<PAGE>

                                                                     EXHIBIT 3

AETERNA LABORATORIES INC.
ANNUAL REPORT 2002

EXPANDING OUR VISION

STAYING FOCUSED

"By any measure, 2002 signalled a defining moment in AEterna's rapid evolution.
Our principal objectives for the year were inspired by an ambitious growth
strategy. On all counts, we exceeded our expectations. In fact, the developments
of the past year have set the stage for AEterna to become a world-class
biopharmaceutical company."


SUMMARY

<TABLE>
<C>         <S>

            AETERNa
          4 AEterna 2002 Highlights and Milestones
          6 Message from the Executive Chairman
         10 Message from the President and CEO
         12 Product Portfolio
         14 Clinical Development Strategy
         16 Worldwide Partnerships
            ATRIUM
         18 Atrium Biotechnologies Inc.
            FINANCES
         26 Management's Discussion and Analysis of Financial Condition and
            Results of Operations
         32 Management Report and Report from Auditors
         36 Notes to Consolidated Financial Statements
         60 Corporate Governance
         61 Corporate Information
</TABLE>


HIGHLIGHTS
AS AT DEC. 31, 2002 - ALL FIGURE IN CANADIAN DOLLARS

<TABLE>
<S>     <C>                           <C>

o        Total Assets:                $331 million
o        Cash:                         $82 million
o        Working Capital:              $44 million
o        Revenues:                    $101 million
o        Issued & outstanding shares:   41 million
o        R&D Investments: $26 million
</TABLE>

                                                                               1
<PAGE>

SIGNIFICANT MILESTONES

o    Three strategic shareholders invest $57 million in AEterna.

o    AEterna signs a partnership agreement with Mayne Pharma., an Australian
     multinational pharmaceutical company, for the marketing of Neovastat in
     Australia, New-Zealand, Canada and Mexico.

o    Gilles Gagnon is appointed President and, subsequent to year-end, Chief
     Executive Officer.

o    The U.S. Food and Drug Administration (FDA) grants Orphan Drug Status to
     Neovastat for the treatment of renal cell carcinoma, a form of kidney
     cancer.

o    AEterna acquires Zentaris, a Frankfurt-based biopharmaceutical company that
     specializes in developing innovative new therapies for endocrinological and
     oncological indications for $85 million. Zentaris has eight products in
     clinical trials and one compound that has been approved and is being
     marketed for IN VITRO fertilization. Additionally, it maintains a library
     of 100,000 proprietary compounds and established marketing alliances with
     some of the world's leading pharmaceutical companies. In 2002, Zentaris is
     cash-flow positive and debt-free.

o    Sales of the subsidiary Atrium increased 130% to $101 million in 2002 and
     generated an EBIT of $12.3 million, an increase of 89% compared to 2001.

o    Subsequent to year-end, AEterna subsidiary Zentaris signs a product
     partnership contract with Hainan Tianwang International Pharmaceutical for
     the manufacturing and marketing of Zentaris' patent-protected compound,
     Lobaplatin(R), in China, for different cancer indications.

CORPORATE PROFILE

Established in 1991, AEterna Laboratories Inc. is a biopharmaceutical company
focused on the development of novel therapeutic treatments, mainly in oncology
and endocrinology. Its product pipeline includes 12 compounds, and its strategic
partnerships with leading pharmaceutical companies extend throughout the world.

AEterna owns 100% of the biopharmaceutical company, Zentaris AG, based in
Frankfurt, Germany, and 61.8% of Atrium Biotechnologies Inc., which develops and
markets nutritional supplements as well as active ingredients and fine chemicals
intended for the cosmetics, nutrition, fine chemicals and pharmaceuticals
industries. Atrium markets over 500 products in 20 countries.

AEterna and its subsidiaries have 270 employees in North America and Europe.

AEterna is listed on the Toronto Stock Exchange (symbol: AEL) and Nasdaq
(symbol: AELA).


                                                                               2
<PAGE>


BROADENING HORIZONS

MESSAGE FROM THE EXECUTIVE CHAIRMAN

By any measure, 2002 signalled a defining moment in AEterna's rapid evolution.
Our principal objectives for the year were inspired by an ambitious growth
strategy. Aside from guiding our proprietary angiogenesis-inhibiting compound,
Neovastat, through its late-stage clinical trials, our expressed mission
featured two key initiatives: to forge additional strategic alliances with the
pharmaceutical industry and to develop the Company by acquiring promising
therapeutic technologies or biotech companies. At the heart of our corporate
strategy was the desire to greatly expand our product pipeline and global reach,
and to optimize risk management through product diversification.

On all counts, I am very proud to say that we exceeded our expectations. In
fact, the developments of the past year have set the stage for AEterna to become
a world-class biopharmaceutical company.

When the year began, Neovastat had embarked upon two final-stage clinical
trials, one targeting the treatment of metastatic renal cell carcinoma, a form
of kidney cancer, and one targeting non-small cell lung cancer. During the year,
Data Safety Monitoring Boards, constituted of independent oncologists and
statisticians, confirmed Neovastat's safety profile for these ongoing Phase III
trials.

By year-end, we had entered into a third partnership agreement for the
commercialization of Neovastat with Mayne Group Ltd., a multinational healthcare
products and services company based in Australia.

Even more momentous, however, was our acquisition on December 30, 2002, of
Zentaris AG from Degussa AG, Germany's largest chemicals company and the
worldwide leader in the field of specialty chemicals.

The acquisition of Zentaris represents a major milestone in our corporate growth
strategy. Based in Frankfurt, Zentaris has built its reputation on its
demonstrated proficiency in the fields of endocrinology and oncology. It
develops innovative products for new patient-friendly therapies, specializing in
the treatment of benign and malignant tumors, and has the expertise to integrate
drug discovery and clinical development for this purpose.

The new entity formed by this acquisition fits exactly with the vision I had
twelve years ago when AEterna was founded. It is a vision that has endured: to
build a company dedicated to seeking out and developing groundbreaking
biopharmaceutical therapies for cancer and other debilitating diseases.

Our history has been marked by a number of successes, dating back to 1994 when
our team of scientists and researchers discovered Neovastat. Today, our
proprietary compound is recognized as a frontrunner in a new class of drugs
known as angiogenesis inhibitors.

                                                                               3
<PAGE>

The establishment of our thriving subsidiary, Atrium Biotechnologies Inc.,
marked another milestone. Atrium has become a leading Canadian company
specializing in the development and marketing of high-end value-added products
and active ingredients in the cosmetics, nutrition, fine chemicals and
pharmaceuticals sectors. Atrium recorded sales of over $100 million in 2002,
with an EBIT of $12.3 million.

Our financial position is solid. At the end of fiscal 2002, our total assets
amounted to $331 million, our cash and short term investments amounted to $82
million and our working capital exceeded $44 million.

In short, AEterna has demonstrated its skills in combining innovative science
with responsible risk management, as well as its ability to expand its
operations swiftly and successfully.

Now, with the Zentaris acquisition, AEterna is transformed. A year ago we had
one promising drug therapy in our product pipeline; today we have twelve.
Moreover, our leading position in angiogenesis research in oncology has been
significantly strengthened, and we have been able to expand into endocrinology.

Going forward, I fully expect that Zentaris will drive drug discovery at AEterna
under the expertise of Dr. Jurgen Engel.

Over the past decade the biotechnology industry has come of age, and AEterna has
grown along with it. At this juncture in our history, we begin the next exciting
phase of our evolution. AEterna is now an international multi-product
biopharmaceutical company with development and marketing alliances that extend
around the globe.

None of these achievements would have been possible without the substantial
contributions of our management and employees. I would like to take this
opportunity to thank them all for their tireless efforts, for the extraordinary
skills they bring to our team, and most of all for dedicating themselves to the
vision we established twelve years ago. Indeed, I am extremely grateful to all
of our stakeholders, who have been instrumental in helping the Company advance
so far in so brief a time.

On a more personal basis, it is very gratifying to be in a position to pass on
the management reins to a second generation of seasoned executives from the
pharmaceutical industry. I am delighted by the recent appointments of Mr. Gilles
Gagnon as President and CEO and of Dr. Jurgen Engel as Executive Vice-President
Global R&D and COO, and very confident that their considerable wisdom and
expertise will accelerate the continued evolution and growth of AEterna.

Signed,

Dr. Eric Dupont, PhD
Executive Chairman
Quebec, Quebec, Canada
March 30, 2003

                                                                               4
<PAGE>


o    10 CLINICAL TRIALS ADDRESSING UNMET MEDICAL NEEDS IN ONCOLOGY AND
     ENDOCRINOLOGY

o    150 PARTICIPATING HOSPITAL CENTERS WORLWIDE


EXTENDING OUR REACH

"In Zentaris we found the perfect partner. In fact, the magnitude of this
acquisition has surpassed even our own objectives. It represents nothing less
than a turning point in the history of AEterna. Our new company is poised to
become an international force in the biopharmaceutical industry, with proven
capabilities and expertise that extend from drug discovery up to drug approval."

                                                         Gilles Gagnon, MSc, MBA
                                           President and Chief Executive Officer
                                                       AEterna Laboratories Inc.


POWERING OUR EXPANSION
MESSAGE FROM THE PRESIDENT AND CHIEF EXECUTIVE OFFICER

One of the greatest challenges in our industry is to manage risk as prudently as
possible. By its very nature, biopharmaceutical research requires that a company
take chances as it explores therapeutic possibilities that have never been
realized before. Yet, with these risks, there is the potential for great
rewards.

This can also be an extremely costly enterprise. Identifying and developing
compounds with untapped potential may take more than a decade and often
necessitates an investment of many millions of dollars. The list of companies
with promising ideas and products who have nevertheless fallen victim to
financial difficulties is legion.

Last year, with our lead product Neovastat well advanced in its Phase III
clinical trials for lung and kidney cancer, and with our production facilities
scaled up to meet commercial needs, we made a commitment to leverage our
scientific and management skills to greatly broaden the scope of our operations.
We determined that one of the best ways to develop our company while managing
risk wisely was to expand our product pipeline, either by purchasing therapeutic
compounds that have reached the clinical development stage or by acquiring a
company that has already established its scientific credibility and is
generating promising new treatments.

As part of our planning process, we raised $55 million with our partners, SGF
Sante and the Solidarity Fund QFL, from which $35 million was set aside for our
acquisition program. Then we began screening acquisition candidates, our
investigations guided by specific and demanding criteria.

                                                                               5
<PAGE>

First, we limited our search to companies that possessed a solid scientific
rationale for the products they were developing as well as substantial patent
protection. Second, we looked only at companies with a specialization in
oncological research and products that had reached late-stage clinical
development. Third, we considered only those enterprises with skilled management
teams and solid financial positions. Fourth, we required that the companies had
established collaborative relationships with pharmaceutical partners.

In Zentaris we found the perfect partner. In fact, the magnitude of this
acquisition has surpassed even our own objectives. It represents nothing less
than a turning point in the history of AEterna.With our joined forces, we are
now able to offer a vastly expanded product pipeline.

The transaction comes with a range of other substantial benefits as well. From a
financial perspective, Zentaris was cash-flow positive, debt-free and had
working capital of $36.4 million as at December 31, 2002. Moreover, it brings us
a very experienced management team with extensive pharmaceutical development
experience, as well as relationships with some of the best international
scientists and research institutions.

Zentaris has also forged development and marketing partnerships with nine major
pharmaceutical companies around the world. These partnerships are ongoing, and
will help us realize our growth potential on a global scale. Subsequent to
year-end, for example, Zentaris signed an agreement with one of these partners,
Hainan Tianwang International Pharmaceutical, that calls for the manufacture and
marketing of Zentaris' patent protected compound, Lobaplatin(R) , in China.
Lobaplatin(R) belongs to the therapeutic group of platinum-based drugs that have
proven highly effective in the treatment of many cancer indications.

In essence, then, our acquisition of Zentaris represents a defining step towards
making AEterna an international force in the biopharmaceutical industry, with
proven capabilities and expertise that extend from drug discovery up to drug
approval.

Our next objective involves the successful merging of our respective clinical
operations. Because time is of the essence, this process has already begun. A
strategy that achieves maximum efficiency is crucial, so we have assigned
portfolio priorities in order to focus the combined AEterna-Zentaris product
pipeline. These priorities have been established by carefully evaluating the
competitive environment for our products, as well as their potential markets,
their development costs, their expected time to market and the degree to which
our pharmaceutical partners will participate in clinical studies.

Neovastat retains the top priority in our oncology portfolio, and we will now
focus strictly on the two ongoing Phase III studies in kidney cancer and lung
cancer. This will allow us to advance a new series of promising preclinical and
clinical projects for the development of innovative treatments for oncological
and endocrinological indications.

The year 2003 promises to be very exciting for AEterna. Aside from marketing
Lobaplatin(R) in China, we expect to be able to disclose results for Neovastat's
Phase III trial in kidney cancer by year-end. If the results are positive, we
plan to launch the drug in 2004. Zentaris' IN VITRO fertilization therapy,
Cetrotide(R), which is already marketed in 40 countries, should be approved

                                                                               6
<PAGE>

for marketing in Japan in the second half of 2003. Another product in
Zentaris'pipeline, an anti-infective with the trade name Impavido(R), which has
proven effective in the treatment of leishmaniasis (black fever), has received
approval and should be marketed in India in 2003.

Over the past year, we were successful in meeting the specific objectives of our
growth strategy, first by signing a commercialization agreement with Mayne
Group, which extended our coverage for Neovastat to nearly 45% of the world's
oncology market, and second by our milestone acquisition of Zentaris.

In 2003, we will continue to pursue our growth strategy, with a particular focus
on consolidating our strong position in both oncology and endocrinology. With
the moves we have made over the past year, AEterna is now positioned to become a
significant player in the biopharmaceutical field at the international level.

Signed,

Gilles Gagnon, MSc, MBA
President and Chief Executive Officer


PURSUING EXCELLENCE

"The joined forces of AEterna and Zentaris provide us with a very extensive
product pipeline. Our combined expertise will allow us to advance multiple
promising preclinical and clinical projects for the development of novel
treatments focused on oncology and endocrinology."

                                                     Prof. Dr. Jurgen Engel, PhD
                                           Chief Executive Officer - Zentaris AG
                                        Executive Vice President, Global R&D and
                             Chief Operating Officer - AEterna Laboratories Inc.


PRODUCT PORTFOLIO


With its acquisition of Zentaris, AEterna has an exceptional product pipeline in
two principal therapeutic fields, oncology and endocrinology. This pipeline
includes twelve different products in various development stages, from
preclinical to marketing.

In oncology, AEterna has six compounds in clinical trials and two at the
preclinical stage.
The Phase III trial in renal cell carcinoma for its potentially groundbreaking
angiogenesis inhibitor, Neovastat, is close to completion, and results should be
available during the current year. If these results are positive, the drug will
be ready for market in 2004.

In endocrinology, one product, Cetrotide(R), is already being marketed for IN
VITRO fertilization, and is in clinical development for three other indications.
Two other products are at the preclinical stage.

                                                                               7
<PAGE>

Finally, AEterna's anti-infective product, Miltefosine, will be marketed in
India in 2003 under the trade name Impavido(R) as the first available oral
treatment for visceral Leishmaniasis, or black fever. The drug is also in the
midst of a Phase III trial for cutaneous Leishmaniasis, a related parasitic skin
disease.

AEterna also maintains a state-of-the-art drug discovery unit, which includes a
proprietary library of 100,000 compounds, and an intellectual property portfolio
that consists of some 70 patent families.

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------------------------
PRODUCT PIPELINE
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
ONCOLOGY
---------------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------------
PRODUCTS           CLASS           INDICATIONS        STATUS           PARTNERS          COVERED TERRITORY
---------------------------------------------------------------------------------------------------------------------------
<S>                <C>                               <C>                <C>              <C>
Neovastat          Multifunctional Renal cell        Phase III -        Grupo Ferrer     Southern Europe, France,
                   angiogenesis    carcinoma         Results in 2003    Internacional    Belgium, South and Central
                   inhibitor                                                             America

                                                                        Medac GmbH       Europe (North & East), U.K.

                                                                        Mayne Pharma     Australia, New Zealand, Canada
                                                                                         and Mexico
                                                                        LG Life Science  Korea
---------------------------------------------------------------------------------------------------------------------------
Neovastat          Multifunctional Non-small cell    Phase III -        Grupo Ferrer     Southern Europe, France,
                   angiogenesis    lung cancer       Results in 2006    Internacional    Belgium, South and Central
                   inhibitor                                                             America

                                                                        Medac GmbH       Europe (North & East), U.K.

                                                                        Mayne Pharma     Australia, New Zealand, Canada
                                                                                         and Mexico
                                                                        LG Life Science  Korea
---------------------------------------------------------------------------------------------------------------------------
D-63153            LHRH            Prostate cancer   Phase II           Baxter Oncology  World
                   antagonist
---------------------------------------------------------------------------------------------------------------------------
Perifosine         Signal          Multiple cancers  Phase I/II         Access Oncology  U.S.A., Canada, Mexico
                   transduction    Radiosensitizer                      U.S. NCI
                   inhibitor
---------------------------------------------------------------------------------------------------------------------------
RC-3095            Bombesin        Multiple cancers  Phase I
                   antagonist
---------------------------------------------------------------------------------------------------------------------------
Teverelix          LHRH            Prostate cancer   Phase I            Ardana           World (excl. Japan, Taiwan,
                   antagonist                                           Bioscience       Korea)
                                                                        Teikoku Hormone  Japan, Taiwan, Korea
---------------------------------------------------------------------------------------------------------------------------
Lobaplatin(R)        Platinum        Multiple cancers  Approved in      Hainan           China
                   derivative                          China            Tianwang
                                                                        International
                                                                        Pharmaceutical
---------------------------------------------------------------------------------------------------------------------------
AN-152/AN-238/     Cytotoxic-      Solid tumors      Preclinical
AN-215             Conjugates
---------------------------------------------------------------------------------------------------------------------------
D-82318            Tubulin         Solid tumors      Preclinical
D-81050            inhibitors
---------------------------------------------------------------------------------------------------------------------------

ENDOCRINOLOGY

---------------------------------------------------------------------------------------------------------------------------
PRODUCTS           CLASS           INDICATIONS        STATUS           PARTNERS          COVERED TERRITORY
---------------------------------------------------------------------------------------------------------------------------
Cetrotide(R)         LHRH          IN VITRO          Marketed           Serono           World (excl. Japan)
(Cetrorelix)       antagonist      fertilization     Market expected    Shionogi /       Japan
                                   (IVF)             in 2003            Nippon Kayaku
---------------------------------------------------------------------------------------------------------------------------


                                                                               8
<PAGE>
---------------------------------------------------------------------------------------------------------------------------
Cetrorelix         LHRH            Endometriosis     Phase II           Solvay           World (excl. Japan)
                   antagonist      Uterine myoma                        Shionogi /       Japan
                                   Benign prostatic                     Nippon Kayaku
                                   hyperplasia (BPH)
---------------------------------------------------------------------------------------------------------------------------
EP-1572            Growth hormone  TBD               Preclinical        Ardana           World
                   secretagogue                                         Bioscience
                   (GHS)
---------------------------------------------------------------------------------------------------------------------------
LHRH-              LHRH-           TBD               Preclinical
peptidomimetic     antagonist
                   (oral)

---------------------------------------------------------------------------------------------------------------------------

ANTI-INFECTIVES
---------------------------------------------------------------------------------------------------------------------------

PRODUCTS           CLASS           INDICATIONS        STATUS           PARTNERS          COVERED TERRITORY
---------------------------------------------------------------------------------------------------------------------------
                                   Visceral          Market expected    Cooperation with   India
Impavido(R)        Alkylphospho-   Leishmaniasis     in 2003 in India   the WHO and
(Miltefosine)      lipid           (black fever)                        Indian Government

                                                                        German Remedies    India, Bangladesh
                                   ----------------------------------------------------------------------------------------
                                   Cutaneous         Phase III
                                   Leishmaniasis
                                   (parasitic skin
                                   disease)
---------------------------------------------------------------------------------------------------------------------------

</TABLE>

                 COMPOUND LIBRARY (MORE THAN 100,000 COMPOUNDS)




                                                                               9
<PAGE>


CLINICAL DEVELOPMENT STRATEGY

With its vastly expanded product pipeline, AEterna has articulated a clinical
development strategy. This strategy is designed to efficiently advance multiple
preclinical and clinical projects for the development of innovative treatments
for oncology and endocrinology, and to diversify Company and shareholder risk.

PARTNERS AROUND THE WORLD
AEterna has now established international strategic alliances for the
codevelopment, manufacturing and marketing of its products in the oncology,
endocrinology and anti-infective fields. These alliances generally provide
upfront and milestone payments, drug development cost-sharing and royalties on
sales.

<TABLE>
<S>                                                  <C>

ONCOLOGY PARTNERS                                    ENDOCRINOLOGY PARTNERS
Access Oncology                                      Nippon Kayaku & Co., Ltd.
Baxter Healthcare S.A.                               Serono International S.A.
Grupo Ferrer Internacional                           Shionogi & Co., Ltd.
Hainan Tianwang International Pharmaceutical         Solvay Pharmaceuticals B.V.
Mayne Group                                          Ardana Bioscience
Medac GmbH
Tekoku Hormone

</TABLE>

ANTI-INFECTIVES PARTNERS
German Remedies


ATRIUM BIOTECHNOLOGIES INC.


o    130% sales increase

o    89% increase in EBIT

o    48% increase in net earnings in 2002

PARTNERING FOR SUCCESS

"Our ultimate goal is to be recognized by our clients as an international leader
in the development of high-end raw materials, value-added products and active
ingredients for the cosmetics, nutrition, fine chemicals and pharmaceuticals
sectors. In order to do so, we have committed significant resources to the
development and acquisition of innovative technologies which will allow to
further enhance the competitiveness of the businesses that form our
international network."

                                                                      Luc Dupont
                                              CEO and Vice Chairman of the Board
                                                     Atrium Biotechnologies Inc.

                                                                              10
<PAGE>

MILESTONES

|X|  Atrium successfully integrates its French subsidiary, Unipex, in which it
     first acquired 70% ownership. Unipex provides value-added services related
     to the development and marketing of specialty chemicals and active
     ingredients in the cosmetics, nutrition, fine chemicals and pharmaceuticals
     sectors. In January 2003, Atrium increased its ownership in Unipex to 76%.

|X|  Atrium acquires the privately-owned French company ADF Chimie S.A.,
     specialized in the marketing of active ingredients and fine chemical
     products for the cosmetics industry.

|X|  Atrium invests close to $2 million for acquisition and licensing agreements
     allowing it to commercialize state of the art technologies and products
     developed by companies such as Fytokem Products Inc. and Eukarion Inc.

|X|  Atrium's consolidated sales reached $101million, a 130% increase over the
     $44 million recorded in 2001. Its EBIT stood at $12.3 million, compared to
     $6.5 million a year earlier, an increase of 89%. Consolidated net earnings
     increased 48% to $6.6 million, up from $4.5 million reported in 2001. At
     year-end, Atrium's cash in hand stood at $14 million.


PROFILE
Since its establishment as a subsidiary of AEterna Laboratories in 2000, Atrium
Biotechnologies Inc. has evolved into one of the most important Canadian
companies in the development and marketing of active ingredients and fine
chemical products in the cosmetics, nutrition, fine chemicals and
pharmaceuticals sectors.

From its headquarters in Quebec City, Atrium manages a network of over 1,600
customers and partners throughout the Americas, Europe and Asia. With its
subsidiaries, located in the strategic metropolitan areas of New-York and Paris,
Atrium maintains research and development collaboration and preferred supplier
relationships with numerous international companies. Its client list includes
such major multinationals as Estee Lauder, L'Oreal, Kanebo, Aventis,
SanofiSynthelabo and Danone.

Over the past two years, Atrium delivered on its expressed corporate growth
strategy, positioning itself as a global player in its field. First, it acquired
70% of Unipex, a major French company that specializes in the value-added
marketing of raw materials for the cosmetics, nutrition, fine chemicals and
pharmacuticals sectors. Then, Atrium purchased another privately-owned French
company ADF Chimie S.A., enhancing its portfolio and bolstering its expertise in
active ingredients and fine chemical products for the cosmetics industry in
France.

The addition of these new specialized products significantly strengthened
Atrium's value offering and augmented its client relations in the active
ingredients sector. Additionally, these transactions allowed Atrium to acquire
expertise in specific cosmetic segments such as hair

                                                                              11
<PAGE>

colorants, dispersing agents and delivery systems, opening up access to new
clientele and new markets.

Indeed, with its increasing global presence and substantial market penetration
in Europe, Atrium is emerging as a key partner, on one hand, to many of the
leading companies that are seeking a consistent supply of innovative raw
materials and, on the other, to biotech companies which want access to
international markets.

Atrium also acquired a line of nutritional supplements to strengthen its product
portfolio and developed its sales force in the United States to optimize the
distribution of its high- end dietary supplements to the medical community.


In 2003, Atrium intends to continue adding new products to its pipeline, forging
additional partnerships with companies around the globe and seeking out
additional acquisition opportunities. For this purpose, the Company has put in
place an internal team of business development specialists supported by an
international network of consultants. Its solid financial position, its ability
to successfully integrate its subsidiaries and its strong presence on the global
markets, enable it to capitalize on the opportunities that exist in its sector
of activity marked by consolidation and expansion.


PRODUCTS

Atrium develops and markets active ingredients and products for the cosmetics,
nutrition, fine chemicals and pharmaceuticals sectors which meet the industy's
highest quality standards such as GMP and ISO.

PHARMACY

o    Active, natural or synthetic molecules
o    Excipients for all galenic forms
o    Additives such as flavoring agents, antiseptics, antioxidants, etc.

CHEMICAL SPECIALTIES

o    Fine chemicals and chemical specialties developed by the manufacturer we
     represent in areas such as photography, painting, electronics or adhesives

ORGANIC CHEMISTRY

o    Wide range of intermediates and promotion of our manufacture's contract
     production capabilities in areas such as pharmacy, cosmetics and
     photography

COSMETICS

o    Wide variety of cosmetic raw materials ranging from innovative additives to
     the most sophisticated active ingredients

HUMAN NUTRITION AND DIETETICS

                                                                              12
<PAGE>

o    Functional ingredients

o    Additives and processing aids

o    Nutritional supplements


VETERINARY, ANIMAL NUTRITION
o        High-performance ingredients and additives for animal nutrition


CONTINUED GROWTH

In 2002, Atrium continued to show consistent growth in both sales and earnings.
Its sales rose to $101 million, an increase of 130% over the previous year. This
increase is mainly due to sales generated by its French subsidiary Unipex and
reflects the successful integration of both Unipex and ADF Chimie.

Compared to last year, the Company's net earnings increased 48%, demonstrating
the soundness of its business model and its capacity to establish partnerships
with an increasing number of multinational companies for the research,
development and marketing of a full range of value-added products. International
markets represented 99% of Atrium's sales in 2002.

<TABLE>
<CAPTION>
SALES:                              EBIT:                     NET EARNINGS:
<S>                                 <C>                       <C>
2000 : 8,4 M$                       2000 :  4.1 M$            2000 : 3.4 M$
2001 : 44 M$                        2001 :  6,5M$             2001 : 4,5 M$
2002 : 101 M$                       2002 :  12,3 M$           2002 : 6,6 M$
</TABLE>


PEOPLE ARE THE KEYSTONES OF A COMPANY

"To become a world-class company, you must have a team of well qualified
professionals who know how to meet customer needs. To that effect, Atrium can
count on the expertise of its 75 employees in the development and marketing of
ingredients and products in its highly specialized sector."

                                                                      Luc Dupont
                               Chief Executive Officer and Chairman of the Board
                                                     Atrium Biotechnologies Inc.


                                                                              13

<PAGE>


DELIVERING RESULTS

o        Cash on hand: $82 million
o        Revenues: $101 million


"With Atrium being a fast growing and profitable subsidiary, Zentaris AG having
a deep pipeline that is funded by strategic pharma partners, and Neovastat
disclosing Phase III results in 2003 for renal cell carcinoma, as well as a
solid financial position, we are well risk diversified and on the edge of
becoming a profitable biopharmaceutical.."

                                                               Dennis Turpin, CA
                                      Vice President and Chief Financial Officer



                                                                              14


<PAGE>



MANAGEMENT REPORT


The following consolidated financial statements of AEterna Laboratories Inc. and
all other financial information contained in this annual report are the
responsibility of management.

Management has prepared the consolidated financial statements in accordance with
Canadian generally accepted accounting principles. When it was possible to use
different accounting methods, management chose those that it felt were the most
appropriate in the circumstances. The financial statements include amounts based
on the use of estimates and best judgment. Management has determined these
amounts in a reasonable way in order to ensure that the financial statements are
presented accurately in all important regards. Management has also prepared the
financial information presented elsewhere in the annual report, and has ensured
that it is in accordance with the financial statements.

Management maintains systems of internal accounting and administrative controls.
The systems are used to provide a reasonable degree of certainty that the
financial information is relevant, reliable and accurate, and that the Company's
assets are correctly accounted for and effectively protected.

The Board of Directors is responsible for ensuring that management assumes its
responsibilities with regard to the presentation of financial information, and
has ultimate responsibility for examining and approving the financial
statements. The Board assumes this responsibility principally through its Audit
Committee which is comprised of non-management directors. The Audit Committee
met with management as well as with external auditors to discuss the internal
monitoring system for presenting financial information, to address issues
related to the audit and the presentation of financial information, to ensure
that all parties carry out their duties correctly, and to examine the financial
statements and the report of the external auditors.

The consolidated financial statements have been audited on behalf of
shareholders by external auditors PricewaterhouseCoopers LLP for each of the
years ended December 31, 2002, 2001 and 2000, in accordance with Canadian
generally accepted accounting principles. The external auditors were given full
and unrestricted access to the Audit Committee to discuss matters related to
their audit and the reporting of information.

The Board of Directors has approved the Company's consolidated financial
statements on the recommendation of the Audit Committee.



Gilles Gagnon, MSc, MBA                     Dennis Turpin, CA
President and Chief Executive Officer       Vice President and Chief Financial
                                            Officer

Quebec, Quebec Canada

February 20, 2003


                                                                              15

<PAGE>


Corporate governance



GENERAL

The responsibility to oversee the conduct of the business and to guide
management of AEterna resides with the Board of Directors.


DIRECTORS

The Board of Directors consists of nine members, including three officers and
six external directors. In addition to the Board of Directors, two committees
were formed to assist the Directors in their responsibilities. These are the
Audit Committee and the Corporate Governance Committee.


AUDIT COMMITTEE

The Audit Committee is comprised of three external directors. The Audit
Committee assists the Board of Directors by reviewing the Company's internal
controls and auditing procedures, any relevant accounting or regulatory matters
and by recommending the appointment of external auditors.


CORPORATE GOVERNANCE COMMITTEE

The Corporate Governance Committee consists of three directors, including two
external directors. The Corporate Governance Committee is responsible for
proposing all nominees to the Board and its committees and for assessing
performance of individual directors and the Board as a whole. The Corporate
Governance Committee also reviews overall compensation issues for senior
management, and assesses the performance of the Chief Executive Officer and
senior management.

The Board believes that the Board and its Committees carry out effective
governance of the Company's affairs. The Board will continue to review the
Company's governance practices and will make changes as required.


                                                                              16



<PAGE>


CORPORATE INFORMATION


BOARD OF DIRECTORS


MARCEL AUBUT, O.C., Q.C.
Quebec, Quebec
Managing Partner
Heenan Blaikie Aubut

DR. FRANCIS BELLIDO, PHD(1)
Beaconsfield, Quebec
President and Chief Operating Officer
SGF Sante Inc.

STORMY BYORUM, MBA (1)
Managing Partner
New York, NY
Violy, Byorum & Partners Holdings LLC

DR. ERIC DUPONT, PHD(2)
Sainte-Petronille
Ile d'Orleans, Quebec
Executive Chairman
AEterna Laboratories Inc.

PROF. DR. JURGEN ENGEL, PHD
Frankfurt, Germany
Chief Executive Officer
Zentaris AG
Executive Vice President, Global Research & Development
and Chief Operating Officer
AEterna Laboratories Inc.

GILLES R. GAGNON, MSC, MBA
Sherbrooke, Quebec
President and Chief Executive Officer
AEterna Laboratories Inc.

JEAN-CLAUDE GONNEAU
Louveciennes, France
Managing Director
SG COWEN EUROPE SAS


                                                                             17

<PAGE>


DR. PIERRE LAURIN, PHD, O.C. (2)
Verdun, Quebec
Executive in Residence
H.E.C. Montreal

PIERRE MACDONALD, MSC (COMM) (1) (2)
Verdun, Quebec
President and Chief Executive Officer
MacD Consult Inc.


(1)  Member of the Audit Committee
(2)  Member of the Corporate Governance Committee


                                                                             18
<PAGE>


SENIOR OFFICERS


DR. ERIC DUPONT, PHD
Sainte-Petronille
Ile d'Orleans, Quebec
Chairman of the Board

GILLES R. GAGNON, MSC, MBA
Sherbrooke, Quebec
President and Chief Executive Officer

PROF. DR. JURGEN ENGEL, PHD
Frankfurt, Germany
Executive Vice President, Global Research and Development
and Chief Operating Officer

CLAUDE CARDINAL, LPHARM
Lac Delage, Quebec
Vice President, Technical Operations

DR. PIERRE CHAMPAGNE, MD
Cap-Rouge, Quebec
Vice President, Clinical Affairs

DR. ECKHARD GUNTHER, PHD
Frankfurt, Germany
Vice President, Drug Discovery

DR. MATTHIAS RISCHER, PHD
Frankfurt, Germany
Vice President, Pharmaceutical Development

NORMAND TREMBLAY
Neuville, Quebec
Vice President, Planning and External Affairs

DENNIS TURPIN, CA
Quebec, Quebec
Vice President and Chief Financial Officer

CLAUDE VADBONCOEUR, LL.L.
Quebec, Quebec
Vice President, Legal Affairs and
Corporate Secretary


                                                                             19
<PAGE>


CORPORATE INFORMATION


HEAD OFFICE
AEterna Laboratories Inc.
1405 Parc-Technologique Blvd.
Quebec, Quebec  G1P 4P5
CANADA

Phone: (418) 652-8525
Fax: (418) 652-0881
E-mail: aeterna@aeterna.com
Internet: www.aeterna.com

TICKER SYMBOLS
AEL - The Toronto Stock Exchange (TSX)
AELA - The Nasdaq Stock Market, Inc. (NASDAQ)

TRANSFER AGENT AND REGISTRAR
National Bank Trust Inc.
1100 University Street
9th Floor
Montreal, Quebec  H3B 2G7

AUDITORS
PricewaterhouseCoopers LLP
900 Rene-Levesque Blvd. East
Suite 500
Quebec, Quebec  G1R 2B5

INTELLECTUAL PROPERTY SOLICITORS
Haynes and Boone, LLP
901 Main Street, Suite 3100
Dallas, TX 75202
U.S.A.

CORPORATE SOLICITORS
Ogilvy Renault
1981 McGill College, Suite 1100
Montreal (Quebec)
H3A 3C1

Arnold & Porter
399 Park Avenue
New York, NY 10022-4690
U.S.A.


                                                                             20


<PAGE>

ANNUAL MEETING
May 29, 2003, 10:30 a.m.
Ritz-Carlton Hotel
1228 Sherbrooke Street West
Montreal, Quebec  H3G 1H6


                                                                             21

<PAGE>


AETERNA'S SCIENTIFIC ADVISORY BOARD

EXTERNAL MEMBERS:

o    DR. GERALD BATIST, MD, CM, FACP, Director of the McGill Center for
     Translational Research in Cancer and Professor, Department of Oncology and
     Medicine, McGill University, Jewish General Hospital, Montreal, Canada

o    DR. RICHARD BELIVEAU, PHD, Director of the Molecular Oncology Laboratory of
     the Cancer Research Centre, Sainte-Justine Hospital, Montreal, Canada

o    DR. FRANCOIS BERGER, MD, PHD, Professor, INSERM U318, Centre hospitalier
     universitaire, Grenoble, France

o    DR. W.K. (BILL) EVANS, MD, FRCPC, Executive Vice President, Clinical
     Programs, Cancer Care Ontario, Toronto, Canada

o    DR. FERNAND LABRIE, O.C., O.Q., MD, PHD, Head, Centre hospitalier de
     l'Universite Laval, (CHUL) Research Centre, Quebec, Canada.

o    PROF. DR. KLAUS H.R. DIEDRICH, Director of the Department of Gynecology and
     Obstetrics at the University Clinic in Luebeck, Germany

o    PROF. DR. RENE FRYDMAN, Head of the Department of Gynecology and Obstetrics
     at the Hopital Antoine Beclere in Clamart (Paris), France

o    DR. GEORGES PELLETIER, MD, PHD, Professor, Faculty of Medicine, Laval
     University, Researcher, Centre Hospitalier Universitaire de Quebec (CHUQ),
     CHUL Pavillon, Quebec, Canada

o    DR. DILIP PATEL, MD, Program Director Hematology and Oncology, North Shore
     Long Island Jewish Health System, New Hyde Park, New York, U.S.A.

o    DR. JANICE P. DUTCHER, MD, Associate Director, Clinical Affairs and
     Professor of Medicine, Comprehensive Cancer Center, Our Lady of Mercy
     Medical Center, New York, U.S.A.

o    DR. LEE S. ROSEN, MD, Director of Developmental Therapeutics, Cancer
     Institute Medical Group, Santa Monica, CA, U.S.A.


                                                                             22