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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
 Form 10-K
  (Mark One)þ

Annual Report Pursuant To Section 13 or 15(d) of the
    Securities Exchange Act of 1934For the Fiscal
    Year Ended December 31,
    2010o

Transition Report Pursuant To Section 13 or 15(d) of the
    Securities Exchange Act of 1934   Commission File
    No. 001-33637
 Cumberland Pharmaceuticals
    Inc.
 (Exact name of registrant as
    specified in its charter)
  TennesseeState or other jurisdiction
    of
    Incorporation or organization

62-1765329(I.R.S. Employer
    Identification No.)2525 West End Avenue,
    Suite 950, Nashville, Tennessee (Address of principal executive
    offices)

37203(Zip
    Code)  (615) 255-0068
 (Registrants telephone
    number, Including area code)
 Securities Registered Pursuant to Section 12(b) of the
    Act
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon stock, no par value

Nasdaq Global Select Market   o þ
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer þ
    Non-accelerated
    filer o
    Smaller
    reporting
    company o   Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K




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##### 





CUMBERLAND
    PHARMACEUTICALS INC. INDEX
    
 PART I


1Item 1:


Business


1Item 1A:


Risk Factors


22Item 1B:


Unresolved Staff Comments


36Item 2:


Properties


36Item 3:


Legal Proceedings


36PART II


37Item 5:


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


37Item 6:


Selected Financial Data


39Item 7:


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


39Item 7A:


Quantitative and Qualitative Disclosures About
    Market Risks


53Item 8:


Financial Statements and Supplemental Data


53Item 9:


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


53Item 9A:


Controls and Procedures


54Item 9B:


Other Information


54PART III


55PART IV


56Item 15:


Exhibits, Financial Statement Schedules


56SIGNATURES


61EX-10.11EX-10.12EX-10.13EX-10.15EX-10.26EX-23.1EX-31.1EX-31.2EX-32.1




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Part I
 Item 1:Business  BUSINESS
  Our
    Company
    ® acetylcysteine ® ibuprofen ® lactulose
      Form 10-K, Form 10-Q, Form 8-K
    1




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##### Table of Contents



Part I
      Our
    Strategy
  Maximize sales of
    Acetadote and Kristalose
     Successfully
    commercialize Caldolor
   Continue to build
    a high-performance sales organization to address our target
    markets
   Hospital market:
  Gastroenterology market:
    2




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Part I
      Expand our
    product portfolio by acquiring rights to additional products and
    late-stage product candidates
   Develop a
    pipeline of early-stage products through CET
   Our
    Products
    Product

Indication

Delivery

StatusAcetadote®

Acetaminophen Poisoning

Injectable

MarketedCaldolor®

Pain and Fever

Injectable

MarketedKristalose®

Chronic and Acute Constipation

Oral Solution

Marketed   Acetadote®
 ® over-the-counter
        3




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Part I
              Market
    for Acetadote
 over-the-counter
    4




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##### Table of Contents



Part I
      The Medical Letter on Drugs and
    Therapeutics,
  Competitive
    Advantages
   Journal of Medical Economics
  Caldolor®
         5




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Part I
      The
    Market for Caldolor
       U.S.-approved
  Clinical
    Development Overview
 New England Journal of Medicine
    6




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##### Table of Contents



Part I
      NumberofStudy
    name

subjects


Setting

Study
    resultsPharmacokinetic Study


36


Healthy volunteers

Similar PK parameters between oral and CaldolorAdult Safety Study


12


Healthy volunteers

Safe and well-tolerated IV infusion of CaldolorSepsis Study IND
    32803(1)


455


Hospitalized patients with severe sepsis

Significant and sustained reduction of temperature in patients
    with high fever
    (p<0.01)(3)Adult Malaria Fever Study


60


Hospitalized adult malaria patients

Significant reduction in temperature over 24 hours of
    treatment (p=0.002)Phase III Adult Fever
    Study(2)


120


Hospitalized adult febrile patients

Significant, dose-dependent, reduction in temperature supporting
    400mg dose (p=0.0003)Phase III Adult Dose Ranging Pain
    Study(2)


406


Hospitalized adult abdominal and orthopedic post-operative
    patients

Dose-dependent, morphine sparing effect (22%) supporting 800mg
    dose Significant reduction in pain intensity scores
    (VAS)(4)

    over 24 hours of treatment (p=0.001)Phase III Adult Abdominal Hysterectomy Pain
    Study(2)


319


Hospitalized adult abdominal hysterectomy patients

Significant, morphine-sparing effect (19%, p <0.001) Significant reduction in pain intensity scores (VAS) over 24 hours of treatment (p=0.011)Total


1,408     (1)
    
    Study data licensed from Vanderbilt
    University; Cumberland report filed 2003(2)
    
    Pivotal Study(3)
    
    P-value <0.05 represents
    statistical significance(4)
    
    Visual Analog Scale  Additional
    Studies
     7




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Part I
            Phase IV
    Required Pediatric Assessment
     Safety
    Summary
     8




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Part I
        Kristalose®
   Market
    for Kristalose
 over-the-counter ® ®
  Competitive
    Advantages
   14-day
  Early-stage
    product candidates
     9




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##### Table of Contents



Part I
      Ø
    In collaboration with Vanderbilt University, we are currently
    developing a new palliative treatment for fluid buildup in the
    lungs of cancer patients. The product candidate is a protein
    therapeutic being designed to treat pleural
    effusion, a condition which occurs when cancer spreads to
    the surface of the lung and chest cavity, causing fluid to
    accumulate and patients to suffer shortness of breath and chest
    pain. An estimated 100,000 patients are affected by this
    condition each year. Vanderbilt University researchers believe
    they have found a method of treating this condition which may
    involve less pain, a higher success rate and faster healing
    time, resulting in significantly shorter hospital stays.Ø
    In collaboration with the University of Mississippi, we are
    developing a highly purified, injectable anti-infective used to
    treat fungal infections in immuno-compromised patients. This
    product candidates active ingredient is currently
    FDA-approved in a different formulation, and while it is the
    therapeutic of choice for infectious disease specialists in
    treating such fungal infections, it can produce serious side
    effects related to renal toxicity, often resulting in dosage
    limitations or discontinued use. University of Mississippi
    researchers have developed what they believe is a purer and
    safer form of the anti-infective.Ø
    In collaboration with the University of Tennessee, we are
    currently developing a novel asthma therapeutic designed to
    prevent remodeling of airway smooth muscle to reduce asthmatic
    reaction in pediatric patients. Airway remodeling occurs when
    the cells or muscles that line the airway become inflamed and
    can result in decreased lung function. University of Tennessee
    researchers believe they have found a treatment that can reduce,
    or even prevent, asthma attacks in children.Ø
    CET previously entered into an agreement with Vanderbilt
    University to develop a novel treatment to improve renal
    function in patients with hepatorenal syndrome, a condition
    where kidneys fail suddenly due to cirrhosis of the liver. The
    product candidate may reduce renal blood flow in association
    with acute kidney failure. In the third quarter of 2010,
    Cumberland Pharmaceuticals entered into an option agreement with
    CET to assume the rights and responsibilities associated with
    the product candidate. We have commenced product manufacturing
    and submitted an investigational new drug application for the
    clinical evaluation of this product candidate.  BUSINESS
    DEVELOPMENT
          10




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Part I
    CLINICAL AND
    REGULATORY AFFAIRS
    Clinical
    development
    Ø
    creating clinical development strategies;Ø
    designing and monitoring our clinical trials;Ø
    creating case report forms and other study-related documents;Ø
    overseeing clinical work contracted to third parties; andØ
    overseeing CET grant funding proposals.  Regulatory and
    quality affairs
    Ø
    preparing and submitting NDAs and fulfilling post-approval
    marketing commitments;Ø
    maintaining investigational and marketing applications through
    the submission of appropriate reports;Ø
    submitting supplemental applications for additional label
    indications, product line extensions and manufacturing
    improvements;Ø
    evaluating regulatory risk profiles for product acquisition
    candidates, including compliance with manufacturing, labeling,
    distribution and marketing regulations;Ø
    monitoring applicable third-party service providers for quality
    and compliance with current Good Manufacturing Practices, Good
    Laboratory Practices, and Good Clinical Practices, and
    performing periodic audits of such vendors; andØ
    maintaining systems for document control, product and process
    change control, customer complaint handling, product stability
    studies and annual drug product reviews.  Professional and
    medical affairs
    SALES AND
    MARKETING
      11




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Part I
          International
    sales and marketing
            12




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Part I
      MANUFACTURING AND
    DISTRIBUTION
    Manufacturing
    Ø
    In July 2000, we established an international manufacturing
    alliance with a predecessor to Hospira Australia Pty. Ltd., or
    Hospira. Hospira sources active pharmaceutical ingredients, or
    APIs, and manufactures Caldolor for us under an agreement that
    expires in June 2014, subject to early termination upon
    45 days prior notice in the event of uncured material
    breach by us or Hospira. The agreement will automatically renew
    for successive three-year terms unless Hospira or we provide at
    least 12 months prior written notice of non-renewal. Under
    the agreement, we pay Hospira a transfer price per unit of
    Caldolor supplied. In addition, we reimburse Hospira for
    agreed-upon
    development, regulatory and inspection and audit costs.Ø
    Bioniche Teoranta, or Bioniche, sources APIs and has
    manufactured our Acetadote product for sale in the U.S. at
    its FDA-approved manufacturing facility in Ireland. Our
    relationship with Bioniche began in January 2002. Bioniche
    manufactures and packages Acetadote for us, and we purchase
    Acetadote from Bioniche pursuant to an agreement that we are
    currently renegotiating.Ø
    Inalco S.p.A. and Inalco Biochemicals, Inc., or collectively
    Inalco, from which we licensed exclusive
    U.S. commercialization rights to Kristalose in April 2006,
    source APIs and supply us with the product under an agreement
    that expires in 2021. The agreement renews automatically for
    successive three-year terms unless we or Inalco provide written
    notice of intent not to renew at least 12 months prior to
    expiration of a term. Either we or Inalco may terminate this
    agreement upon at least 45 days prior written notice in the
    event of uncured material breach. Under the agreement, we are
    required to pay Inalco a transfer price per unit of Kristalose
    supplied and a percentage royalty in the low to mid
    single-digits throughout the term of the agreement based on our
    net sales of Kristalose. We are required to purchase minimum
    quantities of Kristalose. In 2010, Inalco sold its facility that
    manufactured the API for Kristalose, resulting in shipping
    delays and possible increases in supply prices. We are currently
    in discussions with Inalco regarding these price increases, as
    well as an amendment to the Inalco agreement.Ø
    We entered into an agreement with Bayer Healthcare, LLC, or
    Bayer, in February 2008 for the manufacture of Caldolor and
    Acetadote. The agreement expires in February 2013, subject to
    early termination upon 30 days prior written notice in the
    event of uncured material breach by us or Bayer. The agreement
    will automatically renew for successive one-year terms unless
    Bayer or we provide at least six months prior written notice of
    non-renewal. Under the agreement, we pay Bayer a transfer price
    per each unit of Caldolor or Acetadote supplied. In addition, we
    pay Bayer for agreed upon development costs.    13




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Part I
     Distribution
    INTELLECTUAL
    PROPERTY
    Acetadote
    Caldolor
            14




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##### Table of Contents



Part I
    Kristalose
    COMPETITION
    Ø
    product attributes such as efficacy, safety,
    ease-of-use
    and cost-effectiveness;Ø
    brand awareness and recognition driven by sales and marketing
    and distribution capabilities;Ø
    intellectual property and other exclusivity rights;Ø
    availability of resources to build and maintain developmental
    and commercial capabilities;Ø
    successful business development activities;Ø
    extent of third-party reimbursements; andØ
    establishment of advantageous collaborations to conduct
    development, manufacturing or commercialization efforts.    Acetadote
    Caldolor
    Ø
    Morphine, the most commonly used product for the treatment of
    acute, post-operative pain, is manufactured and distributed by
    several generic pharmaceutical companies.Ø
    DepoDur®

    is an extended release injectable formulation of morphine that
    is marketed by EKR Therapeutics, Inc.    15




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##### Table of Contents



Part I
     Ø
    Other generic injectable opioids, including fentanyl, meperidine
    and hydromorphone, address this market.Ø
    Ketorolac (brand name
    Toradol®),

    an injectable NSAID, is also manufactured and distributed by
    several generic pharmaceutical companies.Ø
    Ofirmev®,

    an injectable acetaminophen product, was approved by the FDA in
    2010.      Kristalose
  ®
  ®
  GOVERNMENT
    REGULATION
      16




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##### Table of Contents



Part I
    FDA Approval
    Process
    Ø
    completion of pre-clinical laboratory and animal testing;Ø
    the submission to the FDA of an investigational new drug
    application, or IND, which must be evaluated and found
    acceptable by the FDA before human clinical trials may commence;Ø
    performance of adequate and well-controlled human clinical
    trials to establish the safety and efficacy of the proposed drug
    for its intended use; andØ
    submission and approval of an NDA.          17




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##### Table of Contents



Part I
    Section 505(b)(2)
    New Drug Applications
      Special Protocol
    Assessment Process
  45-day end-of-Phase II
    Orphan Drug
    Designation
      18




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##### Table of Contents



Part I
    The Hatch-Waxman
    Act
    Recent Health
    Care Legislation
    Pharmaceutical
    Industry Fee
    Medicaid
    Rebate Rate
    Federal Grant
    Funding
  (2009-2010)
  Other Regulatory
    Requirements
      19




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Part I
          ENVIRONMENTAL
    MATTERS
    SEASONALITY
    BACKLOG
      20




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Part I
    EMPLOYEES
      21




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##### Table of Contents



Part I
    Item 1A:
    Risk Factors  You should carefully consider the risk factors described
    below and throughout this report, which could materially affect
    our business. There are also risks that are not presently known
    or not presently material, as well as the other information set
    forth in this report that could materially affect our business.
    In addition, in our periodic filings with the SEC, press
    releases and other statements, we discuss estimates and
    projections regarding our future performance and business
    outlook. By their nature, such forward-looking
    statements involve known and unknown risks, uncertainties
    and other factors that in some cases are out of our control. For
    a further discussion of forward-looking statements, please refer
    to the section entitled Special Note Regarding
    Forward-Looking Statements. These factors could cause our
    actual results to differ materially from our historical results
    or our present expectations and projections. These risk factors
    and uncertainties include, but are not limited to the
    following:
  RISKS RELATED TO
    OUR BUSINESS
  An adverse
    development regarding our products could have a material and
    adverse impact on our future revenues and
    profitability.
    Ø
    The prices of our products relative to other drugs or competing
    treatments;Ø
    Any unfavorable publicity concerning us, our products, or the
    markets for these products such as information concerning
    product contamination or other safety issues in either of our
    product markets, whether or not directly involving our products;Ø
    Perception by physicians and other members of the healthcare
    community of the safety or efficacy of our products or competing
    products;Ø
    Regulatory developments related to our marketing and promotional
    practices or the manufacture or continued use of our products;Ø
    Changes in intellectual property protection available for our
    products or competing treatments;Ø
    The availability and level of third-party reimbursement for
    sales of our products; andØ
    The continued availability of adequate supplies of our products
    to meet demand.    If any
    manufacturer we rely upon fails to produce our products in the
    amounts we require on a timely basis, or fails to comply with
    stringent regulations applicable to pharmaceutical drug
    manufacturers, we may be unable to meet demand for our products
    and may lose potential revenues.
      22




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##### Table of Contents



Part I
            Ø
    fines and civil penalties;Ø
    suspension of production or distribution;Ø
    suspension or delay in product approval;Ø
    product seizure or recall; andØ
    withdrawal of product approval.  We are dependent
    on a variety of other third parties. If these third parties fail
    to perform as we expect, our operations could be disrupted and
    our financial results could suffer.
    Ø
    Cardinal Health Specialty Pharmaceutical Services, a logistics
    and fulfillment company and business unit of Cardinal, which
    warehouses and ships our marketed products; andØ
    Vanderbilt University and the Tennessee Technology Development
    Corporation, co-owners with us of CET, and the universities that
    collaborate with us in connection with CETs research and
    development programs.    Competitive
    pressures could reduce our revenues and profits.
      23




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##### Table of Contents



Part I
          The commercial
    launch of Caldolor is subject to many internal and external
    challenges and if we cannot overcome these challenges in a
    timely manner, our future revenues and profits could be
    materially and adversely impacted.
        24




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##### Table of Contents



Part I
    Any attempt by us
    to expand the potential market for Caldolor is subject to
    limitations.
  ages 1-16.
    Our future growth
    depends on our ability to identify and acquire rights to
    products. If we do not successfully identify and acquire rights
    to products and successfully integrate them into our operations,
    our growth opportunities may be limited.
    If we are unable
    to maintain and build an effective sales and marketing
    infrastructure, we will not be able to commercialize and grow
    our products and product candidates successfully.
    If governmental
    or third-party payors do not provide adequate reimbursement for
    our products, our revenue and prospects for continued
    profitability may be limited.
      25




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##### Table of Contents



Part I
        Formulary
    practices of third-party payors could adversely affect our
    competitive position.
    Continued
    consolidation of distributor networks in the pharmaceutical
    industry as well as increases in retailer concentration may
    limit our ability to profitably sell our products.
    Our CET joint
    initiative may not result in our gaining access to commercially
    viable products.
    Ø
    CET investigates early-stage products, which have the greatest
    risk of failure prior to FDA approval and commercialization;Ø
    In some programs, we do not have pre-set rights to product
    candidates developed by CET. We would need to agree with CET and
    its collaborators on the terms of any product licensed to, or
    acquired by, us;Ø
    We rely principally on government grants to fund CETs
    research and development programs. If these grants were no
    longer available, we or our co-owners might be unable or
    unwilling to fund CET operations at current levels or at
    all;    26




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##### Table of Contents



Part I
     Ø
    We may become involved in disputes with our co-owners regarding
    CET policy or operations, such as how best to deploy CET assets
    or which product opportunities to pursue. Disagreement could
    disrupt or halt product development; andØ
    CET may disagree with one of the various universities with which
    CET is collaborating on research. A disagreement could disrupt
    or halt product development.  We depend on our
    key personnel, the loss of whom would adversely affect our
    operations. If we fail to attract and retain the talent required
    for our business, our business will be materially
    harmed.
    We face potential
    product liability exposure, and if successful claims are brought
    against us, we may incur substantial liability for a product or
    product candidate and may have to limit its
    commercialization.
    Ø
    decreased demand for our products;Ø
    injury to our reputation;Ø
    withdrawal of clinical trial participants;Ø
    significant litigation costs;Ø
    substantial monetary awards to or costly settlement with
    patients;Ø
    product recalls;Ø
    loss of revenue; andØ
    the inability to commercialize our product candidates.      27




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##### Table of Contents



Part I
          Regulatory
    approval for any approved product is limited by the FDA to those
    specific indications and conditions for which clinical safety
    and efficacy have been demonstrated.
      Our business and
    operations would suffer in the event of system
    failures.
    RISKS RELATING TO
    GOVERNMENT REGULATION
  We are subject to
    stringent government regulation. All of our products face
    regulatory challenges.
      28




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##### Table of Contents



Part I
                Proposed
    legislation may permit re-importation of drugs from other
    countries into the U.S., including foreign countries where the
    drugs are sold at lower prices than in the U.S., which could
    materially adversely affect our operating results and our
    overall financial condition.
      29




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##### Table of Contents



Part I
    RISKS RELATING TO
    INTELLECTUAL PROPERTY
  Our strategy to
    secure and extend marketing exclusivity or patent rights may
    provide only limited protection from competition.
          If we are unable
    to protect the confidentiality of our proprietary information
    and know-how, the value of our technology and products could be
    adversely affected.
      30




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##### Table of Contents



Part I
      We depend on our
    licensors for the maintenance and enforcement of our
    intellectual property and have limited, if any, control over the
    amount or timing of resources that our licensors devote on our
    behalf.
    If the use of our
    technology conflicts with the intellectual property rights of
    third parties, we may incur substantial liabilities, and we may
    be unable to commercialize products based on this technology in
    a profitable manner or at all.
    We may be
    involved in lawsuits to protect or enforce our patents or the
    patents of our collaborators or licensors, which could be
    expensive and time consuming.
          31




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##### Table of Contents



Part I
    If we breach any
    of the agreements under which we license rights to our products
    and product candidates from others, we could lose the ability to
    continue commercialization of our products and development and
    commercialization of our product candidates.
    We may be subject
    to claims that our employees have wrongfully used or disclosed
    alleged trade secrets of their former employers.
    RISKS RELATED TO
    OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Our operating
    results are likely to fluctuate from period to period.
    Ø
    new product launches, which could increase revenues but also
    increase sales and marketing expenses;Ø
    acquisition activity and other charges (such as for inventory
    expiration);Ø
    increases in research and development expenses resulting from
    the acquisition of a product candidate that requires significant
    additional development;Ø
    changes in the competitive, regulatory or reimbursement
    environment, which could drive down revenues or drive up sales
    and marketing or compliance costs; andØ
    unexpected product liability or intellectual property claims and
    lawsuits.    Our focus on
    acquisitions as a growth strategy has created a large amount of
    intangible assets whose amortization could negatively affect our
    results of operations.
      32




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##### Table of Contents



Part I
      We may need
    additional funding and may be unable to raise capital when
    needed, which could force us to delay, reduce or eliminate our
    product development or commercialization and marketing
    efforts.
    RISKS RELATED TO
    OWNING OUR STOCK
  The market price
    of our common stock may fluctuate substantially.
      Unstable market
    conditions may have serious adverse consequences on our
    business.
      33




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##### Table of Contents



Part I
    We are
    experiencing increased costs as a result of operating as a
    public company, and our management will be required to devote
    additional time to new compliance initiatives.
    Form 10-K
    Some provisions
    of our third amended and restated charter, bylaws, credit
    facility and Tennessee law may inhibit potential acquisition
    bids that you may consider favorable.
    Ø
    the authorization of undesignated preferred stock, the terms of
    which may be established and shares of which may be issued
    without shareholder approval;Ø
    advance notice procedures required for shareholders to nominate
    candidates for election as directors or to bring matters before
    an annual meeting of shareholders;Ø
    limitations on persons authorized to call a special meeting of
    shareholders;Ø
    a staggered board of directors;Ø
    a restriction prohibiting shareholders from removing directors
    without cause;Ø
    a requirement that vacancies in directorships are to be filled
    by a majority of the directors then in office and the number of
    directors is to be fixed by the board of directors; andØ
    no cumulative voting.      34




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##### Table of Contents



Part I
          We have never
    paid cash dividends on our capital stock, and we do not
    anticipate paying any cash dividends in the foreseeable
    future.
  and/or
  SPECIAL
    NOTE REGARDING FORWARD-LOOKING STATEMENTS
  Form 10-K Form 10-K.
  Ø
    legislative, regulatory or other changes in the healthcare
    industry at the local, state or federal level which increase the
    costs of, or otherwise affect our operations;Ø
    changes in reimbursement available to us by government or
    private payers, including changes in Medicare and Medicaid
    payment levels and availability of third-party insurance
    coverage;Ø
    competition; andØ
    changes in national or regional economic conditions, including
    changes in interest rates and availability and cost of capital
    to us.    35




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Part I
    Item 1B:
    Unresolved Staff Comments   Item 2:
    Properties     Item 3:
    Legal Proceedings      36




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Part II
  Item 5:
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  MARKET
    INFORMATION
    High


LowFiscal year ended December 31, 2009:Fourth quarter

$
16.77


$
11.78Fiscal year ended December 31, 2010:First quarter


14.52



10.26Second quarter


11.11



6.16Third quarter


6.90



4.70Fourth quarter


8.18



5.63   DIVIDEND
    POLICY
    SECURITIES
    AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
    PLANS
  page F-22 Form 10-K.
    37




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Part II
     PERFORMANCE
    GRAPH
    Comparison
    of Cumulative Total Return
  
  USE OF PROCEEDS
    FROM INITIAL PUBLIC OFFERING OF COMMON STOCK
  Form S-1 No. 333-142535)
  PURCHASES OF
    EQUITY SECURITIES
    Maximum numberTotal number of
    shares


(or
    approximate(or units)


dollar value)
    ofAverage


purchased as


shares (or
    units)Total number
    of


price paid


part of
    publicly


that may yet
    beshares (or
    units)


per share


announced plans
    or


purchased under
    thePeriod

purchased


(or
    unit)


programs


plans or
    programsOctober 1October 31


39,751


$
6.38



381,796


$
7,531,094
(1)November 1November 30


18,035



6.69



399,831



7,410,516December 1December 31


52,602



6.87



452,433



7,049,308Total


110,388     (1)
    
    On May 13, 2010, we announced
    a share repurchase program to purchase up to $10 million of
    our common stock pursuant to
    Rule 10b-18
    of the Securities Act. In January 2011, our Board of Directors
    modified the existing repurchase program to provide for the
    repurchase of $10 million of our outstanding common stock,
    in addition to the amount repurchased in 2010.    38




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##### Table of Contents



Part II
     Item 6:
    Selected
    Financial Data  Form 10-K.
  Years ended
    December 31,Statement of
    income data:

2010


2009


2008


2007


2006(in thousands,
    except per share data)Net revenues

$
45,876


$
43,537


$
35,075


$
28,064


$
17,815Cost of products sold


3,587



4,137



3,046



2,670



2,399Selling and marketing


22,675



20,194



14,387



10,053



7,349Research and development


4,327



4,993



4,429



3,694



2,233General and administrative


7,990



7,643



5,140



4,138



2,999Other operating expenses


796



794



791



783



612Operating income


6,502



5,777



7,282



6,725



2,224Earnings per sharebasic

$
0.12


$
0.22


$
0.47


$
0.40


$
0.45Earnings per sharediluted

$
0.12


$
0.17


$
0.29


$
0.24


$
0.27   As of
    December 31,Balance sheet
    data:

2010


2009


2008


2007


2006(in
    thousands)Cash and cash equivalents

$
65,894


$
78,702


$
11,830


$
10,815


$
6,255Working capital


71,811



74,549



10,104



6,669



3,945Total assets


92,054



103,724



31,119



28,919



26,481Total long-term debt and other long-termobligations (including current portion)


7,802



20,155



7,666



7,623



10,543Convertible preferred stock










2,604



2,743



2,743Retained earnings (accumulated deficit)


6,999



4,542



1,451



(3,316
)


(7,360
)Total equity


77,715



72,221



17,555



16,746



11,126   Item 7:
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  The following discussion and analysis of our financial
    position and results of operations should be read together with
    our audited consolidated financial statements and related notes
    appearing elsewhere in this
    Form 10-K.
    This discussion and analysis may contain forward-looking
    statements that involve risks and uncertaintiesplease
    refer to the section entitled Special Note Regarding
    Forward-Looking Statements. You should review the
    Risk Factors section of this
    Form 10-K
    for a discussion of important factors that could cause actual
    results to differ materially from the results described in or
    implied by the forward-looking statements described in the
    following discussion and analysis.
  OVERVIEW
      39




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##### Table of Contents



Part II
      ® ibuprofen ® acetylcysteine ® lactulose
        2010 HIGHLIGHTS
    AND RECENT DEVELOPMENTS
  Acetadote®
  Submission of
    Application for New Formulation of Acetadote
     40




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##### Table of Contents



Part II
    Supplemental New
    Drug Application for Acetadote
     Launch of
    Acetadote in Australia
   Caldolor®
     Submission of
    Marketing Application in South Korea
   License Agreement
    for Canada
     41




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##### Table of Contents



Part II
      Compassionate Use
    in Australia
   Other
    Developments
  New Board of
    Directors Appointments
   Amendment of
    Senior Credit Facility
   Share Repurchase
    Program
 time-to-time
    Federal Grant
    Funding
   Transfer of
    License Rights
     42




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##### Table of Contents



Part II
      CRITICAL
    ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND
    ESTIMATES
  Accounting
    Estimates and Judgments
    Revenue
    Recognition
  Revenue Recognition in
    Financial Statements 605-15
        2010


2009


2008Balance at January 1

$
1,863,012


$
1,040,203


$
738,362Current Provision


4,933,553



3,436,208



1,690,134Current Provision for Prior Period Sales


306,706



75,589



(73,960
)Actual Returns/Credits


(4,476,958
)


(2,688,988
)


(1,314,333
)Balance at December 31

$
2,626,313


$
1,863,012


$
1,040,203     43




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##### Table of Contents



Part II
    product-by-product
  Ø
    the contractual terms with customers;Ø
    analysis of historical levels of discounts, returns, chargebacks
    and rebates;Ø
    communications with customers;Ø
    purchased information about the rate of prescriptions being
    written and the level of inventory remaining in the distribution
    channel, if known; andØ
    expectations about the market for each product, including any
    anticipated introduction of competitive products.        Income
    Taxes
      44




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##### Table of Contents



Part II
          Stock-Based
    Compensation
  and/or and/or
    2010


2009


2008Dividend yield


%



%



%Expected term (in years)


2.5-6.0



3.7-6.2



3.5-6.0Expected volatility


49%-53%



50%-52%



49%-51%Risk-free interest rate


0.8%-2.8%



1.4%-2.7%



3.1%     45




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##### Table of Contents



Part II
      2010


2009


2008Dividend yield


%



%



%Expected term (in years)


5.0



2.3-10.0



10.0Expected volatility


52%-53%



51%-67%



68%Risk-free interest rate


2.2%-2.4%



1.1%-2.7%



3.7%   Research and
    Development
  and/or
  Intangible
    Assets
    RESULTS OF
    OPERATIONS
  Description of
    Operating Accounts
  Net revenues
  Cost of products sold
  Selling and marketing expense
  Research and development expense
  General and administrative expense
  Amortization of product license right
  Interest income
  Interest expense
    46




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##### Table of Contents



Part II
    Income tax expense
  Year ended
    December 31, 2010 compared to year ended December 31,
    2009
 Net revenues. fee-for-service gross-to-net
      Cost of products sold.
    Selling and marketing.
  Research and development.
  General and administrative.
    47




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##### Table of Contents



Part II
      Interest income.
  Interest expense.
  Income tax expense.
  Year ended
    December 31, 2009 compared to year ended December 31,
    2008
 Net revenues.
  fee-for-service fee-for-service
  Cost of products sold.
  Selling and marketing.
    48




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##### Table of Contents



Part II
      Research and development.
  General and administrative.
  Interest income.
  Interest expense.
  Income tax expense.
  LIQUIDITY AND
    CAPITAL RESOURCES
    Form 10-K
    49




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##### Table of Contents



Part II
      Years ended
    December 31,2010


2009


2008(in
    thousands)Cash provided by (used in):Operating activities

$
347


$
405


$
6,397Investing activities


(769
)


(712
)


(134
)Financing activities


(12,386
)


67,180



(5,248
)Net (decrease) increase in cash and cash
    equivalents(1)

$
(12,808
)

$
66,872


$
1,015     (1)
    
    The sum of the individual amounts
    may not agree due to rounding.  Form 10-K.
          50




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Part II
                      51




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##### Table of Contents



Part II
        Payments due by
    yearContractual
    obligations

Total(1)


2011


2012


2013


2014


2015+(in
    thousands)Amounts reflected in the balance sheet:Term
    loan(2)

$
5,333


$
2,667


$
2,667


$



$



$
Line of credit


1,826







1,826











Estimated interest on
    debt(3)


459



293



166











Other cash obligations not reflected on the balance sheet:Operating
    leases(4)


5,204



833



860



886



913



1,712Purchase
    obligations(5)


689



517



129



32



8



3Total(1)

$
13,512


$
4,309


$
5,648


$
918


$
921


$
1,715     (1)
    
    The sum of the individual amounts
    may not agree due to rounding.(2)
    
    The term debt is payable in
    quarterly installments of $666,667.(3)
    
    Represents the estimated interest
    payments on our line of credit and term loan based on the
    December 31, 2010 interest rate of LIBOR plus an applicable
    margin, or 4.76%. Interest payments are due and payable
    quarterly in arrears. The line of credit becomes due and payable
    in December 2012. Estimated interest for the line of credit is
    based on the assumption of a consistent outstanding balance.(4)
    
    Includes minimum lease commitments
    for the CET facility for the five-year option renewal beginning
    in July 2011 for which we have notified the landlord in January
    2011 of our intent to exercise.(5)
    
    Represents minimum purchase
    obligations under our manufacturing agreements. The agreement
    requires us to purchase 25% of our prior year purchases.  OFF-BALANCE SHEET
    ARRANGEMENTS
    RECENTLY ISSUED
    BUT NOT YET ADOPTED ACCOUNTING PRONOUNCEMENTS
      52




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##### Table of Contents



Part II
    Item 7A:
    Quantitative
    and Qualitative Disclosures About Market Risk  INTEREST RATE
    RISK
        EXCHANGE RATE
    RISK
      Item 8:
    Financial
    Statements and Supplementary Data  page F-1.
  Item 9:
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure      53




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##### Table of Contents



Part II
    Item 9A:
    Controls
    and Procedures    page F-1 Form 10-K.
  Rule 13a-15(f) 15d-15(f)).
  Item 9B:
    Other
    Information      54




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Part III
  Form 10-K
    55




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##### Table of Contents



Part IV
  Item 15:
    Exhibits,
    Financial Statement Schedules  (a) Documents filed as part of this report:
    Page
    NumberManagement Report on Internal Control over
    Financial Reporting


F-1Report of Independent Registered Public
    Accounting FirmConsolidated Financial Statements


F-2Report of Independent Registered Public
    Accounting FirmInternal Control over Financial
    Reporting


F-3Consolidated Balance Sheets as of
    December 31, 2010 and 2009


F-4Consolidated Statements of Income for the years
    ended December 31, 2010, 2009 and 2008


F-5Consolidated Statements of Cash Flows for the
    years ended December 31, 2010, 2009 and 2008


F-6Consolidated Statements of Equity and
    Comprehensive Income for the years ended December 31, 2010,
    2009 and 2008


F-7Notes to the Consolidated Financial Statements


F-8(2)  Financial Statement ScheduleValuation and Qualifying Accounts


F-27   (b) Exhibits
  ExhibitNumber

Description3
.1

Third Amended and Restated Charter of Cumberland Pharmaceuticals
    Inc., incorporated herein by reference to the corresponding
    exhibit to Amendment No. 19 of the Registrants
    Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on July 17, 20093
.2

Second Amended and Restated Bylaws of Cumberland Pharmaceuticals
    Inc., incorporated herein by reference to the corresponding
    exhibit to Amendment No. 19 of the Registrants
    Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on July 17, 20094
.1

Specimen Common Stock Certificate of Cumberland Pharmaceuticals
    Inc., incorporated herein by reference to the corresponding
    exhibit to Amendment No. 5 of the Registrants
    Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on August 6, 20074
.2

Warrant to Purchase Common Stock of Cumberland Pharmaceuticals
    Inc., issued to Bank of America, N.A. on October 21, 2003,
    incorporated herein by reference to the corresponding exhibit to
    the Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 1, 2007    56




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##### Table of Contents



Part IV
    ExhibitNumber

Description4
.3

Stock Purchase Warrant, issued to S.C.O.U.T. Healthcare
    Fund L.P. on April 15, 2004, incorporated herein by
    reference to the corresponding exhibit to Amendment No. 1
    of the Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on June 22, 20074
.4

Warrant to Purchase Common Stock of Cumberland Pharmaceuticals
    Inc., issued to Bank of America, N.A. on April 6, 2006,
    incorporated herein by reference to the corresponding exhibit to
    the Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 1, 20074
.5#

Form of Option Agreement under 1999 Stock Option Plan of
    Cumberland Pharmaceuticals Inc., incorporated herein by
    reference to the corresponding exhibit to the Registrants
    Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 1, 20074
.6.1#

Form of Incentive Stock Option Agreement under 2007 Long-Term
    Incentive Compensation Plan of Cumberland Pharmaceuticals Inc.,
    incorporated herein by reference to the corresponding exhibit to
    the Registrants Quarterly Report on
    Form 10-Q
    (File
    No. 001-33637)
    as filed with the SEC on May 17, 20104
.6.2#

Form of Nonstatutory Stock Option Agreement under 2007 Long-Term
    Incentive Compensation Plan of Cumberland Pharmaceuticals Inc.,
    incorporated herein by reference to the corresponding exhibit to
    the Registrants Quarterly Report on
    Form 10-Q
    (File
    No. 001-33637)
    as filed with the SEC on May 17, 20104
.7#

Form of Nonstatutory Stock Option Agreement under
    2007 Directors Compensation Plan of Cumberland
    Pharmaceuticals Inc., incorporated herein by reference to the
    corresponding exhibit to the Registrants Quarterly Report
    on
    Form 10-Q
    (File
    No. 001-33637)
    as filed with the SEC on May 17, 20104
.8

Warrant to Purchase Common Stock of Cumberland Pharmaceuticals
    Inc., issued to Bank of America, N.A. on July 22, 2009,
    incorporated herein by reference to the corresponding exhibit to
    the Registrants Annual Report on
    Form 10-K
    (File
    No. 001-33637)
    as filed with the SEC on March 19, 201010
.1

Manufacturing and Supply Agreement for N-Acetylcysteine, dated
    January 15, 2002, by and between Bioniche Life Sciences,
    Inc. and Cumberland Pharmaceuticals Inc., incorporated herein by
    reference to the corresponding exhibit to Amendment No. 5
    of the Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on August 6, 200710
.2

Novation Agreement, dated January 27, 2006, by and among
    Bioniche Life Sciences, Inc., Bioniche Pharma Group Ltd., and
    Cumberland Pharmaceuticals Inc., incorporated herein by
    reference to the corresponding exhibit to the Registrants
    Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 1, 200710
.3

First Amendment to Manufacturing and Supply Agreement for
    N-Acetylcysteine, dated November 16, 2006, by and between
    Bioniche Teoranta and Cumberland Pharmaceuticals Inc.,
    incorporated herein by reference to the corresponding exhibit to
    Amendment No. 3 of the Registrants Registration
    Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on July 11, 200710
.3.1

Second Amendment to Manufacturing and Supply Agreement for
    N-Acetylcysteine, dated March 25, 2008, by and between
    Bioniche Teoranta and Cumberland Pharmaceuticals Inc.,
    incorporated herein by reference to the corresponding exhibit to
    Amendment No. 10 of the Registrants Registration
    Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 21, 2008    57




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##### Table of Contents



Part IV
    ExhibitNumber

Description10
.7

Exclusive Distribution Agreement, effective as of July 1,
    2010, by and between Cardinal Health 105, Inc. and Cumberland
    Pharmaceuticals Inc., incorporated herein by reference to the
    corresponding exhibit of the Registrants Current Report on
    Form 8-K
    (File
    No. 001-33637)
    as filed with the SEC on August 13, 201010
.8

Strategic Alliance Agreement, dated July 21, 2000, by and
    between F.H. Faulding & Co. Limited and Cumberland
    Pharmaceuticals Inc., including notification of assignment from
    F.H. Faulding & Co. Limited to Mayne Pharma Pty Ltd.,
    dated April 16, 2002, incorporated herein by reference to
    the corresponding exhibit to Amendment No. 4 of the
    Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on July 23, 200710
.9

Kristalose Agreement, dated April 7, 2006, by and among
    Inalco Biochemicals, Inc., Inalco S.p.A., and Cumberland
    Pharmaceuticals Inc., incorporated herein by reference to the
    corresponding exhibit to Amendment No. 3 of the
    Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on July 11, 200710
.9.1

Amendment to Kristalose Agreement, dated April 3, 2008, by
    and between Inalco S.p.A., Inalco Biochemicals, Inc., and
    Cumberland Pharmaceuticals Inc., incorporated herein by
    reference to the corresponding exhibit to Amendment No. 10
    of the Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 21, 200810
.9.2

Second Amendment to Kristalose Agreement, dated July 1,
    2008, by and among Inalco Biochemicals, Inc., Inalco S.p.A., and
    Cumberland Pharmaceuticals Inc., incorporated herein by
    reference to the corresponding exhibit to Amendment No. 13
    of the Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on August 12, 200810
.9.3

Third Amendment to Kristalose Agreement, dated April 6,
    2009, by and between Inalco S.p.A., Inalco Biochemicals, Inc.,
    and Cumberland Pharmaceuticals Inc., incorporated herein by
    reference to the corresponding exhibit to Amendment No. 18
    of the Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 12, 200910
.9.4

Fourth Amendment to Kristalose Agreement, effective
    January 1, 2010, by and between Inalco S.p.A., Inalco
    Biochemicals, Inc., and Cumberland Pharmaceuticals Inc.,
    incorporated herein by reference to the corresponding exhibit to
    the Registrants Quarterly Report on
    Form 10-Q
    (File
    No. 001-33637)
    as filed with the SEC on May 17, 201010
.10

License Agreement, dated May 28, 1999, by and between
    Vanderbilt University and Cumberland Pharmaceuticals Inc.,
    incorporated herein by reference to the corresponding exhibit to
    Amendment No. 3 of the Registrants Registration
    Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on July 11, 200710
.11#

Employment Agreement dated March 9, 2011, effective as of
    January 1, 2011, by and between A.J. Kazimi and Cumberland
    Pharmaceuticals Inc.10
.12#

Employment Agreement dated March 9, 2011, effective as of
    January 1, 2011, by and between Jean W. Marstiller and
    Cumberland Pharmaceuticals Inc.10
.13#

Employment Agreement dated March 9, 2011, effective as of
    January 1, 2011, by and between Leo Pavliv and Cumberland
    Pharmaceuticals Inc.10
.15#

Employment Agreement dated March 9, 2011, effective as of
    January 1, 2011, by and between David L. Lowrance and
    Cumberland Pharmaceuticals Inc.    58




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##### Table of Contents



Part IV
    ExhibitNumber

Description10
.16

Fourth Amended and Restated Loan Agreement by and between
    Cumberland Pharmaceuticals Inc. and Bank of America, N.A., dated
    July 22, 2009, incorporated herein by reference to the
    corresponding exhibit to Amendment No. 20 of the
    Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on July 29, 200910
.16.1

Third Amendment to Fourth Amended and Restated Loan Agreement
    dated as of September 29, 2010 by and between Cumberland
    Pharmaceuticals, Inc. and Bank of America, N.A., incorporated
    herein by reference to the corresponding exhibit to the
    Registrants Current Report on
    Form 8-K
    (File
    No. 001-33637)
    as filed with the SEC on October 5, 201010
.17#

1999 Stock Option Plan of Cumberland Pharmaceuticals Inc.,
    incorporated herein by reference to the corresponding exhibit to
    the Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 1, 200710
.18#

2007 Long-Term Incentive Compensation Plan of Cumberland
    Pharmaceuticals Inc., as amended on November 4, 2010,
    incorporated herein by reference to the corresponding exhibit to
    the Registrants Quarterly Report on
    Form 10-Q
    (File
    No. 001-33637)
    as filed with the SEC on November 15, 201010
.19#

2007 Directors Compensation Plan of Cumberland
    Pharmaceuticals Inc., incorporated herein by reference to the
    corresponding exhibit to the Registrants Quarterly Report
    on
    Form 10-Q
    (File
    No. 001-33637)
    as filed with the SEC on May 17, 201010
.20

Form of Indemnification Agreement between Cumberland
    Pharmaceuticals Inc. and all members of its Board of Directors,
    incorporated herein by reference to Exhibit 10.20 to the
    Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 1, 200710
.21

Lease Agreement, dated September 10, 2005, by and between
    Nashville Hines Development, LLC and Cumberland Pharmaceuticals
    Inc., incorporated herein by reference to the corresponding
    exhibit to Amendment No. 3 of the Registrants
    Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on July 11, 200710
.21.1

First Amendment to Office Lease Agreement, dated April 25,
    2008, by and between 2525 West End, LLC (successor in
    interest to Nashville Hines Development LLC) and Cumberland
    Pharmaceuticals Inc., incorporated herein by reference to the
    corresponding exhibit to Amendment No. 10 of the
    Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 21, 200810
.21.2

Second Amendment to Office Lease Agreement, dated March 2,
    2010, by and between 2525 West End, LLC (successor in
    interest to Nashville Hines Development LLC) and Cumberland
    Pharmaceuticals Inc. incorporated herein by reference to the
    corresponding exhibit to the Registrants Quarterly Report
    on
    Form 10-Q
    (File
    No. 001-33637)
    as filed with the SEC on May 17, 201010
.23

Amended and Restated Lease Agreement, dated November 11,
    2004, by and between The Gateway to Nashville LLC and Cumberland
    Emerging Technologies, Inc., incorporated herein by reference to
    the corresponding exhibit to the Registrants Registration
    Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 1, 200710
.24

First Amendment to Amended and Restated Lease Agreement, dated
    August 23, 2005, by and between The Gateway to Nashville
    LLC and Cumberland Emerging Technologies, Inc., incorporated
    herein by reference to the corresponding exhibit to the
    Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 1, 2007    59




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##### Table of Contents



Part IV
    ExhibitNumber

Description10
.24.1

Second Amendment to Amended and Restated Lease Agreement, dated
    January 9, 2006, by and between The Gateway to Nashville
    LLC and Cumberland Emerging Technologies, Inc., incorporated
    herein by reference to the corresponding exhibit to Amendment
    No. 10 of the Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 21, 200810
.25

Manufacturing Agreement, dated February 6, 2008, by and
    between Bayer HealthCare, LLC, and Cumberland Pharmaceuticals
    Inc., incorporated herein by reference to the corresponding
    exhibit to Amendment No. 12 of the Registrants
    Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on June 20, 200810
.26#

Employment Agreement dated March 9, 2011, effective as of
    January 1, 2011, by and between Martin E. Cearnal and
    Cumberland Pharmaceuticals Inc.21


Subsidiaries of Cumberland Pharmaceuticals Inc., incorporated
    herein by reference to the corresponding exhibit to the
    Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142535)
    as filed with the SEC on May 1, 200723
.1

Consent of KPMG LLP31
.1

Certification of Chief Executive Officer Pursuant to
    Rule 13-14(a)
    of the Securities Exchange Act of 1934 as Adopted Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.31
.2

Certification of Chief Financial Officer Pursuant to
    Rule 13-14(a)
    of the Securities Exchange Act of 1934 as Adopted Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.32
.1

Certification of Chief Executive Officer and Chief Financial
    Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
    Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.     #
    
    Indicates a management contract or
    compensatory plan.
    
    Confidential treatment has been
    granted for portions of this exhibit. These portions have been
    omitted from the Registration Statement and submitted separately
    to the Securities and Exchange Commission.
    
    Confidential treatment has been
    requested for portions of this exhibit. These portions have been
    omitted from the Registration Statement and submitted separately
    to the Securities and Exchange Commission.    60




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##### Table of Contents



Signatures
      By:
    /s/  A.
    J. Kazimi    (Principal Executive Officer)
    Signature

Title

Date/s/  A.J.
    KazimiA.J.
    Kazimi

Chairman and CEO(Principal Executive Officer and Director)

March 11, 2011/s/  David L.
    LowranceDavid
    L. Lowrance

Vice President and CFO (Principal Financial and Accounting Officer)

March 11, 2011/s/  Robert G.
    EdwardsRobert
    G. Edwards

Director

March 11, 2011/s/  Thomas R.
    LawrenceThomas
    R. Lawrence

Director

March 11, 2011/s/  Lawrence W.
    GreerLawrence
    W. Greer

Director

March 11, 2011/s/  Martin E.
    CearnalMartin
    E. Cearnal

Director

March 11, 2011/s/  Gordon
    BernardGordon
    Bernard

Director

March 11, 2011/s/  Jonathan
    GriggsJonathan
    Griggs

Director

March 11, 2011/s/  James
    JonesJames
    Jones

Director

March 11, 2011/s/  Joey
    JacobsJoey
    Jacobs

Director

March 11, 2011     61




---



##### Table of Contents



Management report on
    internal control over financial reporting    Internal ControlIntegrated Framework
    page F-3 Form 10-K.
  A. J. Kazimi
      David L. Lowrance
        F-1




---



##### Table of Contents



Report of
    independent registered public accounting firm           Internal ControlIntegrated Framework
  
       F-2




---



##### Table of Contents



Report of
    independent registered public accounting firm     Internal ControlIntegrated Framework
        Internal ControlIntegrated Framework
    
       F-3




---



##### Table of Contents



Cumberland
    Pharmaceuticals Inc. and Subsidiaries
    Consolidated
    balance sheets December 31,
    2010 and 2009
  2010


2009ASSETSCurrent assets:Cash and cash equivalents

$
65,893,970


$
78,701,682Accounts receivable, net of allowances


5,145,494



6,176,585Inventories


7,683,842



4,822,873Prepaid and other current assets


1,336,765



2,746,259Deferred tax assets


978,771



726,196Total current assets


81,038,842



93,173,595Property and equipment, net


1,220,010



918,412Intangible assets, net


7,427,223



7,956,009Deferred tax assets


2,265,192



1,306,514Other assets


102,787



369,790Total assets

$
92,054,054


$
103,724,320LIABILITIES AND EQUITYCurrent liabilities:Current portion of long-term debt

$
2,666,668


$
9,061,973Current portion of other long-term obligations


24,692



144,828Accounts payable


2,124,654



5,632,796Other accrued liabilities


4,411,606



3,784,777Total current liabilities


9,227,620



18,624,374Revolving line of credit


1,825,951



1,825,951Long-term debt, excluding current portion


2,666,665



8,938,027Other long-term obligations, excluding current portion


618,343



184,632Total liabilities


14,338,579



29,572,984Commitments and contingenciesRedeemable common stock






1,930,000Equity:Shareholders equity:Common stockno par value; 100,000,000 shares
    authorized; 20,338,461 and
    20,180,486(1)

    shares issued and outstanding as of December 31, 2010 and
    2009, respectively


70,778,874



67,711,746Retained earnings


6,998,806



4,542,126Total shareholders equity


77,777,680



72,253,872Noncontrolling interests


(62,205
)


(32,536
)Total equity


77,715,475



72,221,336Total liabilities and equity

$
92,054,054


$
103,724,320     (1)
    
    Number of shares issued and
    outstanding represents total shares of common stock regardless
    of classification on the consolidated balance sheet. The number
    of shares of redeemable common stock as of December 31,
    2009 was 142,016.      F-4




---



##### Table of Contents



Cumberland
    Pharmaceuticals Inc. and Subsidiaries
    Consolidated
    statements of income Years ended
    December 31, 2010, 2009 and 2008
  2010


2009


2008Revenues:Net product revenue

$
44,704,570


$
43,142,350


$
34,889,967Other revenue


1,171,801



394,928



185,193Net revenues


45,876,371



43,537,278



35,075,160Costs and expenses:Cost of products sold


3,586,646



4,136,541



3,045,672Selling and marketing


22,674,505



20,194,074



14,387,153Research and development


4,327,485



4,993,278



4,429,064General and administrative


7,990,222



7,643,070



5,139,937Amortization of product license right


686,911



686,904



686,904Other


108,855



106,776



104,209Total costs and expenses


39,374,624



37,760,643



27,792,939Operating income


6,501,747



5,776,635



7,282,221Interest income


200,207



79,363



241,282Interest expense


(1,423,523
)


(772,927
)


(213,303
)Income before income taxes


5,278,431



5,083,071



7,310,200Income tax expense


(2,851,420
)


(2,024,192
)


(2,543,951
)Net income


2,427,011



3,058,879



4,766,249Net loss at subsidiary attributable to noncontrolling interests


29,669



32,536



Net income attributable to common shareholders

$
2,456,680


$
3,091,415


$
4,766,249Earnings per share attributable to common shareholdersBasic

$
0.12


$
0.22


$
0.47Diluted

$
0.12


$
0.17


$
0.29Weighted-average shares outstandingBasic


20,333,932



14,199,479



10,142,807Diluted


21,058,577



18,234,171



16,539,662       F-5




---



##### Table of Contents



Cumberland
    Pharmaceuticals Inc. and Subsidiaries
    Consolidated
    statements of cash flows Years ended
    December 31, 2010, 2009 and 2008
  2010


2009


2008Cash flows from operating activities:Net income

$
2,427,011


$
3,058,879


$
4,766,249Adjustments to reconcile net income to net cash provided by
    operating activities:Gain on early extinguishment of other long-term obligations










(38,577
)Depreciation and amortization expense


978,398



816,499



786,597Deferred tax (benefit) expense


(332,349
)


(525,467
)


683,914Nonemployee stock granted for services received


37,121



210,740



106,558Nonemployee stock option grant expense


43,101



845,661



58,646Stock-based compensationemployee stock options


688,408



606,395



397,500Excess tax benefit derived from exercise of stock options


(3,874,966
)


(3,968,894
)


(398,529
)Noncash interest expense


352,484



128,800



71,933Net changes in assets and liabilities affecting operating
    activities:Accounts receivable


1,031,091



(3,047,238
)


(755,810
)Inventory


(2,860,969
)


(3,060,097
)


(813,667
)Prepaid, other current assets and other assets


1,342,032



(721,464
)


(163,274
)Accounts payable and other accrued liabilities


201,725



6,572,098



1,652,911Other long-term obligations


313,575



(510,942
)


42,501Net cash provided by operating activities


346,662



404,970



6,396,952Cash flows from investing activities:Additions to property and equipment


(577,159
)


(601,802
)


(67,572
)Additions to trademarks and patents


(191,483
)


(110,541
)


(66,576
)Net cash used in investing activities


(768,642
)


(712,343
)


(134,148
)Cash flows from financing activities:Proceeds from initial public offering of common stock






85,000,000



Costs of initial public offering






(7,479,011
)


(687,977
)Proceeds from borrowings on long-term debt






18,000,000



4,083,340Principal payments on note payable


(12,666,667
)


(5,000,000
)


(1,833,336
)Net borrowings on line of credit










500,000Payment of other long-term obligations










(2,760,000
)Costs of financing for long-term debt and credit facility


(110,000
)


(189,660
)


(29,491
)Payments made in connection with repurchase of common shares


(4,846,791
)


(27,295,808
)


(4,999,995
)Proceeds from exercise of stock options


1,362,760



175,089



81,159Excess tax benefit derived from exercise of stock options


3,874,966



3,968,894



398,529Net cash (used in) provided by financing activities


(12,385,732
)


67,179,504



(5,247,771
)Net (decrease) increase in cash and cash equivalents


(12,807,712
)


66,872,131



1,015,033Cash and cash equivalents, beginning of year


78,701,682



11,829,551



10,814,518Cash and cash equivalents, end of year

$
65,893,970


$
78,701,682


$
11,829,551Supplemental disclosure of cash flow information:Cash paid during the year for:Interest

$
814,373


$
677,387


$
221,000Income taxes


52,136



196,187



1,486,991Noncash investing and financing activities:Reclass of redeemable common stock to (from) equity


1,930,000



(1,930,000
)


Deferred financing costs






335,075



125,000       F-6




---



##### Table of Contents



Cumberland
    Pharmaceuticals Inc. and Subsidiaries
    Consolidated
    statements of equity and comprehensive income Years ended
    December 31, 2010, 2009 and 2008
  Cumberland
    Pharmaceuticals Inc. ShareholdersRetainedearnings


Non-Preferred
    stock


Common
    stock


(accumulated


controlling


TotalShares


Amount


Shares


Amount


deficit)


interests


equityBalance, December 31, 2007


855,495


$
2,742,994



10,091,260


$
17,318,713


$
(3,315,538
)

$



$
16,746,169Stock-based compensationemployee stock option grants














397,500











397,500Issuance of common stock for services received










7,961



106,558











106,558Stock-based compensationnonemployee stock option grants














58,646











58,646Conversion of preferred stock into common stock


(42,746
)


(138,924
)


85,492



138,924











Repurchase of common shares










(384,615
)


(4,999,995
)










(4,999,995
)Exercise of options and related tax benefit, net of mature
    shares redeemed for the exercise price










102,949



479,688











479,688Net and comprehensive income


















4,766,249







4,766,249Balance, December 31, 2008


812,749



2,604,070



9,903,047



13,500,034



1,450,711







17,554,815Initial public offering of common stock, net of offering costs










5,000,000



74,801,596











74,801,596Stock-based compensationemployee stock option grants














606,395











606,395Issuance of common stock for services received










20,250



338,240











338,240Stock-based compensationnonemployee stock option grants














845,661











845,661Conversion of preferred stock into common stock


(812,749
)


(2,604,070
)


1,625,498



2,604,070











Repurchase of common shares










(4,018
)


(52,234
)










(52,234
)Issuance of common stock warrants














97,575











97,575Exercise of options and related tax benefit, net of mature
    shares redeemed for the exercise price and statutory tax
    withholdings










3,635,709



(23,099,591
)










(23,099,591
)Net and comprehensive income


















3,091,415



(32,536
)


3,058,879Reclass of redeemable common stock














(1,930,000
)










(1,930,000
)Balance, December 31, 2009










20,180,486



67,711,746



4,542,126



(32,536
)


72,221,336Stock-based compensationemployee stock option grants














688,408











688,408Issuance of common stock for services received










5,636



55,140











55,140Stock-based compensationnonemployee stock option grants














43,101











43,101Repurchase of common shares










(615,455
)


(4,887,247
)










(4,887,247
)Exercise of options and related tax benefit, net of mature
    shares redeemed for the exercise price and statutory tax
    withholdings










767,794



5,237,726











5,237,726Net and comprehensive income


















2,456,680



(29,669
)


2,427,011Reclass of redeemable common stock














1,930,000











1,930,000Balance, December 31, 2010





$




20,338,461


$
70,778,874


$
6,998,806


$
(62,205
)

$
77,715,475       F-7




---



##### Table of Contents



CUMBERLAND
    PHARMACEUTICALS INC. AND SUBSIDIARIES
   Notes to
    consolidated financial statements  (1)
    ORGANIZATION        ® ® ®
  non-U.S. customers
  (2)
    SIGNIFICANT
    ACCOUNTING POLICIES  (a)
    Principles of
    Consolidation    (b)
    Cash and Cash
    Equivalents      F-8




---



##### Table of Contents



Notes to
    consolidated financial statements
    (c)
    Accounts
    Receivable          (d)
    Inventories  first-in,
    December 31,2010


2009Raw materials

$
356,676


$
Finished goods


7,327,166



4,822,873Total

$
7,683,842


$
4,822,873   (e)
    Prepaids and
    Other Current Assets      F-9




---



##### Table of Contents



Notes to
    consolidated financial statements
      (f)
    Property and
    Equipment    (g)
    Intangible
    Assets    ®
        (h)
    Impairment of
    Long-Lived Assets      F-10




---



##### Table of Contents



Notes to
    consolidated financial statements
    held-for-sale
  (i)
    Revenue
    Recognition      product-by-product
          F-11




---



##### Table of Contents



Notes to
    consolidated financial statements
      Net product
    revenue2010


2009


2008Acetadote

$
35,092,796


$
30,176,981


$
25,438,774Kristalose


9,510,275



9,688,998



9,468,562Caldolor(1)


101,499



3,276,371



Other










(17,369
)$
44,704,570


$
43,142,350


$
34,889,967     (1)
    
    The Company obtained FDA approval
    for Caldolor in June 2009 and launched the product in September
    2009.      (j)
    Income
    Taxes        (k)
    Share-Based
    Payments      F-12




---



##### Table of Contents



Notes to
    consolidated financial statements
      (l)
    Research and
    Development    (m)
    Advertising
    Costs    (n)
    Selling and
    Marketing Expense    (o)
    Distribution
    Costs    (p)
    Cost of Products
    Sold    (q)
    Earnings per
    Share      F-13




---



##### Table of Contents



Notes to
    consolidated financial statements
      Year Ended
    December 31,2010


2009


2008Numerator:Net income attributable to common shareholders

$
2,456,680


$
3,091,415


$
4,766,249Denominator:Weighted-average shares outstandingbasic


20,333,932



14,199,479



10,142,807Convertible preferred stock shares






986,840



1,710,990Dilutive effect of other securities


724,645



3,047,852



4,685,865Weighted-average shares outstandingdiluted


21,058,577



18,234,171



16,539,662     (r)
    Comprehensive
    Income    (s)
    Use of
    Estimates    (t)
    Fair Value of
    Financial Instruments    (u)
    Recently Adopted
    Accounting Standards      F-14




---



##### Table of Contents



Notes to
    consolidated financial statements
      (3)
    PROPERTY AND
    EQUIPMENT    Range ofuseful
    lives


2010


2009Computer hardware and software


3-5 years


$
417,681


$
343,494Office equipment


3-15 years



108,140



62,447Furniture and fixtures


5-15 years



488,982



364,158Leasehold improvements


3-15 years, or remaining lease term



931,097



607,4441,945,900



1,377,543Less accumulated depreciation and amortization






(725,890
)


(459,131
)$
1,220,010


$
918,412     (4)
    INTANGIBLE
    ASSETS    2010


2009Trademarks

$
9,020


$
9,020Less accumulated amortization


(8,123
)


(7,396
)Total trademarks


897



1,624License


10,303,595



10,303,595Less accumulated amortization


(3,262,805
)


(2,575,895
)Total license


7,040,790



7,727,700Patents


409,536



226,685Less accumulated amortization


(24,000
)


Total patents


385,536



226,685$
7,427,223


$
7,956,009         F-15




---



##### Table of Contents



Notes to
    consolidated financial statements
      (5)
    OTHER ACCRUED
    LIABILITIES    2010


2009Rebates, fee for services, and product returns

$
2,626,383


$
1,863,012Employee wages and benefits


1,078,367



919,913Outside sales force and related expenses






192,711Other


706,856



809,141$
4,411,606


$
3,784,777   (6)
    LONG-TERM
    DEBT          F-16




---



##### Table of Contents



Notes to
    consolidated financial statements
              Year ending December 31:2011

$
2,666,6682012


4,492,616$
7,159,284   (7)
    OTHER LONG-TERM
    OBLIGATIONS    2010


2009Third-party development costs

$



$
101,369Deferred rent


558,035



168,091Deferred revenue


85,000



60,000643,035



329,460Less current portion


(24,692
)


(144,828
)$
618,343


$
184,632       F-17




---



##### Table of Contents



Notes to
    consolidated financial statements
          (8)
    INCOME
    TAXES    2010


2009


2008Current:Federal

$
(2,665,404
)

$
(2,240,827
)

$
(1,593,865
)State


(518,365
)


(308,832
)


(266,172
)(3,183,769
)


(2,549,659
)


(1,860,037
)Deferred:Federal


268,563



528,602



(571,114
)State


63,786



(3,135
)


(112,800
)332,349



525,467



(683,914
)$
(2,851,420
)

$
(2,024,192
)

$
(2,543,951
)       F-18




---



##### Table of Contents



Notes to
    consolidated financial statements
      2010


2009


2008Deferred tax benefit exclusive of components listed below

$
468,840


$
170,648


$
158,864Creation (utilization) of operating loss carryforwards


9,567



(60,266
)


(248,651
)Creation (utilization) of tax credit carryforwards


(3,115
)


7,172



(626,956
)Change in valuation allowance due to changes in net deferred tax
    asset balances


(10,750
)


(11,342
)


(11,291
)Non-qualified stock options


(132,193
)


419,255



44,120Deferred income tax benefit (expense)

$
332,349


$
525,467


$
(683,914
)       2010


2009


2008Federal tax expense at statutory rate


34
%


34
%


34
%State income tax expense (net of federal income tax benefit)


6



4



4Permanent differences associated with tax grants


5







Permanent differences associated with stock options


4



2



2Other permanent differences


4



1



Recognition of previously unrecognized tax benefits










(4
)Other


1



(1
)


(1
)Net income tax expense


54
%


40
%


35
%       F-19




---



##### Table of Contents



Notes to
    consolidated financial statements
      2010


2009Net operating loss and tax credits

$
957,888


$
72,532Property and equipment


181,156



169,852Allowance for accounts receivable


62,951



89,160Reserve for expired product


559,492



386,669Inventory


141,492



80,462Deferred charges


507,306



257,413Cumulative compensation costs incurred on nonqualified options


914,540



1,046,734Total deferred tax assets


3,324,825



2,102,822Less deferred tax asset valuation allowance


(80,862
)


(70,112
)Net deferred tax assets

$
3,243,963


$
2,032,710             F-20




---



##### Table of Contents



Notes to
    consolidated financial statements
    (9)
    SHAREHOLDERS
    EQUITY  (a)
    Initial Public
    Offering    (b)
    Preferred
    Stock    (c)
    Common
    Stock      (d)
    Warrants          F-21




---



##### Table of Contents



Notes to
    consolidated financial statements
    (e)
    Share
    Repurchases        (10)
    STOCK
    OPTIONS          grant-by-grant
    F-22




---



##### Table of Contents



Notes to
    consolidated financial statements
      Weighted-


Weighted-average


averageexercise


remaining


AggregateNumber of


price


contractual


intrinsicshares


per
    share


term
    (years)


valueOutstanding, December 31, 2009


2,509,585


$
4.65Options granted


223,607



11.36Options exercised


(785,740
)


1.94Options forfeited/expired


(41,982
)


9.62Outstanding, December 31, 2010


1,905,470



6.45



3.28


$
2,853,707Exercisable at December 31, 2010


1,658,479


$
5.59



2.93


$
2,851,950     2010


2009


2008Intrinsic value of options exercised

$
5,519,588


$
86,155,328


$
1,162,796Weighted-average fair value of options granted

$
4.13


$
6.42


$
6.27       2010

2009

2008Dividend yield





Expected term (years)

2.5-6.0

3.7-6.2

3.5-6.0Expected volatility

49%-53%

50%-52%

49%-51%Risk-free interest rate

0.8%-2.8%

1.4%-2.7%

3.1%     2010

2009

2008Dividend yield





Expected term (years)

5

2.3-10.0

10.0Expected volatility

52%-53%

51%-67%

68%Risk-free interest rate

2.2%-2.4%

1.1%-2.7%

3.7%       F-23




---



##### Table of Contents



Notes to
    consolidated financial statements
        (11)
    LEASES    Year ending December 31:2011

$
740,1672012


762,3722013


785,3432014


808,8242015 and thereafter


1,548,140Total minimum lease payments

$
4,644,846   (12)
    MANUFACTURING AND
    SUPPLY AGREEMENTS      F-24




---



##### Table of Contents



Notes to
    consolidated financial statements
        (13)
    COMMITMENTS AND
    CONTINGENCIES      (14)
    EMPLOYMENT
    AGREEMENTS    (15)
    MARKET
    CONCENTRATIONS      2010


2009


2008Customer 1


35
%


37
%


37
%Customer 2


31



29



25Customer 3


26



27



31       F-25




---



##### Table of Contents



Notes to
    consolidated financial statements
    (16)
    EMPLOYEE BENEFIT
    PLAN    (17)
    SUBSEQUENT
    EVENTS      (18)
    QUARTER FINANCIAL
    INFORMATION  (Unaudited)    First


Second


Third


FourthQuarter


Quarter


Quarter


Quarter


Total2010Net revenues

$
10,130,652


$
10,739,935


$
12,190,870


$
12,814,914


$
45,876,371Operating income


810,508



1,009,860



2,443,857



2,237,522



6,501,747Net income attributable to common shareholders


323,578



287,304



1,008,244



837,554



2,456,680Earnings per share attributable to common
    shareholders(1)Basic

$
0.02


$
0.01


$
0.05


$
0.04


$
0.12Diluted

$
0.02


$
0.01


$
0.05


$
0.04


$
0.122009Net revenues

$
9,404,599


$
9,820,613


$
13,597,760
(2)

$
10,714,306


$
43,537,278Operating income


2,117,025



594,116



2,372,059



693,435



5,776,635Net income attributable to common shareholders


1,218,090



295,871



1,288,137



289,317



3,091,415Earnings per share attributable to common
    shareholders(1)Basic

$
0.12


$
0.03


$
0.08


$
0.01


$
0.22Diluted

$
0.08


$
0.02


$
0.07


$
0.01


$
0.17     (1)
    
    Due to the nature of interim earnings per share calculations,
    the sum of the quarterly earnings per share amounts may not
    equal the reported earnings per share for the year.(2)
    
    Includes $3.3 million of net revenue associated with the
    launch of Caldolor in September 2009.    F-26




---



##### Table of Contents



Cumberland
    Pharmaceuticals Inc. and Subsidiaries
   Schedule II
    valuation and qualifying accounts  Column A


Column B


Column C


Column D


Column EBalance at


Charged to


Charged tobeginning of


costs and


other accounts


Deductions


Balance atDescription

period


expenses


describe


describe(1)


end of periodYears ended December 31, 2010, 2009 and 2008Allowance for uncollectible amounts, cash discounts,
    chargebacks, and credits issued for damaged products:For the period ended:December 31, 2008

$
146,972


$
1,242,300


$



$
(1,242,226
)

$
147,046December 31, 2009


147,046



1,734,521







(1,646,287
)


235,280December 31, 2010


235,280



1,494,834







(1,566,366
)


163,748Valuation allowance for deferred tax assets:For the period ended:December 31, 2008

$
47,479


$
11,291


$



$



$
58,770December 31, 2009


58,770



11,342











70,112December 31, 2010


70,112



10,750











80,862     (1)
    
    Actual discounts, chargebacks, and credits taken by customers.      F-27