<Page>

MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2004.

THE FOLLOWING DISCUSSION SUMMARIZES SIGNIFICANT FACTORS AFFECTING THE
CONSOLIDATED OPERATING RESULTS AND FINANCIAL CONDITION OF THE ID BIOMEDICAL
CORPORATION ("ID BIOMEDICAL", "IDB" OR "THE COMPANY") FOR THE YEAR ENDED
DECEMBER 31, 2004 COMPARED TO THE YEAR ENDED DECEMBER 31, 2003. THIS DISCUSSION
SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES THERETO, PREPARED IN ACCORDANCE WITH CANADIAN GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES. ALL AMOUNTS HEREIN ARE EXPRESSED IN CANADIAN
DOLLARS UNLESS OTHERWISE NOTED. THIS MANAGEMENT DISCUSSION AND ANALYSIS IS AS OF
MARCH 4, 2005.

THE CONSOLIDATED FINANCIAL STATEMENTS INCLUDE THE ACCOUNTS OF THE COMPANY, ITS
WHOLLY-OWNED CANADIAN SUBSIDIARY ID BIOMEDICAL CORPORATION OF VANCOUVER
("IDBV"), IDBV'S WHOLLY-OWNED CANADIAN SUBSIDIARY ID BIOMEDICAL CORPORATION
QUEBEC ("IDBQ"), IDBQ'S WHOLLY-OWNED US SUBSIDIARY ID BIOMEDICAL CORPORATION OF
MARYLAND ("IDBM"), THE COMPANY'S WHOLLY-OWNED US SUBSIDIARY (2003 - 100%; 2002 -
97%), ID BIOMEDICAL CORPORATION OF WASHINGTON ("IDBW"), AND IDBW'S WHOLLY-OWNED
US SUBSIDIARY ID BIOMEDICAL CORPORATION OF NORTHBOROUGH ("IDBN") (FORMERLY SHIRE
BIOLOGICS INC.). THE RESULTS FROM OPERATIONS INCLUDE THE ACTIVITIES OF THE
VACCINE BUSINESS ACQUIRED FROM SHIRE BIOCHEM INC. FOR THE PERIOD OF SEPTEMBER
10, 2004 THROUGH DECEMBER 31, 2004.

FLUVIRAL, FLUINSURE, STREPTAVAX, PGCVAX, PROTEOSOME, PROTOLLIN, CYCLING PROBE
TECHNOLOGY, ARE TRADE NAMES AND TRADEMARKS OF ID BIOMEDICAL CORPORATION.
NEISVAC-C IS A TRADEMARK OWNED BY BAXTER CORPORATION AND IS USED BY ID
BIOMEDICAL CORPORATION UNDER LICENSE IN CANADA. THE VARIOUS BRANDS, TRADEMARKS
AND TRADE NAMES MAY OR MAY NOT BE DESIGNATED WITH SUCH SYMBOLS AS (R) OR (TM).

ADDITIONAL INFORMATION CAN BE FOUND BY ACCESSING THE COMPANY'S WEBSITE AT
WWW.IDBIOMEDICAL.COM.


OVERVIEW

ID Biomedical is an integrated biotechnology company dedicated to the
development of innovative vaccine products. It operates in research,
development, manufacturing, sales and marketing from its facilities in Canada
and the United States.

ID Biomedical currently has two marketed products in Canada:

     FLUVIRAL, an injectable influenza vaccine, licensed in Canada, and in
     clinical development for potential approval to enter the U.S. market; and,

     NEISVAC-C for Meningococcal Group C disease, which is distributed by the
     Company on behalf of Baxter Corporation.

ID Biomedical is also developing vaccines targeted at the prevention of a number
of different diseases, as well as vaccines targeting biological warfare agents.
In addition to the development of Fluviral for the U.S. Market, the Company's
lead products in clinical development are:

     FluINsure, a non-live intranasally delivered vaccine for the prevention of
     influenza (flu), which has successfully completed several Phase II clinical
     trials and its first (non-pivotal) field efficacy study.

     StreptAvax, a subunit injectable vaccine for the prevention of diseases
     caused by group A streptococcus in children currently in Phase II clinical
     development.

     PGCvax, a subunit injectable vaccine for the prevention of diseases caused
     by STREPTOCOCCUS PNEUMONIAE (pneumococcus) in children, at-risk adults and
     the elderly, which is expected to be in Phase I testing in infants in the
     first half of 2005, after successfully completing Phase I testing in
     adults, the elderly and toddlers.

The Company also has a number of research and early stage development programs
that include the possible development of intranasal vaccines for respiratory
viruses (RSV, SARS, and measles), respiratory bacteria (second generation group
A streptococcus, pertussis), bioterror agents (plague, anthrax) and allergies
(birch pollen and other allergies). The Company's research and preclinical


                                                                               1
<Page>

programs also include projects for intramuscular (injectable) vaccines:
meningococcal protein vaccine, group B streptococcus vaccine, and HAEMOPHILUS
INFLUENZAe vaccine.

ID Biomedical also owns the Proteosome technology, a proprietary adjuvant system
suitable for stimulating immune responses in the respiratory tract following
nasal administration. The Proteosome technology is a component of FluINsure and
the nasally administered vaccines being developed in the Company's preclinical
research programs.

In addition to the Company's main business, the Company also owns and licenses
rights to a proprietary genomics analysis system, Cycling Probe Technology
("CPT").

ACQUISITION OF SHIRE'S VACCINE BUSINESS

On April 19, 2004, the Company and Shire BioChem Inc. ("Shire") entered into an
Asset Purchase Agreement ("the Agreement") related to the sale of Shire's
vaccine business to the Company. The closing of the transaction was conditional
on consents of the Canadian government for certain government contracts and
obtaining regulatory approvals. On September 9, 2004, the conditions of the
closing were met and the transaction was completed. The acquisition included all
the vaccine related facilities and equipment, working capital including
inventory, intangible assets and long-term debt specifically related to the
Shire vaccine business and it's wholly owned subsidiary, Shire Biologics Inc.

Under the Agreement, the Company acquired all of Shire's vaccine assets for a
cash payment of US$60 million (payable US$30 million at closing and US$30
million being held in escrow and payable on the first anniversary of closing)
and subscription receipts allowing Shire to convert 4,931,864 subscription
receipts into common shares of ID Biomedical, representing additional
consideration of US$60 million. During the first four months after closing, IDB
had the right, in certain circumstances, to require Shire to deliver the
subscription receipts back to IDB (for cancellation) in return for a cash
payment of US$60 million. On January 7, 2005, IDB exercised this right and paid
Shire US$60 million in cash.

As part of the transaction, a related company of Shire provided the Company with
a funding facility ("the Shire Funding Facility") of US$100 million to be used
over a four year period to finance the continued development of the vaccine
business that the Company acquired. Subject to certain minimum repayment
requirements, this facility is repayable out of the net sales of Fluviral
outside of Canada and worldwide pipeline vaccine products, if any, that are
developed utilizing the funding facility.

Under the terms of the agreement, the Company was required to reimburse Shire
for the net operating working capital ("Net Purchased Working Capital") at June
30, 2004 and the net cost of operating the vaccines business ("Net Operating
Cash") from June 30, 2004 until September 9, 2004. The Net Purchased Working
Capital totaled $9.1 million and the Net Operating Cash totaled $16.8 million.
Both amounts have been included by the Company as part of the consideration
paid.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our consolidated financial statements are prepared in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP"). A reconciliation of
amounts measured in accordance with United States generally accepted accounting
principles ("U.S. GAAP") is described in note 25 of the consolidated financial
statements. These accounting principles require us to make certain estimates and
assumptions. We believe that the estimates and assumptions upon which we rely
are reasonable based upon information available to us at the time that these
estimates and assumptions are made. Actual results could differ from our
estimates. Significant areas requiring the use of management estimates relate to
the determination of the valuation of inventory, investments, medical technology
and goodwill, the useful lives of assets for depreciation and amortization,
stock-based compensation, the amounts recorded as revenue and deferred revenue,
product returns and accrued liabilities, and the allocation of the purchase
price on an acquisition.

The significant accounting polices that we believe are the most critical in
fully understanding and evaluating our reported financial results include the
following:

- Revenue recognition
- Cost of product sales
- Medical technology and other assets
- Inventory


                                                                               2
<Page>


REVENUE RECOGNITION

Our revenue is comprised of product sales, licensing revenue, research and
development contract revenue, and other revenue.

Product sales consist of revenues recognized when persuasive evidence of an
arrangement exists, delivery to the customer has occurred, selling price is
fixed and collection is reasonably assured, provided that the Company has not
retained any significant risks of ownership or future obligations with respect
to the products delivered. Revenue is recognized net of customer sales
incentives and returns. The Company monitors and tracks the amount of returns
and reduces revenues at the time of sale based on historical experience and
estimates of future returns. Adjustments to the estimated returns are recorded
to revenue in the period determined. In addition, the Company records a bad debt
allowance based on historical experience and review of significant accounts,
which is recorded within selling, general and administrative expenses.

Licensing revenue from the Company's medical technology agreements, including
royalty payments, license and option fees and milestone payments, some of which
are received as non-refundable upfront payments, is recorded net of amounts
payable to third parties and is recognized on an accrual basis as the Company
fulfills its obligations related to the various elements within the licensing
agreement, in accordance with the contractual arrangements with third parties
and the term over which the underlying benefit has been conferred. Payments
related to medical technology agreements in which the benefit is conferred in
future periods are deferred and recognized as revenue on a straight-line basis
over the term of the related agreements. Revenues associated with multi-element
arrangements are attributed to the various elements based on their relative fair
value.

Research and development contract revenue from collaborative agreements is
recognized on the percentage of completion method, based on the ratio of costs
incurred to date over the estimated costs attributable to the respective
collaborative agreement. This method is used because management considers
expended costs to be the best available measure of progress on these agreements.
Funds received and expenditures incurred are recorded on a gross basis. Cost
related to the collaborative agreements include all direct material and labor
costs, supplies, external contracts, administrative overhead and depreciation
costs of facilities and equipments used directly in performing services under
the agreements and are recorded as research and development expenses; selling,
general, and administrative expenses; and depreciation. Changes in estimates of
agreement price, total estimated costs or estimated losses, if any, are included
in the determination of estimated cumulative revenue and expenses in the period
the change is determined by management.

Payments received under contract research and development agreements, which are
non-refundable, are recorded as revenue as the research and development
activities are performed.

Other revenue includes distribution fees received from the provision of contract
distribution services and a pandemic readiness fee. The Company records
distribution fees, which are based on invoice costs of the goods shipped, at the
time of product shipment. The pandemic readiness fee is earned under certain
arrangements and is calculated as the costs incurred to maintain a state of
readiness plus an allowable margin. This fee is recognized as the readiness
costs are incurred by the Company.

COST OF PRODUCT SALES AND INVENTORY

Cost of product sales, consisting of expenses related to the production of
FLUVIRAL and the agreement to distribute NEISVAC-C, are charged against earnings
in the period of the related product sales to third parties. Expenses are
comprised of direct and indirect costs related to the manufacturing process and
include expenditures related to quality inspection, quality assurance, supply
chain management, safety and regulatory, but exclude depreciation and
amortization expenses. These expenses are allocated to inventory during each
stage of the manufacturing process and eventually to cost of product sales when
the related product is sold to third parties. While the Company believes that
its allocations are reliable, actual production costs and volume changes may
impact inventory, cost of product sales, and the absorption of production
expenses. Cost related to maintaining a state of readiness against an influenza
pandemic are also recognized as cost of product sales and are charged against
earnings in the period the costs are incurred.

Inventory consists of raw materials, supplies, work in progress and finished
goods. Raw materials and supplies are recorded at the lower of cost and
replacement cost. Work in progress and finished goods are recorded at the lower
of cost and net realizable value. Cost is determined on a first-in, first-out
basis.


                                                                               3
<Page>

MEDICAL TECHNOLOGY AND OTHER ASSETS

The Company capitalizes the cost of acquiring medical technology and other
assets from third parties. Costs are amortized over the estimated useful life of
the technology once use of the related product commences or once the Company
enters into a licensing agreement with respect to the technology. We determine
the estimated useful lives for medical technology and other assets based on a
number of factors such as legal, regulatory or contractual limitations; known
technological advances; anticipated demand; and the existence or absence of
competition. We review the carrying value of our medical technology and other
assets on an annual basis to determine if there has been a change in any of
these factors. A significant change in these factors may warrant a revision of
the expected remaining useful life of the medical technology and other assets,
resulting in accelerated amortization or an impairment charge, which would
impact earnings. During the year ended December 31, 2004, the Company made no
changes to its accounting estimates that would have a material impact on the
carrying value or period of amortization of medical technology and other assets.

CHANGES IN ACCOUNTING POLICIES

Effective July 1, 2004, the Company changed its policy of identifying amounts
related to the initial patent costs associated with the protection of
intellectual property. The costs included in this change are those associated
with the filing and prosecution of patents in domestic and international
jurisdictions. As a result, such costs, previously capitalized, are now
accounted for as selling, general and administrative expenditures and are
recorded as expenses in the period in which they are incurred in accordance with
the Company's accounting policy described in note 2 to our December 31, 2004
consolidated financial statements. This change has been applied retroactively
and the effects of the loss and the loss per share are disclosed in note 3 of
the consolidated financial statements.

RESULTS FROM OPERATIONS

The Company recorded a net loss of $39.7 million ($0.94 per share) for the year
ended December 31, 2004 compared to a net loss of $31.8 million ($0.89 per
share) for the year ended December 31, 2003. The results from operations include
the activities of the acquired vaccine business from Shire for the period of
September 10, 2004 through December 31, 2004. Provided below is selected
financial information for each of the eight most recently completed quarters.

<Table>
<Caption>
-------------------------------------------------------------------------------------------------------------------
YEAR ENDING                                DECEMBER 31         SEPTEMBER 30            JUNE 30            MARCH 31
(IN THOUSANDS OF DOLLARS)
-------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                 <C>                    <C>                 <C>
2004
  Total revenue                               $ 31,945              $17,449           $  2,735            $  1,533
  Income (loss) from operations                (12,219)              (5,015)            (9,145)            (11,714)
  Net income (loss)                            (10,386)              (7,557)           (10,905)            (10,859)
2003
  Total revenue                               $  1,512                2,084              1,856               1,386
  Income (loss) from operations                (14,022)              (7,736)            (6,137)             (5,679)
  Net income (loss)                            (13,131)              (8,661)            (5,869)             (4,112)
</Table>

Total revenue increased for the three months ended December 31, 2004 and
September 30, 2004 as a result of the Shire acquisition. This revenue was
primarily related to flu vaccines sales and research and development contract
revenue. Fluctuations in income (loss) from operations and net income (loss) are
due to the seasonal nature of the Fluviral product sales; most of which occurs
in September, October and November of each year. Also impacting income (loss)
from operations and net income (loss) is the cost of our lead products in
clinical development, and the funding of our research and early stage
development programs. Effective July 1, 2004, the Company changed its policy of
identifying amounts related to the initial patent costs associated with the
protection of intellectual property, described in note 3 to our December 31,
2004 consolidated financial statements. As a result, such costs, previously
capitalized, are now accounted for as selling, general and administrative
expenditures and are recorded as expenses in the period in which they are
incurred in accordance with the Company's accounting policy stated in note 2(g)
of the consolidated accounting statements. This change is reflected in the table
above and did not have a material impact on any one quarter.


                                                                               4
<Page>

REVENUE

Included in revenue are product sales from our two marketed products FLUVIRAL
and NEISVAC-C. Also included in revenue is research and development contract
revenue, deferred licensing revenue and other revenue.

For the year ended December 31, 2004, the Company's revenue totaled $53.7
million compared to $6.8 million for the year ended December 31, 2003.

Product sales revenue in the amount of $36.1 million was recorded for the year
ended December 31, 2004 compared to $0 for the year ended December 31, 2003.
This revenue primarily relates to the sales of the Company's two marketed
vaccines to the Canadian government. Product sales increased as a result of the
Shire acquisition.

Research and development contract revenue in the amount of $13.4 million was
recorded for the year ended December 31, 2004 compared to $4.1 million for the
year ended December 31, 2003. Research and development contract revenue includes
revenue recognized as a result of the Shire Funding Facility to support the
development of the non-flu vaccine candidates acquired from Shire. Revenue
recognized from the Shire Funding Facility totaled $6.8 million for the year
ended December 31, 2004. The Company determined that these amounts are
appropriate to recognize as revenue since the amount and date of repayment of
these advances are not known and there is no requirement to repay any advances
if the early stage, non-flu vaccine candidates acquired from Shire are not
successful. Other research and development contract revenue totaling $6.6
million in 2004 and $4.1 million in 2003 is a result of agreements executed
during 2003 with Dynport Vaccine Company for the development of an antigen for a
injectable subunit plague vaccine.

Previously deferred licensing revenue in the amount of $2.7 million was
recognized for the year ended December 31, 2004, compared to $2.7 million for
the year ending December 31, 2003. Based on the Company's current licensing
agreements, amortization of deferred licensing revenue is expected to continue
at the present amount through October 2006. The amortization of deferred
licensing revenue does not result in additional cash to the Company.

Other revenue, consisting primarily of the pandemic readiness fees under an
agreement with the Government of Canada and other fees to store and distribute
vaccines under an agreement with the Quebec Ministry of Health, totaled $1.5
million for the year ended December 31, 2004 compared to $0 for the year ended
December 31, 2003. Other revenue increased as a result of the Shire Acquisition.

The Company expects to earn additional product sales, licensing revenue and
research and development contract revenue in the future from existing and new
agreements. The extent and timing of such additional product sales, licensing
revenue and research and development contract revenue will be dependent upon the
overall structure and terms and conditions of current and any future agreements
and regulatory approvals.

EXPENDITURES

COST OF PRODUCT SALES

Cost of product sales includes the expenses related to the production and
distribution of FLUVIRAL(R), the distribution of NEISVAC-C, and other product
related costs. Cost of product sales was $21.4 million for the year ended
December 31, 2004. Prior to the acquisition of Shire, the Company did not have
products sales.

RESEARCH AND DEVELOPMENT

Research and development expenses increased $17.0 million or 54%, to $48.5
million for the year ended December 31, 2004 compared to the year ended December
31, 2003. The increase in research and development expenses in 2004, compared to
the same period in 2003 is a result of the Shire acquisition, the cost of
advancing our lead products in clinical development, and the funding of our
research and early stage development programs. Included in research and
development expenses is stock-based compensation expense totaling $1.9 million
and $1.2 million for the year ended December 31, 2004 and 2003 respectively.

Research and development tax credits and grants include amounts received or
receivable from Technology Partnerships Canada ("TPC"), National Institutes of
Health ("NIH") and provincial government investment tax credits. Research and
development tax credits and grants was $2.8 million for the year ended December
31, 2004 compared to $2.3 million for the year ended December 31, 2003. There
were $0.9 million in TPC grants recognized for the year ended December 31, 2004


                                                                               5
<Page>

compared to $1.8 million for the year ended December 31, 2003. NIH grants
totaled $0.8 million for the year ended December 31, 2004. There were no NIH
grants during 2003. Provincial government investment tax credits totaled $1.2
million for the year ended December 31, 2004 as compared to $0.6 million for the
year ending December 31, 2003.

We expect to continue incurring substantial research and development expenses in
the near future relating to the potential licensure of Fluviral in the U.S and
the continued clinical studies for the FluINsure, StreptAvax, and PGCvax
development programs. There will also be incremental costs associated with the
hiring of additional research and development personnel to support the continued
progress of our other research and development programs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses increased $8.8 million, or 125% to
$15.8 million for the year ended December 31, 2004 compared to the year ended
December 31, 2003. This increase is primarily the result of the selling and
administrative organizations acquired in the Shire acquisition. Included in the
selling, general and administrative expenses is stock-based compensation expense
totaling $2.6 million and $0.5 million for the years ended December 31, 2004 and
2003 respectively.

In future periods we expect increases in selling, general and administrative
expenses resulting from stock-based compensation, business development, and the
cost of additional Sarbanes-Oxley reporting compliance.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense relates to facilities and equipment and
medical technology and other assets. Depreciation and amortization expense
increased $4.7 million, or 113% to $8.8 million for the year ended December 31,
2004 compared to the year ended December 31, 2003. These increases are directly
related to the value of the assets acquired in the Shire acquisition.

We believe that depreciation and amortization expense will continue to increase
as the Company invests in manufacturing facilities and equipment necessary to
increase capacity to support the Company's vaccine product candidates. In the
short-term these increases will be offset by the sale and leaseback of our
Vaccine Research Center in Laval, Quebec and of the pilot scale manufacturing
facility in Northborough, Massachusetts.

INVESTMENT INCOME

Investment income increased $1.0 million to $2.6 million for the year ended
December 31, 2004 compared to the year ended December 31, 2003. These increases
in interest income are a result of increased levels of cash and short term
investments resulting from the Company's 2003 financing activities.

The Company expects that investment income will continue to fluctuate in
relation to cash balances and interest rates.

FOREIGN EXCHANGE GAIN (LOSS)

The Company recorded a foreign exchange loss of $3.0 million for the year ended
December 31, 2004 as compared to a $0.1 million loss for the year ended December
31, 2003. This foreign exchange loss is directly related to the Company's
investment in US dollars prior to completion of the Shire acquisition to satisfy
the US$60 million obligation (US$30 million paid at closing on September 9, 2004
and US$30 million held in escrow and payable on the first anniversary of
closing) of the acquisition.

The Company expects that foreign exchange gain (loss) will continue to fluctuate
in relation foreign exchange rates.

INTEREST EXPENSE

Interest expense increased $1.1 million to $1.2 million for the year ended
December 31, 2004 compared to the year ended December 31, 2003. The increase in
interest expense is a direct result of the flu advances, received under the
Shire Funding Facility.


                                                                               6
<Page>

In the future the Company will continue to recognize interest expense related to
the flu advances under the Shire funding Facility. Additionally, interest
expense will be recognized on the loan used to repurchase the Shire subscription
receipts.

GAIN ON SALE OF SHORT-TERM INVESTMENT

In January 2003, the Company sold its investment in Third Wave Technologies Inc.
for $2.5 million resulting in a gain of $1.7 million.

LOSS ON DISPOSAL OF MEDICAL TECHNOLOGY AND OTHER ASSETS

The Company recorded a $0.03 million loss on disposal of medical technology and
other assets for the year ended December 31, 2004 related to the disposal of
certain trademarks. For the year ended December 31, 2003, the Company recorded a
$1.3 million loss from the disposal of medical technology and other assets. The
2003 amount represented the unamortized portion of medical technology, less the
termination of an obligation classified as long-term debt, related to research
programs targeting possible vaccines against E. COLI and MYCOBACTERIUM
TUBERCULOSIS, which the Company is no longer pursuing.

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company has financed its technology acquisitions,
research and development activities and capital expenditures from the licensing
of the Company's technologies, private and public equity financing, and leasing
transactions. The Company has also received proceeds from contract revenue
related to collaborative research and development agreements with corporate
partners, contracts and grants from government agencies, and product sales.

We expect future funding to be provided through public equity financing and
contract revenue from collaborative research and development agreements,
contracts and grants from government agencies, product sales, sale and leaseback
of facilities and asset backed financings.

The Company's primary objective for the investment of funds is to preserve the
Company's cash for the continued advancement of the Company's vaccine product
candidates, research, and other operating expenditures by investing in low risk,
readily marketable securities. The Company had cash and short-term investments
of $105.1 million at December 31, 2004 as compared to $156.2 million at December
31, 2003. Included in cash and cash equivalents and current liabilities is $36.1
million related to the US$30 million loan payable to Shire on September 9, 2005
and held in escrow as at December 31, 2004.

The Company's net working capital decreased to $53.7 million at December 31,
2004 compared to $149.0 million at December 31, 2003. The decrease in working
capital is the result of the Shire acquisition and funding the Company's
research, development, manufacturing and clinical trial expenses. The working
capital does not include $25.1 million received January 10, 2005 from the Shire
Funding Facility or any other amounts remaining under the Shire Funding
Facility. Additionally, the working capital does not include approximately $50
million received on March 3, 2005 for the sale and leaseback of two facilities
acquired from Shire.

Also impacting the Company's liquidity and capital resources are the Shire
Funding Facility, TPC funding, provincial government tax credits, exercise of
stock options, foreign exchange rates, debt repayment, additions of facilities
and equipment, and additions to medical technology and other assets.

On January 7, 2005, the Company closed a loan transaction for proceeds of US$60
million. The loan is backed by the assets of the Company, including a US$20
million Letter of Credit and certain financial covenants. The principal amount
will bear interest at an annual rate of 8%. The principal plus any unpaid and
accrued interest becomes due and fully payable in 18 months. The Company used
the proceeds of this transaction to repurchase the 4,931,864 subscription
receipts held by Shire that were issued in connection with the Company's
acquisition of the vaccine business of Shire Pharmaceuticals Group, plc. All
conditions precedent to this transaction have now been satisfied and the
subscription receipts have been cancelled.

Cash used in operating activities was $6.9 million for the year ended December
31, 2004 compared to cash used in operating activities of $23.2 million for the
year ending December 31, 2003.


                                                                               7
<Page>

Additions to facilities and equipment were $23.8 million for the year ended
December 31, 2004 compared to $5.3 million for the year ended December 31, 2003.
This increase is associated with facility expansion to support the clinical and
manufacturing development of the Company's vaccine product candidates. These
amounts do not include facilities and equipment acquired from Shire totaling
$160.5 million.

Medical technology and other assets added during the year ended December 31,
2004 totaled $0.07 million compared to $0.04 million for the year ended December
31, 2003. These amounts do not include medical technology and other assets
acquired from Shire totaling $10.5 and an increase of $1.0 million in medical
technology and other assets resulting from the issuance of share purchase
warrants to TPC.

For the year ended December 31, 2004, the Company made debt payments, including
payments of obligations under capital leases, totaling $1.2 million. Debt
payments for the year ended December 31, 2003 totaled $1.1 million. Required
additional principal payments on capital leases are $0.05 million. In addition
the Company has entered into a long term funding agreements, and operating lease
agreements for office and laboratory space and office equipment. The minimum
annual commitments related to these agreements and the Company's capital leases
are as follows:

<Table>
<Caption>
-----------------------------------------------------------------------------------------------------------------
(IN THOUSANDS OF DOLLARS)                                   PAYMENTS DUE BY PERIOD
-----------------------------------------------------------------------------------------------------------------
CONTRACTUAL                     TOTAL          LESS THAN 1         1-3 YEARS         4-5 YEARS           AFTER 5
OBLIGATIONS                                       YEAR                                                    YEARS
-----------------------------------------------------------------------------------------------------------------
<S>                           <C>              <C>                 <C>               <C>                 <C>
CAPITAL LEASE
OBLIGATIONS                   $    49               $   30            $   19            $    -           $     -
OPERATING LEASES               12,245                2,239             3,190             2,755             4,061
LONG TERM DEBT                 37,043                  990                               3,610            32,443
</Table>

We have no relationships with any "special purpose" entities and have no
commercial commitments with related parties. The Company's primary contractual
obligations are in the form of operating leases, capital leases, and future
research and development expenditures.

We expect that our current available cash resources, working capital, expected
product revenue, expected interest income, expected licensing revenue, estimated
funding from corporate partnerships, proceeds from asset sales, the Shire
Funding Facility and any required debt or equity financings should be sufficient
to satisfy the funding of existing product development programs and other
operating and capital requirements for at least the next 12 months. The amount
of the expenditures that will be necessary to execute our business plan is
subject to numerous uncertainties, which may adversely affect liquidity and
capital resources to a significant extent. Other than our two marketed products
in Canada, all of our lead vaccine product candidates are currently in human
clinical trials. Completion of clinical trials may take several years, but the
length of time generally varies substantially according to the type, complexity,
novelty and intended use of a product. The duration and the cost of clinical
trials may vary significantly over the life of a project as a result of
unanticipated developments arising during the clinical trials and the duration,
cost and outcome, therefore, cannot be estimated.


                                                                               8
<Page>

RISKS AND UNCERTAINTIES

The Company will require additional capital to fund its ongoing research and
development, product development, and other operating activities. As a result,
the Company intends to seek funds from a variety of sources, including product
sales, corporate alliances, cooperative research and development agreements,
contracts and grants from government agencies, and other financing arrangements.
In addition, the Company will likely issue securities if it determines that
additional capital could be obtained under favorable conditions. However, there
can be no assurance that these funds will be available on favorable terms, if at
all.

The information in this management's discussion & analysis of financial
condition and results of operations contains so-called "forward-looking"
statements. These include statements regarding ID Biomedical's expectations and
plans relating to the integration of the vaccine business acquired from Shire,
statements about ID Biomedical's expectations, beliefs, intentions or strategies
for the future, which may be indicated by words or phrases such as "anticipate",
"expect", "intend", "plan", "will", "we believe", "ID Biomedical believes",
"management believes", and similar language. All forward-looking statements are
based on ID Biomedical's current expectations and are subject to risks and
uncertainties and to assumptions made. Important factors that could cause actual
results to differ materially from those expressed or implied by such
forward-looking statements include: (i) the Company's ability to successfully
integrate the Shire vaccine business; (ii) the Company's ability to successfully
complete preclinical and clinical development of its products; (iii) the
Company's ability to manufacture its products; (iv) the seasonality of the
flu-vaccine business and related fluctuations in the Company's revenues from
quarter to quarter; (v) decisions, and the timing of decisions, made by the
health regulatory agencies regarding approval of its products for human testing;
(vi) the Company's ability to enter into distribution agreements for its
products, and to complete and maintain corporate alliances relating to the
development and commercialization of its technology and products; (vii) market
acceptance of its technologies and products; and (viii) the competitive
environment and impact of technological change and other risks detailed in the
Company's filings with the Securities and Exchange Commission. ID Biomedical
bases its forward-looking statements on information currently available to it,
and assumes no obligation to update them.


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MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING


The consolidated financial statements contained in this annual report have been
prepared by management in accordance with Canadian generally accepted accounting
principles and have been approved by the Board of Directors. The integrity and
objectivity of the information presented in these financial statements are the
responsibility of management. In addition, management is responsible for all
other information in this annual report and for ensuring that this information
is consistent, where appropriate, with the information contained in the
financial statements.

In support of this responsibility, management maintains a system of internal
controls to provide reasonable assurance as to the reliability of financial
information and the safeguarding of assets. The financial statements include
amounts, which are based on the best estimates and judgments of management. The
Board of Directors is responsible for ensuring that management fulfills its
responsibility for financial reporting and internal control and, exercises this
responsibility principally through the Audit Committee. The Audit Committee
consists of six directors not involved in the daily operations of the Company.
The Audit Committee meets with management and the external auditors to satisfy
itself that management's responsibilities are properly discharged and to review
the financial statements prior to their presentation to the Board of Directors
for approval.

The Company's auditors, KPMG LLP, have conducted an independent examination of
the financial statements. Their examination includes a review of the Company's
system of internal controls and appropriate tests and procedures to provide
reasonable assurance that the financial statements are presented fairly and in
accordance with accounting principles generally accepted in Canada.




/s/ ANTHONY F. HOLLER                                   /s/ TODD R. PATRICK
------------------------                                -------------------
Anthony F. Holler                                       Todd R. Patrick
CHIEF EXECUTIVE OFFICER                                 PRESIDENT


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