal claims can be expensive and time consuming,
may adversely affect the Company regardless of the outcome due to the diversion of financial, management and other resources away
from the Company’s primary operations, and could impact the Company’s ability to continue as a going concern in the
longer term. In addition, a negative judgment against the Company, even if the Company is planning to appeal such a decision,
or even a settlement in a case, could negatively affect the cash reserves of the Company, and could have a material negative effect
on the development and sale of its products.



Indemnification obligations to the
Company’s directors and senior management may adversely affect its financial condition.



The Company has entered into agreements
pursuant to which it will indemnify the directors and senior management in respect of certain claims made against them while acting
in their capacity as such. If the Company is called upon to perform its indemnity obligations, the Company’s financial condition
will be adversely affected. The Company is not currently aware of any matters pending or under consideration that may result in
indemnification payments to any of its present or former directors or senior management.



The Company is exposed to foreign exchange
movements since the majority of 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. In the future, the Company may begin to utilize
foreign exchange rate mitigation and management strategies, however any such efforts, if they are not based on accurate predictions
of future fluctuations in foreign exchange rates, may actually have a negative impact on the Company.



22







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 historically 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 rely on the taking on of additional debt and/or the sale of such securities for future financing, resulting in dilution
to its existing shareholders. The Company’s long-term capital requirements may be significant and will depend on many factors,
including continued scientific progress in its product discovery and development program, revenue, 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, debt financing, 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 from the Company’s shareholders. Such approval may not be provided.



For the sake of clarity, any decision
to conduct a major transaction, such as the possible acquisition of shares of Apicore or the possible acquisition of one or more
commercial pharmaceutical products, is likely to necessitate the raising of additional capital through the sale of its securities
(resulting in dilution to its existing shareholders) and/or through additional loans. Such funds may not be available, or may
not be available on reasonable terms, adversely affecting the Company’s operations. They may also adversely affect the Company
subsequent to such a transaction or it may prevent the Company from completing such a transaction.



The Company is exposed to risks given
its significant dependence on revenue from the sale of its sole commercial product, AGGRASTAT®.



The Company has limited financial resources
and is largely dependent upon revenue from the sale of its sole commercial product, AGGRASTAT®. The Company has significant
on-going cash expenses, including commitments to advance research and development programs; however, the Company has limited ability
to generate cash from other sources.



If revenue from the sale of AGGRASTAT®
is not maintained or increased, 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, assets 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 December 31, 2015, the Company had
14,445,168 common shares issued and outstanding. A further 2,277,126 common shares are issuable upon exercise of outstanding stock
options and another 126,442 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 20% of the outstanding common shares at any time.



By Articles of Amendment filed by the
Company under the Canada Business Corporations Act on November 1, 2012, a consolidation of shares was completed to reduce
the total number of outstanding shares. However, as described above, the Company has limited financial resources and may from
time to time be required to finance its operations through the sale of equity securities. In addition, it may be required to issue
equity securities as consideration for services or asset acquisition transactions. 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.



23







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



The Company’s common shares historically
have been subject to extreme price and volume volatility. For example, during the period from January 1, 2015 to December 31,
2015, the high and low closing trading prices of the Company’s common shares were CDN$4.25 and CDN$1.25, respectively, with
a total trading volume of 8,038,156 shares. Daily trading volume on the TSX of the Company’s common shares for the period
from January 1, 2015 to December 31, 2015 has fluctuated, with a high of 1,460,305 shares and a low of noshares traded,
averaging approximately 31,771 shares per trading day.



The Company expects that the trading price
of its common shares will continue to be subject to wide fluctuations in response to a variety of factors including announcement
of material events by the Company, such as the dependence of revenue on a single product, 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 generic equivalents to 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 manufacturing, research and development
                                         efforts, including results and adequacy of, and developments in, its manufacturing activities,
                                         development activities, 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.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



24







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 pharmaceutical 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.



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 inability to meet continued listing requirements. On March
29, 2010, the Company’s common shares commenced trading on the NEX board of the TSX-V under the symbol “MPH.H”.
The shares continued trading on the NEX until October 21, 2011, at which time the trading of the Company’s shares was transferred
to the TSX-V under the symbol “MPH”.



There is no guarantee that an active trading
market for the Company’s common shares will be maintained on the TSX-V. 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 significant and prolonged
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.



Company does not believe that it was a
“passive foreign investment Company” for the taxable year ended December 31, 2015, and does not expect that it will
be a “passive foreign investment Company” (PFIC) for the taxable year ending December 31, 2016. (See more detailed
discussion in Item 10E – Taxation) However, there can be no assurance that the United States Internal Revenue Service
(“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 “Qualified Foreign Corporation”
(QFC) for the taxable year ending December 31, 2015, 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 December 31, 2015 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.



25







The Company no longer has a shareholder
rights plan



During fiscal 2012, the Company allowed
its shareholder rights plan to expire. The provisions of such plan were intended to strengthen the ability of the Board of Directors
to protect the Company's shareholders, and help ensure that the shareholders were treated fairly by limiting the ability of any
person or group to seize control of the Company without appropriately compensating all of the Company’s shareholders.



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 accounting and reporting for complex transactions, due to limited staff not allowing for appropriate
reviews of such transactions. 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 Corporations
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 Corporations 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. This debt was
subsequently settled in July 2011 for consideration that included a royalty payable by the Company to Birmingham based on future
commercial AGGRASTAT® sales until 2023. The royalty is based on four percent of the first $2,000,000 of quarterly AGGRASTAT®
sales, six percent on the portion of quarterly sales between $2,000,000 and $4,000,000 and eight percent on the portion of quarterly
sales exceeding $4,000,000 payable within 60 days of the end of the preceding quarter.



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.



26







Since March 2008, the Company has continued
to focus on the sale and marketing of AGGRASTAT®. The Company has also explored and implemented a number of cost savings measures
and has further downsized its operations. 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 development
and implementation of a new clinical, product and regulatory strategy for AGGRASTAT® and the ongoing Phase II clinical study
of TARDOXALTM.



In calendar years 2014 and 2015, as a
part of its effort to expand sales of AGGRASTAT®, the Company began to significantly increase the number of employees and
otherwise increase expenses related to sales and marketing of AGGRASTAT®, and related to General and Administrative costs
of the Company. In 2016, the Company plans to further expand total employment and otherwise increase expenses.



The Company’s
future operations are dependent upon its ability to maintain sales of AGGRASTAT®, to develop and/or acquire new products,
and/or secure additional capital, which may not be available under favourable terms or at all, and/or renegotiate the terms of
its contractual commitments and long-term debt.



If the Company is unable to maintain sales
of AGGRASTAT®, develop and/or acquire new products, and/or raise additional capital and/or renegotiate the terms of its contractual
commitments, management will consider other strategies including cost curtailments, delays of research and development activities,
asset divestures and/or monetization of certain intangible assets.



During fiscal 2012, 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®. Also during fiscal 2012, Medicure
International engaged and initiated work with a contract manufacturing organization to establish a new source of the raw material
for AGGRASTAT®. This work with the new contract manufacturing organization is still ongoing as part of efforts to establish
the supplier as a new, approved source of the raw material for AGGRASTAT®.



The Company’s subsidiary, Medicure
Pharma, Inc., has a third party manufacturer of the final product AGGRASTAT®and that supply arrangement will expire
on December 31, 2017. The Company has initiated and made significant progress towards transitioning to a new manufacturer of final
product, however final product from the new manufacturer is not yet approved for commercial sale by the FDA and additional work
is required. Although the Company believes that the inventory of final product made by the current manufacturer in 2015 will be
sufficient to fulfill commercial demand needs until the new final product manufacturer is established and approved for commercial
sale, this cannot be guaranteed.



On July 18, 2011, the Company borrowed
$5,000,000 from the Government of Manitoba, under the Manitoba Industrial Opportunities Program, to assist with settling the Company’s
debt to Birmingham. Effective August 1, 2013, the Company renegotiated this debt and received an additional two year deferral
of principal repayments. Under the renegotiated terms, the loan continued to be interest only until August 1, 2015 when blended
payments of principal and interest commenced, and the loan maturity date was extended to July 1, 2018.



On July 3, 2014, the Company and its newly
formed and wholly owned subsidiary, Medicure U.S.A. Inc. ("Medicure USA"), entered into an arrangement whereby they
have acquired a minority interest in a pharmaceutical manufacturing business known as Apicore, along with an option to acquire
all of the remaining issued shares within the next three years. Specifically, Medicure and Medicure USA acquired a 6.09% equity
interest (5.33% on a fully-diluted basis) in two newly formed holding companies of which Apicore LLC and Apicore US LLC will be
wholly owned operating subsidiaries. The Company's equity interest and certain other rights, including the option rights were
obtained by the Company for services provided in its lead role in structuring a US$22.5 million majority interest purchase and
financing of Apicore. There was no cash outflow in connection with the acquisition of the minority interest in Apicore. The business
and operations of Apicore are distinct from the Company, and the Company’s primary operating focus remains on the sale and
marketing of AGGRASTAT®. The Company intends to seek opportunities to increase the value of its minority position in Apicore,
and believes that the potential realization of value through the exercise of its option to acquire all of the remaining issued
shares of Apicore could benefit the Company’s shareholders. As such, a modest amount of the Company’s energies and
resources are being directed towards assisting and assessing Apicore’s ongoing operations.



27







B. Business Overview



Plan of Operation



Medicure 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® 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 primarily focused on developing and implementing new regulatory, brand and life cycle management strategy for AGGRASTAT®.
Medicure is also making selective research and development investments in certain high-value acute cardiovascular generic and
reformulation product opportunities, in addition to exploring neurological treatment applications of its legacy product (MC-1,
TardoxalTM). The Company is actively seeking to acquire and/or license additional approved products.



Strategic changes made over recent years,
coupled with increased sales of AGGRASTAT® and an equity financing in fiscal 2015, have dramatically improved the
Company’s financial position compared to previous years. Nevertheless, the Company's ability to continue in operation for
the foreseeable future remains dependent upon the maintenance of AGGRASTAT® sales and upon the effective execution
of its business development and strategic plans.



The ongoing focus of the Company and its
primary asset of interest is AGGRASTAT®. 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 further 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 estimated US $280 million (2014) glycoprotein
GP IIb/IIIa (GPI) inhibitor market. GPIs are injectable platelet inhibitors used in the treatment of patients with acute coronary
syndrome.



The Company has financed its operations
principally through the net revenue received from the sale of AGGRASTAT®, sale of its equity securities, including
a private placement in June 2015 for gross proceeds to the Company of $4.0 million, the issue of warrants and stock options, interest
on excess funds held, a build up in accounts payable associated with a reliance on trade debt, and the issuance of debt.



Effective August 1, 2013, the Company
renegotiated its long-term debt and received an additional two year deferral of principal repayments. Under the renegotiated terms,
the loan continued to be interest only until July 31, 2015 with principal repayments having begun on August 1, 2015 and the loan
maturing on July 1, 2018.



On July 3, 2014, the Company acquired
a minority interest in Apicore along with an option to acquire all of the remaining issued shares of Apicore until July 3, 2017
at a predetermined price. The business and operations of Apicore are distinct from the Company, and the Company’s primary
operating focus remains on the sale and marketing of AGGRASTAT®. The Company intends to seek opportunities to increase
the value of its minority position in Apicore, and believes that the potential realization of value through the exercise of its
option to acquire all of the remaining issued shares of Apicore could benefit the Company’s shareholders. As such, a modest
amount of the Company’s energies and resources are being directed towards assisting and assessing Apicore’s ongoing
operations.




28







Recent Developments



| | · | Shares for Debt
                                         Settlements
| | - | --------------------------------------------------------------------



On July 11, 2014, the Company
announced that, subject to all necessary regulatory approvals, it has entered into shares for debt agreements with its Chief Executive
Officer, Dr. Albert Friesen and certain members of the Board of Directors, pursuant to which the Company will issue 205,867 of
its common shares at a deemed price of $1.98 per common share to satisfy $407,617 of outstanding amounts owing to the CEO and
members of the Company’s Board of Directors. The shares were issued on January 9, 2015.



On January 27, 2015, the Company
announced that, subject to all necessary regulatory approvals, it has entered into shares for debt agreements with certain members
of the Board of Directors and a consultant, pursuant to which the Company will issue 108,206 of its common shares at a deemed
price of $1.44 per common share to satisfy $155,817 of outstanding amounts owing to these individuals. The shares were issued
on March 20, 2015.



| | · | Approval of Expanded
                                         Dosing Time for AGGRASTAT®
| | - | ----------------------------------------------------------------------------------------



On April 23, 2015 the Company
announced that the FDA had approved a revision to the duration of the bolus delivery for the AGGRASTAT® high-dose
bolus regimen. The dosing change and label modification was requested by the Company to help health care professionals more efficiently
meet patient-specific administration needs and to optimize the implementation of AGGRASTAT® at new hospitals. The
newly approved labeling supplement now allows the delivery duration of the AGGRASTAT® high-dose bolus (25 mcg/kg)
to occur anytime within 5 minutes, instead of the previously specified duration of 3 minutes. This change is part of Medicure’s
ongoing regulatory strategy to expand the applications for AGGRASTAT®.



| | · | Bought Deal Private
                                         Placement Financing
| | - | --------------------------------------------------------------------------------



On June 26, 2015, the Company
announced that it closed a bought deal private placement financing (the “Offering”) with a syndicate of underwriters
led by PI Financial Corp. as sole lead underwriter and including Bloom Burton & Co (collectively, the “Underwriters”).
Pursuant to the Offering, the Company issued 1,829,545 common shares (the “Shares”) of the Company at a purchase price
of $2.20 per Share, including 238,636 Shares issued pursuant to the full exercise of the Underwriters over-allotment option, for
gross proceeds to the Company of approximately $4,025,000.



The Underwriters received a
cash commission equal to 7.0% of the gross proceeds raised in the Offering and were granted compensation options to purchase Shares
of Medicure equal to 7.0% of the total number of Shares issued pursuant to the Offering, exercisable for a 24 month period from
the closing of the Offering at a price of $2.20 per Share.



The net proceeds of the Offering
will be used to fund product development costs related to AGGRASTAT, as well as for general corporate and working capital purposes.



| | · | Filing of Supplemental
                                         New Drug Application for New AGGRASTAT® Indication
| | - | ------------------------------------------------------------------------------------------------------------------



On
September 10, 2015, the Company announced that it submitted a supplemental new drug application (commonly referred to by its acronym,
“sNDA”) to the FDA to expand the label for AGGRASTAT® to include the treatment of patients presenting with ST
Segment Elevation Myocardial Infarction (“STEMI”), a type of heart attack. AGGRASTAT® is currently
approved by the FDA for treatment of patients presenting with non-ST segment elevation acute coronary syndrome (NSTE ACS). If
approved for STEMI, AGGRASTAT® would be the first in its class of glycoprotein IIb/IIIa inhibitors to receive such
a label in the United States.



The Company has a Prescription
Drug User Fee Act (PDUFA) action date for the STEMI sNDA on July 10, 2016. Under PDUFA, the FDA aims to complete its review within
ten months from the receipt of a sNDA submission. The sNDA filing was accompanied by a mandatory US $1.167 million user fee paid
by Medicure International, Inc. to the FDA.



29







| | · | Collaboration
                                         with Apicore
| | - | -------------------------------------------------------------------



Subsequent to December 31,
2015, on January 6, 2016 the Company announced that it has initiated the development of a high-value cardiovascular generic drug.
The project is a collaboration between Medicure International, Inc. and Apicore US LLC (together with its affiliates “Apicore”),
a leading-edge manufacturer of generic active pharmaceutical ingredients ("APIs”). The collaborative project is focused
on the development of an intravenous abbreviated New Drug Application (“ANDA”) drug product for an acute cardiovascular
indication. Medicure and Apicore have entered into an exclusive product supply and development agreement under which Medicure
holds all commercial rights. The companies anticipate filing the ANDA with the U.S. Food and Drug Administration by the end of
2016.



Commercial:



In fiscal 2007, the Company’s subsidiary,
Medicure International, Inc., acquired the U.S. rights to its first commercial product, AGGRASTAT®, in the United
States and its territories (Puerto Rico, Virgin Islands, and Guam). AGGRASTAT®, a glycoprotein IIb/IIIa inhibitor
(“GPI”), is used for the treatment of acute coronary syndrome (ACS), including unstable angina (chest pain) (UA),
which is characterized by chest pain when one is at rest, and non-Q-wave myocardial infarction (MI). AGGRASTAT®
is indicated to reduce the rate of thrombotic cardiovascular events (combined endpoint of death, myocardial infarction, or refractory
ischemia/repeat cardiac procedure) in patients with non-ST elevation acute coronary syndrome (NSTE ACS). Under a contract with
Medicure International, Inc., the Company’s subsidiary, Medicure Pharma, Inc., continues to support, market and distribute
the product. Through a services agreement with Medicure Inc., work related to AGGRASTAT® is primarily conducted
by staff based in Winnipeg, Canada, with support from a small number of third party contractors.



Net revenue from the sale of finished
AGGRASTAT® products for the year ended December 31, 2015 increased by 162% over the net revenue for the twelve
months ended December 31, 2014. All of the Company’s sales are denominated in U.S. dollars. Hospital demand for AGGRASTAT®increased significantly compared to the comparable period in the prior year. The increase in revenue is primarily attributable
to an increase in the number of new hospital customers using AGGRASTAT®. The number of new customers reviewing
and implementing AGGRASTAT® has increased sharply as a result of FDA approval of the new dosing regimen for AGGRASTAT®as announced on October 11, 2013 and due to increased marketing and promotional efforts of the Company. Additionally, favourable
fluctuations in the U.S. dollar exchange rate contributed to the increase in revenue.



Going forward and contingent on sufficient
finances being available, the Company intends to further expand revenue through marketing and promotional activities, strategic
investments related to AGGRASTAT® and the acquisition and/or development of other niche products that fit the commercial
organization.



Research and Development:



The Company’s research and development
activities are predominantly conducted by its subsidiary, Medicure International, Inc.



The primary ongoing research and development
activity is the development and further 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.



An important aspect of the AGGRASTAT®strategy is the revision of its approved prescribing information. On October 11, 2013, the Company announced that the FDA
has approved the AGGRASTAT® HDB regimen, as requested under Medicure's sNDA. The AGGRASTAT® HDB
regimen (25 mcg/kg over 3 minutes, followed by 0.15 mcg/kg/min) now becomes the recommended dosing for the reduction of thrombotic
cardiovascular events in patients with NSTE ACS.



The Company believes that further expanded
indications and dosing regimens may put the Company in a better position to further maximize the revenue potential for AGGRASTAT®.
The Company is currently exploring the potential to make such changes, and the Company may need to conduct appropriate clinical
trials, obtain positive results from those trials, or otherwise provide support in order to obtain regulatory approval for such
proposed indications and dosing regimens.



30







On April 23, 2015 the Company announced
that the FDA has approved a revision to the duration of the bolus delivery for the AGGRASTAT® HDB regimen. The
dosing change and label modification was requested by the Company to help health care professionals more efficiently meet patient-specific
administration needs and to optimize the implementation of AGGRASTAT® at new hospitals. The newly approved labeling
supplement now allows the delivery duration of the AGGRASTAT® high-dose bolus (25 mcg/kg) to occur anytime within
5 minutes, instead of the previously specified duration of 3 minutes. This change is part of Medicure’s ongoing regulatory
strategy to expand the applications for AGGRASTAT®.



On September 10, 2015, the Company announced
that it submitted a sNDA to FDA to expand the label for AGGRASTAT® to include the treatment of patients presenting
with STEMI. AGGRASTAT® is currently approved by the FDA for treatment of patients presenting with NSTE ACS. If
approved for STEMI, AGGRASTAT® would be the first in its class of GPIs to receive such a label in the United States.



In previous communication with the Company,
the FDA’s Division of Cardiovascular and Renal Drug Products indicated its willingness to review and evaluate this label
change request based substantially on data from the On-TIME 2 study, with additional support from published studies and other
data pertinent to the use of the AGGRASTAT® HDB regimen in the treatment of STEMI. The efficacy and safety of the
HDB regimen in STEMI has been evaluated in more than 20 clinical studies involving over 11,000 patients and is currently recommended
by the ACCF/AHA Guideline for the Management of STEMI.



The Company has a Prescription Drug User
Fee Act (PDUFA) action date for the STEMI sNDA on July 10, 2016. Under PDUFA, the FDA aims to complete its review within ten months
from the receipt of a sNDA submission. The sNDA filing was accompanied by a mandatory US $1.167 million user fee paid by Medicure
International, Inc. to the FDA.



Another aspect of the AGGRASTAT®strategy is to advance studies related to the contemporary use and future regulatory positioning of the product. On May
10, 2012 the Company announced the commencement of enrolment in a new clinical trial of AGGRASTAT® entitled “Shortened
AGGRASTAT® Versus Integrilin in Percutaneous Coronary Intervention” (SAVI-PCI). SAVI PCI is a randomized,
open-label study enrolling patients undergoing percutaneous coronary intervention (PCI) at sites across the United States. In
June 2013, the target number of patients to be enrolled in the study was increased from 600 to 675. The study is designed to evaluate
whether patients receiving the investigational, HDB regimen of AGGRASTAT® (25 mcg/kg bolus over 3 minutes) followed by an
infusion of 0.15 mcg/kg/min for either a shortened duration of 1 to 2 hours or a lengthened infusion of 12 to 18 hours will have
outcomes that are similar, or “non-inferior,” to patients receiving a 12 to 18 hour infusion of Integrilin® (eptifibatide)
(Merck & Co., Inc.) at its FDA approved dosing regimen. The study arm investigating AGGRASTAT® HDB followed
by a 12 to 18 hour infusion was added subsequent to enrolment commencing.



The primary objective of SAVI-PCI is to
demonstrate AGGRASTAT® is non-inferior to Integrilin with respect to the composite endpoint of death, PCI-related
myocardial infarction, urgent target vessel revascularization, or major bleeding within 48 hours following PCI or hospital discharge.
The secondary objectives of this study include the assessment of safety as measured by the incidence of major bleeding.



The first patient was enrolled in June
2012. As of March 29, 2016 the study was approximately 75% through to completion of enrolment.



Yet another aspect of the AGGRASTAT®strategy is to explore and develop new uses and dosing approaches related to the product. On September 26, 2012, the Company
announced the development of a transdermal delivery formulation of AGGRASTAT®. The ability to administer a drug
transdermally (i.e. through the skin) provides a convenient way to deliver a stable, therapeutic level of medication to the patient.
AGGRASTAT® and other antiplatelet drugs of its class (known as glycoprotein IIb/IIIa inhibitors or GPIs) are currently
only administered by intravenous infusion. In vivo proof of principle for the transdermal delivery of therapeutic levels of AGGRASTAT®'s
active ingredient, tirofiban, has been established in animal studies conducted in collaboration with 4P Therapeutics, Inc. (Alpharetta,
GA). 4P Therapeutics, a world leader in the research and development of novel transdermal products, has entered into an agreement
with the Company's subsidiary, Medicure International, Inc., to further develop transdermal tirofiban. The delivery of tirofiban
by a novel, transdermal method has potential to provide significant advantages over the current treatments used in this setting,
including the potential for increased use prior to hospitalization.



31







Medicure International, Inc. holds worldwide
rights to transdermal tirofiban. The Company is managing the advancement of the transdermal tirofiban development program in an
effort to conserve resources and focus on other areas of investment.



The Company is also continuing to explore
other experimental uses and product formats related to AGGRASTAT®.



Through an ongoing research and development
investment, the Company is also exploring other new product opportunities in the interest of developing future sources of revenue
and growth.



Subsequent to December 31, 2015, on January
6, 2016 the Company announced that it has initiated the development of a high-value cardiovascular generic drug. The project is
a collaboration between Medicure International, Inc. and Apicore US LLC (together with its affiliates “Apicore”),
a leading-edge manufacturer of generic active pharmaceutical ingredients ("API’s”). The collaborative project
is focused on the development of an intravenous abbreviated New Drug Application (“ANDA”) drug product for an acute
cardiovascular indication. Medicure and Apicore have entered into an exclusive product supply and development agreement under
which Medicure holds all commercial rights. The companies anticipate filing the ANDA with the U.S. Food and Drug Administration
by the end of 2016.



The Company is actively working and devoting
a modest amount of resources to this program, including, but not limited to the development of TARDOXALTM(formerly
known as MC-1) for neurological conditions such as Tardive Dyskinesia. This work includes, but is not limited to, working with
the FDA to better understand and refine the next steps in development of the product.



On August 13, 2014 the Company announced
that the preliminary results of its Phase IIa Clinical Trial, TARDOXALTM for the Treatment of Tardive Dyskinesia (TEND-TD)
showed a non-statistically significant improvement in the primary efficacy endpoint in patients treated with TARDOXALTM.
Medicure views these preliminary results as supportive of continuing the program and developing a modified formulation as a prelude
to a larger, confirmatory Phase II study.



It is the Company’s intention to
develop TARDOXALTM independently and/or in conjunction with a larger pharmaceutical company for commercialization of
the product. Similar partnerships may be required for other products that the Company may from time to time seek to develop. Such
a partnership would provide funding for clinical development, add experience to the product development process and provide market
positioning expertise. No formal agreement for such a commercial partnership has been entered into by the Company as of the date
hereof.



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 Development                                                      
|---------------------- |  | --------------------------- |  | --------------------------------------------------------------------------
|AGGRASTAT®®            |  | Acute Cardiology            |  | Approved – Additional studies underway                                    
|Generic aNDA           |  | Acute Cardiology            |  | aNDA filing preparation is underway                                       
|TARDOXALTM             |  | TD/Neurological indications |  | Phase IIa – enrollment complete, Regulatory and clinical planning underway
|Transdermal AGGRASTAT® |  | Acute Cardiology            |  | Preclinical– formulation development                                      



32







The Company has evaluated and continues
to evaluate the acquisition or license of other approved commercial products with the objective of further broadening its product
portfolio and generating additional revenue.



Potential New Products in Development Stage



Cardiovascular Generic and Reformulation
Products:Subsequent to year-end, Medicure Inc. initiated the development of a high-value cardiovascular generic drug. The
project is a collaboration between Medicure International Inc. (a wholly owned subsidiary of Medicure) and Apicore U.S. LLC, a
leading-edge manufacturer of generic active pharmaceutical ingredients. The collaborative project is focused on the development
of an intravenous abbreviated new drug application (ANDA) drug product for an acute cardiovascular indication. Medicure and Apicore
have entered into an exclusive product supply and development agreement under which Medicure holds all commercial rights. The
companies anticipate filing the ANDA with the U.S. Food and Drug Administration by the end of 2016. Medicure is also exploring
and investing in other opportunities to reformulate and to develop generic versions of acute cardiovascular drugs.



TARDOXALTMfor Neurological
Conditions: One of the Company’s ongoing investments is the clinical development and commercialization of its lead research
product, TARDOXALTM (pyridoxal 5-phosphate) for TD and other neurological conditions. 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.



On August 13, 2014 the Company announced
that the preliminary results of its Phase IIa Clinical Trial, TARDOXALTM for the Treatment of Tardive Dyskinesia (TEND-TD)
showed a non-statistically significant improvement in the primary efficacy endpoint in patients treated with TARDOXALTM.
Medicure views these preliminary results as supportive of continuing the program and developing a modified formulation as a prelude
to a larger, confirmatory Phase II study.



TEND-TD was planned as a 140 patient Phase
II clinical trial to evaluate the efficacy and safety of TARDOXALTM for the treatment of Tardive Dyskinesia, with
a pre-planned interim analysis after approximately 40 patients were enrolled. The primary efficacy endpoint for the study was
a decrease in involuntary movements as measured by the Abnormal Involuntary Movement Scale (AIMS), a standardized test used to
detect and monitor TD and other movement disorders. The results from all 37 patients (17 randomized to TARDOXALTM and
20 to matching placebo) who completed the 12 week treatment period showed a trend to greater improvement in AIMS score from baseline
to completion of study in the TARDOXALTM group versus placebo. The study was not adequately powered to assess efficacy
and the improvement noted was not statistically significant. No significant differences between the study groups were seen in
safety endpoints, however, there was a trend to increased nausea reported in the treatment group. This side effect was anticipated
and has been seen in the Company’s previous clinical studies with the product. As it was not feasible to complete an adequately
powered study prior to expiry of the product and due to the Company’s limited financial resources at that time, enrolment
was stopped after attainment of the target number for the pre-planned interim analysis.



The Company plans to maintain a modest
investment in the research and development of TARDOXALTM over the next several months and is currently working with
the FDA to develop clinical development plans. The Company is also exploring modified formulations to reduce nausea that may be
associated with use of the product. A larger, confirmatory Phase II study will be required to evaluate and confirm the safety
and efficacy of TARDOXALTM in treatment of TD and other neurological conditions. TARDOXALTM is an experimental
drug and has not been approved for commercial use by regulatory bodies such as the FDA or Health Canada.



TARDOXALTM continues to have
Fast Track designation from the FDA for the treatment of moderate to severe TD. Fast Track designation is designed to facilitate
the development and expedite the review of new drugs that are intended to treat serious or life-threatening conditions and that
demonstrate the potential to address unmet medical needs.



33







Transdermal AGGRASTAT®:The
Company has invested a modest amount of capital on the development of a new, transdermal formulation of AGGRASTAT®.
On September 26, 2012, the Company announced the development of a transdermal delivery formulation of AGGRASTAT®.
The ability to administer a drug transdermally (i.e. through the skin) provides a convenient way to deliver a stable, therapeutic
level of medication to the patient. AGGRASTAT® and other antiplatelet drugs of its class (known as glycoprotein
IIb/IIIa inhibitors or GPIs) are currently only administered by intravenous infusion. In vivo proof of principle for the transdermal
delivery of therapeutic levels of AGGRASTAT®'s active ingredient, tirofiban, was recently established in animal
studies conducted in collaboration with 4P Therapeutics, Inc. (Alpharetta, GA). 4P Therapeutics, a world leader in the research
and development of novel transdermal products, has entered into an agreement with the Company's subsidiary, Medicure International,
Inc., to further develop transdermal tirofiban. The delivery of tirofiban by a novel, transdermal method has potential to provide
significant advantages over the current treatments used in this setting, including the potential for increased use prior to hospitalization.



Medicure International, Inc. holds worldwide
rights to transdermal tirofiban. Limitations in the amount of available resources have caused the Company to slow the advancement
of the transdermal tirofiban development program in an effort to conserve resources and focus on other areas of investment.



The Company is also exploring other experimental
uses and product formats related to AGGRASTAT®.



Other Products:TheCompany is also investing in the research and development of other new product development opportunities. The Company
is also exploring opportunities to grow the business through acquisition. The Company has evaluated and continues to evaluate
the acquisition or license of other approved commercial products with the objective of further broadening its product portfolio
and generating additional revenue.



As at December 31, 2015, 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).



Competitors’ Current Products



The Company’s only commercial product
AGGRASTAT®, 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® is indicated to reduce the rate of thrombotic
cardiovascular events (combined endpoint of death, myocardial infarction, or refractory ischemia/repeat cardiac procedure) in
patients with non-ST elevation acute coronary syndrome (NSTE-ACS).



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 an antiplatelet drug which affects 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®). All three are proprietary drugs and only eptifibatide has a generic equivalent, which was introduced
in December 2015. Of the two directly competing agents, AGGRASTAT® is most closely comparable to eptifibatide (Integrilin)
as they are both highly potent, small molecule drugs that have reversible antiplatelet effects.



The launch of the injectable antiplatelet
agent, cangrelor, by The Medicines Company, occurred in 2015 and is expected to have some impact on the use and sale of GPIs,
including AGGRASTAT®.



The launch of generic versions of eptifibatide
(Integrilin) occurred in December 2015 and may impact the utilization of AGGRASTAT®.



34







Competitors’ Products in Development



At present the Company is not aware of
any other glycoprotein IIb/IIIa inhibitors in mid to late stage clinical development. However, the choice and use of AGGRASTAT®
may be affected by the continued advancement of new antithrombotic and antiplatelet agents, including the recently approved oral
antiplatelet agents, ticagrelor (Brilinta®) and prasugrel (Effient®). Any future launch of generic
version of AGGRASTAT® and/or of other competitive drugs may also be 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:



| | · | Maintaining
                                         and growing AGGRASTAT® sales in the United States
| | - | ------------------------------------------------------------------------------------------------------



The Company is working to expand
sales of AGGRASTAT® in the United States. The present market for GPIs, of which AGGRASTAT® is one
of three agents, is approximately $280 million per year (2014). The use of AGGRASTAT® is recommended by the AHA
and ACC Guidelines for the treatment of ACS. AGGRASTAT® has been shown, to reduce the rate of thrombotic cardiovascular
events (combined endpoint of death, myocardial infarction, or refractory ischemia/repeat cardiac procedure) in patients with NSTE
ACS.



| | · | 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 further implementation of a new regulatory, brand and
life cycle management strategy for AGGRASTAT®.



An important aspect of the
AGGRASTAT® strategy is the revision of its approved prescribing information. On October 11, 2013, the Company announced
that the FDA has approved the AGGRASTAT® HDB regimen, as requested under Medicure's sNDA. The AGGRASTAT®HDB regimen (25 mcg/kg over 3 minutes, followed by 0.15 mcg/kg/min) now becomes the recommended dosing for the reduction
of thrombotic cardiovascular events in patients with NSTE ACS.



The Company believes that further
expanded indications and dosing regimens may put the Company in a better position to further maximize the revenue potential for
AGGRASTAT®. The Company is currently exploring the potential to make such changes, and the Company may need to
conduct appropriate clinical trials, obtain positive results from those trials, or otherwise provide support in order to obtain
regulatory approval for such proposed indications and dosing regimens.



On September 10, 2015, the
Company announced that it submitted a sNDA to the FDA to expand the label for AGGRASTAT® to include the treatment
of patients presenting with STEMI. AGGRASTAT® is currently approved by the FDA for treatment of patients presenting
with NSTE ACS. If approved for STEMI, AGGRASTAT® would be the first in its class of GPI to receive such a label
in the United States.



The SAVI-PCI trial is intended
to generate additional clinical data related to use of AGGRASTAT® which may help support future investments in
the product. The SAVI-PCI study is not expected nor intended to support further changes to AGGRASTAT®’s prescribing
information.



While the Company believes
that it will be able to implement a relatively low cost clinical, product and regulatory strategy, the Company’s limited
financial resources may limit its ability to fully realize the product’s revenue potential. The Company is working to advance
this program with the modest capital investment that it can make from its available cash resources.



35







| | · | Developing
                                         high-value acute cardiovascular generic and reformulation products
| | - | ----------------------------------------------------------------------------------------------------------------------



Subsequent to year-end, Medicure
Inc. initiated the development of a high-value cardiovascular generic drug. The project is a collaboration between Medicure International
Inc. (a wholly owned subsidiary of Medicure) and Apicore U.S. LLC, a leading-edge manufacturer of generic active pharmaceutical
ingredients. The collaborative project is focused on the development of an intravenous abbreviated new drug application (ANDA)
drug product for an acute cardiovascular indication. Medicure and Apicore have entered into an exclusive product supply and development
agreement under which Medicure holds all commercial rights. The companies anticipate filing the ANDA with the U.S. Food and Drug
Administration by the end of 2016. Medicure is also exploring and investing in other opportunities to reformulate and to develop
generic versions of acute cardiovascular drugs.



| | · | Generating
                                         material value for the Company from the minority ownership position in Apicore and, potentially,
                                         from the Company’s option to acquire additional shares of Apicore
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On July 3, 2014, the Company
acquired a minority interest in Apicore along with an option to acquire all of the remaining issued shares of Apicore within the
next three years at a predetermined price. The business and operations of Apicore are distinct from the Company, and the Company’s
primary operating focus remains on the sale and marketing of AGGRASTAT®. The Company intends to seek opportunities
to increase the value of its minority position in Apicore, and believes that the potential realization of value through the exercise
of its option to acquire all of the remaining issued shares of Apicore could benefit the Company’s shareholders. As such,
a modest amount of the Company’s energies and resources are being directed towards assisting and assessing Apicore’s
ongoing operations.



| | · | The
                                         development of TARDOXALTM for Tardive Dyskinesia and other neurological indications
| | - | --------------------------------------------------------------------------------------------------------------------------------



The Company is actively working
and devoting a modest amount of resources to this program, including, but not limited to the development of TARDOXALTM(formerly
known as MC-1) for neurological conditions such as Tardive Dyskinesia. This work includes, but is not limited to, working with
the FDA to better understand and refine the next steps in development of the product.



It is the Company’s intention
to develop TARDOXALTM independently and/or in conjunction with a larger pharmaceutical company for commercialization
of the product. Similar partnerships may be required for other products that the Company may from time to time seek to develop.
Such a partnership would provide funding for clinical development, add experience to the product development process and provide
market positioning expertise. No formal agreement for such a commercial partnership 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 1st Floor Limegrove Centre 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 49 Napoleon Court, Suite 2, Somerset, NJ, 08873.



Medicure U.S.A., Inc., a wholly owned
subsidiary of the Company, was incorporated pursuant to the laws of the State of Delaware, United States of America, on June 23,
2014. Medicure U.S.A. Inc.’s registered office is 2711 Centerville Road, Suite 400, Wilmington, Delaware, 19808.



36







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, 2014, American Cardio Therapeutics Inc. had no activity and it is the Company’s intention
that American Cardio Therapeutics Inc. will be wound up.



D. Property, Plant and Equipment



Office Space



Included within the business and administration
services agreemententered into with Genesys Venture Inc. (see Item 5F - Contractual Obligations), is the use of office
space at Genesys Venture Inc.’s head office located at 1250 Waverley Street in Winnipeg, Manitoba, Canada. As at December
31, 2015, the Company had use of approximately 8,500 square feet.



ITEM 4A. UNRESOLVED STAFF COMMENTS



Not applicable



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 3D - Risk Factors. The following
discussion of the financial condition, changes in financial conditions and results of operations of the Company for the years
ended December 31, 2015 and December 31, 2014 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 IFRS included under Item 18 to this Annual Report.



Critical Accounting Policies and Estimates



Estimates



The Company’s consolidated financial
statements are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting
Standards Board (IASB). IFRS requires management to make estimates and assumptions that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.



Estimates and underlying assumptions are
reviewed on an on-going basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised
and in any future periods affected.



Areas where management has made critical
judgments in the process of applying accounting policies and that have the most significant effect on the amounts recognized in
the consolidated financial statements include the determination of the Company and its subsidiaries, functional currency and the
determination of the Company's cash generating units ("CGU") for the purposes of impairment testing.



Information about key assumptions and
estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amount of assets and
liabilities within the next financial year are included in the notes the financial statements. Areas of significant estimates
include; valuation of the royalty obligation, valuation of the warrant liability, valuation of the other long-term liability,
provisions for returns, chargebacks and discounts, the estimation of accruals for research and development costs, the measurement
and period of useful life of intangible assets, valuation of investment in Apicore, valuation of long-term derivative, the assumptions
and model used to estimate the value of share-based payment transactions and the measurement of the amount and assessment of the
recoverability of income tax assets.



37







Valuation of the royalty obligation,
warrant liability and other long-term liability



The Company has the following non-derivative
financial liabilities which are classified as other financial liabilities: accounts payable and accrued liabilities and long-term
debt.



All other financial liabilities are recognized
initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument. Such financial
liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition,
these financial liabilities are measured at amortized cost using the effective interest method. 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 finance expense.



The Company derecognizes a financial liability
when its contractual obligations are discharged or cancelled, or when they expire.



The royalty obligation was recorded at
its fair value at the date at which the liability was incurred and subsequently measured at amortized cost using the effective
interest method at each reporting date. Estimating fair value for this liability requires determining the most appropriate valuation
model which is dependent on its underlying terms and conditions. This estimate also requires determining expected revenue from
AGGRASTAT® sales and an appropriate discount rate and making assumptions about them.



The other long-term liability was recorded
at its fair value at the date at which the liability was incurred and subsequently measured at amortized cost using the effective
interest method at each reporting date. Estimating fair value for this liability requires determining the most appropriate valuation
model which is dependent on its underlying terms and conditions. This estimate also requires determining the time frame when certain
sales targets are expected to be met and an appropriate discount rate and making assumptions about them.



Warrants with an exercise price denominated
in a foreign currency are recorded as a liability and classified as fair value through profit and loss. The warrant liability
is included within accounts payable and accrued liabilities and the change in the fair value of the warrants is recorded as a
gain or loss in the consolidated statement of net income (loss) and comprehensive income (loss) within finance expense. These
warrants have not been listed on an exchange and therefore do not trade on an active market.



The warrant liability was recorded at
the fair value of the warrants at the date at which they were granted and subsequently revalued at each reporting date. Estimating
fair value for these warrants requires determining the most appropriate valuation model which is dependent on the terms and conditions
of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected
life of the warrants, volatility and dividend yield and making assumptions about them.



IFRS 13 Fair Value Measurement,
establishes a fair value hierarchy that reflects the significance of the inputs used in measuring fair value. The fair value hierarchy
has the following levels:



| | • | Level 1 – Quoted prices (unadjusted) in active
markets for identical assets or liabilities;
| | - | -------------------------------------------------------------------------------------------



| | • | Level 2 – Inputs other
                                         than quoted prices included within Level 1 that are either directly or indirectly observable;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| | • | Level 3 - Unobservable inputs
                                         in which little or no market activity exists, therefore requiring an entity to develop
                                         its own assumptions about the assumptions that market participants would use in pricing.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The fair value of the warrant liability
is based on level 2 (significant observable inputs) and the fair value of the royalty obligation and other long-term liability
are based on level 3 (unobservable inputs).



38







Provision for returns and discounts



Revenue from the sale of goods, comprising
finished and unfinished products, in the course of ordinary activities is measured at the fair value of the consideration received
or receivable, net of estimated returns, chargebacks, trade discounts and volume rebates. Revenue is recognized when persuasive
evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have
been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can
be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured
reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized
as a reduction of revenue as the sales are recognized.



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.



Estimation of accruals for research
and development costs



Expenditure on research activities, undertaken
with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred.



Development activities involve a plan
or design for the production of new or substantially improved products and processes. Development expenditures are capitalized
only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic
benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the
asset. No development costs have been capitalized to date.



Research and development expenses include
all direct and indirect operating expenses supporting the products in development.



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.



Measurement and period of use of intangible
assets



Intangible assets that are acquired separately
and have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses. Subsequent
expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they
relate. All other expenditures are recognized in profit or loss as incurred.



Costs incurred in obtaining a patent are
capitalized and amortized on a straight-line basis over the legal life of the respective patent, ranging from five to twenty years,
or its economic life, if shorter. Costs incurred in obtaining a trademark are capitalized and amortized on a straight-line basis
over the legal life of the respective trademark, being ten years, or its economic life, if shorter. Costs incurred in obtaining
a customer list are capitalized and amortized on a straight-line basis over approximately ten years, or its economic life, if
shorter.



Costs incurred in successfully obtaining
a patent, trademark or customer list are measured at cost less accumulated amortization and accumulated impairment losses. The
cost of servicing the Company's patents and trademarks are expensed as incurred.



39







Subsequent expenditures are capitalized
only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures
are recognized in profit or loss as incurred.



At each
reporting date, the Company assesses whether there is objective evidence that a financial asset is impaired. If such evidence
exists, the Company recognizes an impairment loss for financial assets carried at amortized cost. The loss is the difference between
the amortized cost of the loan or receivable and the present value of the estimated future cash flows, discounted using the instrument’s
original effective interest rate. The carrying amount of the asset is reduced by this amount through the use of an allowance account.



Impairment
losses on financial assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and
the decrease can be related objectively to an event occurring after the impairment was recognized.



Assumptions and model used to estimate
the value of share-based payment transactions



The grant date fair value of share-based
payment awards granted to employees is recognized as a personnel expense, with a corresponding increase in equity, over the period
that the employees unconditionally become entitled to the awards. The amount recognized as an expense is adjusted to reflect the
number of awards for which the related service and non-market vesting conditions are expected to be met, such that the amount
ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market performance
conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based
payment is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.



Share-based payment arrangements in which
the Company receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based
payment transactions. In situations where equity instruments are issued and some or all of the goods or services received by the
entity as consideration cannot be specifically identified, they are measured at fair value of the share-based payment.



For share-based payment arrangements with
non-employees, the expense is recorded over the service period until the options vest. Once the options vest, services are deemed
to have been received.



For the year ended December 31, 2015,
the Company recorded $1,460,316 related to stock-based compensation (seven months ended December 31, 2014 - $620,705 and year
ended May 31, 2014 - $295,144).



Measurement of the amount and assessment
of the recoverability of income tax assets



Income tax expense comprises current and
deferred taxes. Current taxes and deferred taxes are recognized in profit or loss except to the extent that it relates to a business
combination, or items recognized directly in equity (deficiency) or in other comprehensive income (loss).



Current taxes are the expected tax receivable
or payable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date,
and any adjustment to tax receivable or payable in respect of previous years.



Deferred taxes are recognized in respect
of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts
used for taxation purposes. Deferred taxes are not recognized for the following temporary differences: the initial recognition
of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit
or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable
that they will not reverse in the foreseeable future. In addition, deferred taxes are not recognized for taxable temporary differences
arising on the initial recognition of goodwill. Deferred taxes are measured at the tax rates that are expected to be applied to
temporary differences when they reverse, based on the tax laws that have been enacted or substantively enacted by the reporting
date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and
liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax
entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities will
be realized simultaneously.



40







A deferred tax asset is recognized for
unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits
will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will be realized.



Investment in Apicore and long-term
derivative



The investment in Apicore represents
the acquisition of a minority interest in a pharmaceutical manufacturing business as described in note 8 of the consolidated
financial statements. The acquisition was completed by the Company and a wholly owned subsidiary, Medicure U.S.A. Inc. and
was initially recorded at fair value and subsequently remeasured at amortized cost.



The long-term derivative is the value
associated to the options rights received by the Company and is classified as fair value through profit and loss. The change in
the long-term derivative is recorded as a revaluation of long-term derivative in the consolidated statement of net income (loss)
and comprehensive income (loss). The long-term derivative is non-transferable and is recorded at fair value at the date at which
it was acquired and subsequently revalued at each reporting date. Estimating fair value for this derivative requires determining
the most appropriate valuation model which is dependent on the terms and conditions of the derivative. This estimate also requires
determining the most appropriate inputs to the valuation model, including the expected life of the derivative, volatility, dividend
yield and probabilities pertaining to its exercise and making assumptions about them.



A. Operating Results



General



Although the Company is currently focused
on Medicure International’s sole commercial product, AGGRASTAT®, this product has not been able to generate enough revenue
for the Company to reach sustained profitability.



Historically, the Company concentrated
primarily on research and development and continues to invest a significant amount of funds in research and development activities.
To date, the Company has yet to and may never derive any revenues from its research and development 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.



Twelve Months Ended December 31, 2015
Compared to the Twelve Months Ended December 31, 2014



On December 18, 2014, the Company announced
that the Board of Directors had approved a change in the Company's fiscal year end from May
31 to December 31. The change resulted in a stub period from June 1, 2014, to December 31, 2014, and as a result of the change,
the first full fiscal year ended on December 31, 2015. This change in year end from May 31 to December 31 was being made by the
Company to better align the Company’s financial reporting calendar with its industry peers and with most other companies
trading on the TSX.V. As a result of this change in year end, it is important to note that the comparable period, being the twelve
months ended December 31, 2014 is unaudited and considered estimated.



Net product sales for year ended December
31, 2015 were $22,083,000, compared to $8,426,000 in the comparable period in 2014. The Company currently sells finished 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.



41







Net revenue from the sale of finished
AGGRASTAT® products for the year ended December 31, 2015 increased by 162% over the net revenue for the twelve
months ended December 31, 2014. The increase in revenue compared to the
previous year and the comparable quarter for the previous year is primarily attributable to an increase in the number of
new hospital customers using AGGRASTAT®and the
increase in market share held by the product. Revenue growth was also aided by favourable fluctuations in the U.S. dollar exchange
rate throughout the third quarter. The Company's commercial team continues to work on further expanding its customer base.



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



Cost of goods sold, excluding amortization,
for the year ended December 31, 2015 were $1,604,000 compared to $393,000 for the comparable period in the prior year. For the
year ended December 31, 2015, increases to cost of goods sold are the result of increases in net sales of AGGRASTAT® during
the period when compared to the same period in 2014.



Amortization
of AGGRASTAT® intangible assets increased for the year ended December 31, 2015 to $656,000, when compared to $663,000for
the comparable period in the prior year.The increase is as a result of fluctuations in foreign
exchange rates causing the amortization expense to be higher during the year ended December 31, 2015 as the asset is owned by
a subsidiary whose functional currency is the US dollar.



Total selling, general, and administrative
expenditures for the year ended December 31, 2015 were $10,237,000, compared to $5,549,000 for the comparable period in the prior
year. Selling, general, and administrative expenditures related to AGGRASTAT®were $7,666,000 for the year ended
December 31, 2015, compared to $4,038,000 for the comparable period in the prior year. Selling, general, and administrative expenditures
– Other were $2,571,000 for the year ended December 31, 2015, compared to $1,511,000 the comparable period in the prior
year. 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®increased during the year ended December 31, 2015 as compared to same period in the prior year
mainly due to:



| | · | Additional
                                         payroll costs associated with the sale of AGGRASTAT® due to additional head office
                                         employees providing support for AGGRASTAT® as the Company’s headcount increased
                                         from 18 at December 31, 2014 to 39 at December 31, 2015; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Increased
                                         travel costs associated with the sale of AGGRASTAT® due to more sales people travelling
                                         to service accounts and increased frequency of hospital visits.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Selling, general and administrative expenditures
– Other increased during the  year ended December 31, 2015 as compared to same period in the prior year mainly due
to:



| | · | Higher
                                         stock-based compensation expenses, which totaled $1,460,318 during the year ended December
                                         31, 2015 as a result of stock options issued during the year, compared to $915,849 for
                                         the twelve months ended December 31, 2014.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



42







Net research and development
expenditures for the year ended December 31, 2015 were $4,865,000, compared to $999,000 for the comparable period in the
prior year. Research and development expenditures include costs associated with the Company’s on-going AGGRASTAT
development, clinical development and preclinical programs including salaries, research centred costs and monitoring costs.
The Company expenses research costs and has not had any development costs that meet the criteria for capitalization under
IFRS. The increase in research and development expenditures, for the year ended December 31, 2015 as compared to the twelve
months ended December 31, 2014 is primarily due to the filing of a sNDA during 2015 with the FDA to expand the label for
AGGRASTAT® to include the treatment of patients presenting with ST segment elevation myocardial infarction (STEMI). This
filing included a one-time filing fee paid to the FDA of $1.5 million ($1.2 million USD), as well as approximately $700,000
in other costs associated with its filing and preparation incurred during the quarter. Additionally research and development
expenditures increased as a result of manufacturing set-up costs associated with the AGGRASTAT® finished product and
development costs associated with non-AGGRASTAT® projects.



Generally, included in research and development
expenses are charges related to impairment of the Company’s intangibles assets, however there were no impairments recorded
in either period. 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 no longer pursue these patents and as a result
the carrying value of these patents was written off.



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.



During the year ended December 31, 2015,
the Company recorded a reversal of an impairment loss relating to AGGRASTAT intangible assets, originally written down during
the year ended May 31, 2008, totalling $788,305 as a result of sustained improvements in the AGGRASTAT business



During the twelve months ended December
31, 2014, the Company recognized $1,385,000 of income pertaining to investment structuring services resulting from its acquisition
of a minority interest in a pharmaceutical manufacturing business known as Apicore. The Company’s equity interest and certain
other rights, including the option rights, were obtained by the Company for services provided in its lead role in structuring
a US$22.5 million majority purchase and financing of Apicore. There was no cash outflow in connection with the acquisition of
the minority interest in Apicore, with the exception of costs incurred by the Company in relation to the transaction which totalled
$167,672.



Finance expense for the year ended December
31, 2015 was $4,123,000, compared to $2,145,000 in the comparable period in the prior year. The increase in finance expense for
the year ended December 31, 2015 as compared to the prior fiscal year is due to higher accretion on the Company’s royalty
obligation resulting from higher revenue estimates as a result of the October 2013 label change and the Company’s continued
sales growth. The royalty obligation arose out of the previous debt settlement.



The net foreign exchange loss for the
year ended December 31, 2015 was $69,000, compared to a net foreign exchange loss of $18,000 for the comparable period in the
prior year. The change is due to higher fluctuations in the Canadian dollar versus the US dollar experienced during the year ended
December 31, 2015 compared to the twelve months ended December 31, 2014.



The Company recognized an income tax recovery
of $379,000 for the year ended December 31, 2015 to the extent it is probable that future taxable profits will be available against
which the accumulated tax losses and temporary differences can be utilized.



43







For
the year ended December 31, 2015, the Company recorded consolidated net income of $1,668,000 or $0.12 per share compared to $463,000
or $0.04 per share for the twelve months ended December 31, 2014. As discussed above, the main factors contributing to the increase
in the net income were the income resulting from investment structuring services relating to the acquisition of a minority interest
in Apicore in the comparable period offset by the significant increase revenues experienced during the year ended December 31,
2015 when compared to the comparable period in the prior year. Revenue increase were partially offset by increases in selling,
general and administration, research and development and finance expenses.



For
the year ended December 31, 2015, the Company recorded total comprehensive income of $2,474,000 compared to $620,000 for the twelve
months ended December 31, 2014. The change in comprehensive income results from the factors described above.



The weighted average number of common
shares outstanding used to calculate basic income per share was 13,461,608 for the year ended December 31, 2015 and 12,209,907
for the twelve months ended December 31, 2014.



The weighted average number of common
shares outstanding used to calculate diluted income per share was 15,765,570 for the year ended December 31, 2015 and 13,843,126
for the twelve months ended December 31, 2014.



Seven Months Ended December 31, 2014
Compared to the Seven Months Ended December 31, 2013



On December 18, 2014, the Company announced
that the Board of Directors had approved a change in the Company's fiscal year end to December
31. The change resulted in a stub period from June 1, 2014, to December 31, 2014, and as a result of the change, the first full
fiscal year ended on December 31, 2015. This change in year end from May 31 to December 31 was being made by the Company to better
align the Company’s financial reporting calendar with its industry peers and with most other companies trading on the TSX.V.
As a result of this change in year end, it is important to note that the comparable period, being the seven months ended December
31, 2013 is unaudited.



Net product sales for seven months ended
December 31, 2014 were $5,264,000, compared to $2,165,000 in the comparable period in 2013. The Company currently sells finished
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.



Net revenue from the sale of finished
AGGRASTAT® products for the seven months ended December 31, 2014 increased by 143% over the net revenue for the seven months
ended December 31, 2013. Hospital demand for AGGRASTAT® increased significantly compared to the comparable period in the prior
year. The increase in revenue is primarily attributable to an increase in the number of new hospital customers using AGGRASTAT®.
The number of new customers reviewing and implementing AGGRASTAT® has increased sharply as a result of FDA approval of the
new dosing regimen for AGGRASTAT® as announced on October 11, 2013.  Additionally, favourable fluctuations in the U.S.
dollar exchange rate contributed to the increase in revenue.



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



Cost of goods sold, excluding amortization,
for the seven months ended December 31, 2014 were $269,000 compared to $148,000 for the comparable period in the prior year. For
the seven months ended December 31, 2014, increases to cost of goods sold are the result of increases in net sales of AGGRASTAT®
during the period when compared to the same period in 2013.



44







Amortization
of AGGRASTAT® intangible assets increased for the seven months ended December 31, 2014 to $332,000, when compared to $299,000for the comparable period in the prior year.The increase is as a result of fluctuations
in foreign exchange rates causing the amortization expense to be higher during the seven months ended December 31, 2014 as the
asset is owned by a subsidiary whose functional currency is the US dollar.



Total selling, general, and administrative
expenditures for the seven months ended December 31, 2014 were $3,231,000, compared to $1,807,000 for the comparable period in
the prior year. Selling, general, and administrative expenditures related to AGGRASTAT®were $1,711,000 for the
seven months ended December 31, 2014, compared to $1,031,000 for the comparable period in the prior year. Selling, general, and
administrative expenditures – Other were $1520,000 for the seven months ended December 31, 2014, compared to $776,000 the
comparable period in the prior year. 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®increased during the seven months ended December 31, 2014 as compared to same period in the
prior year mainly due to:



| | · | Additional
                                         payroll costs associated with the sale of AGGRASTAT® due to additional head office
                                         employees providing support for AGGRASTAT®; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Increased
                                         travel costs associated with the sale of AGGRASTAT®.
| | - | -------------------------------------------------------------------------------------------------------



Selling, general and administrative expenditures
– Other increased during the seven months ended December 31, 2014 as compared to same period in the prior year mainly due
to:



| | · | Increased
                                         business development costs, some of which were associated with the Apicore transaction
                                         that closed on July 3, 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Higher
                                         stock-based compensation expenses, which totaled $620,705 during the seven months ended
                                         December 31, 2014 as a result of stock options issued during the period, which were granted
                                         on July 7, 2014. No stock options were issued and no stock-based compensation expense
                                         was recorded during the seven months ended December 31, 2013.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Net research and development expenditures
for the seven months ended December 2014 were $783,000, compared to $473,000 for the comparable period in the prior year. 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 research costs and has not had any development costs
that meet the criteria for capitalization under IFRS. The increase in research and development expenditures, for the seven months
ended December 31, 2014 as compared to the same period in the prior year is due to increased costs from the Company’s clinical
trial of AGGRASTAT® (tirofiban HCl) entitled “Shortened AGGRASTAT® Versus Integrilin in Percutaneous Coronary Intervention”
(SAVI-PCI), in addition to an increase in the Company’s transdermal research program.



Generally charges related to impairment
of the Company’s intangibles assets are included in research and development expenses. However there were no impairments
recorded in either period. 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 no longer pursue these patents and as a result
the carrying value of these patents was written off.



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.



45







During the seven months ended December
31, 2014, the Company recognized $1,385,000 of income pertaining to investment structuring services resulting from its acquisition
of a minority interest in a pharmaceutical manufacturing business known as Apicore. The Company’s equity interest and certain
other rights, including the option rights, were obtained by the Company for services provided in its lead role in structuring
a US$22.5 million majority purchase and financing of Apicore. There was no cash outflow in connection with the acquisition of
the minority interest in Apicore, with the exception of costs incurred by the Company in relation to the transaction which totalled
$167,672.



Finance expense for the seven months ended
December 31, 2014 was $730,000, compared to $394,000 in the comparable period in the prior year. The increase in finance expense
for the seven ended December 31, 2014 as compared to the prior fiscal year is due to higher accretion on the Company’s royalty
obligation resulting from higher revenue estimates as a result of the October 2013 label change. The royalty obligation arose
out of the previous debt settlement.



The net foreign exchange loss for the
seven months ended December 31, 2014 was $28,000, compared to a net foreign exchange loss of $5,000 for the comparable period
in the prior year. The change is due to higher fluctuations in the Canadian dollar versus the US dollar experienced during the
seven months ended December 31, 2014 compared to the seven months ended December 31, 2013.



For
the seven months ended December 31, 2014, the Company recorded consolidated net income of $1,196,000 or $0.10 per share compared
to a loss of $960,000 or $0.08 per share for the seven months ended December 31, 2013. As discussed above the main factors contributing
to the increase in the net income were the income resulting from investment structuring services relating to the acquisition of
a minority interest in Apicore and the increased revenues experienced during the seven months ended December 31, 2014 when compared
to the comparable period in the prior year. These were partially offset by increases in selling, general and administration expenses
and finance expense.



For
the seven months ended December 31, 2014, the Company recorded total comprehensive income of $1,339,000 compared to a total comprehensive
loss of $887,000 for the seven months ended December 31, 2013. The change in comprehensive income results from the factors described
above.



The weighted average number of common
shares outstanding used to calculate basic loss per share was 12,204,827 for the seven months ended December 31, 2014 and 12,196,508
for the seven months ended December 31, 2013.



The weighted average number of common
shares outstanding used to calculate diluted loss per share was 13,843,126 for the seven months ended December 31, 2014 and 12,196,508
for the seven months ended December 31, 2013.



Year Ended May 31, 2014 Compared to
the Year Ended May 31, 2013



During the preparation of the Company’s
consolidated financial statements for the seven months ended December 31, 2014, the Company determined that the accounting for
stock-based compensation pertaining to a consulting agreement signed during the year ended May 31, 2014 was interpreted incorrectly
in accordance with IFRS 2 Share-Based Payments for the year ended May 31, 2014. As a result the May 31, 2014 information provided
has been restated to include stock-based compensation expense relating to this consulting agreement.



Net product sales for fiscal 2014 were
$5,051,000, compared to $2,603,000 in fiscal 2013. The Company currently sells finished 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.



46







Net revenue from the sale of finished
AGGRASTAT® products for the year ended May 31, 2014 increased by 94% over the net revenue for the year ended May 31, 2013.
Hospital demand for AGGRASTAT® increased significantly compared to the previous fiscal year. The increase in revenue is primarily
attributable to an increase in the number of new hospital customers using AGGRASTAT®. The number of new customers reviewing
and implementing AGGRASTAT® has increased sharply as a result of FDA approval of the new dosing regimen for AGGRASTAT®
as announced on October 11, 2013. Additionally, favourable fluctuations in the U.S. dollar exchange rate contributed to the
increase in revenue as all sales are denominated in U.S. dollars.



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



Cost of goods sold, excluding amortization,
for fiscal 2014 were $323,000 compared to $131,000 in fiscal 2013. For the year ended May 31, 2014, increases to cost of goods
sold are the result of increases in net sales of AGGRASTAT® during fiscal 2014 when compared to fiscal 2013.



Amortization
of AGGRASTAT® intangible assets increased for the year ended May 31, 2014 to $546,000, when compared to $515,000 in fiscal
2013.The increase is as a result of fluctuations in foreign exchange rates causing the amortization expense to be higher
during fiscal 2014 as the asset is owned by a subsidiary whose functional currency is the US dollar.



Total selling, general, and administrative
expenditures for fiscal 2014 were $3,625,000, compared to $2,323,000 in fiscal 2013. Selling, general, and administrative expenditures
related to AGGRASTAT®were $1,626,000 in fiscal 2014, compared to $1,331,000 in fiscal 2013. Selling, general,
and administrative expenditures – Other were $1,999,000 in fiscal 2014, compared to $992,000 in fiscal 2013. 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®increased during the year ended May 31, 2014 as compared to same period in the prior year mainly
due to:



| | · | Additional
                                         payroll costs associated with the sale of AGGRASTAT® due to additional head office
                                         employees providing support for AGGRASTAT®; and
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Increased
                                         travel costs associated with the sale of AGGRASTAT®.
| | - | -------------------------------------------------------------------------------------------------------



Selling, general and administrative expenditures
– Other increased during the year ended May 31, 2014 as compared to same period in the prior year mainly due to:



| | · | Increased
                                         business development costs, some of which were associated with the Apicore transaction
                                         that closed on July 3, 2014.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Higher
                                         salaries and benefits due to $286,849 of bonuses declared to the Company’s Chief
                                         Executive Officer. The Chief Executive Officer agreed on July 11, 2014 to receive these
                                         bonuses in the form of common shares when the Company and Chief Executive Officer entered
                                         into a shares for debt agreement. To date, the shares have not been issued as the Company
                                         is in the process of obtaining the necessary regulatory approval for issuance of the
                                         shares.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Stock-based
                                         compensation of $295,144 pertaining to stock-based compensation for a consultant whom
                                         the Company signed a consulting agreement with during the year ended May 31, 2014
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



47







Net research and development expenditures
for fiscal 2014 were $689,000, compared to $1,700,000 in fiscal 2013. 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 research costs and has not had any development costs that meet the criteria for capitalization under
IFRS. The decrease in research and development expenditures, for the year ended May 31, 2014 as compared to the same period in
fiscal 2013 is due to reduced costs from the Company’s clinical trial of AGGRASTAT® (tirofiban HCl) entitled “Shortened
AGGRASTAT® Versus Integrilin in Percutaneous Coronary Intervention” (SAVI-PCI) as well as a renal dosing study that
was completed as a part of the Company’s sNDA filing during fiscal 2013.



Included in research and development expenses
are charges related to impairment of the Company’s intangibles assets. Impairments of intangible assets for fiscal 2014
were nil, compared to $62,000 in fiscal 2013. 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 no longer pursue these
patents and as a result the carrying value of these patents was written off.



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.



Finance expense for fiscal 2014 was $1,809,000,
compared to $466,000 in fiscal 2013. The increase in finance expense for the year ended May 31, 2014 as compared to the prior
fiscal year is due to higher accretion on the Company’s royalty obligation resulting from higher revenue estimates as a
result of the October 2013 label change. The royalty obligation arose out of the previous debt settlement.



The net foreign exchange gain for the
year ended May 31, 2014 was $6,000, compared to a net foreign exchange loss of $22,000 in fiscal 2013. The change is due to higher
fluctuations in the Canadian dollar versus the US dollar experienced during the year-ended May 31, 2014 compared to the year ended
May 31, 2013.



For
the year ended May 31, 2014, the Company recorded a consolidated net loss of $1,934,000 or $0.16 per share compared to $2,574,000
or $0.21 per share for the year ended May 31, 2013. As discussed above the main factors contributing to the decrease in net loss
were the increased revenues and decreased research and development expenses experienced during the year ended May 31, 2014 when
compared to the previous year. These were partially offset by increases in selling, general and administration expenses and finance
expense.



For
the year ended May 31, 2014, the Company recorded a total comprehensive loss of $1,847,000 compared to $2,609,000 for the year
ended May 31, 2013. The change in comprehensive loss results from the factors described above.



The weighted average number of common
shares outstanding used to calculate basic loss per share was 12,196,745 for the year ended May 31, 2014 and 12,196,508 for the
year ended May 31, 2013.



The weighted average number of common
shares outstanding used to calculate diluted loss per share was 12,196,745 for the year ended May 31, 2014 and 12,196,508 for
the year ended May 31, 2013.



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 and exercise of warrants and stock options, interest on excess funds held and the issuance of debt as well as a build up
in accounts payable associated with a reliance on trade debt.



On July 18, 2011, the Company borrowed
$5,000,000 from the Government of Manitoba, under the Manitoba Industrial Opportunities Program, to assist with settling the Company’s
debt to Birmingham. Effective August 1, 2013, the Company renegotiated this debt and received an additional two year deferral
of principal repayments. Under the renegotiated terms, the loan continued to be interest only until August 1, 2015 when blended
payments of principal and interest commenced, and the loan maturity date was extended to July 1, 2018.



48







On December 18, 2014, the Company announced
that the Board of Directors had approved a change in the Company's fiscal year end to December 31. The change resulted in a stub
period from June 1, 2014, to December 31, 2014, and as a result of the change, the first full fiscal year ended on December 31,
2015. This change in year end from May 31 to December 31 was made by the Company to better align the Company’s financial
reporting calendar with its industry peers and with most other companies trading on the TSX.V. As a result of this change in year
end, it is important to note that the comparable period, being the twelve months ended December 31, 2014 is unaudited.



Cash from operating activities for the year ended December
31, 2015 decreased $331,000 to $143,000 compared to cash from operating activities of $474,000 for the comparable period in the
prior year primarily due to higher accounts receivable balances as at December 31, 2015 when compared to December 31, 2014.



Investing activities for the year ended
December 31, 2015 were cash used totaling $227,000 relating to the acquisition of property and equipment, including leasehold
improvements, compared to $41,000 relating to the acquisition of property and equipment for the twelve months ended December 31,
2014.



Financing activities for the year ended
December 31, 2015 included $3.6 million received from a private placement financing completed in June of 2015, $33,000 and $150,000
received upon the exercise of stock options and warrants, respectively, during fiscal this period and $694,000 in repayments on
long-term debt. Cash from financing activities for the twelve months ended December 31, 2014 included $6,000 received upon the
exercise of stock options.



As at December
31, 2015, the Company had cash totaling $3.6 million compared to $493,000 as of December 31, 2014. As at December 31, 2015, the
Company had a working capital of $7.0 million compared to a working capital deficit of $506,000 at December 31, 2014. The increase
in working capital between the two periods is as a result of higher net income, when factoring out non-cash items, resulting from
increased revenues resulting in higher accounts receivable and cash as at December 31, 2015. Additionally, the $3.6 million, net,
private placement financing completed during June of 2015 contributed to the increase in working capital.



The Company has long-term debt at
December 31, 2015 of $4.3 million recorded in its financial statements relating to the Government of Manitoba loan. Interest
is accrued based on an annual effective interest rate of  seven percent. The minimum annual debt obligations are disclosed
under Contractual Obligations.



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



Research and Development



The Company’s research and development
activities are predominantly conducted by its subsidiary, Medicure International, Inc.



The primary ongoing research and development
activity is the development and further 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.



An important aspect of the AGGRASTAT®strategy is the revision of its approved prescribing information. On October 11, 2013, the Company announced that the FDA
has approved the AGGRASTAT® HDB regimen, as requested under Medicure's sNDA. The AGGRASTAT® HDB
regimen (25 mcg/kg over 3 minutes, followed by 0.15 mcg/kg/min) now becomes the recommended dosing for the reduction of thrombotic
cardiovascular events in patients with NSTE ACS.



49







The Company believes that further expanded
indications and dosing regimens may put the Company in a better position to further maximize the revenue potential for AGGRASTAT®.
The Company is currently exploring the potential to make such changes, and the Company may need to conduct appropriate clinical
trials, obtain positive results from those trials, or otherwise provide support in order to obtain regulatory approval for such
proposed indications and dosing regimens.



On April 23, 2015 the Company announced
that the FDA has approved a revision to the duration of the bolus delivery for the AGGRASTAT® HDB regimen. The
dosing change and label modification was requested by the Company to help health care professionals more efficiently meet patient-specific
administration needs and to optimize the implementation of AGGRASTAT® at new hospitals. The newly approved labeling
supplement now allows the delivery duration of the AGGRASTAT® high-dose bolus (25 mcg/kg) to occur anytime within
5 minutes, instead of the previously specified duration of 3 minutes. This change is part of Medicure’s ongoing regulatory
strategy to expand the applications for AGGRASTAT®.



On September 10, 2015, the Company announced
that it submitted a sNDA to FDA to expand the label for AGGRASTAT® to include the treatment of patients presenting
with STEMI. AGGRASTAT® is currently approved by the FDA for treatment of patients presenting with NSTE ACS. If
approved for STEMI, AGGRASTAT® would be the first in its class of GPIs to receive such a label in the United States.



In previous communication with the Company,
the FDA’s Division of Cardiovascular and Renal Drug Products indicated its willingness to review and evaluate this label
change request based substantially on data from the On-TIME 2 study, with additional support from published studies and other
data pertinent to the use of the AGGRASTAT® HDB regimen in the treatment of STEMI. The efficacy and safety of the
HDB regimen in STEMI has been evaluated in more than 20 clinical studies involving over 11,000 patients and is currently recommended
by the ACCF/AHA Guideline for the Management of STEMI.



The Company has a PDUFA action date for the STEMI sNDA on July 10, 2016. Under PDUFA, the FDA aims to complete its review within ten months
from the receipt of a sNDA submission. The sNDA filing was accompanied by a mandatory US $1.167 million user fee paid by Medicure
International, Inc. to the FDA.



Another aspect of the AGGRASTAT®strategy is to advance studies related to the contemporary use and future regulatory positioning of the product. On May
10, 2012 the Company announced the commencement of enrolment in a new clinical trial of AGGRASTAT® entitled “Shortened
AGGRASTAT® Versus Integrilin in Percutaneous Coronary Intervention” (SAVI-PCI). SAVI PCI is a randomized,
open-label study enrolling patients undergoing percutaneous coronary intervention (PCI) at sites across the United States. In
June 2013, the target number of patients to be enrolled in the study was increased from 600 to 675. The study is designed to evaluate
whether patients receiving the investigational, HDB regimen of AGGRASTAT® (25 mcg/kg bolus over 3 minutes) followed by an
infusion of 0.15 mcg/kg/min for either a shortened duration of 1 to 2 hours or a lengthened infusion of 12 to 18 hours will have
outcomes that are similar, or “non-inferior,” to patients receiving a 12 to 18 hour infusion of Integrilin® (eptifibatide)
(Merck & Co., Inc.) at its FDA approved dosing regimen. The study arm investigating AGGRASTAT® HDB followed
by a 12 to 18 hour infusion was added subsequent to enrolment commencing.



The primary objective of SAVI-PCI is to
demonstrate AGGRASTAT® is non-inferior to Integrilin with respect to the composite endpoint of death, PCI-related
myocardial infarction, urgent target vessel revascularization, or major bleeding within 48 hours following PCI or hospital discharge.
The secondary objectives of this study include the assessment of safety as measured by the incidence of major bleeding.



The first patient was enrolled in June
2012. As of March 29, 2016 the study was approximately 75% through to completion of enrolment.



Yet another aspect of the AGGRASTAT®strategy is to explore and develop new uses and dosing approaches related to the product. On September 26, 2012, the Company
announced the development of a transdermal delivery formulation of AGGRASTAT®. The ability to administer a drug
transdermally (i.e. through the skin) provides a convenient way to deliver a stable, therapeutic level of medication to the patient.
AGGRASTAT® and other antiplatelet drugs of its class (known as glycoprotein IIb/IIIa inhibitors or GPIs) are currently
only administered by intravenous infusion. In vivo proof of principle for the transdermal delivery of therapeutic levels of AGGRASTAT®'s
active ingredient, tirofiban, has been established in animal studies conducted in collaboration with 4P Therapeutics, Inc. (Alpharetta,
GA). 4P Therapeutics, a world leader in the research and development of novel transdermal products, has entered into an agreement
with the Company's subsidiary, Medicure International, Inc., to further develop transdermal tirofiban. The delivery of tirofiban
by a novel, transdermal method has potential to provide significant advantages over the current treatments used in this setting,
including the potential for increased use prior to hospitalization.



50







Medicure International, Inc. holds worldwide
rights to transdermal tirofiban. The Company is managing the advancement of the transdermal tirofiban development program in an
effort to conserve resources and focus on other areas of investment.



The Company is also continuing to explore
other experimental uses and product formats related to AGGRASTAT®.



Through an ongoing research and development
investment, the Company is also exploring other new product opportunities in the interest of developing future sources of revenue
and growth.



Subsequent to December 31, 2015, on January
6, 2016 the Company announced that it has initiated the development of a high-value cardiovascular generic drug. The project is
a collaboration between Medicure International, Inc. and Apicore US LLC (together with its affiliates “Apicore”),
a leading-edge manufacturer of generic active pharmaceutical ingredients ("API’s”). The collaborative project
is focused on the development of an intravenous abbreviated New Drug Application (“ANDA”) drug product for an acute
cardiovascular indication. Medicure and Apicore have entered into an exclusive product supply and development agreement under
which Medicure holds all commercial rights. The companies anticipate filing the ANDA with the U.S. Food and Drug Administration
by the end of 2016.



The Company is actively working and devoting
a modest amount of resources to this program, including, but not limited to the development of TARDOXALTM(formerly
known as MC-1) for neurological conditions such as Tardive Dyskinesia. This work includes, but is not limited to, working with
the FDA to better understand and refine the next steps in development of the product.



On August 13, 2014 the Company announced
that the preliminary results of its Phase IIa Clinical Trial, TARDOXALTM for the Treatment of Tardive Dyskinesia (TEND-TD)
showed a non-statistically significant improvement in the primary efficacy endpoint in patients treated with TARDOXALTM.
Medicure views these preliminary results as supportive of continuing the program and developing a modified formulation as a prelude
to a larger, confirmatory Phase II study.



It is the Company’s intention to
develop TARDOXALTM independently and/or in conjunction with a larger pharmaceutical company for commercialization of
the product. Similar partnerships may be required for other products that the Company may from time to time seek to develop. Such
a partnership would provide funding for clinical development, add experience to the product development process and provide market
positioning expertise. No formal agreement for such a commercial partnership has been entered into by the Company as of the date
hereof.



Company-sponsored research and development
net expenditures the year ended December 31, 2015 were $4,865,000 (seven months ended December 31, 2014 - $783,000, year ended
May 31, 2014 - $689,000 and year ended May 31, 2013 - $1,700,000).



Patents and Licenses



In addition to a number of pending patent
applications, the Company has 17 7 issued patents from the United States Patent Office providing protection for
AGGRASTAT®and related its current and historic development compounds. The Company will continue to file patents
related to its research and development activities. The United States patents currently issued to the Company are as follows:



51







|Patent Number |  | Issue Date       |  | Title                                                                                                              
|------------- |  | ---------------- |  | -------------------------------------------------------------------------------------------------------------------
|5,733,919     |  | March 31, 1998   |  | Compositions for Inhibiting Platelet Aggregation                                                                   
|5,965,581     |  | October 12, 1999 |  | Compositions for Inhibiting Platelet Aggregation                                                                   
|5,972,967     |  | October 26, 1999 |  | Compositions for Inhibiting Platelet Aggregation                                                                   
|5,978,698     |  | November 2, 1999 |  | Angioplasty Procedure Using Nonionic Contrast Media                                                                
|6,136,794     |  | October 24, 2000 |  | Platelet Aggregation Inhibition Using Low Molecular Weight Heparin in Combination with a
    GP IIb/IIIa Antagonist
|6,770,660     |  | August 3, 2004   |  | Method for Inhibiting Platelet Aggregation                                                                         
|7,375,112     |  | May 20, 2008     |  | Compounds and Methods for Reducing Triglyceride Levels                                                             



Patents 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.



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).



52







Although the Company is no longer developing
MC-1, the Company does have a royalty bearing agreement with its subsidiary in regards to this discontinued development program.
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.
CanAm continues to perform work on AGGRASTAT®, TARDOXALTM and other projects under this agreement, however there
is no ongoing research activity related to MC-1.



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 product sales for year ended December
31, 2015 were $22,083,000, compared to $8,426,000 for the twelve months ended December 31, 2014. The Company currently sells finished
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.



Net revenue from the sale of finished
AGGRASTAT® products for the year ended December 31, 2015 increased by 162% over the net revenue for the twelve
months ended December 31, 2014. All of the Company’s sales are denominated in U.S. dollars. Hospital demand for AGGRASTAT®increased significantly compared to the comparable period in the prior year. The increase in revenue is primarily attributable
to an increase in the number of new hospital customers using AGGRASTAT®. The number of new customers reviewing
and implementing AGGRASTAT® has increased sharply as a result of FDA approval of the new dosing regimen for AGGRASTAT®as announced on October 11, 2013. Additionally, favourable fluctuations in the U.S. dollar exchange rate contributed to
the increase in revenue.



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.



53







E. Off-balance Sheet Arrangements



As of December 31, 2015 the Company does
not have any off-balance sheet arrangements, other than those disclosed below.



F. Contractual Obligations



The following tables set forth the Company’s
contractual obligations as of December 31, 2015:



|                                         |  | Contractual Obligations Payment Due By Period |       
|---------------------------------------- |  | --------------------------------------------- | ------
|(in thousands of CDN$)                   |  | Total                                         |       
|Accounts Payable and Accrued Liabilities |  | $                                             | 7,079 
|Long-term debt obligations 1             |  |                                               | 4,607 
|Purchase Agreement commitments 2         |  |                                               | 5,839 
|Total                                    |  | $                                             | 17,525



| | 1. | On July 18, 2011, the Company borrowed
                                         $5,000,000 from the Government of Manitoba, under the Manitoba Industrial Opportunities
                                         Program ("MIOP"), to assist in the settlement of its then existing long-term
                                         debt. The loan bears interest annually at 5.25% and originally matured on July 1, 2016.
                                         The loan was payable interest-only for the first 24 months, with blended principal and
                                         interest payments made monthly thereafter until maturity. Effective August 1, 2013, the
                                         Company renegotiated its long-term debt and received an additional two-year deferral
                                         of principal repayments. Under the renegotiated terms, the loan continued to be interest-only
                                         until August 1, 2015, at which point blended principal and interest payments began. The
                                         loan matures on July 1, 2018 and is secured by the Company's assets and guaranteed by
                                         the Chief Executive Officer of the Company and entities controlled by the Chief Executive
                                         Officer. The Company issued 1,333,333 common shares (20,000,000 pre-consolidated common
                                         shares) of the Company with a fair value of $371,834, net of share issue costs of $28,166,
                                         in consideration for the guarantee to the Company's Chief Executive Officer and entities
                                         controlled by the Chief Executive Officer. In connection with the guarantee, the Company
                                         entered into an indemnification agreement with the Chief Executive Officer under which
                                         the Company shall pay the Guarantor on demand all amounts paid by the Guarantor pursuant
                                         to the guarantee. In addition, under the indemnity agreement, the Company agreed to provide
                                         certain compensation upon a change in control of the Company. 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.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company is required to maintain
certain non-financial covenants under the terms of the MIOP loan. As at December 31, 2015, management believes it is in compliance
with the terms of the loan.



54







| | 2. | The Company had entered into manufacturing
                                         and supply agreements, as amended, to purchase a minimum quantity of AGGRASTAT® from
                                         a third party and all remaining committed payments relating to inventory purchases were
                                         completed during fiscal 2015. Effective January 1, 2014, the agreement was amended and
                                         the amounts previously due during fiscal 2014 were deferred and bore interest at 3.25%
                                         per annum, with monthly payments being made against this balance owing of US$45,000 until
                                         June 30, 2015. These payments were applied to inventory purchases made during fiscal
                                         2015 and prepayments for future manufacturing expected to be completed during fiscal
                                         2016, and as at December 31, 2015, $1,063,707 (December 31, 2014 - $549,247 and May 31,
                                         2014 - $182,620) is recorded within prepaid expenses in regards to this agreement. For
                                         the year ended December 31, 2015, interest of $22,675 (seven months ended December 31,
                                         2014 - $18,738, May 31, 2014 - $17,009 and May 31, 2014 - nil) is recorded within finance
                                         expense relating to this agreement. The Company signed an amendment to this manufacturing
                                         and supply agreement which extends the agreement to December 31, 2017 with additional
                                         minimum purchase commitments of US$719,420 (based on current pricing) per annum until
                                         2017.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Additionally, the Company has
entered into a manufacturing and supply agreement to purchase a minimum quantity of unfinished product inventory totaling US $150,000
annually (based on current pricing) until 2024.



On November 1, 2014, the Company
amended its business and administration services agreement with Genesys Venture Inc. ("GVI"), a company controlled by
the Chief Executive Officer, under which the Company is now committed to pay $17,917 per month, or $215,000 per year effective
November 1, 2014 for a fourteen month term. The services provided under the business and administration agreement are described
in note 16(b) to the consolidated financial statements. Either party may terminate this agreement at any time upon 90 days written
notice. Additionally, effective November 1, 2014, the Company has entered into a sub-lease with GVI to lease office space at a
rate of $170,000 per annum for three years ending October 31, 2017.



Subsequent to December 31, 2015
and effective January 1, 2016, the Company entered into a new business and administration services agreement with GVI, under which
the Company is committed to pay $7,083 per month or $85,000 per year for a one year term.



During 2015, the Company began
a development project of a high value cardiovascular generic drug in collaboration with Apicore. The Company has entered into
a supply and development agreement under which the Company holds all commercial rights to the drug and is required to pay an additional
US$200,000 in milestone payments and US$507,500 in costs relating to the project.



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 research and development related to AGGRASTAT® and TARDOXALTM as well
as other product opportunities.



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.
The Company may terminate this agreement at any time upon 120 days written notice.



The Company received
$200,000 of funding from the Province of Manitoba’s Commercialization Support for Business program to assist the Company
with the completion of a study evaluating AGGRASTAT® in patients with impaired kidney function. The study was completed and
the funds received during the year ended May 31, 2013. The funding is repayable when certain sales targets are met and the repayable
requirement will remain in effect for a period not less than eight fiscal years.



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.



55







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.



As a part of the Birmingham
debt settlement described in note 9 to the Company’s consolidated financial statements, for the year ended December 31,
2015, beginning on July 18, 2011, the Company is obligated to pay a royalty to the previous lender based on future commercial
AGGRASTAT® sales until 2023. The royalty is based on 4% of the first $2,000,000 of quarterly AGGRASTAT®sales, 6% on the portion of quarterly sales between $2,000,000 and $4,000,000 and 8% on the portion of quarterly sales exceeding
$4,000,000 payable within 60 days of the end of the preceding quarter. The previous lender has a one-time option to switch the
royalty payment from AGGRASTAT® to a royalty on MC-1 sales. Management has determined there is no value to the
option to switch the royalty to MC-1 as the product is not commercially available for sale and development of the product is on
hold. Royalties for the year ended December 31, 2015 total $1,207,772, in regards to the royalty obligation (seven months ended
December 31, 2014 - $210,576, year ended May 31, 2014 - $201,131 and year ended May 31, 2013 - $104,979) with payments made during
the year ended December 31, 2015 of $642,768 (seven months ended December 31, 2014 - $156,722, year ended May 31, 2014 - $165,291
and year ended May 31, 2013 - $88,105).



The Company is obligated
to pay royalties to the University of Manitoba based on any future commercial sales of MC-1, aggregating up to 3.9% on net sales.
To date, no royalties are due and/or payable and, given the fact that these development programs have been placed on hold, the
Company does not anticipate any such royalties to be paid.



The Company received
$200,000 of funding from the Province of Manitoba’s Commercialization Support for Business program to assist the Company
with the completion of a study evaluating AGGRASTAT® in patients with impaired kidney function. The study was completed and
the funds received during the year ended May 31, 2013. The funding is repayable when certain sales targets are met and the repayable
requirement will remain in effect for a period not less than eight fiscal years.



In the normal course
of business the Company may from time to time be subject to various claims or possible claims. Although management currently believes
there are no claims or possible claims that if resolved would either individually or collectively result in a material adverse
impact on the Company’s financial position, results of operations, or cash flows, these matters are inherently uncertain
and management’s view of these matters may change in the future.



On September 10, 2015
the Company submitted a sNDA to the FDA to expand the label for AGGRASTAT®. The label change is being reviewed
and evaluated based substantially on data from published studies. If the label change submission is successful, the Company will
be obligated to pay 300,000 euros over the course of a three year period in equal quarterly instalments following approval. A
decision from the FDA is expected in July 2016. The payments are contingent upon the success of the filing and as such the Company
has not recorded any amount in the consolidated financial statements pertaining to this contingent liability.



In connection with the
Company's development project of a high value cardiovascular generic drug, as described in note 15(a) to the consolidated financial
statements, in collaboration with Apicore, the Company is obligated to pay Apicore 50% of net profit from the sale of this drug.



56







G. Safe Harbor



Statements in Item 5.E and Item 5.F of
this Annual Report on Form 20-F that are not statements of historical fact, constitute “forward-looking statements.”
See “Forward-Looking Statements” on page 1 of this Annual Report. Our Company is relying on the safe harbor provided
in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
in making such forward-looking statements.



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 and CEO and Chair of the Board
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 the first employee and President of the Winnipeg Rh Institute for
over 20 years (then acquired by Cangene Inc. and more recently by Emergent BioSolutions), ABI Biotechnology (acquired by Apotex
Inc.), Viventia Biotech Inc., Genesys Pharma Inc., DiaMedica Inc, Miraculins Inc., Kane Biotech 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.  Dr. Friesen served as both CEO
and President of Medicure Inc. until July 25, 2011 at which point the position of President was filled by Mr. Dawson Reimer. Dr.
Friesen’s date of birth is May 19, 1947.



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, Chair of Genome
Prairie Immediate Past-Chair of CancerCare Manitoba.  Dr. Naimark serves on the National Statistics Council of Canada
and is Vice-Chair of the Statistics Canada Audit Committee. He was formerly: on the Research Council of the Canadian Institute
for Advanced Research, Chair of Health Canada’s Ministerial Science Advisory Board, Member of the International
Advisory Committee on Research of the Alberta Cancer Board, Research Institute, Vice-Chair of the Manitoba Health Research Council
and Director of the Robarts Research Institute. He is the founding Chairman of the North Portage Development Corporation, the
Canadian Health Services Research Foundation and the Canadian Biotechnology Advisory Committee. 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.



57







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



Mr. McDole is currently a director of
two 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 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.



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



Peter Quick has over 30 years experience
in the securities and financial services industries. He is a recognized leader in the securities industry with experience in the
domestic and international equities market, equities market making, market structure reform, trading technology and clearing operations.
Mr. Quick is a Partner of Burke and Quick Partners Holdings LLP, the parent company of Burke & Quick Partners LLC a broker
dealer. Mr. Quick was President at the American Stock Exchange from 2000 to 2005. Prior to joining the American Stock Exchange
he served as President of Quick & Reilly Inc., a Quick & Reilly subsidiary and a national discount brokerage firm. He
also served as President of Quick & Reilly/Fleet Securities. Mr. Quick is a graduate from the University of Virginia with
a B.S. in Engineering, and attended Stanford University’s Graduate School of Petroleum Engineering. He served four years
active duty from 1978 to 1982 as an Officer in the United States Navy. He is Chairman of the Board of Directors of Gain Capital
(GCAP: NYSE) and a member of the Boards of Trustees of First of Long Island Corporation (FLIC: NASDAQ) and First National Bank
of Long Island. He is a member of the Board of Directors of Fund for the Poor. Mr. Quick serves as the Mayor of the Incorporated
Village of Mill Neck, NY. He is a former member of the Board of Alliance Capital Money Market Fund, Chicago Stock Exchange Inc
(CHX), The Depository Trust & Clearing Corporation (DTCC), The Midwest Trust Company, Securities Industry Automation Corporation
(SIAC), National Security Clearing Corporation, The American Stock Exchange and the National Association of Security Dealers Inc),
Quick & Reilly, Inc., (NYSE: BQR), Reckson Associates Realty Corp (NYSE: RX) and The Bear Stearns Current Yield Fund (AMEX:YYY).
He is a former Chairman of the Board of Governors of St. Francis Hospital, Roslyn, NY and Mercy Medical Center, Rockville Centre,
NY. Date of birth is February 11, 1956.



Brent Fawkes, Winnipeg, Manitoba, Canada
- Director



Mr.
Fawkes is a Chartered Accountant with over 20 years of experience in accounting and finance. Mr. Fawkes is currently the Vice
President of Finance with Standard Aero Limited, one of the world’s largest independent providers of a variety of aerospace
services serving a diverse array of customers in business and general aviation, airline, military, helicopter, components, energy
and VIP completions markets. In his current role, Mr. Fawkes is responsible for the oversight of the finance department including
external reporting, budgeting and planning and treasury management. Date of birth isDecember 21, 1969.



58







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. Beginning in 1996, he served as Business Development/Investor Relations with Genesys Pharma Inc. In 1997, he
transitioned to Genesys Venture Inc., a biotech business incubator, where he 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. In July 2011 he transitioned
from Vice President, Operations to his current position as President and Chief Operating Officer of the Company.  Mr.
Reimer is a son-in-law of Dr. Albert D. Friesen, Director, Chairman and Chief Executive Officer.   Date of birth is
May 7, 1971.



James Kinley, CA – Chief Financial
Officer



Effective
September 21, 2011 Mr. James Kinley was appointed as CFO of the Company, replacing Dawson Reimer, who has served as Chief Financial
Officer in an interim capacity since July 15, 2011 until Mr. Kinley’s appointment. Mr. Kinley’s 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.



Graeme Merchant, B.B.A. – Vice
President, Commercial Operations



Graeme
Merchant joined the Company as an analyst in business development and commercial operations in 2007. He was soon promoted to Manager
of Commercial Operations for AGGRASTAT, and eventually named Director. Since 2013, Mr. Merchant has been Vice President of Commercial
Operations. He is responsible for all sales, marketing, and medical activities for AGGRASTAT within the United States. Graeme
was instrumental in helping guide the Company through its corporate restructuring and the relaunch of AGGRASTAT under the FDA
approved High-Dose Bolus regimen. He has a B.B.A. from the University of New Brunswick with a specialization in finance.



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).



Graeme Merchant, B.B.A. – Vice
President, Commercial Operations: Mr. Merchant is responsible for the Company’s Commercial
Operations pertaining to AGGRASTAT (see “Directors and Senior Management” under this item).



59







B. Compensation



Compensation paid to the directors, and
executive officers of the Company during the year ended December 31, 2015, is described below and stock-based compensation described
in Item 6(E) below:



The Company recorded $57,701 in fees paid
or payable to Board members for attendance at meetings between January 1, 2015 and December 31, 2015 and the chairs of the Audit
and Finance Committee and executive compensation, nominating and corporate governance committee were paid an additional $5,000
each for services are committee chairs.



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, October 1, 2007 and July 18, 2011. For the year ended December 31, 2015,
the Company recorded A.D. Friesen Enterprises Ltd., $186,000 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. During
the year ended December 31, 2015, a bonus of $100,000 was accrued to Dr. Friesen.



Dawson Reimer serves the Company as President
and Chief Operating Officer and received a salary of $190,000 payable in equal semi-monthly instalments and a bonus of $38,000
paid as a lump-sum for the year ended December 31, 2015.



Graeme Merchant serves the Company as
Vice President, Commercial Operations and received a salary of $155,000 payable in equal semi-monthly instalments and bonuses
of $49,676 paid quarterly for the year ended December 31, 2015.



During the year ended December 31, 2015,
the Company paid directors a total of Nil (seven months ended December 31, 2014: Nil, Year ended May 31, 2014: Nil; Year ended
May 31, 2013: Nil; Year ended May 31, 2012: Nil; and Year ended May 31, 2012: 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 that is not held in conjunction with a regular Board meeting.



For fiscal 2011 and prior, due to the
Company’s financial position, the board had offered and committed not to request, and has therefore not received, any compensation
for their services as independent directors. Subsequent to the debt settlement that occurred on July 18, 2011, the Company began
paying the Board members this amount owing and had paid $54,000 during fiscal 2013 relating to these accrued amounts. During fiscal
2013, the members of the Board of Directors agreed to further defer payments on amounts owing. Beginning on February 22, 2013
and until June 30, 2015, these amounts bore interest at a rate of 5.5% per annum. For the year ended December 31, 2015, $4,517
(seven months ended December 31, 2014 - $10,127 and year ended May 31, 2014 - $14,918) was recorded within finance expense in
relation to these amounts payable to the members of the Company’s Board of Directors. As at December 31, 2015, the Company
has $5,675 of accrued compensation owing to the independent members of the Board of Directors relating to Directors fees.



On July
11, 2014, the Company announced that, subject to all necessary regulatory approvals, it has
entered into shares for debt agreements with certain members of the Board of Directors, pursuant to which the Company will issue
106,490 of its common shares at a deemed price of $1.98 per common share to satisfy $210,850 of outstanding amounts owing to the
Company’s Board of Directors. The shares were issued on January 9, 2015.



On January
27, 2015, the Company announced that, subject to all necessary regulatory approvals, it has
entered into shares for debt agreements with certain members of the Board of Directors, pursuant to which the Company will issue
75,472 of its common shares at a deemed price of $1.44 per common share to satisfy $108,680 of outstanding amounts owing to these
individuals. The shares were issued on March 20, 2015.



60







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 five directors, four of whom were elected at the Company’s annual general meeting of the shareholders held on June 26,
2015. 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 By-Laws of the Company, or pursuant to the provisions of the Canada
Business Corporations 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. Brent Fawkes has served as a director of the Company since January 2013.



As discussed in more detail below, the
Board of Directors maintains an Audit and Finance Committee and an Executive Compensation, Nominating and Corporate Governance
Committee.



Corporate Governance



The Canadian Securities Administrators
(the "CSA") have adopted National Policy 58-201 Corporate Governance Guidelines, which provides non-prescriptive
guidelines on corporate governance practices for reporting issuers such as the Company. In addition, the CSA have implemented
National Instrument NI 58-101 Disclosure of Corporate Governance Practices, which prescribes certain disclosure by the
Company of its corporate governance practices. The Company's approach to corporate governance is set forth below.



The Board believes that a clearly defined
system of corporate governance is essential to the effective and efficient operation of the Company. The system of corporate governance
should reflect the Company’s particular circumstances, having always as its ultimate objective, the best long-term interests
of the Company and the enhancement of value for all shareholders.



Directors are considered to be independent
if they have no direct or indirect material relationship with the Company. A "material relationship" is a relationship
which could, in the view of the Company's board of directors, be reasonably expected to interfere with the exercise of a director's
independent judgment.



The Executive Compensation, Nominating
and Corporate Governance Committee has reviewed the independence of each director on the basis of the definition in section 1.4
of National Instrument 52-110 – Audit Committees ("NI 52-110"). The Board has determined, after reviewing
the roles and relationships of each of the directors, that Dr. Arnold Naimark, Brent Fawkes, Gerald McDole and Peter Quick are
independent from the Company. Only Dr. Albert Friesen is deemed to not be independent from the Company. As part of every regularly
scheduled Board and committee meeting, the independent directors are given the opportunity to meet separately from management
and the non-independent director. Board committees are entirely composed of independent directors who meet without management
when required.



Gerald McDole is presently a director
of Cipher Pharmaceuticals Inc. No other director of the Company is currently a director of any other “reporting issuers”
(as such term is defined in Canadian provincial securities legislation).



61







The Board has an orientation program in
place for new directors which the Board feels is appropriate having regard to the current makeup of the Board. Each director receives
relevant corporate and business information on the Company, the Board, and its committees. The directors regularly meet with Management
and are given periodic presentations on relevant business issues and developments.



Presentations are made to the Board from
time to time to educate and keep it informed of changes within the Company and of regulatory and industry requirements and standards.



The Company’s Board has adopted
a Code of Ethics applicable to directors, officers and employees, copies of which are available on the Company’s website
(www.medicure.com). A copy may also be obtained upon request to the Secretary of the Company at its head office, 2-1250 Waverley
Street, Winnipeg, Manitoba, R3T 6C6. The ECNCG Committee regularly monitors compliance with the Code of Ethics and also ensures
that Management encourages and promotes a culture of ethical business conduct.



Audit and Finance Committee



Pursuant to Section 171 of the Canada
Business Corporations Act (the “Act”), the Company is required to have an Audit Committee. 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.



Pursuant to section 6.1 of NI 52-110,
the Company is exempt from the requirements of Parts 3 and 5 of NI 52-110 for the year ended December 31, 2015, by virtue of the
Company being a "venture issuer" (as defined in NI 52-110).



Part 3 of NI 52-110 prescribes certain
requirements for the composition of audit committees of non-exempt companies that are reporting issuers under Canadian provincial
securities legislation. Part 3 of NI 52-110 requires, among other things that an audit committee be comprised of at three directors,
each of whom, is, subject to certain exceptions, independent and financially literate in accordance with the standards set forth
in NI 52-110.



Part 5 of NI 52-110 requires an annual
information form that is filed by a non-exempt reporting issuer under National Instrument 51-102 – Continuous Disclosure
Obligations, as adopted the CSA, to include certain disclosure about the issuer's audit committee, including, among other
things: the text of the audit committee's charter; the name of each audit committee member and whether or not the member is independent
and financially literate; whether a recommendation of the audit committee to nominate or compensate an external auditor was not
adopted by the issuer's board of directors, and the reasons for the board's decision; a description of any policies and procedures
adopted by the audit committee for the engagement of non-audit services; and disclosure of the fees billed by the issuer's external
auditor in each of the last two fiscal years for audit, tax and other services.



Notwithstanding the exemption available
under section 6.1 of NI 52-110, as at the date hereof, the Audit and Finance Committee is comprised of four independent directors:
Brent Fawkes (Chair), Gerald McDole, Dr. Arnold Naimark, and Peter Quick. The relevant experience of each member is described
above. (See “Item 6 - Directors, Senior Management and Employees”.)



As a result of their education and experience,
each member of the audit committee has familiarity with, an understanding of, or experience in:



62







| | · | the
                                         accounting principles used by the Company to prepare its financial statements, and the
                                         ability to assess the general application of those principles in connection with estimates,
                                         accruals and reserves;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | reviewing
                                         or evaluating financial statements that present a breadth and level of complexity of
                                         accounting issues that are generally comparable to the breadth and complexity of issues
                                         that can reasonably be expected to be raised by the Company's financial statements, and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | an
                                         understanding of internal controls and procedures for financial reporting.
| | - | ----------------------------------------------------------------------------------------------------------------------



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 and Finance Committee
Charter reproduced below.



63







AUDIT AND FINANCE COMMITTEE CHARTER  GENERAL FUNCTIONS, AUTHORITY, AND ROLE  The purpose of the Audit and Finance Committee
(the “Committee”) is to oversee the accounting, financial reporting and disclosure processes of the Company and the
audits of its financial statements, and thereby assist the Board of Directors of the Company (the “Board”) in monitoring
the following:  (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 and disclosure;  (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; (5) performance of the Company's internal
controls and financial reporting and disclosure processes; and  (6) that management of the Company has
assessed areas of potential significant financial risk to the Company and taken appropriate measures.  The 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 Committee has the authority to independently retain, and set
and pay compensation to, 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 Committee or to meet with any
members of, or consultants to, the Committee. The 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.  In the course of fulfilling its specific
responsibilities hereunder, the Committee has authority to, and must, maintain free and open communication between the Company's
independent auditor, Board and Company management. The responsibilities of a member of the Committee are in addition to such member's
duties as a member of the Board.  While the Committee has the responsibilities
and powers set forth in this charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company's
financial statements are complete, accurate, and in accordance with International Financial Reporting Standards (“IFRS”).
This is the responsibility of management and the independent auditor. Nor is it the duty of the 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 Committee has the power to act upon, may be recommended
to the Board to act upon.  MEMBERSHIP  The membership of the Committee will be
as follows:  The Committee shall consist of a minimum
of three members of the Board, appointed from time to time, each of whom is affirmatively confirmed as independent by the Board
in accordance with the definition of independence for audit committee members set out in Appendix I hereto, with such affirmation
disclosed in the Company's Management Information Circular for its annual meeting of shareholders. All members of the Committee
should be “financially literate”, as defined in Appendix I, and at least one of the members shall be an “audit
committee financial expert” as defined in as defined in Appendix I.




64







The Board will elect, by a majority vote,
one member as chairperson. In the absence of the Chair of the Committee, the members shall appoint an acting Chair.  The members of the Committee shall meet
all independence and financial literacy requirements of The TSX Venture Exchange, and the requirements of such other securities
exchange or quotations system or regulatory agency as may from time to time apply to the Company.  Any member of the Committee may be removed
and replaced at any time by the Board and will automatically cease to be a member of the Committee as soon as such member ceases
to be a Director. The Board may fill vacancies in the Committee by election from among the members of the Board. If and whenever
a vacancy exists on the Committee, the remaining members may exercise all its powers so long as a quorum remains in office.  A quorum shall be a majority of the members
provided that if the number of members is an even number, one half of the number plus one shall constitute a quorum.  A member of the Committee may not, other
than in his or her capacity as a member of the Committee, the Board, 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 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 Committee will meet with the independent
auditor at least annually, either in person or telephonically.  Reporting Responsibilities  Provide to the Board proper Committee
minutes.  Report Committee actions to the Board
with such recommendations as the Committee may deem appropriate.  Committee and Charter Evaluation  The Committee shall annually review, discuss
and assess its own performance. In addition, the Committee shall periodically review its role and responsibilities.  Annually review and reassess the adequacy
of this Charter and recommend any proposed changes to the Board for approval.  Whistleblower Mechanism  Adopt and review annually a procedure
through which employees and others can confidentially and anonymously inform the 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.




65







INDEPENDENT AUDITOR  Nomination, Compensation and Evaluation  The Company’s independent auditor
is ultimately accountable to the Committee and the Board and shall report directly to the Committee. The Committee shall review
the independence and performance of the auditor and annually recommend to the Board the appointment and compensation of the independent
auditor or approve any discharge of auditor when circumstances warrant.  Review of Work  The Committee is directly responsibility
for overseeing the work of the independent auditor engaged to prepare or issue an audit report or perform other audit, review
or attest services for the Company, including the resolution of disagreements between management and the independent auditor regarding
financial reporting.  Approval in Advance of Related Party
Transactions  Pre-approval of 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 provided to the Company or its subsidiary
entities 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 Securities Exchange Commission (“SEC”) or any securities exchange
on which the Company's shares are traded including any of the following 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;  ·Internal
                                         audit outsourcing services;  ·Any
                                         management or human resources function;  ·Broker,
                                         dealer, investment advisor, or investment banking services;  ·Legal
                                         services;


66





·Expert
                                         services related to the auditing service; and  ·Any
                                         other service the Board determines is not permitted.  Hiring Practices  Review and approve the Company’s
hiring policy regarding the partners, employees and former partners and employees of the present and former independent auditor
of the Company. Ensure that no individual who is, or in the past three 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 three 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 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
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 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.  OTHER PROFESSIONAL CONSULTING SERVICES  Engagement Review  As necessary, consider with management
the rationale and selection criteria for engaging professional consulting services firms.




67







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 such auditing standards as may be applicable.  Review and discuss with management and
the independent auditor at the completion of annual and quarterly examinations, if any:  ·The
                                         Company's audited and unaudited financial statements and related notes;  ·The
                                         Company's Management Discussion & Analysis (“MD&A”) and news releases
                                         related to financial results;  ·The
                                         Company’s management certifications of the financial statements and accompanying
                                         MD&A as required under applicable securities laws;  ·The
                                         Company’s annual information form (“AIF”), if one is prepared and filed.  ·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-IFRS 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 Committee
                                         under generally accepted auditing standards.  Review the management letter, if any,
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 and discuss with management and
the independent auditor the adequacy of the Company's internal accounting and financial controls that management and the Board
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.  Meet separately with the independent auditor
and management, as necessary or appropriate, to discuss any matters that the Committee or any of these groups believe should be
discussed privately with the 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 IFRS 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


.

68







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 legal 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, prior to public
disclosure, the Company’s financial statements and MD&A and related press releases. The chairperson of the Committee
may represent the entire Committee for purposes of this review.  Ensure that adequate procedures are in
place for the review of the Company’s public disclosure of financial information extracted or derived from the Company’s
financial statements, other than the disclosure stated above, and periodically assess the adequacy of those procedures.  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 from time
to time.  Review and discuss with management, and
approve changes to, the Company's Corporate Investment Policy.  LIMITATION ON DUTIES OF AUDIT AND FINANCE
COMMITTEE  In contributing to the Committee’s
discharging of its duties under this charter, each member of the Committee shall be obliged only to exercise the care, diligence
and skill that a reasonably prudent person would exercise in comparable circumstances. Nothing in this charter is intended, or
may be construed, to impose on any member of the Committee a standard of care or diligence that is in any way more onerous or
extensive than the standard to which all Board members are subject.  ADOPTION OF CHARTER  This charter was originally adopted by
the Board on August 23, 2004 and revised on January 17, 2012.






69







APPENDIX I  GLOSSARY OF TERMS  “Independent”means
a director who has no direct or indirect material relationship with the Company or its subsidiaries.  A “material relationship”is a relationship which could, in the view of the Board of the Company, be reasonably expected to interfere with the exercise
of the person’s independent judgment.  For greater certainty, certain individuals
will be deemed not to be independent:  a)an individual who is, or has been
                                         within the last three years, an employee or executive officer of the Company;  b)an individual whose immediate
                                         family member is, or has been within the last three years, an executive officer of the
                                         Company;  c)an individual who is a partner
                                         of, or employed by the Company’s internal or external auditor or who was, within
                                         the last three years, a partner or employee of that audit firm and personally worked
                                         on the Company’s audit within that time. For this purpose, “partner”
                                         does not include a fixed income partner;  d)an individual whose child or stepchild
                                         shares a home with the individual or whose spouse, is a partner of the Company’s
                                         internal or external auditor, or is an employee of the audit firm and participates in
                                         its audit, assurance or tax compliance practice or who was within the last three years
                                         a partner or employee of the audit firm and personally worked on the Company’s
                                         audit within that time. For this purpose, “partner” does not include a fixed
                                         income partner;  e)an individual who, or whose immediate
                                         family member, is or has been within the last three years, an executive officer of an
                                         entity if any of the Company’s current executive officers serve or served at the
                                         same time on the entity’s compensation committee; and  f)an individual who received, or
                                         whose immediate family member who is employed as an executive officer of the Company
                                         received, more than $75,000 in direct compensation from the Company during any 12 month
                                         period within the last three years. For purposes hereof, direct compensation does not
                                         include remuneration for acting as a member of the Board or of any Board committee or
                                         remuneration consisting of fixed amounts of compensation under a retirement plan for
                                         prior service provided that such compensation is not contingent on any way on continued
                                         service.  For purposes hereof, “Company”includes Medicure Inc. and any subsidiaries thereof.  Notwithstanding the foregoing, a person
will not be considered to have a material relationship with the Company solely because he or she:  a)has previously acted as an interim
                                         chief executive officer of the issuer, or  b)acts, or has previously acted,
                                         as a chair or vice-chair of the Board or any Board committee, on a part-time basis.  Meaning Of “Independence”
For Audit Committees  In addition to the requirement of being
an Independent Director as described above, members of the Audit Committee will not be considered “independent” for
that purpose where the individual:  a)accepts, directly or indirectly,
                                         any consulting, advisory or other compensatory fee from the Company or subsidiary of
                                         the Company, other than as remuneration for acting in his or her capacity as a member
                                         of the Board or any Board committee, or as a part-time or vice-chair of the Board or
                                         any Board Committee; or  b)is an affiliated entity (as defined
                                         in National Instrument 52-110 Audit Committees) of the Company or any of its subsidiaries.


70







For purposes hereof, indirect acceptance
by an individual of any consulting, advisory or other compensatory fee includes acceptance of a fee by (i) an individual’s
spouse, minor child or stepchild, or child or stepchild who shares the individual’s home, or (ii) an entity in which such
individual is a partner, member, executive officer or managing director (or comparable position) and which provides accounting,
consulting, legal, investment banking or financial advisory services to the Company or any subsidiary of the Company. Notwithstanding
the foregoing, compensatory fees do not include receipt of fixed amounts of compensation under a retirement plan (including deferred
compensation) for prior service with the issuer if the compensation is not contingent in any way on continued service.  Meaning of “financially literate”  For purposes hereof, an individual is
financially literate if he or she has the ability to read and understand a set of financial statements that present a breadth
and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can
reasonably be expected to be raised by the Company’s financial statements.  Meaning of “audit committee financial
expert”  An “audit committee financial expert”
means a person who has the following attributes:  (1) An understanding of generally accepted
accounting principles and financial statements;  (2) The ability to assess the general
application of such principles in connection with the accounting for estimates, accruals and reserves;  (3) Experience preparing, auditing, analyzing
or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable
to the breadth and complexity of issues that can reasonably be expected to be raised by the Company’s financial statements,
or experience actively supervising one or more persons engaged in such activities;  (4) An understanding of internal controls
over financial reporting;  (5) An understanding of audit committee
functions.  A person shall have acquired such attributes
through:  (1) Education and experience as a principal
financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions
that involve the performance of similar functions;  (2) Experience actively supervising a
principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar
functions;  (3) Experience overseeing or assessing
the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements;
or  (4) Other relevant experience.




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, Peter Quick and Brent Fawkes, none of whom is a current
or former executive officer of the Company. The Committee meets at least once a year.



71









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 39 employees as at December 31, 2015. During the year
ended December 31, 2015, the Company has increased its total employment and plans to continue to increase total employment during
2016.



E. Share Ownership



The following table discloses the number
of shares (each share possessing identical voting rights), stock options and percent of the shares outstanding held by the directors
and officers of the Company, and their respective affiliates, directly and indirectly, at December 31, 2015.



|Title of Class |  | Identity of Person or Group  |  | Amount Owned |           |     | Percentage of Class | 
|-------------- |  | ---------------------------- |  | ------------ | --------- | --- | ------------------- | 
|               |  |                              |  |              |           |     |                     | 
|Common shares  |  | Dr. Albert D. Friesen(1) (2) |  |              | 2,448,455 | (1) |                     | 
|Common shares  |  | Dr. Arnold Naimark (3)       |  |              | 35,194    |     |                     | 
|Common shares  |  | Gerald P. McDole (2)         |  |              | 44,950    |     |                     | 
|Common shares  |  | Peter Quick (3)              |  |              | 40,278    |     |                     | 
|Common shares  |  | Brent Fawkes (2)             |  |              | 12,376    |     |                     | 
|Common shares  |  | James Kinley                 |  |              | 2,100     |     |                     | 
|Common shares  |  | Dawson Reimer                |  |              | 23,315    |     |                     | 
|Common shares  |  | Graeme Merchant              |  |              | 17,217    |     |                     | 



| | (1) | Dr. Albert D. Friesen holds 834,867
                                         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 11, 2014, the Company announced that, subject
                                         to all necessary regulatory approvals, it has entered into shares for debt agreements
                                         with its Chief Executive Officer, Dr. Albert Friesen and certain members of the Board
                                         of Directors, pursuant to which the Company will issue 205,867 of its common shares at
                                         a deemed price of $1.98 per common share to satisfy $407,617 of outstanding amounts owing
                                         to CEO and members of the Company’s Board of Directors. The shares were issued
                                         on January 9, 2015.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



72







| | (3) | Subsequent
                                         to December 31, 2014, on January 27, 2015, the Company
                                         announced that, subject to all necessary regulatory approvals, it has entered into shares
                                         for debt agreements with certain members of the Board of Directors and a consultant,
                                         pursuant to which the Company will issue 108,206 of its common shares at a deemed price
                                         of $1.44 per common share to satisfy $155,817 of outstanding amounts owing to these individuals.
                                         The shares were issued on March 20, 2015.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Incentive Stock Options



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.



The number of Common Shares allocated
to the Plan, the exercise period for the options, 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 stock options outstanding, will not exceed 20% of the issued and outstanding Common Shares at the date of adoption of the
Plan. The Plan was adopted by the shareholders of the Company on November 4, 2014.



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.



The following table discloses the stock
options beneficially held by the directors and officers of the Company, and their respective affiliates, directly and indirectly,
as of December 31, 2015. The stock options are subject to the Plan and are for shares of Common Stock of the Company.



73







|Name of Person        |  | Number of Shares Subject to Issuance |         |  | Exercise Price per Share |   |       | Expiry Date
|--------------------- |  | ------------------------------------ | ------- |  | ------------------------ | - | ----- | -----------
|Dr. Albert D. Friesen |  |                                      | 10,000  |  |                          | $ | 24.45 |            
|                      |  |                                      | 414,000 |  |                          | $ | 1.50  |            
|                      |  |                                      | 75,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 7,500   |  |                          | $ | 1.90  |            
|                      |  |                                      | 9,000   |  |                          | $ | 1.90  |            
|Dr. Arnold Naimark    |  |                                      | 7,333   |  |                          | $ | 14.70 |            
|                      |  |                                      | 3,333   |  |                          | $ | 0.60  |            
|                      |  |                                      | 667     |  |                          | $ | 0.60  |            
|                      |  |                                      | 45,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 4,500   |  |                          | $ | 1.90  |            
|                      |  |                                      | 7,200   |  |                          | $ | 1.90  |            
|Gerald P. McDole      |  |                                      | 667     |  |                          | $ | 14.70 |            
|                      |  |                                      | 3,333   |  |                          | $ | 0.60  |            
|                      |  |                                      | 667     |  |                          | $ | 0.60  |            
|                      |  |                                      | 45,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 4,500   |  |                          | $ | 1.90  |            
|                      |  |                                      | 7,200   |  |                          | $ | 1.90  |            
|Peter Quick           |  |                                      | 3,333   |  |                          | $ | 23.10 |            
|                      |  |                                      | 667     |  |                          | $ | 14.70 |            
|                      |  |                                      | 3,333   |  |                          | $ | 0.60  |            
|                      |  |                                      | 667     |  |                          | $ | 0.60  |            
|                      |  |                                      | 45,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 4,500   |  |                          | $ | 1.90  |            
|                      |  |                                      | 7,200   |  |                          | $ | 1.90  |            
|Brent Fawkes          |  |                                      | 45,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 4,500   |  |                          | $ | 1.90  |            
|                      |  |                                      | 7,200   |  |                          | $ | 1.90  |            
|James Kinley          |  |                                      | 45,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 7,500   |  |                          | $ | 1.90  |            
|                      |  |                                      | 7,200   |  |                          | $ | 1.90  |            
|Dawson Reimer         |  |                                      | 6,667   |  |                          | $ | 24.45 |            
|                      |  |                                      | 6,667   |  |                          | $ | 0.45  |            
|                      |  |                                      | 266,667 |  |                          | $ | 1.50  |            
|                      |  |                                      | 56,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 5,600   |  |                          | $ | 1.90  |            
|                      |  |                                      | 7,200   |  |                          | $ | 1.90  |            
|Graeme Merchant       |  |                                      | 430     |  |                          | $ | 14.70 |            
|                      |  |                                      | 3,333   |  |                          | $ | 0.60  |            
|                      |  |                                      | 6,667   |  |                          | $ | 0.60  |            
|                      |  |                                      | 100,000 |  |                          | $ | 1.50  |            
|                      |  |                                      | 45,000  |  |                          | $ | 0.30  |            
|                      |  |                                      | 8,500   |  |                          | $ | 1.90  |            
|                      |  |                                      | 7,200   |  |                          | $ | 1.90  |            



On March 27, 2015, the Company granted
an aggregate of 236,070 options to certain directors, officers, employees, management company employees and consultants of the
Company pursuant to the Company’s Stock Option Plan. Of these options, 181,070 are set to expire on the tenth anniversary
of the date of grant, 5,000 are set to expire on the third anniversary of the date of grant and 50,000 are set to expire on the
first anniversary of the date of grant. All of the options were issued at an exercise price of $1.90 per share. Of the 236,070
options granted on March 27, 2015, 183,570 vested immediately, 25,000 vested on July 1, 2015 and 27,500 vested on October 1, 2015.



On July 7, 2015, the Company granted an
aggregate of 240,000 options to a consultant of the Company. These options are set to expire on the fifth anniversary of the date
of grant and were issued at an exercise price of $2.50 per share and vested immediately.



On November 25, 2015, the Company granted
an aggregate of 168,000 options to certain employees and consultants of the Company pursuant to the Company’s Stock Option
Plan. These options are set to expire on the fifth anniversary of the date of grant and were issued at an exercise price of $3.90
per share and vested immediately.





Subsequent to December 31, 2015, 226,850 stock options were
exercised, 132,000 at an exercise price of $0.30 per common share, 81,350 at an exercise price of $1.90 per common share and 13,500
at an exercise price of $3.90 per common share. The 132,000 stock options exercised at $0.30 pertained to the officers of the Company.







74







ITEM 7. MAJOR SHAREHOLDERS AND RELATED
PARTY TRANSACTIONS



A. Major Shareholders



As of December 31, 2015, 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. 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 Winnipeg, Manitoba  |  |              | 2,448,455 | (1) |                     | 
|               |  |                                           |  |              |           |     |                     | 
|Common shares  |  | MM Asset Management Inc. Toronto, Ontario |  |              | 2,524,445 |     |                     | 



Notes:

| | (1) | Dr. Albert Friesen holds
                                         834,867 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.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As of December 31, 2014 there were approximately
6,500 shareholders of record worldwide. As of this date there were approximately 1,600 shareholders of record in the United States
holding a total of 3,450,000 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 December 31, 2015, 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 2,606,668 (or 18.05% 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.



Insider Reports under Canadian Securities
Legislation



Since the Company a reporting issuer under
the Securities Acts of each of the provinces of Canada, certain "insiders" of the Company (including its directors,
certain executive officers, and persons who directly or indirectly beneficially own, control or direct more than 10% of its common
shares) are generally required to file insider reports of changes in their ownership of the Company's common shares five days
following the trade under National Instrument 55-104 – Insider Reporting Requirements and Exemptions, as adopted
by the Canadian Securities Administrators. Insider reports must be filed electronically five days following the date of the trade
at www.sedi.ca. The public is able to access these reports at www.sedi.ca.



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.



75







B. Related Party Transactions



Except as disclosed below, the Company
has not, since June 1, 2013, and does not at this time propose to:



| | (1) | enter into any transactions which are
                                         material to the Company or a related party or any transactions unusual in their nature
                                         or conditions involving goods, services or tangible or intangible assets to which the
                                         Company or any of its former subsidiaries was a party;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | make any loans or guarantees directly
                                         or through any of its former subsidiaries to or for the benefit of any of the following
                                         persons:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) | enterprises directly or indirectly
                                         through one or more intermediaries, controlling or controlled by or under common control
                                         with the Company;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | associates of the Company (unconsolidated
                                         enterprises in which the Company has significant influence or which has significant influence
                                         over the Company) including shareholders beneficially owning 10% or more of the outstanding
                                         shares of the Company;
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (c) | individuals owning, directly or
                                         indirectly, shares of the Company that gives them significant influence over the Company
                                         and close members of such individuals families;
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (d) | key management personnel (persons
                                         having authority in responsibility for planning, directing and controlling the activities
                                         of the Company including directors and senior management and close members of such directors
                                         and senior management); or
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (e) | enterprises in which a substantial
                                         voting interest is owned, directly or indirectly, by any person described in (c) or (d)
                                         or over which such a person is able to exercise significant influence.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On July 18, 2011, the Company entered
into a consulting agreement with A.D. Friesen Enterprises Ltd. pursuant to which Dr. Albert Friesen serves the Company as its
Chief Executive Officer. The agreement is for a term of five years, at a rate of $180,000 annually. Dr. Friesen is also eligible
for a yearly merit/performance bonus, if any, that the Company’s board of directors, in its sole discretion, may authorize.



During the year ended December 31, 2015,
the Company recorded a bonus of $100,000 to its Chief Executive Officer which is recorded within selling, general and administrative
expenses. During the seven months ended December 31, 2014, the Company recorded a bonus of $58,904 to its Chief Executive Officer
which is recorded within selling, general and administrative expenses. During the year ended May 31, 2014, the Company recorded
a bonus of $286,849 to its Chief Executive Officer which is recorded within selling, general and administrative expenses.



On July
11, 2014, the Company announced that, subject to all necessary regulatory approvals, it has
entered into shares for debt agreements with its Chief Executive Officer, Dr. Albert Friesen and certain members of the Board
of Directors, pursuant to which the Company will issue 205,867 of its common shares at a deemed price of $1.98 per common share
to satisfy $407,617 of outstanding amounts owing to CEO and members of the Company’s Board of Directors. The shares were
issued on January 9, 2015.



The Company may terminate the consulting
agreement with the CEO for any reason and at any time upon 120 days written notice. In relation to the consulting agreement with
A.D. Friesen Enterprises Ltd. the Company recorded consulting fees payable to A.D. Friesen Enterprises Ltd. During the year ended
December 31, 2015, the Company recorded a total of $186,000 to A.D. Friesen Enterprises Ltd. During the seven months ended December
31, 2014 the Company recorded a total $108,500 to A.D. Friesen Enterprises Ltd. During the year ended May 31, 2013, the Company
recorded a total of $186,000 to A.D. Friesen Enterprises Ltd. During the year ended May 31, 2012, the Company recorded a total
of $186,000 to A.D. Friesen Enterprises Ltd.



76







Dr. Friesen, a director, the Chairman
and the Chief Executive Officer of the Company is also the majority shareholder in a management services company, Genesys Venture
Inc. (“GVI”) which entered into a management services agreement with the Company as of October 1, 2010. Effective
January 1, 2012, the Company entered into a new business and administration services agreement with GVI under which the Company
is committed to pay $15,833.33 per month or $190,000 per annum along with an additional $500 per month for each office space it
requests and is given access to by GVI. The agreement was for an initial term of one year and shall be automatically renewed for
succeeding terms of one year. Either party may terminate the agreement at any time after June 30, 2012, upon 90 days written notice
to the other party. The Chief Financial Officer's services, accounting, payroll, human resources, and information technology are
provided pursuant to this agreement. The agreement was renewed for the 2013 and 2014 calendar years. Effective November 1, 2014,
the business and administration services agreement was renegotiated for a further 14 month term ending December 31, 2015 at a
rate of $17,917 per month, or $215,000 per year. Subsequent to December 31, 2015 and effective January 1, 2016, the Company entered
into a new business and administration services agreement with GVI, under which the Company is committed to paying $7,083 per
month or $85,000 per year for a one year term and the agreement no longer includes the services of the Chief Financial Officer.



During the year ended December 31, 2015,
the Company paid GVI, a company controlled by the Chief Executive Officer, a total of $215,000 (seven months ended December 31,
2014 - $115,000, year ended May 31, 2014 - $190,000 and year ended May 31, 2013 - $190,000) for business administration services,
$176,051 (seven months ended December 31, 2014 - $36,500, year ended May 31, 2014 - $30,500 and year ended May 31, 2013 - $32,500)
in rental costs and $33,575 (seven months ended December 31, 2014 - $25,115, year ended May 31, 2014 - $33,735 and year ended
May 31, 2013 - $26,125) for commercial and information technology support services. As described in note 16 to the Company’s
consolidated financial statements, the Chief Financial Officer's services are provided through a consulting agreement with GVI.
In addition, accounting, payroll, human resources and information technology services are provided to the Company through the
GVI agreement.



Dr. Friesen, a director, the Chairman
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 on an hourly basis.                                                          
|                                              |  |                 |  |                                                                                                          
|Pharmacovigilance and medical affairs support |  | January 1, 2014 |  | Monthly retainer of $2,000, plus hourly charges for pharmacovigilance services outside base
    services.
|                                              |  |                 |  |                                                                                                          
|Pharmacovigilance and medical affairs support |  | January 1, 2014 |  | Monthly retainer of $1,250, plus hourly charges for pharmacovigilance services outside base
    services.
|                                              |  |                 |  |                                                                                                          
|Quality assurance support                     |  | June 1, 2010    |  | Services provided as needed on an hourly basis.                                                          
|                                              |  |                 |  |                                                                                                          
|AGGRASTAT®clinical trial management           |  | May 1, 2010     |  | Services provided as needed on an hourly basis.                                                          



During the seven months ended December
31, 2014, the Company paid GVI CDS $330,764 (seven months ended December 31, 2014 - $56,904, year ended May 31, 2014 - $125,583
and year ended May 31, 2013 - $134,696) for clinical research services.



77







The Company also has a consulting agreement
with CanAm Bioresearch Inc. (CanAm), a company controlled by a close family member of Dr. Friesen’s to provide contract
research services. During the, the Company paid CanAm $399,580 (seven months ended December 31, 2014 - $233,938, year ended May
31, 2014 - $229,732 and year ended May 31, 2013 - $467,763) for research and development services.



These transactions were in the normal
course of business and have been measured at the exchange amount, which is the amount of consideration established and agreed
to by the related parties. Beginning on February 22, 2013 and until June 30, 2015, these amounts bore interest at a rate of 5.5%
per annum. For the year ended December 31, 2015, $12,409 (seven months ended December 31, 2014, $18,082, year ended May 31, 2014
- $36,904 and year ended May 31, 2013 - $7,366) was recorded within finance expense in relation to these amounts payable to related
parties.



As at December 31, 2015, included in accounts
payable and accrued liabilities is $23,494 (December 31, 2014 - $120,962 and May 31, 2014 - $90,262) payable to GVI, $64,539 (December
31, 2014 - $145,100 and May 31, 2014 - $148,461) payable to GVI CDS and $60,611 (December 31, 2014 - $247,752 and May 31, 2014
- $373,956) payable to CanAm, which are unsecured, payable on demand and bear interest as described above.



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. The Company
may terminate this agreement at any time upon 120 days written notice. During the seven months ended December 31, 2015, the Company
recorded a bonus of $100,000 (seven months ended December 31, 2014 - $58,904, year ended May 31, 2014 - $286,849 and year ended
May 31, 2013 - nil) to its Chief Executive Officer which is recorded within selling, general and administrative expenses. As at
December 31, 2015, included in accounts payable and accrued liabilities is $45,753 (December 31, 2014 - $345,753 and May 31, 2014
- $286,849) payable to the Chief Executive Officer as a result of this consulting agreement, which is unsecured, payable on demand
and non-interest bearing.



On July 11, 2014, the Company announced
that, subject to all necessary regulatory approvals, it had entered into a shares for debt agreement with its Chief Executive
Officer, pursuant to which the Company will issue common shares at a deemed price of $1.98 per common share to satisfy outstanding
amounts owing to the Chief Executive Officer. Of the amount payable to the Chief Executive Officer as at December 31, 2014, $297,808
was included in this shares for debt agreement. The shares were issued on January 9, 2015.



C. Interests of Experts and Counsel



Not applicable



ITEM 8. FINANCIAL INFORMATION



A. Consolidated Statements or Other
Financial Information



financial
Statements



The consolidated financial statements
of the Company for the year ended December 31, 2015, the seven months ended December 31, 2014 and years ended May 31, 2014 and
2013 have been prepared in accordance with IFRS, as issued by the IASB, and are included under Item 18 of this Annual Report.
The consolidated financial statements including related notes are accompanied by the report of the Company’s independent
registered public accounting firm, Ernst & Young 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.



78







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.



B. Significant Changes



There have been no significant changes
to the accompanying financial statements since December 31, 2014, except as disclosed in this Annual Report on Form 20-F.



ITEM 9. THE OFFERING AND LISTING



A. Listing Details



From March 26, 2010 until October 21,
2011, shares of the Company traded on the NEX board of the TSX-V under the symbol “MPH.H”. On October 24, 2011 shares
of the Company commenced trading on the TSX-V under the symbol “MPH”. The following tables et forth for the periods
indicated the price history of the Company’s common shares on the TSX-V and the NEX.



|                                                    |  | TSX/NEX/ TSX-V High ($) |       |  | TSX/NEX/ TSX-V Low ($) | 
|--------------------------------------------------- |  | ----------------------- | ----- |  | ---------------------- | 
|                                                    |  |                         |       |  |                        | 
|Fiscal Quarter Ended                                |  |                         |       |  |                        | 
|                                                    |  |                         |       |  |                        | 
|December 31, 2015                                   |  |                         | 4.35  |  |                        | 
|September 30, 2015                                  |  |                         | 3.94  |  |                        | 
|June 30, 2015                                       |  |                         | 2.74  |  |                        | 
|March 31, 2015                                      |  |                         | 2.39  |  |                        | 
|Period from December 1, 2014 to December 31, 2014   |  |                         | 2.51  |  |                        | 
|November 30, 2014                                   |  |                         | 2.91  |  |                        | 
|August 31, 2014                                     |  |                         | 2.97  |  |                        | 
|May 31, 2014                                        |  |                         | 3.15  |  |                        | 
|February 28, 2014                                   |  |                         | 0.70  |  |                        | 
|November 1, 2013                                    |  |                         | 0.53  |  |                        | 
|August 31, 2013                                     |  |                         | 0.28  |  |                        | 
|May 31, 2013                                        |  |                         | 0.45  |  |                        | 
|February 29, 2013                                   |  |                         | 0.67  |  |                        | 
|Period from November 2, 2012 to November 30, 2012   |  |                         | 0.64  |  |                        | 
|Period from September 1, 2012 to   November 1, 2012 |  |                         | 0.045 |  |                        | 
|August 31, 2012                                     |  |                         | 0.04  |  |                        | 
|May 31, 2012                                        |  |                         | 0.045 |  |                        | 
|February 29, 2012                                   |  |                         | 0.045 |  |                        | 
|November 30, 2011                                   |  |                         | 0.035 |  |                        | 
|August 31, 2011                                     |  |                         | 0.06  |  |                        | 



79







| | 1) | The Company changed its fiscal year end from May 31 to December
                                         31 in 2014, resulting in a stub fiscal year of June 1, 2014 to December 31, 2014. For
                                         comparison purposes, trading data is presented for calendar rather than fiscal periods.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2) | By Articles of Amendment filed by the Company under the Canada
                                         Business Corporations Act on November 1, 2012, the Company’s issued and outstanding
                                         common shares were consolidated on the basis of one post-consolidation common share for
                                         every fifteen pre-consolidation common shares. The Company's name and trading symbol
                                         did not change as a result of the consolidation. The Company’s common shares were
                                         reduced from 182,947,595 to 12,196,508 issued and outstanding as a result of the consolidation.
                                         The trading prices presented here have not been adjusted to reflect the consolidation.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



B. Plan of Distribution



Not applicable.



C. Markets



The Company's common shares are listed
for trading on the TSX-V under the symbol “MPH”. Certain market makers also trade the Company’s common shares
on the OTC Pink Market, under the symbol MCUJF.



D. Selling Shareholders



Not applicable.



E. Dilution



Not applicable.



F. Expenses of the Issue



Not applicable.



ITEM 10. ADDITIONAL INFORMATION



A. Share Capital



Not applicable



80







B. Memorandum and Articles of Association



1. Objects and Purposes of the Company



The Articles of Continuance (as amended,
the “Articles”) and the By-Laws of the Company place 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 4.18 of By-Law No.1A 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 Corporations 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.



The Company’s Articles provide that
the Company’s board shall consist of a minimum of one and a maximum of 15 directors. The exact number of directors to form
the board, between the minimum and maximum number of directors prescribed by the Articles, is determined from time to time by
the board. Section 4.01 of the By-Law states that the quorum of the board shall be a majority of the board, or such other number
of directors as the board may from time to time determine. 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;
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | iii) | subject to section 44 of the Act,
                                         give a guarantee on behalf of the Company to secure performance of any present or future
                                         indebtedness, liability or 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.



81







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 of the By-law states that
a director need not be a shareholder to be qualified as a director. However, section 4.02 also provides that at least 25% of the
directors shall be resident Canadians unless the Company has less than four directors, in which case at least one director must
be a resident Canadian.



Under section 4.03 of the By-law, directors
are to be elected yearly by ordinary resolution to hold office until the close of the next annual meeting of shareholder. If directors
fail to be elected at any such meeting of shareholders, then the incumbent directors continue in office until their successors
are elected.



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.



82







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.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



83







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 two shareholders present or represented by proxy and holding in all not less than 10% percent of the outstanding shares entitled
to vote at the meeting. 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 imposed by the
Act, or by the Articles or By-Law or any other constituent document of the Company., on the right of non-resident or foreign shareholders
to own or vote securities of the Company. However, the Investment Canada Act (Canada) will prohibit implementation, or if necessary,
require divestiture of an investment deemed “reviewable” under the Investment Canada Act (Canada) by an investor that
is not a “Canadian” as defined in the Investment Canada Act (Canada), unless after review the Minister responsible
for the Investment Canada Act (Canada) is satisfied that the “reviewable” investment is likely to be of net benefit
to Canada.



The following discussion summarizes the
principal features of the Investment Canada Act for a non-Canadian who proposes to acquire common shares of the Company. The discussion
is general only; it is not a substitute for independent legal advice from an investor's own adviser; and, except where expressly
noted, it does not anticipate statutory or regulatory amendments.



The Investment Canada Act is a federal
statute of broad application regulating the establishment and acquisition of Canadian businesses by non-Canadians, including individuals,
governments or agencies thereof, corporations, partnerships, trusts or joint ventures, Investments by non-Canadians to acquire
control over existing Canadian businesses or to establish new ones are either reviewable or notifiable under the Investment Canada
Act. If an investment by a non-Canadian to acquire control over an existing Canadian business is reviewable under the Investment
Canada Act, the Investment Canada Act generally prohibits implementation of the investment unless, after review, the Minister
of Industry is satisfied that the investment is likely to be of net benefit to Canada.



An investment in the Company’s common
shares by a non-Canadian, who is not a resident of a World Trade Organization (“WTO”) member, would be reviewable
under the Investment Canada Act (Canada) if it was an investment to acquire control of the Company and the value of the assets
of the Company was CAN$5 million or more. An investment in common shares of the Company by residents of WTO members would be reviewable
only if it was an investment to acquire control of the Company and the value of the assets of the Company was equal to or greater
than a specified amount, which is published by the Minister after its determination for any particular year. This amount is currently
CAN $600 million for the year 2016; it will increase to CAN $800 million starting April 24, 2017.



84







A non-Canadian would be deemed to acquire
control of the Company for the purposes of the Investment Canada Act if the non-Canadian acquired a majority of the outstanding
common shares (or less than a majority but controlled the Company in fact through the ownership of one-third or more of the outstanding
common shares) unless it could be established that, on the acquisition, the Company is not controlled in fact by the acquirer
through the ownership of such common shares. Certain transactions in relation to the Company’s common shares would be exempt
from review under the Investment Canada Act, including, among others, the following:



| | i) | the acquisition of voting shares
                                         or other voting interests by any person in the ordinary course of that person’s
                                         business as a trader or dealer in securities;
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii) | the 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
                                         Canada Act (Canada), if the acquisition is subject to approval under the Bank Act (Canada),
                                         the Cooperative Credit Associations Act (Canada), the Insurance Companies Act (Canada)
                                         or the Trust and Loan Companies Act (Canada); and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii) | the acquisition of control of
                                         the Company by reason of an amalgamation, merger, consolidation or corporate reorganization
                                         following which the ultimate direct or indirect control of the Company, through the ownership
                                         of voting interests, remains unchanged.
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



7. Change in Control of Company



No provision of the Company’s Articles
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 no longer has
a shareholder rights plan.



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.



None



D. Exchange Controls



There is no law or governmental decree
or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other
payments to a non-resident holder of Common Shares, other than withholding tax requirements. Any such remittances to United States
residents are generally subject to withholding tax, however no such remittances are likely in the foreseeable future. (See "Item
10E - Taxation", below.)



Except as provided in the Investment Canada
Act (Canada), which has rules regarding certain acquisitions of shares by non-residents, there is no limitation imposed by Canadian
law, or by the Company’s Articles or By-Law, or by any other constituent documents of the Company, on the right of a non-resident
to hold or vote the Company’s common shares. Investment Canada Act is a Canadian federal statute of broad application regulating
the establishment and acquisition of Canadian businesses by non-Canadians, including individuals, governments or agencies thereof,
corporations, partnerships, trusts or joint ventures, . Investments by non-Canadians to acquire control over existing Canadian
businesses or to establish new ones are either reviewable or notifiable under the Investment Canada Act. If an investment by a
non-Canadian to acquire control over an existing Canadian business is reviewable under the Investment Canada Act, the Investment
Canada Act generally prohibits implementation of the investment unless, after review, the Minister of Industry is satisfied that
the investment is likely to be of net benefit to Canada.



85







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.



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.



86







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.



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).



87







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 December 31, 2015,
and does not expect that it will be a “passive foreign investment Company” for the taxable year ending December 31,
2016. (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
December 31, 2015, 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 December 31, 2015 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.



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).



88







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.



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.



89







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.



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.



90







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.



The Company does not believe that it was
a PFIC for the taxable year ended May 31, 2014, and, based on current operations and financial projections, does not expect that
it will be a PFIC for the taxable year ending December 31, 2016. 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 December 31, 2015 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.



91







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. The Canada Revenue Agency has introduced special forms to be used in order to substantiate eligibility for
benefits under the Convention, and affected holders should consult with their own advisers with respect to these forms and all
relevant compliance matters.



Holders who meet all such criteria in
clauses (a) and (b) above are referred to herein as a “U.S. Holder” or “U.S. Holders” and this summary
only addresses such U.S. Holders. The summary does not deal with special situations, such as particular circumstances of traders
or dealers, limited liability companies, tax -exempt entities, insurers, financial institutions (including those to which the
mark-to-market provisions of the Tax Act apply), or entities considered fiscally transparent under applicable law, or otherwise.



This summary is based on the current provisions
of the Tax Act, and the regulations thereunder, all proposed amendments to the Tax Act and regulations publicly announced by the
Minister of Finance (Canada) to the date hereof, the current provisions of the Convention and our understanding of the current
administrative practices of the Canada Revenue Agency. It has been assumed that all currently proposed amendments to the Tax Act
and regulations will be enacted as proposed and that there will be no other relevant change in any governing law, the Convention
or administrative policy, although no assurance can be given in these respects. This summary does not take into account provincial,
U.S. or other foreign income tax considerations, which may differ significantly from those discussed herein.



This summary is not exhaustive of all
possible Canadian income tax consequences. It is not intended as legal or tax advice to any particular U.S. Holder and should
not be so construed. The tax consequences to a U.S. Holder will depend on that U.S. Holder's particular circumstances. Accordingly,
all U.S. Holders or prospective U.S. Holders should consult their own tax advisers with respect to the tax consequences applicable
to them having regard to their own particular circumstances. The discussion below is qualified accordingly.



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.



Dividends



Dividends paid or deemed to be paid or
credited by the Company to a U.S. Holder are subject to Canadian withholding tax. Under the Convention, the rate of withholding
tax on dividends paid to a U.S. Holder is generally not subject to tax under the Tax Act in respect of a capital gain realized
on the disposition of a common share in the open market, unless the share is "taxable Canadian property" to the holder
thereof and the U.S. Holder is not entitled to relief under the Convention.



92







Dispositions



A U.S. Holder is generally not subject
to tax under the Tax Act in respect of a capital gain realized on the disposition of a common share in the open market, unless
the share is "taxable Canadian property" to the holder thereof and the U.S. Holder is not entitled to relief under the
Convention.



Provided that the Company's common shares
are listed on a "designated stock exchange" for purposes of the Tax Act (which currently includes the TSX Venture) at
the time of disposition, a common share will generally not constitute taxable Canadian property to a U.S. Holder unless, at any
time during the 60 month period ending at the time of disposition, (i) the U.S. Holder or persons with whom the U.S. Holder did
not deal at arm's length (or the U.S. Holder together with such persons) owned 25% or more of the issued shares of any class or
series of the Company AND (ii) more than 50% of the fair market value of the share was derived directly or indirectly from certain
types of assets, including real or immoveable property situated in Canada, Canadian resource properties or timber resource properties,
and options, interests or rights in respect of any of the foregoing. Common shares may also be deemed to be taxable Canadian property
under the Tax Act in certain specific circumstances. A U.S. Holder holding Common shares as taxable Canadian property should consult
with the U.S. Holder's own tax advisers in advance of any disposition of Common shares or deemed disposition under the Tax Act
in order to determine whether any relief from tax under the Tax Act may be available by virtue of the Convention, and any related
compliance procedures.



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. 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



G. Statement by Experts



Not applicable



H. Documents on Display



Exhibits attached to this Annual Report
are available for viewing on EDGAR, or may be inspected at the head office of Company at 2 – 1250 Waverley Street, Winnipeg,
Manitoba, Canada R3T 6C6, during normal business hours. Copies of the Company’s financial statements and other continuous
disclosure documents required under Canadian securities legislation are available for viewing on the internet at www.sedar.com.



I. Subsidiary Information



Not applicable



93







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.



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, long-term debt and
other long-term liability.



An increase or decrease in interest rates
of one percent during the year ended December 31, 2015, with all other variables held constant, would result in a corresponding
increase or decrease on the Company's net income (loss) of approximately $20,000 (seven months ended December 31, 2014 - $4,000
and year ended May 31, 2014 - $2,000). An increase in the crown company borrowing rate of one percent during the year ended December
31, 2015, with all other variables held constant, would result in a corresponding increase or decrease on the Company's net income
(loss) of approximately $49,000 (seven months ended December 31, 2014 - $52,000 and year ended May 31, 2014 - $52,000).



FOREIGN EXCHANGE RISK



The Company’s primary currency of
operations is the Canadian dollar. Its wholly-owned operating subsidiaries primary currency of operations is the US dollar. The
Company has expenditures and holds investments denominated in US dollars.  During the year ended December 31, 2015, it is
estimated that approximately 65% 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 the year ended December 31, 2015 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



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



Not applicable



94







ITEM 15. CONTROLS AND PROCEDURES



Disclosure Controls and Procedures



The Company’s disclosure controls
and procedures, 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 a material weakness 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 weakness is remediated.



Management’s Annual Report
on Internal Control over Financial Reporting



The management of the Company, including
the CEO and CFO, 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 IFRS. 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 IFRS, 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.



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 December 31, 2014, 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 December 31, 2015 due to the following material weaknesses:



95







Due to the limited number of staff with
an appropriate level of technical accounting knowledge, experience and training 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.
This control deficiency 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.



No remediation activities have been undertaken
to date in fiscal 2015. Due to resource constraints and the present stage of the Company’s development the Company does
not have sufficient size and scale to warrant the hiring of additional staff to correct this material weakness at this time.



ITEM 16. RESERVED



Not applicable



ITEM 16A. AUDIT COMMITTEE FINANCIAL
EXPERT



As of December 31, 2015, Mr. Brent Fawkes
CA, 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. Fawkes (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 in section 803 of the NYSE MKT 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.



During the most recently completed fiscal
year, the Company has neither: (a) amended its Code of Ethics; nor (b) granted any waiver (including any implicit waiver) form
any provision of its Code of Ethics.



96







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, Ernst & Young 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.



The
Company incurred the following fees to Ernst & Young LLP for the previous two fiscal years. As at December 31, 2015, the Company
had accrued $86,400 relating to Ernst & Young LLP audit fees.



|(a)  Audit fees |  | 2015 |        |  | 2014 |  
|--------------- |  | ---- | ------ |  | ---- | -
|                |  | $    | 86,400 |  |      | $



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



|(b)  Audit-related fees |  | 2015 |   |  | 2014 |  
|----------------------- |  | ---- | - |  | ---- | -
|                        |  | $    | - |  |      | $



Audit-related
fees consist of fees billed for accounting consultations.



|(c)  Tax fees |  | 2015 |   |  | 2014 |  
|------------- |  | ---- | - |  | ---- | -
|              |  | $    | - |  |      | $



|(d)  All other fees |  | 2015 |   |  | 2014 |  
|------------------- |  | ---- | - |  | ---- | -
|                    |  | $    | - |  |      | $



(e) Audit Committee’s Pre-approval Policies



All Ernst & Young LLP services and fees are approved by
the Audit Committee.



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



Not
applicable



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



In
the year ended December 31, 2015, the Company did not purchase any of its issued and outstanding Common Shares pursuant to any
repurchase program or otherwise.



ITEM
16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT



Not applicable.



ITEM
16G. CORPORATE GOVERNANCE



Not applicable.



ITEM
16H.MINE SAFETY DISCLOSURE



Not applicable.



97







PART III



ITEM 17. FINANCIAL STATEMENTS



Not applicable. See “Item 18 –
Financial Statements”.



ITEM 18. FINANCIAL STATEMENTS



The consolidated financial statements
were prepared in accordance with IFRS, as issued by the IASB, and are presented in Canadian dollars.



The consolidated financial statements
are in the following order:



| | 1. | Report of Independent Registered
                                         Public Accounting Firm;
| | -- | -------------------------------------------------------------------------------------------------

| | 2. | Consolidated Statements of Financial
                                         Position;
| | -- | ---------------------------------------------------------------------------------------

| | 3. | Consolidated Statements of Net Income
                                         (Loss) and Comprehensive Income (Loss);
| | -- | ----------------------------------------------------------------------------------------------------------------------

| | 4. | Consolidated Statements of Changes
                                         in Deficiency
| | -- | -----------------------------------------------------------------------------------------

| | 5. | Consolidated Statements of Cash
                                         Flows; and
| | -- | -----------------------------------------------------------------------------------

| | 6. | Notes to Consolidated Financial
                                         Statements.
| | -- | ------------------------------------------------------------------------------------



98







Consolidated Financial Statements

(Expressed in Canadian Dollars)



MEDICURE INC.



Year ended December 31, 2015











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 International Financial Reporting Standards. The significant accounting policies, which management believes
are appropriate for the Company, are described in note 3 to these financial statements. The Company maintains a system of internal
control and processes intended to provide reasonable assurance that assets are safeguarded and to ensure that relevant and reliable
financial information is produced.



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 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.



Ernst & Young LLP, the Company’s
external auditors, who are appointed by the shareholders, audited the financial statements in accordance with Canadian generally
accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States) 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 
|Chief Executive Officer |  | Chief Financial Officer



March 28, 2016













Independent auditors’ report
of registered public accounting firm







To the Shareholders of

Medicure Inc.



We have audited the accompanying consolidated
financial statements of Medicure Inc., which comprise the consolidated statements of financial position as at December
31, 2015, December 31, 2014 and May 31, 2014, and the consolidated statements of net income (loss) and comprehensive income (loss),
changes in equity (deficiency) and cash flows for the year ended December 31, 2015, the seven-month period ended December 31,
2014 and each of the years in the two-year period ended May 31, 2014, and a summary of significant accounting policies and
other explanatory information.



Management’s responsibility for the consolidated
financial statements



Management is responsible for the preparation
and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary
to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.





Auditors’ responsibility



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 comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the consolidated
financial statements are free from material misstatement. We were not engaged to perform an audit of the Company’s internal
control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.



An audit involves performing procedures
to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend
on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures
in the consolidated financial statements, evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.



We believe that the audit evidence we
have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.



Opinion



In our opinion, the consolidated financial
statements present fairly, in all material respects, the financial position of Medicure Inc. as at December 31, 2015, December
31, 2014 and May 31, 2014, and its financial performance and its cash flows for the year ended December 31, 2015, the seven-month
period ended December 31, 2014 and each of the years in the two-year period ended May 31, 2014 in accordance with International
Financial Reporting Standards as issued by the International Accounting Standards Board.







|Winnipeg, Canada |                                   
|---------------- | ----------------------------------
|March 28, 2016   | Chartered Professional Accountants

















MEDICURE INC.

Consolidated Statements of Financial Position

(expressed in Canadian dollars)

As at December 31, 2015 and 2014 and May 31, 2014



|                                          |  |      |                |     | December 31, |   |              | December 31, |  |   | May 31,      |  
|----------------------------------------- |  | ---- | -------------- | --- | ------------ | - | ------------ | ------------ |  | - | ------------ | -
|                                          |  | Note |                |     | 2015         |   |              | 2014         |  |   | 2014         |  
|Assets                                    |  |      |                |     |              |   |              |              |  |   |              |  
|Current assets:                           |  |      |                |     |              |   |              |              |  |   |              |  
|Cash                                      |  |      |                |     |              | $ | 3,568,592    |              |  | $ | 493,869      |  
|Accounts receivable                       |  |      | 4              |     |              |   | 9,823,616    |              |  |   | 1,637,676    |  
|Inventories                               |  |      | 5              |     |              |   | 2,289,275    |              |  |   | 1,099,576    |  
|Prepaid expenses                          |  |      | 15             |     |              |   | 1,767,071    |              |  |   | 642,976      |  
|Total current assets                      |  |      |                |     |              |   | 17,448,554   |              |  |   | 3,874,097    |  
|                                          |  |      |                |     |              |   |              |              |  |   |              |  
|Non-current assets:                       |  |      |                |     |              |   |              |              |  |   |              |  
|Property and equipment                    |  |      | 6              |     |              |   | 230,162      |              |  |   | 33,161       |  
|Intangible assets                         |  |      | 7              |     |              |   | 1,411,992    |              |  |   | 1,096,946    |  
|Investment in Apicore                     |  |      | 8              |     |              |   | 1,559,599    |              |  |   | 1,361,824    |  
|Long-term derivative                      |  |      | 8              |     |              |   | 227,571      |              |  |   | 194,491      |  
|Deferred tax assets                       |  |      | 13             |     |              |   | 379,000      |              |  |   | -            |  
|Total non-current assets                  |  |      |                |     |              |   | 3,808,324    |              |  |   | 2,686,422    |  
|                                          |  |      |                |     |              |   |              |              |  |   |              |  
|Total assets                              |  |      |                |     |              | $ | 21,256,878   |              |  | $ | 6,560,519    |  
|                                          |  |      |                |     |              |   |              |              |  |   |              |  
|Liabilities and Equity (Deficiency)       |  |      |                |     |              |   |              |              |  |   |              |  
|Current liabilities:                      |  |      |                |     |              |   |              |              |  |   |              |  
|Accounts payable and accrued liabilities  |  |      | 11, 12(d) & 16 |     |              | $ | 7,079,091    |              |  | $ | 3,248,877    |  
|Current portion of long-term debt         |  |      | 9              |     |              |   | 1,625,191    |              |  |   | 654,877      |  
|Current portion of royalty obligation     |  |      | 10             |     |              |   | 1,648,180    |              |  |   | 473,744      |  
|Total current liabilities                 |  |      |                |     |              |   | 10,352,462   |              |  |   | 4,377,498    |  
|                                          |  |      |                |     |              |   |              |              |  |   |              |  
|Non-current liabilities                   |  |      |                |     |              |   |              |              |  |   |              |  
|Long-term debt                            |  |      | 9              |     |              |   | 2,617,593    |              |  |   | 4,225,949    |  
|Royalty obligation                        |  |      | 10             |     |              |   | 3,725,272    |              |  |   | 1,715,310    |  
|Other long-term liability                 |  |      | 11             |     |              |   | 100,000      |              |  |   | 152,778      |  
|Total non-current liabilities             |  |      |                |     |              |   | 6,442,865    |              |  |   | 6,094,037    |  
|Total liabilities                         |  |      |                |     |              |   | 16,795,327   |              |  |   | 10,471,535   |  
|                                          |  |      |                |     |              |   |              |              |  |   |              |  
|Equity (deficiency):                      |  |      |                |     |              |   |              |              |  |   |              |  
|Share capital                             |  |      | 12             | (b) |              |   | 121,413,777  |              |  |   | 117,045,763  |  
|Warrants                                  |  |      | 12             | (d) |              |   | 101,618      |              |  |   | -            |  
|Contributed surplus                       |  |      |                |     |              |   | 6,789,195    |              |  |   | 5,360,748    |  
|Accumulated other comprehensive income    |  |      |                |     |              |   | 1,104,388    |              |  |   | 298,329      |  
|Deficit                                   |  |      |                |     |              |   | (124,947,427 | )            |  |   | (126,615,856 | )
|Total equity (deficiency)                 |  |      |                |     |              |   | 4,461,551    |              |  |   | (3,911,016   | )
|                                          |  |      |                |     |              |   |              |              |  |   |              |  
|Commitments and contingencies             |  |      | 15             |     |              |   |              |              |  |   |              |  
|Subsequent events                         |  |      | 12(c) & 15     |     |              |   |              |              |  |   |              |  
|                                          |  |      |                |     |              |   |              |              |  |   |              |  
|Total liabilities and equity (deficiency) |  |      |                |     |              | $ | 21,256,878   |              |  | $ | 6,560,519    |  



On behalf of the Board:



|"Dr. Albert D. Friesen" |  | "Mr. Brent Fawkes"
|----------------------- |  | ------------------
|Director                |  | Director          



See accompanying notes to the consolidated
financial statements.



- 1 -






MEDICURE INC.

Consolidated Statements of Net Income (Loss) and Comprehensive
Income (Loss)

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



|                                                  |  |            |  | December 31, |            |   | December 31, |   |            | May 31, |  |   | May 31,    |  
|------------------------------------------------- |  | ---------- |  | ------------ | ---------- | - | ------------ | - | ---------- | ------- |  | - | ---------- | -
|                                                  |  | Note       |  | 2015         |            |   | 2014         |   |            | 2014    |  |   | 2013       |  
|Revenue                                           |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|Product sales, net                                |  |            |  | $            | 22,083,128 |   |              | $ | 5,264,395  |         |  | $ | 5,050,761  |  
|Cost of goods sold                                |  | 5 & 7      |  |              | 2,259,867  |   |              |   | 600,574    |         |  |   | 868,122    |  
|Gross Profit                                      |  |            |  |              | 19,823,261 |   |              |   | 4,663,821  |         |  |   | 4,182,639  |  
|                                                  |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|Expenses                                          |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|Selling, general and administrative               |  |            |  |              | 10,237,116 |   |              |   | 3,231,392  |         |  |   | 3,624,695  |  
|Research and development                          |  |            |  |              | 4,865,255  |   |              |   | 783,130    |         |  |   | 688,671    |  
|                                                  |  |            |  |              | 15,102,371 |   |              |   | 4,014,522  |         |  |   | 4,313,366  |  
|Income (loss) before the undernoted               |  |            |  |              | 4,720,890  |   |              |   | 649,299    |         |  |   | (130,727   | )
|                                                  |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|Other expense (income):                           |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|Reversal of impairment loss7                      |  |            |  |              | (788,305   | ) |              |   | -          |         |  |   | -          |  
|Investment structuring services                   |  | 8          |  |              | -          |   |              |   | (1,385,099 | )       |  |   | -          |  
|Revaluation of long-term derivative               |  | 8          |  |              | (33,080    | ) |              |   | 81,431     |         |  |   | -          |  
|Loss on settlements of debt                       |  | 12(b)      |  |              | 60,595     |   |              |   | -          |         |  |   | -          |  
|                                                  |  |            |  |              | (760,790   | ) |              |   | (1,303,668 | )       |  |   | -          |  
|                                                  |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|Finance expense (income):                         |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|Finance expense, net                              |  | 12(d) & 14 |  |              | 4,123,452  |   |              |   | 729,657    |         |  |   | 1,808,987  |  
|Foreign exchange loss (gain), net                 |  |            |  |              | 68,799     |   |              |   | 27,714     |         |  |   | (5,618     | )
|                                                  |  |            |  |              | 4,192,251  |   |              |   | 757,371    |         |  |   | 1,803,369  |  
|Net income (loss) before income taxes             |  |            |  |              | 1,289,429  |   |              |   | 1,195,596  |         |  |   | (1,934,096 | )
|Income tax recovery                               |  | 13         |  |              | 379,000    |   |              |   | -          |         |  |   | -          |  
|                                                  |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|Net income (loss)                                 |  |            |  | $            | 1,668,429  |   |              | $ | 1,195,596  |         |  | $ | (1,934,096 | )
|Translation adjustment                            |  |            |  |              | 806,059    |   |              |   | 143,538    |         |  |   | 86,679     |  
|                                                  |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|Comprehensive income (loss)                       |  |            |  | $            | 2,474,488  |   |              | $ | 1,339,134  |         |  | $ | (1,847,417 | )
|                                                  |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|Basic earnings (loss) per share                   |  |            |  | $            | 0.12       |   |              | $ | 0.10       |         |  | $ | (0.16      | )
|Diluted earnings (loss) per share                 |  |            |  | $            | 0.11       |   |              | $ | 0.09       |         |  | $ | (0.16      | )
|Weighted average number of common shares used in  |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|computing basic earnings (loss) per share         |  |            |  |              | 13,461,609 |   |              |   | 12,204,827 |         |  |   | 12,196,745 |  
|Weighted average number of common shares used in  |  |            |  |              |            |   |              |   |            |         |  |   |            |  
|computing fully diluted earnings (loss) per share |  |            |  |              | 15,765,570 |   |              |   | 13,843,126 |         |  |   | 12,196,745 |  



See accompanying notes to the consolidated
financial statements.



- 2 -






MEDICURE INC.

Consolidated Statements of Changes in Equity (Deficiency)

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



|                                                                            |  |       |  |         |             |  |          |   |          | Cumulative  |  |   |             |   |  |           |           |   |       |  
|--------------------------------------------------------------------------- |  | ----- |  | ------- | ----------- |  | -------- | - | -------- | ----------- |  | - | ----------- | - |  | --------- | --------- | - | ----- | -
|                                                                            |  |       |  | Share   |             |  |          |   |          | Contributed |  |   | Translation |   |  | Equity    |           |   |       |  
|                                                                            |  | Note  |  | Capital |             |  | Warrants |   |          | Surplus     |  |   | Account     |   |  | (Deficit) |           |   | Total |  
|Balance, May 31, 2012                                                       |  |       |  | $       | 117,033,258 |  |          | $ | -        |             |  | $ | 4,346,312   |   |  | $         | 102,809   |   |       | $
|Net loss for the year
    ended May 31, 2013                                |  |       |  |         | -           |  |          |   | -        |             |  |   | -           |   |  |           | -         |   |       |  
|Other comprehensive loss
    for the year ended May 31, 2013                |  |       |  |         | -           |  |          |   | -        |             |  |   | -           |   |  |           | (34,697   | ) |       |  
|Transactions with owners,
    recorded directly in equity                   |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Share-based
    payments                                                    |  | 12(c) |  |         | -           |  |          |   | -        |             |  |   | 102,993     |   |  |           | -         |   |       |  
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Total transactions with
    owners                                          |  |       |  |         | -           |  |          |   | -        |             |  |   | 102,993     |   |  |           | -         |   |       |  
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Balance, May 31, 2013                                                       |  |       |  | $       | 117,033,258 |  |          | $ | -        |             |  | $ | 4,449,305   |   |  | $         | 68,112    |   |       | $
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Net loss for the year
    ended May 31, 2014                                |  |       |  |         | -           |  |          |   | -        |             |  |   | -           |   |  |           | -         |   |       |  
|Other comprehensive income
    for the year ended May 31, 2014              |  |       |  |         | -           |  |          |   | -        |             |  |   | -           |   |  |           | 86,679    |   |       |  
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Transactions with owners,
    recorded directly in equity                   |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Stock options exercised                                                     |  | 12(c) |  |         | 3,414       |  |          |   | -        |             |  |   | (1,414      | ) |  |           | -         |   |       |  
|Share-based payments                                                        |  | 12(c) |  |         | -           |  |          |   | -        |             |  |   | 295,144     |   |  |           | -         |   |       |  
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Total transactions with
    owners                                          |  |       |  |         | 3,414       |  |          |   | -        |             |  |   | 293,730     |   |  |           | -         |   |       |  
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Balance, May 31, 2014                                                       |  |       |  | $       | 117,036,672 |  |          | $ | -        |             |  | $ | 4,743,035   |   |  | $         | 154,791   |   |       | $
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Net income for the seven months ended December
    31, 2014                 |  |       |  |         | -           |  |          |   | -        |             |  |   | -           |   |  |           | -         |   |       |  
|Other comprehensive income
    for the seven months ended December 31, 2014 |  |       |  |         | -           |  |          |   | -        |             |  |   | -           |   |  |           | 143,538   |   |       |  
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Transactions with owners,
    recorded directly in equity                   |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Stock options exercised                                                     |  | 12(c) |  |         | 9,091       |  |          |   | -        |             |  |   | (2,992      | ) |  |           | -         |   |       |  
|Share-based payments                                                        |  | 12(c) |  |         | -           |  |          |   | -        |             |  |   | 620,705     |   |  |           | -         |   |       |  
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Total transactions with
    owners                                          |  |       |  |         | 9,091       |  |          |   | -        |             |  |   | 617,713     |   |  |           | -         |   |       |  
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Balance, December 31,
    2014                                              |  |       |  | $       | 117,045,763 |  |          | $ | -        |             |  | $ | 5,360,748   |   |  | $         | 298,329   |   |       | $
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Net income for the yea
    ended December 31, 2015                          |  |       |  |         | -           |  |          |   | -        |             |  |   | -           |   |  |           | -         |   |       |  
|Other comprehensive income
    for the year months ended December 31, 2015  |  |       |  |         | -           |  |          |   | -        |             |  |   | -           |   |  |           | 806,059   |   |       |  
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Transactions with owners,
    recorded directly in equity                   |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Issuance of common shares                                                   |  | 12(b) |  |         | 4,021,782   |  |          |   | -        |             |  |   | -           |   |  |           | -         |   |       |  
|Issuance of warrants                                                        |  | 12(b) |  |         | -           |  |          |   | 232,571  |             |  |   | -           |   |  |           | -         |   |       |  
|Stock options exercised                                                     |  | 12(c) |  |         | 65,034      |  |          |   | -        |             |  |   | (31,869     | ) |  |           | -         |   |       |  
|Warrants exercised                                                          |  | 12(b) |  |         | 281,198     |  |          |   | (130,953 | )           |  |   | -           |   |  |           | -         |   |       |  
|Share-based compensation                                                    |  | 12(c) |  |         | -           |  |          |   | -        |             |  |   | 1,460,316   |   |  |           | -         |   |       |  
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Total transactions with
    owners                                          |  |       |  |         | 4,368,014   |  |          |   | 101,618  |             |  |   | 1,428,447   |   |  |           | -         |   |       |  
|                                                                            |  |       |  |         |             |  |          |   |          |             |  |   |             |   |  |           |           |   |       |  
|Balance, December 31, 2015                                                  |  |       |  | $       | 121,413,777 |  |          | $ | 101,618  |             |  | $ | 6,789,195   |   |  | $         | 1,104,388 |   |       | $



See accompanying notes to the consolidated
financial statements.



- 3 -






MEDICURE INC.

Consolidated Statement of Cash Flows

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



|                                                                                |  |       |  | December 31, |            |   | December 31, |   |            | May 31, |  |   | May 31,    |  
|------------------------------------------------------------------------------- |  | ----- |  | ------------ | ---------- | - | ------------ | - | ---------- | ------- |  | - | ---------- | -
|                                                                                |  | Note  |  | 2015         |            |   | 2014         |   |            | 2014    |  |   | 2013       |  
|                                                                                |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Cash provided by (used in):                                                     |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Operating activities:                                                           |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Net income (loss)                                                               |  |       |  | $            | 1,668,429  |   |              | $ | 1,195,596  |         |  | $ | (1,934,096 | )
|Adjustments for:                                                                |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Income tax recovery                                                             |  | 13    |  |              | (379,000   | ) |              |   | -          |         |  |   | -          |  
|Reversal of impairment loss                                                     |  | 7     |  |              | (788,305   | ) |              |   | -          |         |  |   | -          |  
|Investment structuring services                                                 |  | 8     |  |              | -          |   |              |   | (1,552,771 | )       |  |   | -          |  
|Revaluation of long-term derivative                                             |  | 8     |  |              | (33,080    | ) |              |   | 81,431     |         |  |   | -          |  
|Loss on settlements of debt                                                     |  | 12(b) |  |              | 60,595     |   |              |   | -          |         |  |   | -          |  
|Amortization of property and equipment                                          |  | 6     |  |              | 31,544     |   |              |   | 5,033      |         |  |   | 7,727      |  
|Amortization of intangible assets                                               |  | 7     |  |              | 659,390    |   |              |   | 428,116    |         |  |   | 553,542    |  
|Stock-based compensation                                                        |  | 12(c) |  |              | 1,460,316  |   |              |   | 620,705    |         |  |   | 295,144    |  
|Write-up (write-down) of inventory                                              |  | 5     |  |              | 40,920     |   |              |   | (80,874    | )       |  |   | 22,209     |  
|Write-down of intangible assets                                                 |  | 7     |  |              | -          |   |              |   | -          |         |  |   | -          |  
|Finance expense, net                                                            |  | 14    |  |              | 4,123,452  |   |              |   | 729,657    |         |  |   | 1,808,987  |  
|Difference between fair value of other long-term liability and funding received |  | 11    |  |              | 47,222     |   |              |   | -          |         |  |   | (14,483    | )
|Unrealized foreign exchange loss (gain)                                         |  |       |  |              | 111,817    |   |              |   | (27,892    | )       |  |   | 5,303      |  
|Change in the following:                                                        |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Accounts receivable                                                             |  |       |  |              | (8,185,940 | ) |              |   | (690,074   | )       |  |   | (514,986   | )
|Inventories                                                                     |  |       |  |              | (1,230,619 | ) |              |   | (253,049   | )       |  |   | 114,937    |  
|Prepaid expenses                                                                |  |       |  |              | (1,124,095 | ) |              |   | (436,788   | )       |  |   | (176,733   | )
|Accounts payable and accrued liabilities                                        |  |       |  |              | 4,637,217  |   |              |   | 639,573    |         |  |   | 407,966    |  
|Other long-term liability                                                       |  |       |  |              | -          |   |              |   | -          |         |  |   | -          |  
|Interest paid                                                                   |  | 14    |  |              | (314,300   | ) |              |   | (225,459   | )       |  |   | (299,346   | )
|Royalties paid                                                                  |  | 10    |  |              | (642,768   | ) |              |   | (156,722   | )       |  |   | (165,291   | )
|                                                                                |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Cash flows from (used in) operating activities                                  |  |       |  |              | 142,795    |   |              |   | 276,482    |         |  |   | 110,880    |  
|                                                                                |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Investing activities:                                                           |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Acquisition of property and equipment                                           |  | 6     |  |              | (226,570   | ) |              |   | (16,713    | )       |  |   | (5,513     | )
|Acquisition of intangible assets                                                |  | 7     |  |              | -          |   |              |   | (7,206     | )       |  |   | -          |  
|                                                                                |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Cash flows used in investing activities                                         |  |       |  |              | (226,570   | ) |              |   | (23,919    | )       |  |   | (5,513     | )
|                                                                                |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Financing activities:                                                           |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Issuance of common shares, net of issue costs                                   |  | 12(b) |  |              | 3,630,324  |   |              |   | -          |         |  |   | -          |  
|Exercise of stock options                                                       |  | 12(c) |  |              | 33,165     |   |              |   | 6,099      |         |  |   | 2,000      |  
|Exercise of warrants                                                            |  | 12(b) |  |              | 150,245    |   |              |   | -          |         |  |   | -          |  
|Repayment of long-term debt                                                     |  | 9     |  |              | (694,444   | ) |              |   | -          |         |  |   | -          |  
|                                                                                |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Cash flows from financing activities                                            |  |       |  |              | 3,119,290  |   |              |   | 6,099      |         |  |   | 2,000      |  
|                                                                                |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Foreign exchange gain on cash held in foreign currency                          |  |       |  |              | 39,208     |   |              |   | 910        |         |  |   | 315        |  
|                                                                                |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Increase (decrease) in cash                                                     |  |       |  |              | 3,074,723  |   |              |   | 259,572    |         |  |   | 107,682    |  
|Cash, beginning of period                                                       |  |       |  |              | 493,869    |   |              |   | 234,297    |         |  |   | 126,615    |  
|                                                                                |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Cash, end of period                                                             |  |       |  | $            | 3,568,592  |   |              | $ | 493,869    |         |  | $ | 234,297    |  
|                                                                                |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Supplementary information:                                                      |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Non-cash investing activities:                                                  |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Investment structuring services                                                 |  | 8     |  | $            | -          |   |              | $ | 1,552,771  |         |  | $ | -          |  
|Non-cash financing activities:                                                  |  |       |  |              |            |   |              |   |            |         |  |   |            |  
|Shares issued on debt settlements                                               |  | 12(b) |  | $            | 624,029    |   |              | $ | -          |         |  | $ | -          |  
|Warrants issued as share issue costs                                            |  | 12(b) |  | $            | 232,571    |   |              | $ | -          |         |  | $ | -          |  



See accompanying notes to the consolidated
financial statements.



- 4 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



| | 1. | Reporting entity:
| | -- | -----------------



Medicure Inc. (the "Company")
is a company domiciled and incorporated in Canada and as of October 24, 2011, its Common Shares are listed on the TSX Venture Exchange.
Prior to October 24, 2011 and beginning on March 29, 2010, the Company's Common Shares were listed on the NEX board of the TSX
Venture Exchange. Prior to March 29, 2010, the Company's Common Shares were listed on the Toronto Stock Exchange. Additionally,
the Company's shares were listed on the American Stock Exchange (later called NYSE Amex and now called NYSE MKT) on February 17,
2004 and the shares ceased trading on the NYSE Amex effective July 3, 2008. The Company remains a U.S. Securities and Exchange
Commission registrant. The address of the Company's registered office is 2-1250 Waverley Street, Winnipeg, Manitoba, Canada. 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 including unstable angina,
which is characterized by chest pain when one is at rest, and non-Q-wave myocardial infarction. The Company’s ongoing research
and development activities include the development and implementation of a new regulatory, brand and life cycle management strategy
for AGGRASTAT®.



| | 2. | Basis of preparation of financial statements:
| | -- | ---------------------------------------------



| | (a) | Statement of compliance
| | --- | -----------------------



These consolidated financial
statements of the Company and its subsidiaries were prepared in accordance with International Financial Reporting Standards ("IFRS")
as issued by the International Accounting Standards Board ("IASB").



The consolidated financial statements
were authorized for issue by the Board of Directors on March 28, 2016.



| | (b) | Basis of presentation
| | --- | ---------------------



The consolidated financial statements
have been prepared on the historical cost basis except for the following items:



| | · | Derivative financial instruments are measured at fair value.
| | - | ------------------------------------------------------------



| | · | Financial instruments at fair value through profit and loss are measured at fair value.
| | - | ---------------------------------------------------------------------------------------



In December 2014, the Company
received approval from securities regulators to change its financial year end from May 31 to December 31. The change of year end
enabled the Company to align its year end with industry peers and with most other companies trading on the TSX Venture Exchange.
The change in year end results in the current period reflecting twelve months of operations ended December 31, 2015, while the
immediately comparative period ended December 31, 2014 only reflects seven months of operations. Additional comparable periods
reflect the twelve months ended May 31, 2014 and 2013.



Certain of the comparative figures
have been reclassified to conform with the presentation in the current year.



| | (c) | Functional and presentation currency
| | --- | ------------------------------------



The consolidated financial statements
are presented in Canadian dollars, which is the Company's functional currency. All financial information presented has been rounded
to the nearest dollar except where indicated otherwise.



- 5 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



| | 2. | Basis of preparation of financial statements (continued):
| | -- | ---------------------------------------------------------



| | (d) | Use of estimates and judgments
| | --- | ------------------------------



The preparation of these consolidated
financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Actual results may differ from these
estimates.



Estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised
and in any future periods affected.



Areas where management has made
critical judgments in the process of applying accounting policies and that have the most significant effect on the amounts recognized
in the consolidated financial statements include the determination of the Company and its subsidiaries functional currency and
the determination of the Company's cash generating units ("CGU") for the purposes of impairment testing.



Information about key assumptions
and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amount of assets
and liabilities within the next financial year are included in the following notes:



| | · | Note 3(c)(ii): Valuation of the royalty obligation
| | - | --------------------------------------------------



| | · | Note 3(c)(ii): Valuation of the warrant liability
| | - | -------------------------------------------------



| | · | Note 3(c)(ii): Valuation of the other long-term liability
| | - | ---------------------------------------------------------



| | · | Note 3(d): Provisions for returns, chargebacks and discounts
| | - | ------------------------------------------------------------



| | · | Note 3(g)(ii): The measurement and period of use of intangible assets
| | - | ---------------------------------------------------------------------



| | · | Note 3(g)(iv): The estimation of accruals for research and development costs
| | - | ----------------------------------------------------------------------------



| | · | Note 3(h): Valuation of investment in Apicore
| | - | ---------------------------------------------



| | · | Note 3(h): Valuation of long-term derivative
| | - | --------------------------------------------



| | · | Note 3(m): The measurement of the amount and assessment of the recoverability of income tax assets
| | - | --------------------------------------------------------------------------------------------------



| | · | Note 19(c): The assumptions and model used to estimate the value of share-based payment transactions
and warrants
| | - | -----------------------------------------------------------------------------------------------------------------



| | 3. | Significant accounting policies:
| | -- | --------------------------------



The accounting policies set
out below have been applied consistently to all periods presented in these consolidated financial statements, unless otherwise
indicated.



| | (a) | Basis of consolidation
| | --- | ----------------------



These consolidated financial
statements include the accounts of the Company and its wholly owned subsidiaries, Medicure International Inc., Medicure Pharma
Inc., and Medicure U.S.A. Inc. The financial statements of the subsidiaries are prepared for the same reporting period as the parent
company, using consistent accounting policies. All significant intercompany transactions and balances have been eliminated.



- 6 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



| | (b) | Foreign currency
| | --- | ----------------



Items included in the financial
statements of each of the Company's consolidated subsidiaries are measured using the currency of the primary economic environment
in which the subsidiary operates (the functional currency). The consolidated financial statements are presented in Canadian dollars,
which is the Company's functional and presentation currency. The U.S. dollar is the functional currency of Medicure Pharma, Inc.
and Medicure U.S.A. Inc. In the three months ended August 31, 2011, as a result of the long-term debt settlement (note 10) and
other factors, the focus of Medicure International Inc.'s operations changed and, accordingly, its functional currency was changed
from the Canadian dollar to the U.S. dollar, effective June 1, 2011. In accordance with IAS 21, The Effects of Changes in Foreign
Exchange Rates, this change has been accounted for prospectively.



Foreign currency transactions
are translated into the respective functional currencies of the Company and its subsidiaries using the exchange rates prevailing
at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from
the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized
in profit and loss. The results and financial position of the Company's consolidated subsidiaries that have a functional currency
different from the presentation currency are translated into the presentation currency as follows:



(i) assets and liabilities
for each consolidated statement of financial position presented are translated at the closing rate at the date of that consolidated
statement of financial position;



(ii) revenue and expenses
for each year are translated at average exchange rates (unless this is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates, in which case revenue and expenses are translated at the dates of the transactions);
and



(iii) all resulting exchange
differences are recognized in other comprehensive income (loss) in the cumulative translation account.



When a foreign operation is
disposed of, a proportionate share of the cumulative exchange differences previously recognized in equity is recognized in the
consolidated statements of net income (loss) and comprehensive income (loss), as part of the gain or loss on sale where applicable.



| | (c) | Financial instruments
| | --- | ---------------------



(i) Financial assets



The Company initially recognizes
loans and receivables and deposits on the date that they are originated. All other financial assets are recognized initially on
the trade date at which the Company becomes a party to the contractual provisions of the instrument.



The Company derecognizes a financial
asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual
cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial
asset are transferred.



Financial assets and liabilities
are offset and the net amount presented in the consolidated statements of financial position when, and only when, the Company has
a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability
simultaneously.



The Company classifies non-derivative
financial assets into the following category: loans and receivables. The Company has not classified any assets or liabilities as
held-to-maturity or as available-for-sale.



Loans and receivables



Loans and receivables are non-derivative
financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are recognized initially
at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, loans and receivables are measured
at amortized cost. Loans and receivables are comprised of cash and accounts receivable.



- 7 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



| | (c) | Financial instruments (continued)
| | --- | ---------------------------------



(ii) Financial liabilities



The Company has the following
non-derivative financial liabilities which are classified as other financial liabilities: accounts payable and accrued liabilities
and long-term debt.



All other financial liabilities
are recognized initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.
Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent
to initial recognition, these financial liabilities are measured at amortized cost using the effective interest method. 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 finance expense.



The Company derecognizes a financial
liability when its contractual obligations are discharged or cancelled, or when they expire.



The royalty obligation was recorded
at its fair value at the date at which the liability was incurred and subsequently measured at amortized cost using the effective
interest method at each reporting date. Estimating fair value for this liability requires determining the most appropriate valuation
model which is dependent on its underlying terms and conditions. This estimate also requires determining expected revenue from
AGGRASTAT® sales and an appropriate discount rate and making assumptions about them.



The other long-term liability
was recorded at its fair value at the date at which the liability was incurred and subsequently measured at amortized cost using
the effective interest method at each reporting date. Estimating fair value for this liability requires determining the most appropriate
valuation model which is dependent on its underlying terms and conditions. This estimate also requires determining the time frame
when certain sales targets are expected to be met and an appropriate discount rate and making assumptions about them.



Warrants with an exercise price
denominated in a foreign currency are recorded as a liability and classified as fair value through profit and loss. The warrant
liability is included within accounts payable and accrued liabilities and the change in the fair value of the warrants is recorded
as a gain or loss in the consolidated statement of net income (loss) and comprehensive income (loss) within finance expense. These
warrants have not been listed on an exchange and therefore do not trade on an active market.



The warrant liability was recorded
at the fair value of the warrants at the date at which they were granted and subsequently revalued at each reporting date. Estimating
fair value for these warrants requires determining the most appropriate valuation model which is dependent on the terms and conditions
of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected
life of the warrants, volatility and dividend yield and making assumptions about them.



| | (d) | Revenue recognition
| | --- | -------------------



Revenue from the sale of goods,
comprising finished and unfinished products, in the course of ordinary activities is measured at the fair value of the consideration
received or receivable, net of estimated returns, chargebacks, trade discounts and volume rebates. Revenue is recognized when persuasive
evidence exists, usually in the form of an executed sales agreement, that the significant risks and rewards of ownership have been
transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated
reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. If
it is probable that discounts will be granted and the amount can be measured reliably, then the discount is recognized as a reduction
of revenue as the sales are recognized.



- 8 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



| | (e) | Inventories
| | --- | -----------



Inventories consist of unfinished
product (raw materials) and packaging materials, finished products which are available for sale and pre-launch inventory and are
measured at the lower of cost and net realizable value. Pre-launch inventory represents inventory for which regulatory approval
is being sought, but has not yet been received and therefore is not available for sale. The cost of inventories is based on the
first-in first-out principle, and includes expenditures incurred in acquiring the inventories, production or conversion costs and
other costs incurred in bringing them to their existing location and condition.



Pre-launch inventory is capitalized
when the likelihood of obtaining regulatory approval is high. Should the likelihood of obtaining regulatory approval decline, any
capitalized costs will be written-off in cost of goods sold. If regulatory approval is subsequently obtained, any write-down would
be reversed, to the extent that the assigned cost is realizable.



Net realizable value is the estimated
selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.



| | (f) | Property and equipment
| | --- | ----------------------



(i) Recognition and measurement



Items of property and equipment
are measured at cost less accumulated amortization and accumulated impairment losses. When parts of an item of property and equipment
have different useful lives, they are accounted for as separate items (major components) of property and equipment. The costs of
the day-to-day servicing of property and equipment are recognized in the consolidated statements of net income (loss) and comprehensive
income (loss) in the period in which they are incurred.



(ii) Amortization



Amortization is recognized in
profit or loss over the estimated useful lives of each part of an item of property and equipment in a manner which most closely
reflects the expected pattern of consumption of the future economic benefits embodied in the asset. The estimated useful lives
for the current and comparative periods are as follows:



|Asset                             |  | Basis               |  | Rate |              
|--------------------------------- |  | ------------------- |  | ---- | -------------
|                                  |  |                     |  |      |              
|Computer and office equipment     |  | Straight-line       |  |      | 25%          
|Furniture, fixtures and equipment |  | Diminishing balance |  |      | 20% to 25%   
|Leasehold improvements            |  | Straight-line       |  |      | Term of lease



Amortization methods, useful
lives and residual values are reviewed at each period end and adjusted if appropriate.



- 9 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013





| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



| | (g) | Intangible assets
| | --- | -----------------



(i) Research and development



Expenditure on research activities,
undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss
as incurred.



Development activities involve
a plan or design for the production of new or substantially improved products and processes. Development expenditures are capitalized
only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic
benefits are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset.
No development costs have been capitalized to date.



Research and development expenses
include all direct and indirect operating expenses supporting the products in development.



(ii) Intangible assets



Intangible assets that are acquired
separately and have finite useful lives are measured at cost less accumulated amortization and accumulated impairment losses. Subsequent
expenditures are capitalized only when they increase the future economic benefits embodied in the specific asset to which they
relate. All other expenditures are recognized in profit or loss as incurred.



Costs incurred in obtaining a
patent are capitalized and amortized on a straight-line basis over the legal life of the respective patent, ranging from five to
twenty years, or its economic life, if shorter. Costs incurred in obtaining a trademark are capitalized and amortized on a straight-line
basis over the legal life of the respective trademark, being ten years, or its economic life, if shorter. Costs incurred in obtaining
a customer list are capitalized and amortized on a straight-line basis over approximately ten years, or its economic life, if shorter.



Costs incurred in successfully
obtaining a patent, trademark or customer list are measured at cost less accumulated amortization and accumulated impairment losses.
The cost of servicing the Company's patents and trademarks are expensed as incurred.



(iii) Subsequent expenditures



Subsequent expenditures are capitalized
only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures
are recognized in profit or loss as incurred.



(iv) 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.



(v) 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.



- 10 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



| | (h) | Investment in Apicore and long-term derivative
| | --- | ----------------------------------------------



The investment in Apicore represents
the acquisition of a minority interest in a pharmaceutical manufacturing business as described in note 8. The acquisition was completed
by the Company and a wholly owned subsidiary, Medicure U.S.A. Inc. and was initially recorded at fair value and subsequently measured
at amortized cost.



The long-term derivative is the
value associated to the options rights received by the Company and is classified as fair value through profit and loss. The change
in the long-term derivative is recorded as a revaluation of long-term derivative in the consolidated statement of net income (loss)
and comprehensive income (loss). The long-term derivative is non-transferable and is recorded at fair value at the date at which
it was acquired and subsequently revalued at each reporting date. Estimating fair value for this derivative requires determining
the most appropriate valuation model which is dependent on the terms and conditions of the derivative. This estimate also requires
determining the most appropriate inputs to the valuation model, including the expected life of the derivative, volatility, dividend
yield and probabilities pertaining to its exercise and making assumptions about them.



| | (i) | Impairment of financial assets
| | --- | ------------------------------



At each reporting date, the
Company assesses whether there is objective evidence that a financial asset is impaired. If such evidence exists, the Company recognizes
an impairment loss for financial assets carried at amortized cost. The loss is the difference between the amortized cost of the
loan or receivable and the present value of the estimated future cash flows, discounted using the instrument’s original effective
interest rate. The carrying amount of the asset is reduced by this amount through the use of an allowance account.



Impairment losses on financial
assets carried at amortized cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognized.



| | (j) | Impairment of non-financial assets
| | --- | ----------------------------------



The Company assesses at each
reporting period whether there is an indication that a non-financial asset may be impaired. An impairment loss is recognized when
the carrying amount of an asset, or its CGU, exceeds its recoverable amount. Impairment losses are recognized in net income (loss)
and comprehensive income (loss) and included in research and development expense if they relate to patents. A CGU is the smallest
identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or
groups of assets. The recoverable amount is the greater of the asset's or CGU's fair value less costs to sell and value in use.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. In determining
fair value less cost to sell, an appropriate valuation model is used. For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the CGU to which the asset belongs.



Impairment losses recognized
in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment
loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of
amortization, if no impairment loss had been recognized.



- 11 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



| | (k) | Employee benefits
| | --- | -----------------



(i) Short-term employee benefits



Short-term employee benefit obligations
are measured on an undiscounted basis and are expensed as the related service is provided.



(ii) Share-based payment transactions



The grant date fair value of
share-based payment awards granted to employees is recognized as a personnel expense, with a corresponding increase in equity,
over the period that the employees unconditionally become entitled to the awards. The amount recognized as an expense is adjusted
to reflect the number of awards for which the related service and non-market vesting conditions are expected to be met, such that
the amount ultimately recognized as an expense is based on the number of awards that do meet the related service and non-market
performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value
of the share-based payment is measured to reflect such conditions and there is no true-up for differences between expected and
actual outcomes.



Share-based payment arrangements
in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity-settled
share-based payment transactions. In situations where equity instruments are issued and some or all of the goods or services received
by the entity as consideration cannot be specifically identified, they are measured at fair value of the share-based payment.



For share-based payment arrangements
with non-employees, the expense is recorded over the service period until the options vest. Once the options vest, services are
deemed to have been received.



| | (l) | Finance income and finance costs
| | --- | --------------------------------



Finance costs comprise interest
expense on borrowings which are recognized in profit or loss using the effective interest method, changes in the fair value of
the warrant liability, accretion on the royalty obligation and amortization of deferred debt issue costs using the effective interest
method, offset by any finance income which is comprised of interest income on funds invested which is recognized as it accrues
in profit or loss, using the effective interest method.



Foreign currency gains and losses
are reported on a net basis.



| | (m) | Income taxes
| | --- | ------------



Income tax expense comprises
current and deferred taxes. Current taxes and deferred taxes are recognized in profit or loss except to the extent that it relates
to a business combination, or items recognized directly in equity (deficiency) or in other comprehensive income (loss).



Current taxes are the expected
tax receivable or payable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting
date, and any adjustment to tax receivable or payable in respect of previous years.



Deferred taxes are recognized
in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for taxation purposes. Deferred taxes are not recognized for the following temporary differences: the initial
recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor
taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that
it is probable that they will not reverse in the foreseeable future. In addition, deferred taxes are not recognized for taxable
temporary differences arising on the initial recognition of goodwill. Deferred taxes are measured at the tax rates that are expected
to be applied to temporary differences when they reverse, based on the tax laws that have been enacted or substantively enacted
by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current
tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax assets and liabilities on a net basis or their tax assets and liabilities
will be realized simultaneously.



- 12 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



| | (m) | Income taxes (continued)
| | --- | ------------------------



A deferred tax asset is recognized
for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable
profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced
to the extent that it is no longer probable that the related tax benefit will be realized.



| | (n) | Earnings (loss) per share
| | --- | -------------------------



The Company presents basic earnings
per share ("EPS") data for its common voting shares. Basic EPS is calculated by dividing the profit or loss attributable
to common voting shareholders of the Company by the weighted average number of common voting shares outstanding during the period,
adjusted for the Company's own shares held. Diluted EPS is computed similar to basic EPS except that the weighted average shares
outstanding are increased to include additional shares for the assumed exercise of stock options and warrants, if dilutive. The
number of additional shares is calculated by assuming that outstanding stock options and warrants were exercised and that the proceeds
from such exercise were used to acquire common shares at the average market price during the reporting periods.



| | (o) | New standards and interpretations not yet adopted
| | --- | -------------------------------------------------



Certain new standards, interpretations
and amendments to existing standards issued by the IASB or the International Financial Reporting Interpretations Committee that
are not yet effective up to the date of issuance of the Company’s consolidated financial statements are listed below. The
Company is assessing the impact of these pronouncements on its consolidated results and financial position. The Company intends
to adopt those standards when they become effective.



IFRS 9, Financial Instruments:
Classification and Measurement ("IFRS 9")



IFRS 9 replaces the guidance
in IAS 39, Financial Instruments: Recognition and Measurement, on the classification and measurement of financial assets.
The standard eliminates the existing IAS 39 categories of held-to-maturity, available-for-sale and loans and receivables.



Financial assets will be classified into one of two
categories on initial recognition:



| | · | financial assets measured at amortized cost; or
| | - | -----------------------------------------------



| | · | financial assets measured at fair value.
| | - | ----------------------------------------



Under IFRS 9, for financial liabilities
measured at fair value under the fair value option, changes in fair value attributable to changes in credit risk will be recognized
in other comprehensive income (loss), with the remainder of the change recognized in profit and loss. IFRS 9 is effective for annual
periods beginning on or after January 1, 2018 and is to be applied retrospectively with some exemptions. The Company is currently
evaluating the impact of the above standard on its financial statements.



IFRS 15,Revenue from Contracts
with Customers ("IFRS 15")



IFRS 15, issued by the IASB in
May 2014, is applicable to all revenue contracts and provides a model for the recognition and measurement of gains or losses from
sales of some non-financial assets. The core principle is that revenue is recognized to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services. The standard will also result in enhanced disclosures about revenue, provide guidance for transactions that
were not previously addressed comprehensively (for example, service revenue and contract modifications) and improve guidance for
multiple-element arrangements. IFRS 15 is effective for annual periods beginning on or after January 1, 2018, and is to be applied
retrospectively, with earlier adoption permitted. Entities will transition following either a full or modified retrospective approach.
The Company is currently evaluating the impact of the above standard on its financial statements.



- 13 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



| | 3. | Significant accounting policies (continued):
| | -- | --------------------------------------------



| | (o) | New standards and interpretations not yet adopted (continued)
| | --- | -------------------------------------------------------------



IFRS 16,Leases ("IFRS
16")



In January 2016, the IASB issued
IFRS 16 which requires lessees to recognize assets and liabilities for most leases. Lessees will have a single accounting model
for all leases, with certain exemptions. The new standard is effective January 1, 2019, with limited early application permitted.
The new standard permits lessees to use either a full retrospective or a modified retrospective approach on transition for leases
existing at the date of transition, with options to use certain transition reliefs. The Company is currently evaluating the impact
of the above amendments on its financial statements.



Amendments to IAS 1, Presentation
of Financial Statements ("IAS 1")



On December 18, 2014, the IASB
issued amendments to IAS 1 as part of its major initiative to improve presentation and disclosure in financial reports (the "Disclosure
Initiative"). The amendments are effective for annual periods beginning on or after January 1, 2016. Early adoption is permitted.
These amendments will not require any significant change to current practice, but should facilitate improved financial statements
disclosures. The Company intends to adopt these amendments in its financial statements for the annual period beginning on January
1, 2016. The Company is currently evaluating the impact of the above amendments on its financial statements.



| | 4. | Accounts receivable:
| | -- | --------------------



|                          |  | December 31, 2015 |           |  | December 31, 2014 |   |           | May 31, 2014 | 
|------------------------- |  | ----------------- | --------- |  | ----------------- | - | --------- | ------------ | 
|                          |  |                   |           |  |                   |   |           |              | 
|Trade accounts receivable |  | $                 | 9,797,312 |  |                   | $ | 1,606,473 |              | 
|Other accounts receivable |  |                   | 26,304    |  |                   |   | 31,203    |              | 
|                          |  |                   |           |  |                   |   |           |              | 
|                          |  | $                 | 9,823,616 |  |                   | $ | 1,637,676 |              | 



As at December 31, 2015, the
trade accounts receivable consist of amounts owing from four customers which represent approximately 100% (December 31, 2014 -
five customers and 99% and May 31, 2014 - four customers and 98%) of trade accounts receivable.



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



|                                          |  | December 31, 2015 |           |  | December 31, 2014 |   |           | May 31, 2014 | 
|----------------------------------------- |  | ----------------- | --------- |  | ----------------- | - | --------- | ------------ | 
|                                          |  |                   |           |  |                   |   |           |              | 
|Unfinished product and packaging material |  | $                 | 110,330   |  |                   | $ | 163,163   |              | 
|Finished product available-for-sale       |  |                   | 1,008,773 |  |                   |   | 936,413   |              | 
|Pre-launch inventory                      |  |                   | 1,170,172 |  |                   |   | -         |              | 
|                                          |  |                   |           |  |                   |   |           |              | 
|                                          |  | $                 | 2,289,275 |  |                   | $ | 1,099,576 |              | 



During the year ended December
31, 2015, the Company wrote off $40,920 of inventory that had expired or was otherwise unuseable. During the seven months ended
December 31, 2014, the Company recorded a recovery of $80,874 relating to inventories that were previously written off. During
the years ended May 31, 2014 and 2013, the Company wrote off $22,209 and $19,639 respectively, of inventory that had expired or
were otherwise unuseable. Inventories expensed as part of cost of goods sold during the year ended December 31, 2015 amounted to
$1,563,344 (seven months ended December 31, 2014 - $349,901, year ended May 31, 2014 - $300,378 and year ended May 31, 2013 - $131,355).



- 14 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



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



|                                      |  | Computer   |         |   | Furniture,   |   |         |              |  |   |        | 
|------------------------------------- |  | ---------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ------ | 
|                                      |  | and office |         |   | fixtures and |   |         | Leasehold    |  |   |        | 
|Cost                                  |  | equipment  |         |   | equipment    |   |         | improvements |  |   | Total  | 
|                                      |  |            |         |   |              |   |         |              |  |   |        | 
|Balance, May 31, 2013                 |  | $          | 27,739  |   |              | $ | 132,436 |              |  | $ | -      | 
|Additions                             |  |            | 5,513   |   |              |   | -       |              |  |   | -      | 
|Effect of movements in exchange rates |  |            | -       |   |              |   | 5,218   |              |  |   | -      | 
|                                      |  |            |         |   |              |   |         |              |  |   |        | 
|Balance, May 31, 2014                 |  |            | 33,252  |   |              |   | 137,654 |              |  |   | -      | 
|Additions                             |  |            | 13,607  |   |              |   | 3,106   |              |  |   | -      | 
|Effect of movements in exchange rates |  |            | -       |   |              |   | 8,357   |              |  |   | -      | 
|                                      |  |            |         |   |              |   |         |              |  |   |        | 
|Balance, December 31, 2014            |  | $          | 46,859  |   |              | $ | 149,117 |              |  | $ | -      | 
|                                      |  |            |         |   |              |   |         |              |  |   |        | 
|Additions                             |  |            | 74,007  |   |              |   | 55,797  |              |  |   | 96,766 | 
|Disposals                             |  |            | (21,654 | ) |              |   | -       |              |  |   | -      | 
|Effect of movements in exchange rates |  |            | -       |   |              |   | 24,652  |              |  |   | -      | 
|                                      |  |            |         |   |              |   |         |              |  |   |        | 
|Balance, December 31, 2015            |  | $          | 99,212  |   |              | $ | 229,566 |              |  | $ | 96,766 | 



|                                      |  | Computer   |         |   | Furniture,   |   |         |              |  |   |       | 
|------------------------------------- |  | ---------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ----- | 
|                                      |  | and office |         |   | fixtures and |   |         | Leasehold    |  |   |       | 
|Accumulated Amortization              |  | equipment  |         |   | equipment    |   |         | improvements |  |   | Total | 
|                                      |  |            |         |   |              |   |         |              |  |   |       | 
|Balance, May 31, 2013                 |  | $          | 21,682  |   |              | $ | 116,258 |              |  | $ | -     | 
|Amortization                          |  |            | 3,577   |   |              |   | 4,150   |              |  |   | -     | 
|Effect of movements in exchange rates |  |            | -       |   |              |   | 4,558   |              |  |   | -     | 
|                                      |  |            |         |   |              |   |         |              |  |   |       | 
|Balance, May 31, 2014                 |  |            | 25,259  |   |              |   | 124,966 |              |  |   | -     | 
|Amortization                          |  |            | 2,882   |   |              |   | 2,151   |              |  |   | -     | 
|Effect of movements in exchange rates |  |            | -       |   |              |   | 7,557   |              |  |   | -     | 
|                                      |  |            |         |   |              |   |         |              |  |   |       | 
|Balance, December 31, 2014            |  | $          | 28,141  |   |              | $ | 134,674 |              |  | $ | -     | 
|                                      |  |            |         |   |              |   |         |              |  |   |       | 
|Amortization                          |  |            | 12,445  |   |              |   | 11,358  |              |  |   | 7,741 | 
|Disposals                             |  |            | (21,654 | ) |              |   | -       |              |  |   | -     | 
|Effect of movements in exchange rates |  |            | -       |   |              |   | 22,677  |              |  |   | -     | 
|                                      |  |            |         |   |              |   |         |              |  |   |       | 
|Balance, December 31, 2015            |  | $          | 18,932  |   |              | $ | 168,709 |              |  | $ | 7,741 | 



|                        |  | Computer   |        |  | Furniture,   |   |        |              |  |   |        | 
|----------------------- |  | ---------- | ------ |  | ------------ | - | ------ | ------------ |  | - | ------ | 
|                        |  | and office |        |  | fixtures and |   |        | Leasehold    |  |   |        | 
|Carrying amounts        |  | equipment  |        |  | equipment    |   |        | Improvements |  |   | Total  | 
|                        |  |            |        |  |              |   |        |              |  |   |        | 
|As at May 31, 2014      |  | $          | 7,993  |  |              | $ | 12,688 |              |  | $ | -      | 
|As at December 31, 2014 |  | $          | 18,718 |  |              | $ | 14,443 |              |  | $ | -      | 
|As at December 31, 2015 |  | $          | 80,280 |  |              | $ | 60,857 |              |  | $ | 89,025 | 



- 15 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



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



|                                               |  |         |            |  |            |   |           | Customer |  |   |         | 
|---------------------------------------------- |  | ------- | ---------- |  | ---------- | - | --------- | -------- |  | - | ------- | 
|Cost                                           |  | Patents |            |  | Trademarks |   |           | list     |  |   | Total   | 
|                                               |  |         |            |  |            |   |           |          |  |   |         | 
|Balance, May 31, 2013                          |  | $       | 8,834,298  |  |            | $ | 1,642,142 |          |  | $ | 289,790 | 
|Effect of movements in exchange rates          |  |         | 403,853    |  |            |   | 75,074    |          |  |   | 13,248  | 
|                                               |  |         |            |  |            |   |           |          |  |   |         | 
|Balance, May 31, 2014                          |  |         | 9,238,151  |  |            |   | 1,717,216 |          |  |   | 303,038 | 
|Additions                                      |  |         | 7,206      |  |            |   | -         |          |  |   | -       | 
|Effect of movements in exchange rates          |  |         | 647,266    |  |            |   | 120,215   |          |  |   | 21,215  | 
|                                               |  |         |            |  |            |   |           |          |  |   |         | 
|Balance, December 31,  2014                    |  |         | 9,892,623  |  |            |   | 1,837,431 |          |  |   | 324,253 | 
|Effect of movements in exchange rates          |  |         | 1,820,309  |  |            |   | 364,473   |          |  |   | 64,319  | 
|Reversal of impairment loss                    |  |         | 3,995,617  |  |            |   | 2,226,434 |          |  |   | 392,900 | 
|                                               |  |         |            |  |            |   |           |          |  |   |         | 
|Balance, December 31, 2015                     |  | $       | 15,708,549 |  |            | $ | 4,428,338 |          |  | $ | 781,472 | 
|                                               |  |         |            |  |            |   |           |          |  |   |         | 
|                                               |  |         |            |  |            |   |           | Customer |  |   |         | 
|Accumulated amortization and impairment losses |  | Patents |            |  | Trademarks |   |           | list     |  |   | Total   | 
|                                               |  |         |            |  |            |   |           |          |  |   |         | 
|Balance, May 31, 2013                          |  | $       | 7,406,600  |  |            | $ | 1,232,126 |          |  | $ | 217,435 | 
|Amortization                                   |  |         | 408,679    |  |            |   | 123,134   |          |  |   | 21,729  | 
|Effect of movements in exchange rates          |  |         | 346,531    |  |            |   | 58,657    |          |  |   | 10,356  | 
|                                               |  |         |            |  |            |   |           |          |  |   |         | 
|Balance, May 31, 2014                          |  |         | 8,161,810  |  |            |   | 1,413,917 |          |  |   | 249,520 | 
|Amortization                                   |  |         | 340,076    |  |            |   | 74,834    |          |  |   | 13,206  | 
|Effect of movements in exchange rates          |  |         | 583,406    |  |            |   | 102,508   |          |  |   | 18,084  | 
|                                               |  |         |            |  |            |   |           |          |  |   |         | 
|Balance, December 31, 2014                     |  |         | 9,085,292  |  |            |   | 1,591,259 |          |  |   | 280,810 | 
|Amortization                                   |  |         | 485,298    |  |            |   | 147,978   |          |  |   | 26,114  | 
|Effect of movements in exchange rates          |  |         | 1,687,291  |  |            |   | 319,327   |          |  |   | 56,352  | 
|Reversal of impairment loss                    |  |         | 3,523,955  |  |            |   | 1,957,288 |          |  |   | 345,403 | 
|                                               |  |         |            |  |            |   |           |          |  |   |         | 
|Balance, December 31, 2015                     |  | $       | 14,781,836 |  |            | $ | 4,015,852 |          |  | $ | 708,679 | 
|                                               |  |         |            |  |            |   |           |          |  |   |         | 
|                                               |  |         |            |  |            |   |           | Customer |  |   |         | 
|Carrying amounts                               |  | Patents |            |  | Trademarks |   |           | list     |  |   | Total   | 
|As at May 31, 2014                             |  | $       | 1,076,341  |  |            | $ | 303,299   |          |  | $ | 53,518  | 
|As at December 31, 2014                        |  | $       | 807,331    |  |            | $ | 246,172   |          |  | $ | 43,443  | 
|As at December 31, 2015                        |  | $       | 926,713    |  |            | $ | 412,486   |          |  | $ | 72,793  | 



- 16 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



| | 7. | Intangible assets (continued):
| | -- | ------------------------------



The Company has considered indicators
of impairment as at December 31, 2015, December 31, 2014 and May 31, 2014. To December 31, 2015, the Company has recorded an aggregate
impairment loss of $16,136,325 primarily resulting from a previous write-down of AGGRASTAT® intangible assets and from patent
applications no longer being pursued or patents being abandoned. The Company recorded a reversal of the impairment loss relating
to AGGRASTAT® intangible assets, originally written down during the year ended May 31, 2008, totalling $788,305 for the year
ended December 31, 2015 as a result of sustained improvements in the AGGRASTAT® business. The Company did not record a write-down
of intangible assets during the seven months ended December 31, 2014 or the year ended May 31, 2014. During the year ended May
31, 2013 the Company recorded a write-down of intangible assets, within research and development expense, totalling $62,133, relating
to patent applications no longer being pursued and patents being abandoned. The average remaining amortization period of the Company's
intangible assets is approximately 0.8 years.



For the year ended December 31,
2015, amortization of intangible assets relating to AGGRASTAT® totalling $655,603 (seven months ended December 31, 2014 - $331,547,
year ended May 31, 2014 - 545,535 and year ended May 31, 2013 - $514,902) is recognized in cost of goods sold and amortization
of other intangible assets totalling $3,787 (seven months ended December 31, 2014 - $96,569, year ended May 31, 2014 - $8,007 and
year ended May 31, 2013 - $10,580) is recognized in research and development expenses.



As described in note 9, certain intangible assets
were pledged as security against long-term debt.



| | 8. | Investment in Apicore:
| | -- | ----------------------



On July 3, 2014, the Company
entered into an arrangement whereby it acquired a minority interest in a pharmaceutical manufacturing business known as Apicore,
along with an option to acquire all of the remaining issued shares prior to July 3, 2017. Specifically, the Company acquired a
6.09% equity interest (5.33% on a fully-diluted basis) in two newly formed holding companies of which Apicore LLC. and Apicore
US LLC. will be wholly owned operating subsidiaries. The Company's equity interest and certain other rights, including the option
rights, were obtained by the Company for services provided in its lead role in structuring a US$22.5 million majority interest
purchase and financing of Apicore. There was no cash consideration in connection with the acquisition of the minority interest
in Apicore, with the exception of costs incurred by the Company in relation to the transaction which totaled $167,672.



Subsequent to July 3, 2014, Apicore
granted stock options to certain members of its management team and board of directors, as well as certain of its employees and
25,000 of these stock options have since been exercised. This results in the Company's ownership being diluted to 6.07% (4.95%
fully diluted).



The Company has a contractual
obligation to assist in funding the resolution of certain specified damages if they are encountered before July 3, 2016, not to
exceed US$5 million. The specified mechanism for the Company to fulfill this obligation is through the purchase of a portion of
the equity of Apicore at a specified, discounted price per share. The occurrence of any of the specified damages that would precipitate
such a purchase is not anticipated by the Company, therefore no amount has been recorded in the consolidated financial statements.



As at July 3, 2014, the investment
in Apicore was initially valued at $1,276,849 and the option rights received were recorded at a value of $275,922.



As at December 31, 2015, the
investment in Apicore was recorded at $1,559,599 (December 31, 2014 - $1,361,824). The increase in value is as a result of the
translation of the foreign currency balance of the portion of the investment in Apicore held by Medicure USA. The difference of
$197,775 is recorded as a translation adjustment through other comprehensive income in the consolidated statement of income (loss)
and comprehensive income (loss) for the year ended December 31, 2015 (seven months ended December 31, 2014 - $84,975).



The long-term derivative is the
value associated to the option rights, which is revalued at every reporting period. As at December 31, 2015, the option rights
have a value of $227,571 (December 31, 2014 - $194,491). The change in the value of the option rights of $33,080 is recorded in
the consolidated statement of income (loss) and comprehensive income (loss) for the year ended December 31, 2015 as a revaluation
of the long-term derivative (seven months ended December 31, 2014 - ($81,431)).



- 17 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015, seven months ended December 31,
2014 and years ended May 31, 2014 and 2013



| | 8. | Investment in Apicore (continued):
| | -- | ----------------------------------



As there was no cash consideration
for the investment in Apicore, the Company recorded the initial value of holdings acquired, including the option rights, net of
transaction costs which totalled $167,672 as investment structuring services in the consolidated statement of income (loss) and
comprehensive income (loss) for the seven months ended December 31, 2014.



| | 9. | Long-term debt:
| | -- | ---------------





|                                               |  | December 31, 2015 |            |   | December 31, 2014 |   |           | May 31, 2014 | 
|---------------------------------------------- |  | ----------------- | ---------- | - | ----------------- | - | --------- | ------------ | 
|                                               |  |                   |            |   |                   |   |           |              | 
|Manitoba Industrial Opportunities Program loan |  | $                 | 4,242,784  |   |                   | $ | 4,880,826 |              | 
|Current portion of long-term debt              |  |                   | (1,625,191 | ) |                   |   | (654,877  | )            | 
|                                               |  |                   |            |   |                   |   |           |              | 
|                                               |  | $                 | 2,617,593  |   |                   | $ | 4,225,949 |              | 



Principal repayments to maturity
by fiscal year are as follows:



|2016                                                                            |  | $ | 1,666,667 |  
|------------------------------------------------------------------------------- |  | - | --------- | -
|2017                                                                            |  |   | 1,666,667 |  
|2018                                                                            |  |   | 972,222   |  
|                                                                                |  |   |           |  
|                                                                                |  |   | 4,305,556 |  
|Less deferred debt issue expenses (net of accumulated amortization of $407,469) |  |   | (62,772   | )
|                                                                                |  |   |           |  
|                                                                                |  | $ | 4,242,784 |  



On July 18, 2011, the Company
borrowed $5,000,000 from the Government of Manitoba, under the Manitoba Industrial Opportunities Program ("MIOP"), to
assist in the settlement of its then existing long-term debt. The loan bears interest annually at 5.25% and originally matured
on July 1, 2016. The loan was payable interest only for the first 24 months, with blended principal and interest payments made
monthly thereafter until maturity. Effective August 1, 2013, the Company renegotiated its long-term debt and received an additional
two-year deferral of principal repayments. Under the renegotiated terms, the loan continued to be interest only until August 1,
2015, at which point blended principal and interest payments began. The loan matures on July 1, 2018 and is secured by the Company's
assets and guaranteed by the Chief Executive Officer of the Company and entities controlled by the Chief Executive Officer. The
Company issued 1,333,333 common shares (20,000,000 pre-consolidated common shares) of the Company with a fair value of $371,834,
net of share issue costs of $28,166, in consideration for the guarantee to the Company's Chief Executive Officer and entities controlled
by the Chief Executive Officer. In connection with the guarantee, the Company entered into an indemnification agreement with the
Chief Executive Officer under which the Company shall pay the Guarantor on demand all amounts paid by the Guarantor pursuant to
the guarantee. In addition, under the indemnity agreement, the Company agreed to provide certain compensation upon a change in
control of the Company. 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.



The Company is required to maintain
certain non-financial covenants under the terms of the MIOP loan. As at December 31, 2015, management believes it is in compliance
with the terms of the loan.



The effective interest rate on
the MIOP loan for the year ended December 31, 2015 was 7% (seven months ended December 31, 2014 - 7%, year ended May 31, 2014 -
7% and year ended May 31, 2013 - 8%).



- 18 -






|MEDICURE INC.                                                                                           
|--------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                          
|(expressed in Canadian dollars)                                                                         
|Year ended December 31, 2015, seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 10. | Royalty Obligation:
| | --- | -------------------



On July 18, 2011, the Company settled
its then existing long-term debt with Birmingham Associates Ltd. ("Birmingham"), an affiliate of Elliott Associates L.P.,
in exchange for i) $4,750,000 in cash; ii) 2,176,003 common shares (32,640,043 preconsolidation common shares) of the Company;
and iii) a royalty on future AGGRASTAT® sales until May 1, 2023. The royalty is based on 4% of the first $2,000,000
of quarterly AGGRASTAT® sales, 6% on the portion of quarterly sales between $2,000,000 and $4,000,000 and 8% on
the portion of quarterly sales exceeding $4,000,000 payable within 60 days of the end of the preceding three month periods ended
February 28, May 31, August 31 and November 30. The previous lender has a one-time option to switch the royalty payment from AGGRASTAT®
to a royalty on MC-1 sales. Management has determined there is no value to the option to switch the royalty to MC-1 as the product
is not commercially available for sale and development of the product is on hold.



In accordance with the terms of the
agreement, if the Company were to dispose of its AGGRASTAT® rights, the acquirer would be required to assume the
obligations under the royalty agreement.



The initial fair value assigned to
the royalty obligation, based on an expected value approach, was estimated to be $901,915. The royalty obligation is subsequently
measured at amortized cost using the effective interest method, with the associated cash flows being revised each period resulting
in a carrying value at December 31, 2015 of $5,373,452 (December 31, 2014 - $2,189,054 and May 31, 2014 - $1,778,578) of which
$1,648,180 (December 31, 2014 - $473,744 and May 31, 2014 - $317,006) represents the current portion of the royalty obligation.
The change in the royalty obligation for the year ended December 31, 2015 of $3,791,282 (seven months ended December 31, 2014 -
$492,722, year ended May 31, 2014 - $1,349,372 and May 31, 2013 - $72,689) is recorded within finance expense on the consolidated
statements of net income (loss) and comprehensive Income (loss). Royalties for the year ended December 31, 2015 totalled $1,207,772,
(seven months ended December 31, 2014 - $210,576, year ended May 31, 2014 - $201,131 and year ended May 31, 2013 - $104,979) with
payments made during the year ended December 31, 2015 of $642,768 (seven months ended December 31, 2014 - $156,722, year ended
May 31, 2014 - $165,291 and year ended May 31, 2013 - $88,105).



| | 11. | Other long-term liability
| | --- | -------------------------



The Company received $200,000 of
funding from the Province of Manitoba's Commercialization Support for Business program to assist the Company with the completion
of a study evaluating AGGRASTAT® in patients with impaired kidney function. The study was completed and the funds were received
during the year ended May 31, 2013. The funding is repayable when certain sales targets are met and the repayable requirement will
remain in effect for a period not less than eight fiscal years and it is expected that this funding will be repaid during fiscal
2016 and 2017.



The other long-term liability was
initially recorded at a fair value of $167,261 with the difference between the fair value of the liability and the funding received
being recorded as a reduction in research and development expenses. The other long-term liability is subsequently measured at amortized
cost using the effective interest method, with the associated cash flows being revised each period resulting in a carrying value
at December 31, 2015 of $200,000 (December 31, 2014 - $152,778 and May 31, 2014 - $152,778) of which $100,000 represents the current
portion and is included within accounts payable and accrued liabilities on the consolidated statements of financial position. The
net change in the other long-term liability for the year ended December 31, 2015 of $47,222 (seven months ended December 31, 2014
- nil, year ended May 31, 2014 - $14,483 and year ended May 31, 2013 - nil) is recorded as a research and development expense on
the consolidated statements of net income (loss) and comprehensive income (loss).



| | 12. | Capital stock:
| | --- | --------------



| | (a) | Authorized
| | --- | ----------



The Company has authorized share
capital of an unlimited number of common voting shares, an unlimited number of class A common shares and an unlimited number of
preferred shares. The preferred shares may be issued in one or more series, and the directors may fix prior to each series issued,
the designation, rights, privileges, restrictions and conditions attached to each series of preferred shares.



On November 1, 2012, the Company
completed a consolidation of its outstanding share capital on the basis of one post-consolidation share for every fifteen pre-consolidation
shares. All comparative figures have been adjusted retrospectively.



- 19 -






|MEDICURE INC.                                                                                           
|--------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                          
|(expressed in Canadian dollars)                                                                         
|Year ended December 31, 2015, seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 12. | Capital stock (continued):
| | --- | --------------------------



| | (b) | Shares issued and outstanding
| | --- | -----------------------------



Shares issued and outstanding are
as follows:



|                                                         |  | Number of common shares |            |  | Amount |  
|-------------------------------------------------------- |  | ----------------------- | ---------- |  | ------ | -
|                                                         |  |                         |            |  |        |  
|Balance, May 31, 2012                                    |  |                         | 12,196,508 |  |        | $
|                                                         |  |                         |            |  |        |  
|Balance, May 31, 2013                                    |  |                         | 12,196,508 |  |        | $
|Shares issued upon exercise of stock options (12c)       |  |                         | 3,333      |  |        |  
|                                                         |  |                         |            |  |        |  
|Balance, May 31, 2014                                    |  |                         | 12,199,841 |  |        | $
|Shares issued upon exercise of stock options (12c)       |  |                         | 10,066     |  |        |  
|                                                         |  |                         |            |  |        |  
|Balance, December 31, 2014                               |  |                         | 12,209,907 |  |        | $
|Shares issued for cash net of issue costs of $627,247(1) |  |                         | 1,829,545  |  |        |  
|Shares issued on settlement of debt (2) (3)              |  |                         | 314,073    |  |        |  
|Shares issued upon exercise of stock options (12c)       |  |                         | 23,350     |  |        |  
|Shares issued upon exercise of warrants (12d)            |  |                         | 68,293     |  |        |  
|                                                         |  |                         |            |  |        |  
|Balance, December 31, 2015                               |  |                         | 14,445,168 |  |        | $



(1) On June 26, 2015,
the Company closed a private placement offering with a syndicate of underwriters (the "Offering") of 1,829,545 common
shares at a price of $2.20 per share with aggregate gross proceeds to the Company of $4,024,999. Share issue costs totalled $627,247
pertaining to the Offering. The underwriters received a cash commission equal to 7.0% of the gross proceeds raised in the Offering.
In addition, the underwriters were granted warrants to purchase common shares of Medicure equal to 7.0% of the total number of
common shares issued pursuant to the Offering, exercisable for a 24 month period from the closing of the Offering at a price of
$2.20 per common share. There were 128,068 warrants issued in connection with offering with a fair value of $232,571, which is
included in the share issue costs of $627,247.



(2) On July 11, 2014,
the Company announced that, subject to all necessary regulatory approvals, it had entered into shares for debt agreements with
its Chief Executive Officer, Dr. Albert Friesen, and certain members of the Board of Directors, pursuant to which the Company will
issue 205,867 of its common shares with a fair value of $1.98 per common share to satisfy $407,617 of outstanding amounts owing
to the Chief Executive Officer and members of the Company’s Board of Directors. The shares were issued on January 9, 2015.



(3) On January 27, 2015,
the Company announced that, subject to all necessary regulatory approvals, it had entered into shares for debt agreements with
certain members of the Board of Directors and a consultant, pursuant to which the Company will issue 108,206 of its common shares
with a fair value of $1.44 per common share to satisfy $155,817 of outstanding amounts owing to the these individuals. The shares
were issued on March 20, 2015 and resulted in a loss of $60,595 due to increases in the share price between the date of the debt
settlements and the issuance of the shares. This loss is recorded on the consolidated statements of income (loss) and comprehensive
income (loss) as a loss on settlement of debt.



| | (c) | Stock option plan
| | --- | -----------------



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 2,441,981 common shares of the Company at any time. The stock options generally have a maximum term of ten years.



- 20 -






|MEDICURE INC.                                                                                           
|--------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                          
|(expressed in Canadian dollars)                                                                         
|Year ended December 31, 2015, seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 12. | Capital stock (continued):
| | --- | --------------------------



| | (c) | Stock option plan (continued)
| | --- | -----------------------------



On July 7, 2014, the Company granted
an aggregate of 332,300 options to certain directors, officers, employees, management company employees and consultants of the
Company. Of these options, 92,300 are set to expire on the tenth anniversary of the date of grant, and 240,000 are set to expire
on the fifth anniversary of the date of grant. All 332,300 options were issued at an exercise price of $1.90 per share and vested
immediately.



On March 27, 2015, the Company granted
an aggregate of 236,070 options to certain directors, officers, employees, management company employees and consultants of the
Company pursuant to the Company’s stock option plan. Of these options, 181,070 are set to expire on the tenth anniversary
of the date of grant, 5,000 are set to expire on the third anniversary of the date of grant and 50,000 are set to expire on the
first anniversary of the date of grant. All of the options were issued at an exercise price of $1.90 per share. Of the 236,070
options granted on March 27, 2015, 183,570 vested immediately, 25,000 vested on July 1, 2015 and 27,500 vested on October 1, 2015.



On July 7, 2015, the Company granted
an aggregate of 240,000 options to a consultant of the Company. These options are set to expire on the fifth anniversary of the
date of grant and were issued at an exercise price of $2.50 per share and vested immediately.



On November 25, 2015, the Company
granted an aggregate of 168,000 options to certain employees and consultants of the Company pursuant to the Company’s stock
option plan. These options are set to expire on the fifth anniversary of the date of grant and were issued at an exercise price
of $3.90 per share and vested immediately.



Changes in the number of options
outstanding during the year ended December 31, 2015, the seven months ended December 31, 2014 and the years ended May 31, 2014
and 2013 are as follows:



|                                   |  | December 31, 2015 |           |   | December 31, 2014 |  
|---------------------------------- |  | ----------------- | --------- | - | ----------------- | -
|                                   |  |                   |           |   | Weighted          |  
|                                   |  |                   |           |   | average           |  
|                                   |  |                   |           |   | exercise          |  
|                                   |  | Shares            |           |   | price             |  
|                                   |  |                   |           |   |                   |  
|Balance, beginning of period       |  |                   | 1,720,253 |   |                   | $
|Granted                            |  |                   | 644,070   |   |                   |  
|Exercised                          |  |                   | (23,350   | ) |                   |  
|Forfeited, cancelled or expired    |  |                   | (63,847   | ) |                   |  
|                                   |  |                   |           |   |                   |  
|Balance, end of period             |  |                   | 2,277,126 |   |                   | $
|                                   |  |                   |           |   |                   |  
|Options exercisable, end of period |  |                   | 2,277,126 |   |                   | $





- 21 -






|MEDICURE INC.                                                                                           
|--------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                          
|(expressed in Canadian dollars)                                                                         
|Year ended December 31, 2015, seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 12. | Capital stock (continued):
| | --- | --------------------------



| | (c) | Stock option plan (continued)
| | --- | -----------------------------



|                                   |  | May 31, 2014 |           |   | May 31, 2013 |  
|---------------------------------- |  | ------------ | --------- | - | ------------ | -
|                                   |  |              |           |   |              |  
|                                   |  |              |           |   | Weighted     |  
|                                   |  |              |           |   | average      |  
|                                   |  |              |           |   | exercise     |  
|                                   |  | Shares       |           |   | price        |  
|                                   |  |              |           |   |              |  
|Balance, beginning of period       |  |              | 1,421,352 |   |              | $
|Granted                            |  |              | -         |   |              |  
|Exercised                          |  |              | (3,333    | ) |              |  
|Forfeited, cancelled or expired    |  |              | -         |   |              |  
|                                   |  |              |           |   |              |  
|Balance, end of period             |  |              | 1,418,019 |   |              | $
|                                   |  |              |           |   |              |  
|Options exercisable, end of period |  |              | 1,418,019 |   |              | $



Options outstanding at December
31, 2015 consist of the following:



|                |  |             |           |  | Weighted average |            | Options outstanding |   |       |             | 
|--------------- |  | ----------- | --------- |  | ---------------- | ---------- | ------------------- | - | ----- | ----------- | 
|Range of        |  | Number      |           |  | remaining        |            | weighted average    |   |       | Number      | 
|exercise prices |  | outstanding |           |  | contractual life |            | exercise price      |   |       | exercisable | 
|                |  |             |           |  |                  |            |                     |   |       |             | 
|$0.30           |  |             | 446,000   |  |                  | 7.35 years |                     | $ | 0.30  |             | 
|$0.31 - $1.00   |  |             | 41,999    |  |                  | 2.88 years |                     | $ | 0.58  |             | 
|$1.01 - $3.00   |  |             | 1,595,687 |  |                  | 5.46 years |                     | $ | 1.79  |             | 
|$3.01 - $5.00   |  |             | 160,500   |  |                  | 4.90 years |                     | $ | 3.90  |             | 
|$10.01 - $15.00 |  |             | 11,773    |  |                  | 1.95 years |                     | $ | 14.55 |             | 
|$20.01 - $25.00 |  |             | 20,000    |  |                  | 0.83 years |                     | $ | 24.23 |             | 
|$25.01 - $25.20 |  |             | 1,167     |  |                  | 0.78 years |                     | $ | 25.20 |             | 
|                |  |             |           |  |                  |            |                     |   |       |             | 
|$0.30 - $25.20  |  |             | 2,277,126 |  |                  | 5.68 years |                     | $ | 1.90  |             | 



Compensation expense related to
stock options granted during the year or from previous periods under the stock option plan for the year ended December 31, 2015
is $1,460,316 (seven months ended December 31, 2014 - $620,705, year ended May 31, 2014 - $295,144 and year ended May 31, 2013
- $102,993). 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.



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.



|                        |  | Year ended   |                  |   | Seven months | 
|----------------------- |  | ------------ | ---------------- | - | ------------ | 
|                        |  | December 31, |                  |   | December 31, | 
|                        |  | 2015         |                  |   | 2014         | 
|                        |  |              |                  |   |              | 
|Expected option life    |  |              | 1.0 - 5.3 years  |   |              | 
|Risk-free interest rate |  |              | 0.57% - 0.92     | % |              | 
|Dividend yield          |  |              | nil              |   |              | 
|Expected volatility     |  |              | 135.03% - 171.07 | % |              | 



- 22 -






|MEDICURE INC.                                                                                           
|--------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                          
|(expressed in Canadian dollars)                                                                         
|Year ended December 31, 2015, seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 12. | Capital stock (continued):
| | --- | --------------------------



| | (c) | Stock option plan (continued)
| | --- | -----------------------------



Subsequent to December 31, 2015,
226,850 stock options were exercised, 132,000 at an exercise price of $0.30 per common share, 81,350 at an exercise price of $1.90
per common share and 13,500 at an exercise price of $3.90 per common share.



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



IFRS require warrants with an exercise
price denominated in a currency other the entity's functional currency to be treated as a liability measured at fair value. The
warrants, all with U.S. dollar exercise prices, are recorded at fair value within accounts payable and accrued liabilities as at
December 31, 2015 and total $1,161 (December 31, 2014 - $36,259 and May 31, 2014 - $54,344). Changes in fair value of the warrants
for the year ended December 31, 2015 of ($35,098) (seven months ended December 31, 2014 - ($18,085), year ended May 31, 2014 -
$43,820 and year ended May 31, 2013 - ($24,459)) are recorded within finance expense.



Changes in the number of warrants
with an exercise price denominated in a currency other than the Company's functional currency outstanding during the year ended
December 31, 2015, the seven months ended December 31, 2014 and the year ended May 31, 2014 are as follows:



|                                          |  |          |        |  | Exercise  |      |       |         |  |  |           |  |  |              |   |  |           |  |        |              | 
|----------------------------------------- |  | -------- | ------ |  | --------- | ---- | ----- | ------- |  |  | --------- |  |  | ------------ | - |  | --------- |  | ------ | ------------ | 
|Issue                                     |  | Original |        |  | Price     |      |       | May 31, |  |  | Granted   |  |  | December 31, |   |  | Granted   |  |        | December 31, | 
|(expiry date)                             |  | granted  |        |  | per share |      |       | 2014    |  |  | (expired) |  |  | 2014         |   |  | (expired) |  |        | 2015         | 
|                                          |  |          |        |  |           |      |       |         |  |  |           |  |  |              |   |  |           |  |        |              | 
|66,667 units (expiry - December 31, 2016) |  |          | 66,667 |  |           | USD$ | 18.90 |         |  |  | 66,667    |  |  |              | - |  |           |  | 66,667 |              | 



The warrants expiring on December
31, 2016 were issued with a debt financing agreement in September 2007, are denominated in U.S. dollars and may be exercised, upon
certain conditions being met, on a cashless basis based on a formula described in the warrant agreements.



On June 26, 2015, the Company closed
a private placement offering with a syndicate of underwriters as described in note 12(b). The underwriters were granted warrants
to purchase common shares of Medicure equal to 7.0% of the total number of Shares issued pursuant to the Offering, exercisable
for a 24 month period from the closing of the Offering at a price of $2.20 per Share. There were 128,068 warrants issued in connection
with offering with a fair value of $232,571, which is included in the share issue costs of $627,247.



On November 10, 2015, the underwriters
exercised 68,293 warrants at a price of $2.20 for gross proceeds of $150,245 to the Company.



|                                    |  | December 31, 2015 |        
|----------------------------------- |  | ----------------- | -------
|                                    |  |                   |        
|                                    |  |                   |        
|                                    |  |                   |        
|                                    |  |                   |        
|                                    |  | Shares            |        
|                                    |  |                   |        
|Balance, beginning of period        |  |                   | -      
|Granted                             |  |                   | 128,068
|Exercised                           |  |                   | (68,293
|                                    |  |                   |        
|Balance, end of period              |  |                   | 59,775 
|                                    |  |                   |        
|Warrants exercisable, end of period |  |                   | 59,775 



- 23 -






|MEDICURE INC.                                                                                           
|--------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                          
|(expressed in Canadian dollars)                                                                         
|Year ended December 31, 2015, seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 12. | Capital stock (continued):
| | --- | --------------------------



| | (d) | Warrants (continued)
| | --- | --------------------



The fair value of the warrants issued
on June 26, 2015 was determined at the date of measurement using an option pricing model with the following assumptions:



|                        |  | December 31, 2015 |          
|----------------------- |  | ----------------- | ---------
|                        |  |                   |          
|Expected warrant life   |  |                   | 2.0 years
|Risk-free interest rate |  |                   | 0.63     
|Dividend yield          |  |                   | nil      
|Expected volatility     |  |                   | 133.93   



| | (e) | Per share amounts
| | --- | -----------------



The weighted average number of common
voting shares outstanding for the year ended December 31, 2015, the seven months ended December 31, 2014 and the years ended May
31, 2014 and 2013 was 13,461,609, 12,204,827, 12,196,745 and 12,196,508, respectively. For the year ended December 31, 2015 and
the seven months ended December 31, 2014, the dilution created by options and warrants has been reflected in the per share amounts.
For the years ended May 31, 2014 and 2013, the dilution created by options and warrants has not been reflected in the per share
amounts as the effect would be anti-dilutive.



| | 13. | Income taxes:
| | --- | -------------



The Company recognized an
income tax recovery of $379,000 for the year ended December 31, 2015 (seven months ended December 31, 2014 - nil, year ended
May 31, 2014 - nil and year ended May 31, 2013 - nil) in the consolidated statements of net income (loss) and comprehensive
income (loss) to the extent that it is probable that future taxable profits will be available against which the accumulated
tax losses and deductible temporary differences can be utilized.



As at December 31, 2015, December
31, 2014 and May 31, 2014, deferred tax assets have been recognized with respect to the following items:



|                               |  | December 31, 2015 |         |  | December 31, 2014 |   |   | May 31, 2014 | 
|------------------------------ |  | ----------------- | ------- |  | ----------------- | - | - | ------------ | 
|                               |  |                   |         |  |                   |   |   |              | 
|Deferred tax assets            |  |                   |         |  |                   |   |   |              | 
|Non-capital loss carryforwards |  | $                 | 356,000 |  |                   | $ | - |              | 
|Other                          |  |                   | 23,000  |  |                   |   | - |              | 
|                               |  |                   |         |  |                   |   |   |              | 
|                               |  | $                 | 379,000 |  |                   | $ | - |              | 







- 24 -






|MEDICURE INC.                                                                                           
|--------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                          
|(expressed in Canadian dollars)                                                                         
|Year ended December 31, 2015, seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 13. | Income taxes (continued):
| | --- | -------------------------



As at December 31, 2015, December
31, 2014 and May 31, 2014, deferred tax assets have not been recognized with respect to the following items:



|                                                 |  | December 31, 2015 |            |   | December 31, 2014 |   |            | May 31, 2014 | 
|------------------------------------------------ |  | ----------------- | ---------- | - | ----------------- | - | ---------- | ------------ | 
|                                                 |  |                   |            |   |                   |   |            |              | 
|Deferred tax assets                              |  |                   |            |   |                   |   |            |              | 
|Non-capital loss carryforwards                   |  | $                 | 7,086,000  |   |                   | $ | 6,920,000  |              | 
|Scientific research and experimental development |  |                   | 3,793,000  |   |                   |   | 3,793,000  |              | 
|Other                                            |  |                   | 235,000    |   |                   |   | 1,009,000  |              | 
|Deferred tax liability                           |  |                   |            |   |                   |   |            |              | 
|Investment in Apicore                            |  |                   | (70,000    | ) |                   |   | (66,000    | )            | 
|                                                 |  |                   |            |   |                   |   |            |              | 
|                                                 |  | $                 | 11,044,000 |   |                   | $ | 11,656,000 |              | 



The deferred tax liability as at
December 31, 2015 was not recorded as there are sufficient deductible temporary differences which are available to reverse in the
same periods as the taxable temporary difference.



The reconciliation of the Canadian
statutory rate to the income tax rate applied to the net income (loss) for the year ended December 31, 2015, the seven months ended
December 31, 2014 and years ended May 31, 2014 and 2013 to the income tax recovery is as follows:



|                                                                                                                            |  | December 31, |            |   | December 31, |   |           | May 31, |  |   | May 31,    |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ---------- | - | ------------ | - | --------- | ------- |  | - | ---------- | -
|                                                                                                                            |  | 2015         |            |   | 2014         |   |           | 2014    |  |   | 2013       |  
|                                                                                                                            |  |              |            |   |              |   |           |         |  |   |            |  
|Income (loss) for the period:                                                                                               |  |              |            |   |              |   |           |         |  |   |            |  
|Canadian                                                                                                                    |  | $            | (2,972,573 | ) |              | $ | (283,456  | )       |  | $ | (2,037,987 | )
|Foreign                                                                                                                     |  |              | 4,262,002  |   |              |   | 1,479,052 |         |  |   | 103,891    |  
|                                                                                                                            |  |              |            |   |              |   |           |         |  |   |            |  
|                                                                                                                            |  |              | 1,289,429  |   |              |   | 1,195,596 |         |  |   | (1,934,096 | )
|                                                                                                                            |  |              |            |   |              |   |           |         |  |   |            |  
|Canadian federal and provincial income taxes at 27.00% (December 31, 2014, May 31, 2014 - 27.00% and May 31, 2013 - 27.00%) |  |              | (348,000   | ) |              |   | (323,000  | )       |  |   | 522,000    |  
|Permanent differences and other items                                                                                       |  |              | (537,000   | ) |              |   | (170,000  | )       |  |   | (256,000   | )
|Foreign tax rate in foreign jurisdiction                                                                                    |  |              | 652,000    |   |              |   | 252,000   |         |  |   | (9,000     | )
|Change in unrecognized deferred tax assets                                                                                  |  |              | 619,000    |   |              |   | 241,000   |         |  |   | (257,000   | )
|                                                                                                                            |  |              |            |   |              |   |           |         |  |   |            |  
|                                                                                                                            |  | $            | 379,000    |   |              | $ | -         |         |  | $ | -          |  



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%) and the United States (38%) that  is applicable to income or losses incurred by the Company's wholly-owned
subsidiaries, Medicure International Inc., Medicure Pharma Inc. and Medicure USA.



- 25 -






|MEDICURE INC.                                                                                           
|--------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                          
|(expressed in Canadian dollars)                                                                         
|Year ended December 31, 2015, seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 13. | Income taxes (continued):
| | --- | -------------------------



At December 31, 2015, the Company
has the following Canadian non-capital losses available for application in future years:



|Expires in: |  |   |           
|----------- |  | - | ----------
|2026        |  | $ | 939,503   
|2027        |  |   | 1,111,169 
|2029        |  |   | 5,288,028 
|2030        |  |   | 2,711,408 
|2031        |  |   | 1,893,976 
|2032        |  |   | 1,485,583 
|2033        |  |   | 928,119   
|2034        |  |   | 1,425,224 
|2035        |  |   | 1,467,272 
|            |  |   |           
|            |  | $ | 17,250,282



Scientific research and development
tax credits of $3,826,000 (December 31, 2014 - $3,826,000 and May 31, 2014 - $3,826,000), which can be applied against Canadian
income taxes otherwise payable, will expire by 2028. No asset has been recorded in relation to these credits.



At December 31, 2015, the Company
has the following United States net operating losses available for application in future years:



|Expires in: |  |   |        
|----------- |  | - | -------
|2029        |  | $ | 411,615
|2031        |  |   | 146,304
|2034        |  |   | 7,809  
|2035        |  |   | 875    
|            |  |   |        
|            |  | $ | 566,603



At December 31, 2015, the Company
has the following Barbados losses available for application in future years:



|Expires in: |  |   |            
|----------- |  | - | -----------
|2016        |  | $ | 6,105,564  
|2017        |  |   | 32,284,852 
|2018        |  |   | 49,979,489 
|2019        |  |   | 9,238,044  
|2020        |  |   | 2,515,654  
|2021        |  |   | 1,290,323  
|2023        |  |   | 1,359,356  
|            |  |   |            
|            |  | $ | 102,773,282



- 26 -






|MEDICURE INC.                                                                                           
|--------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                          
|(expressed in Canadian dollars)                                                                         
|Year ended December 31, 2015, seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 14. | Finance Expense:
| | --- | ----------------



During the year ended December 31, 2015, the seven months
ended December 31. 2014 and the years ended May 31, 2014 and 2013, the Company incurred finance expense as follows:



|                                           |  | December 31, 2015 |           |   | December 31, 2014 |   |         | May 31, 2014 |  |   | May 31, 2013 | 
|------------------------------------------ |  | ----------------- | --------- | - | ----------------- | - | ------- | ------------ |  | - | ------------ | 
|                                           |  |                   |           |   |                   |   |         |              |  |   |              | 
|Interest on MIOP loan                      |  | $                 | 309,733   |   |                   | $ | 187,451 |              |  | $ | 327,167      | 
|Change in fair value of royalty obligation |  |                   | 3,791,282 |   |                   |   | 492,722 |              |  |   | 1,349,372    | 
|Change in fair value of warrant liability  |  |                   | (35,098   | ) |                   |   | (18,085 | )            |  |   | 43,821       | 
|Other interest, net and banking fees       |  |                   | 57,535    |   |                   |   | 67,569  |              |  |   | 88,627       | 
|                                           |  |                   |           |   |                   |   |         |              |  |   |              | 
|                                           |  | $                 | 4,123,452 |   |                   | $ | 729,657 |              |  | $ | 1,808,987    | 





During the year ended December 31,
2015, the seven months ended December 31, 2014 and the years ended May 31, 2014 and 2013, the Company paid finance expense as follows:



|                                          |  | December 31, 2015 |         |  | December 31, 2014 |   |         | May 31, 2014 |  |   | May 31, 2013 | 
|----------------------------------------- |  | ----------------- | ------- |  | ----------------- | - | ------- | ------------ |  | - | ------------ | 
|Interest paid on MIOP loan                |  |                   | 256,427 |  |                   |   | 153,904 |              |  |   | 262,500      | 
|Other interest, net and banking fees paid |  |                   | 57,873  |  |                   |   | 71,555  |              |  |   | 36,846       | 
|                                          |  |                   |         |  |                   |   |         |              |  |   |              | 
|                                          |  | $                 | 314,300 |  |                   | $ | 225,459 |              |  | $ | 299,346      | 



| | 15. | Commitments and contingencies:
| | --- | ------------------------------



| | (a) | Commitments
| | --- | -----------



As at December 31, 2015, 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 as follows:



|2016       |  | $ | 3,047,516 | 
|---------- |  | - | --------- | 
|2017       |  |   | 1,173,271 | 
|2018       |  |   | 207,600   | 
|2019       |  |   | 207,600   | 
|2020       |  |   | 207,600   | 
|Thereafter |  |   | 830,400   | 
|           |  |   |           | 
|           |  | $ | 5,673,987 | 



The Company had entered into manufacturing
and supply agreements, as amended, to purchase a minimum quantity of AGGRASTAT® from a third party and all remaining
committed payments relating to inventory purchases were completed during fiscal 2015. Effective January 1, 2014, the agreement
was amended and the amounts previously due during fiscal 2014 were deferred and bore interest at 3.25% per annum, with monthly
payments being made against this balance owing of US$45,000 until June 30, 2015. These payments were applied to inventory purchases
made during fiscal 2015 and prepayments for future manufacturing expected to be completed during fiscal 2016, and as at December
31, 2015, $1,063,707 (December 31, 2014 - $549,247 and May 31, 2014 - $182,620) is recorded within prepaid expenses in regards
to this agreement. For the year ended December 31, 2015, interest of $22,675 (seven months ended December 31, 2014 - $18,738, May
31, 2014 - $17,009 and May 31, 2014 - nil) is recorded within finance expense relating to this agreement. The Company signed an
amendment to this manufacturing and supply agreement which extends the agreement to October 31, 2017 with additional minimum purchase
commitments of US$714,420 (based on current pricing) per annum until 2017.



- 27 -






|MEDICURE INC.                                                                                           
|--------------------------------------------------------------------------------------------------------
|Notes to the Consolidated Financial Statements                                                          
|(expressed in Canadian dollars)                                                                         
|Year ended December 31, 2015, seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 15. | Commitments and contingencies (continued):
| | --- | ------------------------------------------



| | (a) | Commitments (continued)
| | --- | -----------------------



Additionally, the Company has entered
into a manufacturing and supply agreement to purchase a minimum quantity of unfinished product inventory totalling US$150,000 annually
(based on current pricing) until 2024.



On November 1, 2014, the Company
amended its business and administration services agreement with Genesys Venture Inc. ("GVI"), a company controlled by
the Chief Executive Officer, under which the Company is now committed to pay $17,917 per month, or $215,000 per year effective
November 1, 2014 for a fourteen month term. The services provided under the business and administration agreement are described
in note 16(b) Transactions with Related Parties. Either party may terminate this agreement at any time upon 90 days written notice.
Additionally, effective November 1, 2014, the Company has entered into a sub-lease with GVI to lease office space at a rate of
$170,000 per annum for three years ending October 31, 2017.



Subsequent to December 31, 2015
and effective January 1, 2016, the Company entered into a new business and administration services agreement with GVI, under which
the Company is committed to pay $7,083 per month or $85,000 per year for a one year term.



During 2015, the Company began a
development project of a high value cardiovascular generic drug in collaboration with Apicore. The Company has entered into a supply
and development agreement under which the Company holds all commercial rights to the drug and is required to pay an additional
US$200,000 in milestone payments and US$507,500 in costs relating to the project.



Contracts with contract research
organizations are payable over the terms of the associated clinical 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.



| | (b) | Guarantees
| | --- | ----------



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.



| | (c) | Royalties
| | --- | ---------



As a part of the Birmingham debt
settlement described in note 10, beginning on July 18, 2011, the Company is obligated to pay a royalty to the previous lender based
on future commercial AGGRASTAT® sales until 2023. The royalty is based on 4% of the first $2,000,000 of quarterly
AGGRASTAT® sales, 6% on the portion of quarterly sales between $2,000,000 and $4,000,000 and 8% on the portion of
quarterly sales exceeding $4,000,000 payable within 60 days of the end of the preceding quarter. The previous lender has a one-time
option to switch the royalty payment from AGGRASTAT® to a royalty on MC-1 sales. Management has determined there
is no value to the option to switch the royalty to MC-1 as the product is not commercially available for sale and development of
the product is on hold. Royalties for the year ended December 31, 2015 total $1,207,772, in regards to the royalty obligation (seven
months ended December 31, 2014 - $210,576, year ended May 31, 2014 - $201,131 and year ended May 31, 2013 - $104,979) with payments
made during the year ended December 31, 2015 of $642,768 (seven months ended December 31, 2014 - $156,722, year ended May 31, 2014
- $165,291 and year ended May 31, 2013 - $88,105).



The Company is obligated to pay
royalties to third parties based on any future commercial sales of MC-1, aggregating up to 3.9% on net sales. To date, no royalties
are due and/or payable.



- 28 -








MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015,
seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 15. | Commitments and contingencies (continued):
| | --- | ------------------------------------------



| | (d) | Contingencies
| | --- | -------------



In the normal course of business,
the Company may from time to time be subject to various claims or possible claims. Although management currently believes there
are no claims or possible claims that if resolved would either individually or collectively result in a material adverse impact
on the Company’s financial position, results of operations, or cash flows, these matters are inherently uncertain and management’s
view of these matters may change in the future.



On September 10, 2015, the Company
submitted a supplemental New Drug Application to the United States Food and Drug Administration ("FDA") to expand the
label for AGGRASTAT®. The label change is being reviewed and evaluated based substantially on data from published
studies. If the label change submission is successful, the Company will be obligated to pay 300,000 Euros over the course of a
three year period in equal quarterly instalments following approval. A decision from the FDA is expected in July 2016. The payments
are contingent upon the success of the filing and as such the Company has not recorded any amount in the consolidated statements
of net income (loss) and comprehensive income (loss) pertaining to this contingent liability.



In connection with the Company's
development project of a high value cardiovascular generic drug, as described in note 15(a), in collaboration with Apicore, the
Company is obligated to pay Apicore 50% of net profit from the sale of this drug.



| | 16. | Related party transactions:
| | --- | ---------------------------



| | (a) | Key management personnel compensation
| | --- | -------------------------------------



Key
management personnel are those persons having authority and responsibility for planning, directing and controlling the activities
of the Company. The Board of Directors, Chief Executive Officer, President and Chief Operating Officer and the Chief Financial
Officer and beginning in fiscal 2015, the Vice-President, Commercial Operations, are key management personnel.



In
addition to their salaries, the Company also provides non-cash benefits and participation in the Stock Option Plan. The following
table details the compensation paid to key management personnel:



|                                       |  | December 31, 2015 |           |  | December 31, 2014 |   |         | May 31, 2014 |  |   | May 31, 2013 | 
|-------------------------------------- |  | ----------------- | --------- |  | ----------------- | - | ------- | ------------ |  | - | ------------ | 
|                                       |  |                   |           |  |                   |   |         |              |  |   |              | 
|Salaries, fees and short-term benefits |  | $                 | 914,062   |  |                   | $ | 366,015 |              |  | $ | 781,484      | 
|Share-based payments                   |  |                   | 107,554   |  |                   |   | 73,424  |              |  |   | -            | 
|                                       |  |                   |           |  |                   |   |         |              |  |   |              | 
|                                       |  | $                 | 1,021,616 |  |                   | $ | 439,439 |              |  | $ | 781,484      | 





As at December 31, 2015, the
Company has $5,675 (December 31, 2014 - $336,766 and May 31, 2014 - $289,869) recorded within accounts payable and accrued liabilities
relating to amounts payable to the members of the Company's Board of Directors for services provided. Beginning on February 22,
2013 and until June 30, 2015, these amounts bore interest at a rate of 5.5% per annum. For the year ended December 31, 2015, $4,517
(seven months ended December 31, 2014 - $10,127, year ended May 31, 2014 - $14,918 and year ended May 31, 2013 - $3,107) was recorded
within finance expense in relation to these amounts payable to the members of the Company's Board of Directors.



On July 11, 2014 and as described
in note 12(b), the Company announced that, subject to all necessary regulatory approvals, it had entered into shares for debt agreements
with certain members of the Board of Directors, pursuant to which the Company will issue common shares with a fair value of $1.98
per common share to satisfy outstanding amounts owing to the Company’s Board of Directors. Of the amounts payable to the
Company's Board of Directors as at December 31, 2014, $109,809 was included in these shares for debt agreements. The shares were
issued on January 9, 2015.



- 29 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015,
seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 16. | Related party transactions (continued):
| | --- | ---------------------------------------



| | (a) | Key management personnel compensation (continued)
| | --- | -------------------------------------------------



On January 27, 2015 and as described
in note 12(b), the Company announced that, subject to all necessary regulatory approvals, it has entered into shares for debt agreements
with certain members of the Board of Directors, pursuant to which the Company will issue 75,472 of its common shares with a fair
value of $1.44 per common share to satisfy $108,680 of outstanding amounts owing to the these individuals. The shares were issued
on March 20, 2015.



| | (b) | Transactions with related parties
| | --- | ---------------------------------



Directors and key management
personnel control 18% of the voting shares of the Company as at December 31, 2015 (December 31, 2014 - 19% and May 31, 2014 - 19%).



During the year ended December
31, 2015, the Company paid GVI, a company controlled by the Chief Executive Officer, a total of $215,000 (seven months ended December
31, 2014 - $115,000, year ended May 31, 2014 - $190,000 and year ended May 31, 2013 - $190,000) for business administration services,
$176,051 (seven months ended December 31, 2014 - $36,500, year ended May 31, 2014 - $30,500 and year ended May 31, 2013 - $32,500)
in rental costs and $33,575 (seven months ended December 31, 2014 - $25,115, year ended May 31, 2014 - $33,735 and year ended May
31, 2013 - $26,125) for commercial and information technology support services. As described in note 15, the business administration
services summarized above are provided to the Company through a consulting agreement with GVI. The GVI agreement includes the Chief
Financial Officer's services to the Company, as well as accounting, payroll, human resources and some information technology services.



As described in note 15(a), a
new business and administration services agreement was entered into effective January 1, 2016. This new agreement no longer includes
the Chief Financial Officer's services. Effective January 1, 2016, the Chief Financial Officer will be paid directly by the Company
through a consulting agreement.



Clinical research services are
provided through a consulting agreement with GVI Clinical Development Solutions Inc. ("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. During the year ended December 31, 2015, the Company paid GVI CDS $330,764, (seven
months ended December 31, 2014 - $56,904, year ended May 31, 2014 - $125,583 and year ended May 31, 2013 - $134,696) for clinical
research services.



Research and development services
are provided through a consulting agreement with CanAm Bioresearch Inc. ("CanAm"), a company controlled by a close family
member of the Chief Executive Officer. During the year ended December 31, 2015, the Company paid CanAm $399,580 (seven months ended
December 31, 2014 - $233,938, year ended May 31, 2014 - $229,732 and year ended May 31, 2013 - $467,763) for research and development
services.



These transactions were in the
normal course of business and have been measured at the exchange amount, which is the amount of consideration established and agreed
to by the related parties. Beginning on February 22, 2013 and until June 30, 2015, these amounts bore interest at a rate of 5.5%
per annum. For the year ended December 31, 2015 $12,409 (seven months ended December 31, 2014 - $18,082, year ended May 31, 2014
- $36,904 and year ended May 31, 2013 - $7,366) was recorded within finance expense in relation to these amounts payable to related
parties.



As at December 31, 2015, included
in accounts payable and accrued liabilities is $23,494 (December 31, 2014 - $120,962 and May 31, 2014 - $90,262) payable to GVI,
$64,539 (December 31, 2014 - $145,100 and May 31, 2014 - 148,461) payable to GVI CDS and $60,611 (December 31, 2014 - $247,752
and May 31, 2014 - $373,956) payable to CanAm, which are unsecured, payable on demand and bear interest as described above.



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. The
Company may terminate this agreement at any time upon 120 days written notice. During the year ended December 31, 2015 the Company
recorded a bonus of $100,000 (seven months ended December 31, 2014 - $58,904, year ended May 31, 2014 - $286,849 and year ended
May 31, 2013 - nil) to its Chief Executive Officer which is recorded within selling, general and administrative expenses. As at
December 31, 2015, included in accounts payable and accrued liabilities is $45,753 (December 31, 2014 - $345,753 and May 31, 2014
- $286,849) payable to the Chief Executive Officer as a result of this consulting agreement, which is unsecured, payable on demand
and non-interest bearing.



- 30 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015,
seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 16. | Related party transactions (continued):
| | --- | ---------------------------------------



| | (b) | Transactions with related parties (continued)
| | --- | ---------------------------------------------



On July 11, 2014 and as described
in note 12(b), the Company announced that, subject to all necessary regulatory approvals, it had entered into a shares for debt
agreement with its Chief Executive Officer, pursuant to which the Company will issue common shares with a fair value of $1.98 per
common share to satisfy outstanding amounts owing to the Chief Executive Officer. Of the amount payable to the Chief Executive
Officer as at December 31, 2014, $297,808 was included in this shares for debt agreement. The shares were issued on January 9,
2015.



| | 17. | Expenses by nature:
| | --- | -------------------



Expenses incurred for the year
ended December 31, 2015, the seven months ended December 31, 2014 and the years ended May 31, 2014 and 2013 are as follows:





|                                       |  | December 31, |            |  | December 31, |   |           | May 31, |  |   | May 31,   | 
|-------------------------------------- |  | ------------ | ---------- |  | ------------ | - | --------- | ------- |  | - | --------- | 
|                                       |  | 2015         |            |  | 2014         |   |           | 2014    |  |   | 2013      | 
|                                       |  |              |            |  |              |   |           |         |  |   |           | 
|Personnel expenses                     |  |              |            |  |              |   |           |         |  |   |           | 
|Salaries, fees and short-term benefits |  | $            | 3,908,579  |  |              | $ | 1,079,085 |         |  | $ | 1,584,724 | 
|Share-based payments                   |  |              | 1,460,316  |  |              |   | 620,705   |         |  |   | 295,144   | 
|                                       |  |              | 5,368,895  |  |              |   | 1,699,790 |         |  |   | 1,879,868 | 
|Amortization and derecognition         |  |              | 690,934    |  |              |   | 433,149   |         |  |   | 561,269   | 
|Research and development               |  |              | 3,723,317  |  |              |   | 584,991   |         |  |   | 401,311   | 
|Manufacturing                          |  |              | 916,939    |  |              |   | -         |         |  |   | 127,953   | 
|Inventory material costs               |  |              | 1,563,344  |  |              |   | 349,901   |         |  |   | 300,378   | 
|Write-down (up) of inventory           |  |              | 40,920     |  |              |   | (80,874   | )       |  |   | 22,209    | 
|Medical affairs                        |  |              | 865,368    |  |              |   | 260,861   |         |  |   | 136,996   | 
|Administration                         |  |              | 948,226    |  |              |   | 362,483   |         |  |   | 618,022   | 
|Selling and logistics                  |  |              | 3,103,722  |  |              |   | 854,664   |         |  |   | 780,748   | 
|Professional fees                      |  |              | 140,573    |  |              |   | 150,131   |         |  |   | 352,734   | 
|                                       |  |              |            |  |              |   |           |         |  |   |           | 
|                                       |  | $            | 17,362,238 |  |              | $ | 4,615,096 |         |  | $ | 5,181,488 | 





- 31 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015,
seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 18. | Financial instruments:
| | --- | ----------------------



| | (a) | Financial assets and liabilities
| | --- | --------------------------------



Set out below is a comparison
by class of the carrying amounts and fair value of the Company's financial instruments that are carried in the consolidated financial
statements as at December 31, 2015:



|                                         |  | Carrying |           |  | Fair  |  
|---------------------------------------- |  | -------- | --------- |  | ----- | -
|                                         |  | amount   |           |  | value |  
|                                         |  |          |           |  |       |  
|Financial assets                         |  |          |           |  |       |  
|Loans and receivables                    |  |          |           |  |       |  
|Cash                                     |  | $        | 3,568,592 |  |       | $
|Accounts receivable                      |  |          | 9,823,616 |  |       |  
|Long-term derivative                     |  |          | 227,571   |  |       |  
|                                         |  |          |           |  |       |  
|Financial liabilities                    |  |          |           |  |       |  
|Other financial liabilities              |  |          |           |  |       |  
|Accounts payable and accrued liabilities |  | $        | 7,079,091 |  |       | $
|Current portion of long-term debt        |  |          | 1,625,191 |  |       |  
|Current portion of royalty obligation    |  |          | 1,648,180 |  |       |  
|Long-term debt                           |  |          | 2,617,593 |  |       |  
|Royalty obligation                       |  |          | 3,725,272 |  |       |  
|Other long-term liability                |  |          | 100,000   |  |       |  





Included in accounts payable
and accrued liabilities as at December 31, 2015 is the fair value of warrants denominated in a foreign currency (Level 2) of $1,161
and the current portion of the other long-term liability (Level 3) of $100,000.



Set out below is a comparison
by class of the carrying amounts and fair value of the Company's financial instruments that are carried in the consolidated financial
statements as at December 31, 2014 and May 31, 2014:



|                                         |  | December 31, 2014 |           |  | May 31, 2014 |  
|---------------------------------------- |  | ----------------- | --------- |  | ------------ | -
|                                         |  | Carrying amount   |           |  | Fair value   |  
|                                         |  |                   |           |  |              |  
|Financial assets                         |  |                   |           |  |              |  
|Loans and receivables                    |  |                   |           |  |              |  
|Cash                                     |  | $                 | 493,869   |  |              | $
|Accounts receivable                      |  |                   | 1,637,676 |  |              |  
|Long-term derivative                     |  |                   | 194,491   |  |              |  
|                                         |  |                   |           |  |              |  
|Financial liabilities                    |  |                   |           |  |              |  
|Other financial liabilities              |  |                   |           |  |              |  
|Accounts payable and accrued liabilities |  | $                 | 3,248,877 |  |              | $
|Current portion of long-term debt        |  |                   | 654,877   |  |              |  
|Current portion of royalty obligation    |  |                   | 473,744   |  |              |  
|Long-term debt                           |  |                   | 4,225,949 |  |              |  
|Royalty obligation                       |  |                   | 1,715,310 |  |              |  
|Other long-term liability                |  |                   | 152,778   |  |              |  





Included in accounts payable
and accrued liabilities as at December 31, 2014 is the fair value of warrants denominated in a foreign currency (Level 2) of $36,259
(May 31, 2014 - $54,344).



- 32 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015,
seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 18. | Financial instruments (continued):
| | --- | ----------------------------------



| | (a) | Financial assets and liabilities (continued)
| | --- | --------------------------------------------



The Company has determined the
estimated fair values of its financial instruments based on appropriate valuation methodologies. The carrying values of current
monetary assets and liabilities approximate their fair values due to their relatively short periods to maturity. The fair value
of the Company's long-term debt is estimated to approximate its carrying value based on the terms of the long-term debt. The royalty
obligation and other long-term liability are carried at amortized cost (Level 3).



IFRS 13, Fair Value Measurement,
establishes a fair value hierarchy that reflects the significance of the inputs used in measuring fair value. The fair value hierarchy
has the following levels:



| | • | Level 1 – Quoted prices (unadjusted) in active markets
for identical assets or liabilities;
| | - | -------------------------------------------------------------------------------------------



| | • | Level 2 – Inputs other than quoted prices included
within Level 1 that are either directly or indirectly observable;
| | - | --------------------------------------------------------------------------------------------------------------------



| | • | Level 3 - Unobservable inputs in which little or no
market activity exists, therefore requiring an entity to develop its own assumptions about the assumptions that market participants
would use in pricing.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The fair value hierarchy of financial
instruments measured at fair value on the consolidated statements of financial position as at December 31, 2015 is as follows:



|                                         |  | Level 1 |   |  | Level 2 |   |           | Level 3 | 
|---------------------------------------- |  | ------- | - |  | ------- | - | --------- | ------- | 
|                                         |  |         |   |  |         |   |           |         | 
|Financial assets                         |  |         |   |  |         |   |           |         | 
|Long-term derivative                     |  | $       | - |  |         | $ | -         |         | 
|                                         |  |         |   |  |         |   |           |         | 
|Financial liabilities                    |  |         |   |  |         |   |           |         | 
|Accounts payable and accrued liabilities |  | $       | - |  |         | $ | 1,161     |         | 
|Current portion of long-term debt        |  |         | - |  |         |   | 1,625,191 |         | 
|Current portion of royalty obligation    |  |         | - |  |         |   | -         |         | 
|Long-term debt                           |  |         | - |  |         |   | 2,617,593 |         | 
|Royalty obligation                       |  |         | - |  |         |   | -         |         | 
|Other long-term liability                |  |         | - |  |         |   | -         |         | 





Included in accounts payable
and accrued liabilities as at December 31, 2015 is the fair value of warrants denominated in a foreign currency (Level 2) of $1,161
and the current portion of the other long-term liability (Level 3) of $100,000.



- 33 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015,
seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 18. | Financial instruments (continued):
| | --- | ----------------------------------



| | (a) | Financial assets and liabilities (continued)
| | --- | --------------------------------------------



The fair value hierarchy of financial
instruments measured at fair value on the consolidated statements of financial position as at December 31, 2014 is as follows:



|                                         |  | Level 1 |   |  | Level 2 |   |           | Level 3 | 
|---------------------------------------- |  | ------- | - |  | ------- | - | --------- | ------- | 
|                                         |  |         |   |  |         |   |           |         | 
|Financial assets                         |  |         |   |  |         |   |           |         | 
|Long-term derivative                     |  | $       | - |  |         | $ | -         |         | 
|                                         |  |         |   |  |         |   |           |         | 
|Financial liabilities                    |  |         |   |  |         |   |           |         | 
|Accounts payable and accrued liabilities |  | $       | - |  |         | $ | 36,259    |         | 
|Current portion of long-term debt        |  |         | - |  |         |   | 654,677   |         | 
|Current portion of royalty obligation    |  |         | - |  |         |   | -         |         | 
|Long-term debt                           |  |         | - |  |         |   | 4,225,949 |         | 
|Royalty obligation                       |  |         | - |  |         |   | -         |         | 
|Other long-term liability                |  |         | - |  |         |   | -         |         | 





Included in accounts payable
and accrued liabilities at December 31, 2014 is the fair value of warrants denominated in a foreign currency (Level 2) of $36,259.



The fair value hierarchy of financial
instruments measured at fair value on the consolidated statements of financial position as at May 31, 2014 is as follows:



|                                         |  | Level 1 |   |  | Level 2 |   |           | Level 3 | 
|---------------------------------------- |  | ------- | - |  | ------- | - | --------- | ------- | 
|                                         |  |         |   |  |         |   |           |         | 
|Financial liabilities                    |  |         |   |  |         |   |           |         | 
|Accounts payable and accrued liabilities |  | $       | - |  |         | $ | 54,344    |         | 
|Current portion of royalty obligation    |  |         | - |  |         |   | -         |         | 
|Long-term debt                           |  |         | - |  |         |   | 4,847,279 |         | 
|Royalty obligation                       |  |         | - |  |         |   | -         |         | 
|Other long-term liability                |  |         | - |  |         |   | -         |         | 





Included in accounts payable
and accrued liabilities as at May 31, 2014 is the fair value of warrants denominated in a foreign currency (Level 2) of $54,344.



Royalty obligation:Estimating
fair value requires determining the most appropriate valuation model which is dependent on its underlying terms and conditions.
This estimate also requires determining expected revenue from AGGRASTAT® sales and an appropriate discount rate and making
assumptions about them. If the expected revenue from AGGRASTAT® sales were to change by 10%, then the royalty obligation liability
recorded as at December 31, 2015 would change by approximately $692,000. If the discount rate used in calculating the fair value
of the royalty obligation of 20% were to change by 1%, the royalty obligation liability recorded as at December 31, 2015 would
change by approximately $138,000.



- 34 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015,
seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 18. | Financial instruments (continued):
| | --- | ----------------------------------



| | (a) | Financial assets and liabilities (continued)
| | --- | --------------------------------------------



Other long-term liability:
Estimating fair value requires determining the most appropriate valuation model which is dependent on its underlying terms and
conditions. This estimate also requires determining the time frame when certain AGGRASTAT® sales targets are expected to be
met and an appropriate discount rate and making assumptions about them. If the time frame when certain AGGRASTAT® sales targets
are expected to be met were to be extended by one year, the other long-term liability recorded as at December 31, 2015 would change
by approximately $17,000. There is no discount rate used in calculating the fair value of the other long-term liability recorded
as at December 31, 2015.



For assets and liabilities that
are recognized in the consolidated financial statements on a recurring basis, the Company determines whether transfers have occurred
between levels in the hierarchy by reassessing categorization (based on the lowest level input that is significant to the fair
value measurement as a whole) at the end of each reporting period. During the year ended December 31, 2015 and the seven months
ended December 31, 2014 and the years ended May 31, 2014 and 2013, there were no transfers between Level 1 and Level 2 fair value
measurements.



| | (b) | Risks arising from financial instruments and risk
management
| | --- | ------------------------------------------------------------



The Company's activities expose
it to a variety of financial risks; market risk (including foreign exchange and interest rate risks), credit risk and liquidity
risk. Risk management is the responsibility of the Company, which identifies, evaluates and, where appropriate, mitigates financial
risks.



| | (i) | Market risk
| | --- | -----------



(a) Foreign exchange risk
is the risk that the fair value of future cash flows for financial instruments will fluctuate because of changes in foreign exchange
rates. The Company is exposed to currency risks primarily due to its U.S dollar denominated cash, accounts receivable, accounts
payable and accrued liabilities and royalty obligation. The Company has not entered into any foreign exchange hedging contracts.



The Company is exposed to U.S.
dollar currency risk through the following U.S. denominated financial assets and liabilities:



|(Expressed in U.S. Dollars)              |  | December 31, 2015 |            |   | December 31, 2014 |   |            | May 31, 2014 | 
|---------------------------------------- |  | ----------------- | ---------- | - | ----------------- | - | ---------- | ------------ | 
|                                         |  |                   |            |   |                   |   |            |              | 
|Cash                                     |  | $                 | 2,391,230  |   |                   | $ | 397,692    |              | 
|Accounts receivable                      |  |                   | 7,078,982  |   |                   |   | 1,384,772  |              | 
|Long-term derivative                     |  |                   | 164,430    |   |                   |   | 167,650    |              | 
|Accounts payable and accrued liabilities |  |                   | (4,466,722 | ) |                   |   | (1,430,885 | )            | 
|Current portion of royalty obligation    |  |                   | (1,190,881 | ) |                   |   | (408,365   | )            | 
|Royalty obligation                       |  |                   | (2,691,670 | ) |                   |   | (1,478,588 | )            | 
|                                         |  |                   |            |   |                   |   |            |              | 
|                                         |  | $                 | 1,285,369  |   |                   | $ | (1,367,724 | )            | 





Based on the above net exposures
as at December 31, 2015, assuming that all other variables remain constant, a 5% appreciation or deterioration of the Canadian
dollar against the U.S. dollar would result in a corresponding increase or decrease on the Company's net income (loss) of approximately
$64,000 (December 31, 2014 - $68,000 and May 31, 2014 - $84,000).



- 35 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015,
seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 18. | Financial instruments (continued):
| | --- | ----------------------------------



| | (b) | Risks arising from financial instruments and risk
management: (continued)
| | --- | -------------------------------------------------------------------------



| | (i) | Market risk (continued)
| | --- | -----------------------



(b) 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, long-term debt and
other long-term liability.



An increase or decrease in interest
rates of 1% during the year ended December 31, 2015, with all other variables held constant, would result in a corresponding increase
or decrease on the Company's net income (loss) of approximately $20,000 (seven months ended December 31, 2014 - $4,000 and year
ended May 31, 2014 - $2,000). An increase in the crown company borrowing rate of 1% during the year ended December 31, 2015, with
all other variables held constant, would result in a corresponding increase or decrease on the Company's net income (loss) of approximately
$49,000 (seven months ended December 31, 2014 - $52,000 and year ended May 31, 2014 - $52,000).



| | (ii) | 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 accounts receivable. The carrying amounts of the financial assets represents the
maximum credit exposure.



The Company limits its exposure
to credit risk on cash 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 four customers. The Company
has historically had low impairment in regards to its accounts receivable. As at December 31, 2015, none of the outstanding accounts
receivable were outside of the normal payment terms and the Company recorded a reversal of previous amounts written off to bad
debts expenses of $4,142 (seven months ended December 31, 2014 - bad debt expense of $4,142 and year ended May 31, 2014 - nil).



| | (iii) | 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 9.



| | (c) | Capital management:
| | --- | -------------------



The Company manages its capital
structure and makes adjustments to it, based on the funds available to the Company, in order to continue the business of the Company.
The Company, upon approval from its Board of Directors, will balance its overall capital structure through new share and warrant
issuances, granting of stock options, the issuance of debt or by undertaking other activities as deemed appropriate under the specific
circumstance. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies
on the expertise of the Company's management to sustain future development of the business.



- 36 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015,
seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 18. | Financial instruments (continued):
| | --- | ----------------------------------



| | (c) | Capital management (continued)
| | --- | ------------------------------



The Company’s objectives
when managing capital are to safeguard the Company’s ability to continue as a going concern and to provide capital to pursue
the development and commercialization of its products. In the management of capital, the Company includes cash, long-term debt,
capital stock, stock options, warrants and contributed surplus. The Company manages the capital structure and makes adjustments
to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust the
capital structure, the Company may attempt to issue new shares or new debt.



At this stage of the Company's
development, in order to maximize its current business activities, the Company does not pay out dividends. Management reviews its
capital management approach on an on-going basis and believes that this approach, given the relative size of the Company, is reasonable.



The Company’s overall strategy
with respect to capital risk management remains unchanged for the year ended December 31, 2015.



| | 19. | Determination of fair values:
| | --- | -----------------------------



A number of the Company's accounting
policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities.
Fair values have been determined for measurement and/or disclosure purposes based on the following models. When applicable, further
information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.



| | (a) | Intangible assets
| | --- | -----------------



The fair value of intangible
assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.



| | (b) | Long-term derivative
| | --- | --------------------



The long-term derivative is the
value associated to the options rights received by the Company and is classified as fair value through profit and loss. The change
in the long-term derivative is recorded as a revaluation of long-term derivative in the consolidated statement of net income (loss)
and comprehensive income (loss). The long-term derivative is non-transferable and is recorded at fair value at the date at which
it was acquired and subsequently revalued at each reporting date. Estimating fair value for this derivative requires determining
the most appropriate valuation model which is dependent on the terms and conditions of the derivative. This estimate also requires
determining the most appropriate inputs to the valuation model, including the expected life of the derivative, volatility, dividend
yield and probabilities pertaining to its exercise and making assumptions about them.



| | (c) | Share-based payment transactions
| | --- | --------------------------------



The fair value of the employee
share options is measured using the Black-Scholes option pricing model. Measurement inputs include share price on measurement date,
exercise price of the instrument, expected volatility (based on weighted average historic volatility adjusted for changes expected
due to publicly available information), weighted average expected life of the instruments (based on historical experience and general
option holder behaviour), expected dividends, and the risk-free interest rate (based on government bonds). Service and non-market
performance conditions attached to the transactions are not taken into account in determining fair value.



- 37 -






MEDICURE INC.

Notes to the Consolidated Financial Statements

(expressed in Canadian dollars)

Year ended December 31, 2015,
seven months ended December 31, 2014 and years ended May 31, 2014 and 2013



| | 19. | Determination of fair values (continued):
| | --- | -----------------------------------------



| | (d) | Warrant liability
| | --- | -----------------



The warrant liability is recorded
at the fair value of the warrants at the date at which they were granted and is subsequently revalued at each reporting date. Estimating
fair value for these warrants required determining the most appropriate valuation model which is dependent on the terms and conditions
of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including the expected
life of the warrants, volatility and dividend yield and making assumptions about them.



| | (e) | Royalty obligation
| | --- | ------------------



The royalty obligation is recorded
at its fair value at the date at which the liability was incurred and subsequently measured at amortized cost using the effective
interest method at each reporting date. Estimating fair value for this liability requires determining the most appropriate valuation
model which is dependent on its underlying terms and conditions. This estimate also requires determining expected revenue from
AGGRASTAT® sales and an appropriate discount rate and making assumptions about them.



| | (f) | Other long-term liability
| | --- | -------------------------



The other long-term liability
is recorded at its fair value at the date at which the liability was incurred and subsequently measured at amortized cost using
the effective interest method at each reporting date. Estimating fair value for this liability requires determining the most appropriate
valuation model which is dependent on its underlying terms and conditions. This estimate also requires determining the time frame
when certain AGGRASTAT® sales targets are expected to be met and an appropriate discount rate and making assumptions about
them.



| | 20. | Segmented information:
| | --- | ----------------------



The Company operates in one business
segment, the biopharmaceutical industry. Substantially all of the Company’s assets and operations are located in Canada,
the United States and Barbados. During the year ended December 31, 2015 100% of revenue from the sale of finished products was
generated from sales of AGGRASTAT® in the United States, which was to ten customers. customer A accounted for 30%, customer
B accounted for 29%, customer C accounted for 33%, customer D accounted for 8% and the remaining six customers accounted for less
than 1% of revenue.



Property and equipment and intangible
assets are located in the following countries:



|              |  | December 31, 2015 |           |  | December 31, 2014 |   |           | May 31, 2014 | 
|------------- |  | ----------------- | --------- |  | ----------------- | - | --------- | ------------ | 
|              |  |                   |           |  |                   |   |           |              | 
|Canada        |  | $                 | 219,787   |  |                   | $ | 21,565    |              | 
|Barbados      |  |                   | 1,411,992 |  |                   |   | 1,096,946 |              | 
|United States |  |                   | 10,375    |  |                   |   | 11,596    |              | 
|              |  |                   |           |  |                   |   |           |              | 
|              |  | $                 | 1,642,154 |  |                   | $ | 1,130,107 |              | 



- 38 -







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    |  | Certificate of Amendment dated November 1, 2012                                                                                                                                                                                                
|1.8    |  | Bylaw No. 1A                                                                                                                                                                                                                                   
|       |  |                                                                                                                                                                                                                                                
|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];                                                                                                            
|       |  |                                                                                                                                                                                                                                                
|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];                                                                                                                                                                             



99







|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.                                                                                                                                                                                       
|     |  |                                                                                                                                                                                                                                                                                                              
|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.                                                                                                                                                                                                  



100







|4.27 |  | Business and administration services agreement between Genesys Venture
    Inc. and the Company dated January 1, 2012.                       
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------
|     |  |                                                                                                                                              
|4.28 |  | Stock Option Plan approved November 30, 2012                                                                                                 
|     |  |                                                                                                                                              
|4.29 |  | Stock Option Plan approved November 4, 2014 **                                                                                               
|     |  |                                                                                                                                              
|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.      
| |  |                                                                                                                                             
| |  | [11] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on September 28, 2011.      



101







| |  | [12] Herein incorporated by reference as previously included in the Company’s
    Form 20-F annual report filed on September 19, 2012.
| |  | --------------------------------------------------------------------------------------------------------------------------------------
| |  |                                                                                                                                       
| |  | [13] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on September 27, 2013.
| |  |                                                                                                                                       
| |  | [14] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on September 12, 2014.
| |  |                                                                                                                                       
| |  | [14] Herein incorporated by reference as previously included in the Company’s Form
    20-F annual report filed on April 14, 2015.    



|23.1 |  | Consent of Independent Registered Pubic Accounting Firm **
|---- |  | ----------------------------------------------------------



** Filed Herewith



102







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: March 30, 2016



ON BEHALF OF THE CORPORATION,

MEDICURE INC.



per:



|/s/ Albert Friesen       | 
|------------------------ | 
|                         | 
|Albert D. Friesen, Ph.D. | 
|Chairman, & CEO          | 



103