##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington D.C. 20549
  Form 20-F
  o

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

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31, 2008oro

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934oro

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
    THE SECURITIES EXCHANGE ACT OF 1934Date of event requiring this
    shell company report.For the transition period
    from          to   Commission file number
    001-33444
  EURAND N.V.
 (Exact name of Registrant as
    specified in its charter)
  The Netherlands
 (Jurisdiction of incorporation
    or organization)
  Olympic Plaza, Fred. Roeskestraat 123, 1076 EE Amsterdam, The
    Netherlands
 (Address of principal executive
    offices)
  SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE
    ACT:
  Title of Each Class

Name of Each Exchange on Which RegisteredOrdinary shares, par value 0.01 per share

The NASDAQ Stock Market LLC   SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
    ACT:
 None
  SECURITIES FOR WHICH THERE IS A REPORTING OBLIGATION
  PURSUANT TO SECTION 15(d) OF THE ACT:
 None
 (Title of Class)
    o þ
  o þ
  þ o
  Rule 12b-2
 o Large
    accelerated filer
    þ Accelerated
    filer
    o Non-accelerated
    filer   þ U.S. GAAP
    o International
    Financial
    o Other     o o
  Rule 12b-2 o þ




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##### 





TABLE OF
    CONTENTS
   
 PageFORWARD-LOOKING INFORMATION


1PART I


2ITEM 1.


IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND
    ADVISERS


2ITEM 2.


OFFER STATISTICS AND EXPECTED TIMETABLE


2ITEM 3.


KEY INFORMATION


2ITEM 4.


INFORMATION ON THE COMPANY


31ITEM 4A.


UNRESOLVED STAFF COMMENTS


60ITEM 5.


OPERATING AND FINANCIAL REVIEW AND PROSPECTS


60ITEM 6.


DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


77ITEM 7.


MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS


89ITEM 8.


FINANCIAL INFORMATION


91ITEM 9.


THE OFFER AND LISTING


92ITEM 10.


ADDITIONAL INFORMATION


92ITEM 11.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


100ITEM 12.


DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES


100PART II


100ITEM 13.


DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES


100ITEM 14.


MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY
    HOLDERS AND USE OF PROCEEDS


100ITEM 15.


CONTROLS AND PROCEDURES


100ITEM 16A.


AUDIT COMMITTEE FINANCIAL EXPERT


102ITEM 16B.


CODE OF ETHICS


102ITEM 16C.


PRINCIPAL ACCOUNTANT FEES AND SERVICES


102ITEM 16D.


EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES


103ITEM 16E.


PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
    AFFILIATED PURCHASERS


103ITEM 16F.


CHANGES IN CERTIFYING ACCOUNTANT


103ITEM 16G.


CORPORATE GOVERNANCE


103PART III


103ITEM 17.


FINANCIAL STATEMENTS


103ITEM 18.


FINANCIAL STATEMENTS


103ITEM 19.


EXHIBITS


103




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FORWARD-LOOKING
    INFORMATION  Form 20-F
    
    our ability to market, commercialize and achieve market
    acceptance for any of the products that we are developing,
    commercializing or may develop or commercialize in the future,
    including the growth, establishment or acquisition of specialty
    sales, marketing and distribution capabilities in the United
    States to commercialize products;
    the expected timing, costs, progress or success of any of our
    preclinical and clinical development programs, regulatory
    approvals, or commercialization efforts;
    delays in obtaining, or a failure to obtain and maintain,
    regulatory approval for our product candidates, including, but
    not limited to, our lead product candidate, EUR-1008;
    the possibility the FDA may continue to extend the deadline for
    seeking or receiving a new drug application, or NDA,
    and/or not
    withdraw existing pancreatic enzyme products, or PEPs, from the
    U.S. market that do not receive approval for NDAs by the
    then applicable deadline;
    our ability to continue to successfully manufacture our existing
    products;
    the potential advantages of our products or product candidates
    over other existing or potential products;
    our ability to enter into any new co-development or licensing
    agreements or to maintain any existing co-development or
    licensing agreements with respect to our product candidates or
    products;
    our ability to effectively maintain existing licensing
    relationships and establish new licensing relationships;
    the expense, time and uncertainty involved in the development of
    our product candidates, some or all of which may never reach the
    regulatory approval stage;
    our reliance on collaboration partners and licensees, to obtain
    and maintain regulatory approval for certain of our products and
    product candidates, and to commercialize such products;
    our ability to compete in the pharmaceutical industry;
    our ability to protect our intellectual property and know-how
    and operate our business without infringing the intellectual
    property rights or regulatory exclusivity of others;
    the continuation of product sales by our collaborators and
    licensees;
    a loss of rights to develop and commercialize our products under
    our license and sublicense agreements;
    a loss of any of our key scientists or management personnel;
    our estimates of market sizes and anticipated uses of our
    product candidates;
    our estimates of future performance; and
    our estimates regarding anticipated future revenue, expenses,
    operating losses, capital requirements and our needs for
    additional financing.  Form 20-F Form 20-F,
 1




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PART I  Form 20-F,
  ITEM 1.
    IDENTITY
    OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS    ITEM 2.
    OFFER
    STATISTICS AND EXPECTED TIMETABLE    ITEM 3.
    KEY
    INFORMATION  Selected
    Consolidated Financial Data
  Year Ended December 31,2004


2005


2006


2007


2008


2008(In thousands, except per share amounts)Selected Consolidated Statements of Operations Data:Product sales


74,561



63,139



69,771



71,076



79,932


$
111,257Royalties


3,472



3,730



3,896



4,373



8,140



11,330Development fees


3,214



5,386



9,182



9,372



10,464



14,565Revenues


81,247



72,255



82,849



84,821



98,536



137,152Operating expensesCost of goods sold


(49,040
)


(44,150
)


(47,558
)


(49,439
)


(53,811
)


(74,900
)Research and development(1)


(16,525
)


(14,513
)


(16,287
)


(17,110
)


(20,291
)


(28,243
)Selling, general and administrative


(12,854
)


(11,537
)


(14,786
)


(21,497
)


(30,516
)


(42,475
)Income from litigation settlement


















24,404



33,968Amortization of intangibles


(962
)


(720
)


(727
)


(788
)


(1,361
)


(1,894
)Restructuring and impairment charges


(6,864
)


















Other expenses






(973
)


354



(93
)


(50
)


(70
)Operating income (loss)


(4,998
)


362



3,845



(4,106
)


16,911



23,538Interest (expense) income, net


(6,847
)


(7,214
)


(7,261
)


(1,532
)


436



607Foreign exchange gains (losses), net


(158
)


(327
)


12



104



(79
)


(110
)(Loss) income before taxes


(12,003
)


(7,179
)


(3,404
)


(5,534
)


17,268



24,035Income tax expense


(5,069
)


(1,100
)


(1,593
)


(1,140
)


(3,639
)


(5,065
)Net (loss) income


(17,072
)


(8,279
)


(4,997
)


(6,674
)


13,629



18,970Basic net (loss) income per share


(7.71
)


(3.74
)


(2.19
)


(0.24
)


0.30



0.42Diluted net (loss) income per share


(7.71
)


(3.74
)


(2.19
)


(0.24
)


0.29



0.41Weighted average shares used to compute basic net (loss) income
    per share


2,215



2,215



2,278



28,367



44,921



44,921Weighted average shares used to compute diluted net (loss)
    income per share


2,215



2,215



2,278



28,367



46,377



46,377  2




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(1)
    
    Research and development expenses include expenses that can be
    attributed to co-development projects with our customers that
    generate development fee revenues and other expenses related to
    our internal research development projects. The split of cost
    between these two categories is as follows:  Year Ended December 31,2004


2005


2006


2007


2008


2008(In thousands)Expenses attributable to development fees


2,501



3,807



5,590



5,432



5,892


$
8,201Other research and development expenses


14,024



10,706



10,697



11,678



14,399



20,042Research and development expenses


16,525



14,513



16,287



17,110



20,291



28,243   Year Ended December 31,2004


2005


2006


2007


2008


2008(In thousands, except per share amounts)Selected Consolidated Balance Sheet Data:Cash and cash equivalents


3,607



3,423



5,810



12,541



19,146


$
26,649Marketable securities


















3,592



5,000Total assets


111,028



110,094



102,946



109,508



133,959



186,458Total debt(s)


86,703



95,450



63,144



1,551



186



259Total liabilities


108,565



116,823



90,213



28,441



31,857



44,342Series A redeemable preference shares convertible into
    ordinary shares


26,844



26,844



26,844











Series C redeemable preference shares convertible into
    ordinary shares










23,000











Total shareholders equity (deficit)(1)


(24,381
)


(33,573
)


(37,111
)


81,067



102,102



142,116     (1)
    
    Our capital stock of 458,000 at December 31, 2008
    consisted of 45,751,997 ordinary shares with par value of
    0.01 per share compared to 440,000 at
    December 31, 2007 consisting of 44,034,114 such shares. The
    increase was caused by the issuance of 1,717,883 ordinary shares
    due to the granting of shares and the exercise of options
    resulting for equity based compensation for our employees.  Exchange
    Rate Information
     3




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U.S. Dollar per EuroPeriodYear Ended December 31,

High


Low


Average


End2003


1.2597



1.0361



1.1411



1.25972004


1.3625



1.1801



1.2478



1.35382005


1.3476



1.1667



1.2400



1.18422006


1.3327



1.1860



1.2563



1.31972007


1.4862



1.2904



1.3705



1.46032008


1.6010



1.2446



1.4695



1.3919         U.S. Dollar per EuroPeriodMonth in 2008

High


Low


Average


EndSeptember


1.4737



1.3939



1.4342



1.4081October


1.4058



1.2446



1.3267



1.2682November


1.3039



1.2525



1.2744



1.2694December


1.4358



1.2634



1.3511



1.3919Month in 2009January


1.3946



1.2804



1.3244



1.2804February


1.3064



1.2547



1.2797



1.2662March (through March 20, 2009)


1.3730



1.2549



1.2880



1.3566         Capitalization
    and Indebtedness
    Reasons
    For the Offer and Use of Proceeds
   4




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Risk
    Factors
  An investment in our ordinary shares involves a high degree
    of risk. You should consider carefully the risks described
    below, together with the other information contained in this
    Annual Report on
    Form 20-F,
    including in our consolidated financial statements and the
    related notes appearing at the end of this Annual Report on
    Form 20-F,
    before you decide whether to buy our ordinary shares. If any of
    the following risks actually occur, our business, results of
    operations and financial condition could suffer significantly.
    In any of these cases, the market price of our ordinary shares
    could decline, and you may lose all or part of the money you
    paid to buy our ordinary shares.
  Risks
    Related to Our Financial Condition
  We
    have a history of net losses, and we might not achieve or
    maintain profitability.
    Risks
    Related to Our Lead Product Candidate 
    EUR-1008
  Even
    though we have met significant milestones necessary to achieve
    marketing authorization in several venues, we may never succeed
    in obtaining regulatory approval for EUR-1008 from any
    regulatory agency. Without regulatory approval, we will be
    unable to commercialize EUR-1008 and our growth prospects will
    be materially impaired.
      EUR-1008
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
    our failure to demonstrate to the satisfaction of the FDA, the
    EMEA or any other applicable regulatory authority that EUR-1008
    is safe and effective for a particular indication;
    our inability to demonstrate that the benefits of EUR-1008
    outweigh its risks;
    our inability to complete any testing required to obtain FDA
    approval in respect of EUR-1008;
    disagreement of the FDA, the EMEA or any other applicable
    regulatory authorities with the manner in which we interpret the
    results from clinical trials;
    failure of the FDA, the EMEA or any other applicable regulatory
    authorities to approve our manufacturing processes or
    facilities; and
    a change in the approval policies or regulations of the FDA, the
    EMEA or any other applicable regulatory authority, or a change
    in the laws governing the approval process.  EUR-1008
  PEPs
    are life saving drugs. The FDA may not remove existing PEPs from
    the market in April 2010 even if they have not been
    FDA-approved. This would increase the level of competition that
    EUR-1008, if approved, will face.
       6




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EUR-1008
    Even
    though we have completed two Phase III clinical trials in
    respect of EUR-1008, and assuming we obtain regulatory approval
    for EUR-1008, a competitor might obtain approval for a competing
    product that can be marketed to a broader patient population.
    This would put us at a competitive disadvantage.
    We
    currently have limited internal sales, marketing and
    distribution capabilities. If we are unable to develop our
    sales, marketing and distribution capabilities on our own or
    through an acquisition, we will not be successful in
    commercializing EUR-1008 in the United States.
     7




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
    developing our own commercial team would be expensive and
    time-consuming, could delay any product launch, or result in
    high cash burn should there be any delay in approval;
    failure to acquire sufficient or suitable personnel to
    establish, oversee, or implement an effective launch plan;
    failure to recruit, train, oversee and retain adequate numbers
    of effective sales and marketing personnel;
    failure to acquire sales personnel that can effectively obtain
    access to or persuade adequate numbers of physicians to
    prescribe our products; and
    unforeseen costs and expenses associated with creating or
    acquiring and sustaining an independent sales and marketing
    organization.  If we
    or our collaboration partners outside of the United States are
    unable to commercialize EUR-1008 or experience significant
    delays in doing so, our growth prospects will be materially
    harmed.
    
    our ability to find a commercial partner with the appropriate
    resources to efficiently commercialize the product and enter
    into an agreement on commercially reasonable or commercially
    viable terms and conditions;
    our ability to coordinate global regulatory approval for the
    product in a consistent and effective manner;
    successfully completing any trials and tests required by
    applicable regulatory authorities;
    receiving marketing approvals from applicable regulatory
    authorities;
    continued operation of our manufacturing facilities, and our raw
    material suppliers, in compliance with current good
    manufacturing practice regulations, or cGMP;
    establishing favorable pricing from regulatory authorities
    outside of the United States; and
    obtaining commercial acceptance of EUR-1008, if approved, from
    the medical community and third-party payors.    Risks
    Related to Our Business
  We
    depend on the success of our existing products. If we are unable
    to maintain our existing arrangements with our licensees or fail
    to establish new licensing arrangements, our business and growth
    prospects will suffer.
   8




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Disputes
    may arise involving the contractual obligations of our
    customers, licensees or marketing collaborators to purchase our
    products or pay royalties on the sale of our products, and such
    disputes, if not resolved in our favor, could result in
    decreased revenues and material harm to our
    business.
    Any
    difficulties with, or interruptions of, our manufacturing could
    delay our output of products and harm our relationships with our
    collaborators. If we are unable to continue to manufacture our
    existing products, our results of operations and future
    prospects will suffer.
      Development
    of pharmaceutical products is expensive, time-consuming and
    subject to uncertainties, and we may not realize a return on our
    investment in product development for a significant period of
    time, if at all.
   9




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We
    rely on third parties to conduct, supervise and monitor our
    clinical trials, and those third parties may perform in an
    unsatisfactory manner, such as by failing to meet established
    deadlines for the completion of such trials.
    There
    is a high risk that our product candidates will not have
    successful clinical trial results and will not advance to the
    regulatory approval stage.
      
    conditions imposed on us or our collaborators by the FDA, the
    EMEA or other applicable regulatory authorities, regarding the
    scope or design of our clinical trials;
    the results of clinical trials may not meet the level of
    statistical significance required for approval by the FDA, the
    EMEA or other applicable regulatory authorities; 10




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
    the FDA, the EMEA or other applicable regulatory authorities may
    require additional or expanded trials;
    delays in obtaining, or the inability to obtain or maintain,
    required approvals from institutional review boards, or IRBs, or
    other reviewing entities at clinical sites selected for
    participation in our clinical trials;
    insufficient supply or deficient quality of our product
    candidates or other materials necessary to conduct our clinical
    trials;
    difficulties in manufacturing the product;
    difficulties enrolling subjects and high drop-out rates of
    subjects in our or our collaborators clinical trials;
    negative or inconclusive results from clinical trials, or
    results that are inconsistent with earlier results, that
    necessitate additional clinical studies;
    serious or unexpected drug-related side effects experienced by
    subjects in clinical trials; or
    failure of our third-party contractors or our investigators to
    comply with regulatory requirements or otherwise meet their
    contractual obligations to us in a timely manner.    Even
    if we complete our clinical trials, we may never succeed in
    obtaining regulatory approval for any of our product candidates.
    Without regulatory approval, we will be unable to commercialize
    our product candidates, and our growth prospects will be
    materially impaired.
        
    the failure to demonstrate to the satisfaction of the FDA, the
    EMEA or other applicable regulatory authorities that a product
    candidate is safe and effective for a particular indication;
    the inability to demonstrate that a product candidates
    benefits outweigh its risks;
    the inability to demonstrate that the product candidate presents
    an advantage over existing products;
    disagreement of the FDA, the EMEA or other applicable regulatory
    authorities with the manner in which the results from
    preclinical studies or clinical trials are interpreted; 11




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
    failure of the FDA, the EMEA or other applicable regulatory
    authorities to approve the manufacturing processes or facilities
    of third-party manufacturers with whom we contract for clinical
    and commercial supplies; and
    a change in the approval policies or regulations of the FDA, the
    EMEA or other applicable regulatory authorities, or a change in
    the laws governing the approval process.          Failure
    to obtain regulatory approval for our products in our markets
    and to retain approvals already granted will prevent us from
    marketing or licensing our products in these
    markets.
      ®
 12




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and/or
  Even
    if our product candidates receive regulatory approval or do not
    require regulatory approval, they may not become commercially
    viable products.
    
    difficulty in large-scale manufacturing;
    low market acceptance by physicians, healthcare payors, patients
    and the medical community as a result of lower demonstrated
    clinical safety or efficacy compared to other products,
    prevalence and severity of adverse side effects, or other
    potential disadvantages relative to alternative treatment
    methods;
    insufficient or unfavorable levels of reimbursement from
    government or third-party payors;
    infringement on proprietary rights of others for which we have
    not received licenses;
    incompatibility with other drugs;
    other potential advantages of alternative treatment methods;
    ineffective marketing and distribution support;
    lack of cost-effectiveness; or
    timing of market introduction of competitive products.    Our
    existing products and our product candidates, if they receive
    regulatory approval for marketing, remain subject to ongoing
    regulatory requirements and, if we fail to comply with these
    requirements, we could lose these approvals, and the sales of
    any approved commercial products could be
    suspended.
   13




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
    restrictions on the products, manufacturers or manufacturing
    processes;
    warning letters and untitled letters;
    civil penalties and criminal prosecutions and penalties;
    fines;
    injunctions;
    product seizures or detentions;
    import or export bans or restrictions;
    voluntary or mandatory product recalls and related publicity
    requirements;
    suspension or withdrawal of regulatory approvals;
    total or partial suspension of production; and
    refusal to approve pending applications for marketing approval
    of new products or of supplements to approved applications.    If we
    fail to comply with the laws governing the marketing and sale of
    our products, regulatory agencies may take action against us,
    which could significantly harm our business.
       14




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Rapid
    technological change could make our products, product candidates
    or technologies obsolete.
    We
    depend on our senior management and other key personnel to
    manage the growth of our business, and if we fail to attract and
    retain additional key personnel, we may not be able to expand
    our business or manage our growth effectively.
   15




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The
    failure to maintain our existing co-development relationships on
    acceptable terms could adversely affect our ability to develop
    and commercialize our product candidates and our future growth
    prospects.
  and/or
  scale-up
 16




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If we
    are not successful in establishing and maintaining additional
    co-development relationships, our growth prospects will be
    materially harmed.
  co-develop
  We
    rely on our collaboration partners and licensees to successfully
    commercialize products using our technologies, and we cannot
    control the actions of such collaborators and licensees. If we,
    our collaboration partners or licensees are unable to
    commercialize our co-development product candidates or if we,
    our collaboration partners or licensees experience significant
    delays in such commercialization, our growth prospects will be
    materially harmed.
    
    successfully completing preclinical studies and clinical trials
    and any additional trials and tests required by the FDA, the
    EMEA or other applicable regulatory authorities;
    receiving marketing approvals, to the extent required, from the
    FDA, the EMEA or other applicable regulatory
    authorities; and
    obtaining commercial acceptance, if approved, from the medical
    community and third-party payors. 17




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Acquisitions
    are part of our growth strategy, and we may fail to execute this
    aspect of our strategy or to successfully integrate any acquired
    business.
      We
    depend on a few key suppliers.
   18




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We are
    exposed to political, economic and other risks that arise from
    operating a multinational business.
    
    changes in general economic, social and political conditions;
    adverse tax consequences;
    the difficulty of enforcing agreements and collecting
    receivables through certain legal systems;
    inadequate protection of intellectual property;
    required compliance with a variety of laws and regulations of
    jurisdictions outside of the United States, including labor and
    tax laws;
    customers outside of the United States may have longer payment
    cycles;
    changes in laws and regulations of jurisdictions outside of the
    United States; and
    terrorist acts and natural disasters.    Currency
    exchange rate fluctuations may have a negative effect on our
    financial condition.
     19




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Our
    competitors may develop products that are less expensive, safer
    or more effective than, and may diminish or prevent the
    commercial success of, any product candidates that we may bring
    to market. In addition, our proprietary products may compete
    with products we develop and manufacture for our collaborators
    or with our collaborators other products.
              Our
    revenue is currently dependent upon a small number of customers,
    the loss of any one of which could have a material adverse
    impact on our business, financial condition and results of
    operations.
   20




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and/or
  Approximately
    75% of employees are represented by collective bargaining or
    other labor agreements or arrangements, and we could face labor
    disruptions that would interfere with our
    operations.
    Risks
    Related to Intellectual Property
  Patent
    protection for our products is important and
    uncertain.
    ® ® ® ®
     21




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Although
    we have sought patent protection for our lead product candidate,
    EUR-1008, we may not ultimately receive any issued patents or
    related patent rights.
      If we
    are unable to protect the confidentiality of our trade secrets
    or know-how, such proprietary information may be used by others
    to compete against us.
    Legal
    proceedings or third-party claims of intellectual property
    infringement may require us to spend substantial time and money
    and could prevent us from developing or commercializing
    products.
       22




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We may
    be subject to other patent-related litigation or proceedings
    that could be costly to defend and uncertain in their
    outcome.
    ® and/or ®
    
    EP 1058538 for Fast Disintegrating Tablets.
    EP 0914818 for Intraorally Rapidly Disintegrable Tablet.
    EP 01335706 for Process for the Production of Microspheres of
    Pancreatic Enzymes with High Stability.    Risks
    Related to Our Industry
  We
    must comply with the laws, regulations and rules of many
    jurisdictions relating to the healthcare business, and if we are
    unable to fully comply with such laws, regulations and other
    rules, we could face substantial penalties.
    
    the anti-kickback laws that prohibit persons from knowingly and
    willfully soliciting, offering, receiving or providing
    remuneration, directly or indirectly, in cash or in kind, to
    induce either the referral of an individual, or the furnishing
    or arranging for a good or service, for which payment may be
    made under federal healthcare programs such as Medicare and
    Medicaid in the United States;
    other healthcare laws, including Medicare laws in the U.S.,
    regulations, rules, manual provisions and policies that
    prescribe the requirements for coverage and payment for services
    performed by our customers, including the amount of such payment; 23




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
    laws and regulations, including the U.S. False Claims Act,
    which impose civil and criminal liability on individuals and
    entities who submit, or cause to be submitted, false or
    fraudulent claims for payment to the government;
    laws and regulations, including the U.S. False Statements
    Act, which prohibit knowingly and willfully falsifying,
    concealing or covering up a material fact or making any
    materially false statement in connection with the delivery of or
    payment for healthcare benefits, items or services; and
    state law equivalents and comparable laws in countries outside
    of the United States, including laws regarding pharmaceutical
    company marketing compliance, reporting and disclosure
    obligations.    Government
    authorities in many of our target markets have, from time to
    time, proposed legislation that would permit re-importation of
    drugs into those markets, including from countries where the
    drugs are sold at lower prices. This and other regulatory
    changes of a similar nature could force us to lower the prices
    at which we sell our products and impair our ability to derive
    revenues from these products.
    If the
    government or third-party payors fail to provide coverage and
    adequate payment rates for our products, the products of our
    collaboration partners or our future products, if any, our
    revenues and our prospects for profitability will be
    harmed.
   24




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We may
    be exposed to product liability claims.
    
    decreased demand for our product candidates;
    injury to our reputation;
    withdrawal of clinical trial participants;
    significant litigation costs and substantial monetary awards to,
    or costly settlement with, patients;
    product recalls and loss of revenue; and
    the inability to commercialize our product candidates.      We
    deal with hazardous materials and must comply with
    environmental, health and safety laws and regulations, which can
    be expensive and restrict how we do business.
   25




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##### Table of Contents



If we
    or others identify side effects after any of our products are on
    the market, we or our collaborators or licensees may be required
    to withdraw our products from the market, perform lengthy
    additional clinical trials or change the labeling of our
    products, any of which would hinder or preclude our ability to
    generate revenues.
    
    regulatory authorities may withdraw their approvals;
    we or our collaborators or licensees may be required to
    reformulate our products, conduct additional clinical trials,
    change the labeling of our products or implement changes to
    manufacturers facilities to obtain new approvals;
    we or our collaborators or licensees may have to recall the
    affected products from the market;
    we or our collaborators or licensees may experience a
    significant drop in sales of the affected products;
    our reputation in the marketplace may suffer;
    we may become the target of lawsuits, including class action
    suits; and
    we or our collaborators or licensees may be required to withdraw
    our products from the market and may not be able to reintroduce
    them into the market.    If the
    FDA, EMEA or other applicable regulatory agencies approve
    generic products that compete with any of our branded products,
    sales of those products may be adversely affected.
   26




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##### Table of Contents



Our
    development of generic drugs may expose us to
    litigation.
    We are
    currently unable to accurately predict what our short-term and
    long-term effective tax rates will be in the
    future.
    Risks
    Related to Our Ordinary Shares
  We are
    a controlled company under the NASDAQ Stock Market
    rules, and as such we are entitled to exemption from certain
    NASDAQ corporate governance standards, and you may not have the
    same protections afforded to shareholders of companies that are
    subject to all of the NASDAQ corporate governance
    requirements.
   27




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Our
    ordinary share price could be highly volatile.
    
    announcements of technological innovations or new products by us
    or others;
    public concern as to the safety of drugs we or others develop;
    general market conditions;
    success of research and development projects;
    changes in government regulations or patent decisions; and
    developments by our collaboration partners.    Raising
    additional capital by issuing securities may cause dilution to
    existing shares.
    
    the failure to obtain regulatory approval or achieve commercial
    success of our lead product candidate,
    EUR-1008;
    our success in establishing new collaboration partnerships;
    the success of our collaboration partners in selling products
    utilizing our technologies;
    the results of our preclinical studies and clinical trials for
    our earlier stage product candidates, and any decisions to
    initiate clinical trials if supported by the preclinical results;
    the costs, timing and outcome of regulatory review of EUR-1008
    and any of our other product candidates that progress to
    clinical trials;
    the costs of establishing or acquiring specialty sales,
    marketing and distribution capabilities, if any of our product
    candidates are approved;
    the costs of preparing, filing and prosecuting patent
    applications, maintaining and enforcing our issued patents and
    defending intellectual property-related claims;
    the extent to which we acquire or invest in businesses, products
    or technologies and other strategic relationships; and
    the costs of financing unanticipated working capital
    requirements and responding to competitive pressures.   28




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Warburg,
    Pincus Equity Partners, L.P., Warburg, Pincus Ventures
    International, L.P. and their affiliates, our major
    shareholders, control approximately 74.2% of our ordinary
    shares, and this concentration of ownership may deter a change
    in control or other transaction that is favorable to our
    shareholders.
    We are
    a Netherlands public limited liability company (naamloze
    vennootschap) and it may be difficult for you to obtain or
    enforce judgments against us or our executive officers, some of
    our directors and some of our named experts in the United
    States.
  and/or
    Future
    sales of our ordinary shares may depress our share
    price.
   29




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##### Table of Contents



We do
    not anticipate paying dividends on our ordinary shares, which
    could reduce the return on your investment.
    Your
    rights as a holder of ordinary shares will be governed by Dutch
    law and will differ from the rights of shareholders under U.S.
    law.
    We
    will incur significant increased costs as a result of operating
    as a public company, and our management will be required to
    devote substantial time to new compliance
    initiatives.
        Recent
    adverse changes in U.S., global, or regional economic conditions
    could have a continuing adverse effect on the profitability of
    some or all of our businesses.
   30




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##### Table of Contents



ITEM 4.
    INFORMATION
    ON THE COMPANY  History
    and Development of the Company
  20-673 Form 20-F.
  Business
    Overview
  tm ® ®
    EUR-1008
    or
    Zentasetm
     31




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##### Table of Contents



SourceCF
    Product Portfolio.
  ®
 32




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##### Table of Contents



Proprietary
    Pipeline Products.
    
    EUR-1025, a
    once-per-day
    oral formulation of ondansetron, an anti-emetic currently
    prescribed to prevent post-operative nausea and vomiting, and
    nausea and vomiting in cancer patients undergoing chemotherapy
    or radiotherapy.
    EUR-1073, a beclomethasone dipropionate formulation, currently
    marketed in certain countries in Europe by Chiesi Farmaceutici,
    S.p.A., for the treatment of inflammatory bowel disease and for
    which we will be seeking marketing authorization in the United
    States.    Amrix®
  Amrix ® ® once-a-day ® once-a-day scale-up,
    ®
  EUR-1037
    or
    Unisom®

    Sleepmelts
  ® ® ®
 33




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##### Table of Contents



EUR-1048
  ® ® scale-up,
  Continued
    R&D and Product Development
    
    Customized release technologiesto reduce daily dosing
    requirements and time the release of drugs in the body either to
    increase efficacy or to reduce side effects;
    Tastemasking / ODTs technologiesto increase
    patient compliance through more convenient dosage forms such as
    orally disintegrating tablets and taste-masked drugs;
    Bioavailability enhancement technologyto improve drug
    absorption, resulting in dose reduction and improved onset of
    action and improved bioavailability; and
    Drug conjugation technologyto extend drug half-life and
    to target specific organs or other biological targets such as
    tumors.  Our
    Strategy
    
    Establish a U.S. specialty sales and marketing
    organization.  We are establishing a specialty
    sales and marketing organization to commercialize our lead
    product candidate, EUR-1008, in the United States. Our selling
    effort is currently targeting the approximately 120 Cystic
    Fibrosis Treatment Centers and selected gastroenterologists and
    pulmonologists. We continue to grow our sales efforts and expect
    to build and leverage our sales infrastructure with these
    prescribers and prescribers in other therapeutics areas,
    particularly a broader spectrum of gastroenterologists. We
    believe that our current focused sales force will be able to
    serve as a foundation for a sales force that will effectively
    market EUR-1008 and future products to the broader group of
    prescribers.
    Continue to build and develop our product
    pipeline.  Through the application of our
    proprietary technologies, development expertise, and research
    infrastructure, we intend to continue to develop and expand our
    product pipeline. We expect to continue to identify many product
    development opportunities since we believe a large number of
    marketed and development-stage pharmaceuticals have less than
    optimal safety and efficacy profiles. In 2008, our
    cyclobenzaprine product,
    Amrix®,

    developed using our technologies and outlicensed to Cephalon,
    was featured as one of Cephalons top new marketed
    products. By way of 34




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additional example, through the application of our formulation
    technologies and development and manufacturing expertise, we
    believe EUR-1008 has overcome a number of the challenges facing
    current EPI therapies and satisfy the requirements established
    by the FDA for such products.  
    Enter into additional collaboration
    partnerships.  We intend to continue to seek
    collaboration partnerships with other pharmaceutical and
    biopharmaceutical companies. These relationships provide us with
    a diversified revenue stream and facilitate expansion of our
    product pipeline and potential for future revenue growth. For
    example, we currently are collaborating with GSK to develop and
    manufacture formulations of some of their products. We believe
    we are an attractive collaborator for larger pharmaceutical
    companies due to our broad portfolio of proprietary
    technologies, our development track record and our multinational
    infrastructure and manufacturing capabilities.
    Acquire additional businesses, products and
    technologies.  In the past, we have been
    successful in identifying, acquiring and integrating businesses
    and technologies based upon our regulatory, manufacturing and
    development expertise. Examples of our past successes include
    the recent acquisition of the beclomethasone dipropionate
    formulation from Chiesi Farmaceutici, S.p.A. in 2008, the
    acquisition of the SourceCF family of companies in 2007; the
    acquisition of certain assets from Polytech, a drug formulation
    company specializing in polymer-based drug conjugation, in 2002;
    the acquisition of Pharmatec in 2000; and, the execution of an
    agreement with Kyowa Hakko under which we have a worldwide
    license to patents related to
    AdvaTab®

    ODT technology. We intend to continue pursuing assets that would
    further our research and development capabilities, expand our
    product pipeline, and accelerate the expansion of our specialty
    sales and marketing organization.  Our Lead
    Product Candidate  EUR-1008
      Exocrine
    Pancreatic Insufficiency: Overview and Market
    Opportunity
     35




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Cystic Fibrosis.
  Chronic Pancreatitis.
  FDA
    Guidelines to Improve Existing Pancreatic Enzyme
    Products
      
    Overfill.  The finished product should be
    formulated to 100% of the label-claimed lipase activity to
    eliminate drug overfill.
    Viral inactivation.  The manufacturing process
    should be validated for its ability to remove
    and/or
    inactivate viral agents.
    Drug characterization.  The drug substance
    should be adequately characterized using appropriate chemical,
    physical and biological testing.
    Drug product specifications.  Specifications
    for the drug product should include tests for identifying and
    measuring biological activity of different classes of enzymes.
    Stability.  Due to the inherent instability
    observed in currently available PEPs, stability results are
    required to support the recommended shelf life of the product.   36




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Characteristics
    of EUR-1008
    
    Zero overfill.  EUR-1008 is formulated to 100%
    of the label-claimed lipase enzyme activity, which leads to the
    following patient benefits:  
    More consistent and reliable dosing.  The
    elimination of the need to overfill will allow treating
    physicians to know the exact amount of enzymes each patient is
    taking, thus reducing the possibility of therapeutic failures
    and over dosage, as well as the possibility of under
    dosage; and
    Reduced pill burden.  EUR-1008s stability
    leads to more consistent therapeutic outcomes and therefore
    reduced pill burden for patients.  
    Multiple dosage strengths.  Due to the
    variability in dosing requirements, patients with EPI require
    multiple dosage strengths to be adequately treated. We have
    developed four different dosage strengths to facilitate dose
    titration.
    Elimination of concurrent PPI dosing.  PEPs are
    often dosed with proton pump inhibitors, or PPIs, to protect the
    PEPs from destruction by stomach acids. Based on the results
    from our clinical trials, we believe that EUR-1008 will not
    require the concurrent administration of PPIs to achieve
    efficacy, further reducing a patients pill burden and
    medication costs.
    Pediatric formulation.  We have developed and
    tested in clinical trials a specific low-dose formulation of
    EUR-1008 for children between the ages of one and seven. The
    product contains very small particles which can be sprinkled on
    food to facilitate administration to these children.     37




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Overview
    of Our Completed Pivotal and Supportive Phase III Clinical
    Trials for EUR-1008
            Measurement

EUR-1008


Placebo


p-valueCoefficient of Fat Absorption (CFA)


88.3
%


62.8
%


<0.001Coefficient of Nitrogen Absorption (CNA)


87.2
%


65.7
%


<0.001Stools per day


1.77



2.66



<0.001    38




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seven-day seven-day
    End of


End ofMeasurement

Screening


Stabilization


Treatment% of responders


52.6
%


68.4
%


57.9
%Fecal Fat Absorption


24.8
%


27.0
%


27.3
%Body weight


16.60 kg



16.75 kg



16.63 kgStools per day


1.82



1.64



1.45     Bioavailability
    Study
  EUR-1008
  Approvable
    Letter, Complete Response and PDUFA Date
  60-90 days
 39




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Commercialization
    of EUR-1008 Outside the United States
    Commercialization
    of EUR-1008 in the United States
      U.S.-based
  ® ®
    Established
    Business
   40




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Co-development
    ® ® ®
  
    Customized release.  Innopran
    XL®,

    Amrix®,

    Unisom®

    and
    Ultrase®.
    Tastemasking/ODT.  Childrens
    Tylenol®,

    Cibalginadue and Rulide.
    Bioavailability enhancement.  Nimedex.  ®
  and/or
 41




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Multinational Operations.
  Proprietary
    Pharmaceutical Technology Products Marketed and in
    Development
  ® ®
  EUR-1025
  once-a-day ® ® once-a-day
  EUR-1073
  tm
  Amrix®
  Amrix ® ® once-a-day ® once-a-day scale-up,
   42




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®
  EUR-1037
  ® ® ®
  EUR-1048
  ® ® scale-up,
  EUR-1000
  scale-up,
 43




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Earlier
    Stage Product Candidates
    Proprietary
    Pharmaceutical Technologies
    
    accelerate onset of action and symptom relief;
    reduce dosing frequency;
    create convenient, patient-friendly dosage forms such as
    taste-masked orally disintegrating tablets and suspensions;
    customize pharmacokinetic profiles through timed drug release to
    improve therapy;
    enhance bioavailability, or absorption by the body, leading to
    lower doses of drugs; and
    improve therapeutic effect through gastro-protection.    Customized
    Release
  ® ® ® ®
  
    Diffucapstechnology consists of multiparticulate systems
    in which customized release profiles are achieved by layering
    polymer membranes onto drug-containing cores. The type and
    thickness of these membranes control the speed and location at
    which the drug exits the core because the membranes are
    sensitive to pH and dissolve at different rates. By
    incorporating beads of differing drug release profiles into hard
    gelatin capsules, customized release profiles can be achieved.
    This technology has the potential to exhibit less variability
    than a controlled-release tablet, which typically has only a
    single drug release characteristic. Diffucap technology can also
    be combined with our dosage form technologies. Diffucap dosage
    units can contain one or more drugs, and one or more drug
    release profiles can be incorporated into a single dosage unit.
    In comparison to tablets, multiparticulates generally exhibit
    decreased food effects and decreased variability between
    patients.
    Diffutabtechnology consists of a blend of waxes and
    polymers that control drug release through diffusion and
    erosion. Diffutab is an effective means of creating sustained
    release,
    once-a-day
    formulations of high-dosage products. 44




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
    Eurand Minitabsare very small, cylindrical
    tablets.  These tablets can contain materials that are
    able to form gels in water-based environments, and the rate of
    drug release is modified by its need to exit the gel layer. The
    tablets can also be coated with polymer membranes that are
    sensitive to pH or take time to dissolve, allowing the site or
    the time at which the drug is released in the body to be
    controlled. These tablets possess the advantages of
    multiparticulates in that they can be filled into hard-shell
    gelatin capsules. As a result, combination products can be
    developed to allow for two or more release profiles within a
    single capsule. Eurand Minitabs are able to contain a high level
    of drug in comparison to the total weight of the finished dosage
    form, and drug release rates can be fine-tuned.
    Orbexatechnology consists of a process whereby a
    concentrated formulation of a drug is extruded as a ribbon
    through a fine nozzle, cut and then shaped, a process called
    spheronisation, to produce beads suited to formulation as
    sustained or controlled release multiparticulates. This process
    allows a high concentration of a drug to be present in the
    beads, and speed and simplicity make the technology suited for
    use with sensitive materials such as proteins.  Tastemasking/ODT
    
    Microcaps taste-masking.  The ability to mask
    the bitter or irritant characteristics of many drugs with
    flavors and sugars is limited, and coating of the drug is
    generally required to achieve maximum taste-masking
    effectiveness. Our Microcaps technology deposits a polymer layer
    around the drug particles to form a complete and continuous
    barrier.
    Orally disintegrating tablets.  We have two
    commercialized orally disintegrating tablet technologies,
    AdvaTab®,

    through our license with Kyowa Hakko, and our internally
    developed Ziplets. We are able to combine either of these dosage
    forms with our particle-coating technologies for taste-masking,
    gastro-protection and controlled release. Our technologies allow
    us to produce pleasant-tasting tablets that dissolve in the
    mouth in seconds. We are able to manufacture this
    easy-to-administer dosage form using standard tableting and
    packaging equipment, thus eliminating the need for expensive
    specialty packaging.
    Liquitard liquid suspensions.  Oral
    administration of certain dosage forms, such as medium- to
    large-sized capsules and tablets, can be problematic for
    patients having difficulties swallowing, such as pediatric and
    geriatric populations, or patients with severe clinical
    conditions. Using our Liquitard technology, we can incorporate
    both our taste-masking and controlled-release technologies into
    permanent or temporary suspensions.  Bioavailability
    Enhancement
      Drug
    Conjugation
   45




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and/or
  Research
    and Development
        Manufacturing
      scale-up
  
    accelerate development,
    scale-up and
    commercialization of our development candidates and products;
    maintain control over our technologies;
    maximize our revenue streams and profitability;
    control interactions with regulatory agencies; and
    facilitate product approval. 46




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Intellectual
    Property
    Patents
    and Proprietary Technology
    ® ® ® ® ® ® ® ® ®
  ® ® ® ® ® ®
  ® ® ® ® ®
  ®
 47




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® ® ®
          Trademarks
   48




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Know-how
    Competition
             49




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Government
    Regulation
     50




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United
    States
  and/or
    
    preclinical laboratory tests, animal studies and formulation
    studies;
    submission to the FDA of an application for an investigational
    new drug, or IND, exemption for human clinical testing;
    adequate and well controlled clinical trials to determine the
    safety and efficacy of the drug for each indication;
    submission to the FDA of a NDA;
    a potential public hearing of an outside advisory committee to
    discuss the application;
    satisfactory completion of an FDA inspection of the
    manufacturing facility or facilities at which the drug is
    manufactured; and
    FDA review and approval of the NDA.   51




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Clinical Trials.
      NDAs and/or and/or
 52




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Postmarketing Requirements.
 53




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Generic Competition.
           54




---



##### Table of Contents



European
    Economic Area
    Centralized
    Procedure.
  Mutual Recognition and Decentralized
    Procedures.
   55




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##### Table of Contents



Full Applications. 2001 83
  Abridged Applications.
  Cross-referral to Innovators
    Data.
  
    having the same qualitative and quantitative composition in
    active substance as the reference medicinal product;  
    having the same pharmaceutical form as the reference medicinal
    product; and
    whos bioequivalence with the reference medicinal product
    has been demonstrated by appropriate bioavailability studies. 56




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Well-established Medicinal Use. and/or
  Informed Consent.
  Law Relating to Pediatric Research and Vulnerable
    Populations.
 57




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1768 92
  Post-authorization Obligations.
  Other
    Countries
    Related
    Matters
    Pharmaceutical
    Pricing and Reimbursement
     58




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and/or
  and/or
  and/or
  Insurance
   59




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Environmental
    Matters
    Properties
    and Infrastructure
                Employees
    ITEM 4A.
    UNRESOLVED
    STAFF COMMENTS    ITEM 5.
    OPERATING
    AND FINANCIAL REVIEW AND PROSPECTS   60




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Overview
  tm late-stage ® ®
      
    In February 2000, substantially all of the assets of
    Vectorpharma, providing us with complementary expertise for our
    Biorise system, new products in the development pipeline and
    additional research and development capabilities.
    In June 2000, Pharmatec, which provided us with additional
    research and development capabilities, additional manufacturing
    capacity in Italy and several marketed products.
    In January 2002, certain assets of Polytech, an early-stage
    company specializing in polymer-based drug conjugation.
    In December 2007, SourceCF, which provided us with products
    marketed to the Cystic Fibrosis community. SourceCF has a sales
    and marketing organization with knowledge of the Cystic Fibrosis
    market which we expect to be an important market for EUR-1008.    ®
 61




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Co-development co-development co-development
  ® ® ®
  
    Customized release.  Innopran
    XL®,

    Amrix®,

    Unisom®

    and
    Ultrase®.
    Tastemasking / ODT.  Childrens
    Tylenol®,

    Cibalginadue and Rulide.
    Bioavailability enhancement.  Nimedex.    Financial
    Operations Overview
  Revenues
   62




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Total RevenuesYears Ended December 31,2008(1)


2007(1)


2006(1)United States


47.9
%


40.3
%


40.3
%Germany


16.7
%


21.0
%


18.8
%United Kingdom


10.1
%


11.5
%


15.6
%Italy


6.2
%


4.8
%


6.2
%Japan


4.9
%


6.9
%


6.3
%Netherlands


2.3
%


1.2
%


0.0
%Switzerland


2.1
%


3.7
%


3.7
%France


2.1
%


2.4
%


2.6
%Spain


1.6
%


2.1
%


1.2
%Canada


1.4
%


1.3
%


1.3
%Other


4.7
%


4.8
%


4.0
%100.0
%


100.0
%


100.0
%     (1)
    
    For absolute amounts on which these percentages are based please
    refer to the consolidated financial statements included
    elsewhere in this Annual Report.    Product Sales.
  Royalties. ® ®
  Development Fees.
  
    feasibility and prototype development;
    formulation optimization and preparation of pilot clinical
    samples;
    scale-up,
    validation and preparation of clinical samples for regulatory
    and commercial purposes;
    clinical trials; and
    preparation of documents and regulatory filings. 63




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and/or agreed-upon
    Expenses
  Cost of Goods Sold.
  Research and Development.
  
    salaries and expenses for personnel, including stock-based
    compensation expenses;
    costs of manufacturing clinical samples and related materials;
    performance of preclinical studies and clinical trials for
    proprietary products;
    fees paid to professional service providers, notably in
    conjunction with independent monitoring of our clinical trials
    and acquiring and evaluating results in conjunction with our
    clinical trials;
    fees paid to regulatory agencies relating to products under
    development;
    patent filing and maintenance costs;
    depreciation of our fixed assets used for development
    purposes; and
    credits for government grants related to research and
    development activity. 64




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Years Ended December 31,2006


2007


2008(In thousands)Research and development expenses attributable to development
    fees


5,590



5,432



5,892Other research and development expenses


10,697



11,678



14,399Research and development expenses


16,287



17,110



20,291     co-development
    
    the number of sites included in the trials;
    the length of time required to enroll patients;
    the number of patients that participate in the trials;
    the duration of patient
    follow-up
    called for by the trial protocol or that seems appropriate in
    light of the results; and
    the efficacy and safety profile of the product candidate.    Selling, General and Administrative
    Expenses.
  ®
 65




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Equity-Based Compensation.
  Years Ended December 31,2004


2005


2006


2007


2008(In thousands)Included in the statement of operations as:Cost of goods sold










(5
)


269



188Research and development expenses


52



4



(36
)


240



225Selling, general and administrative expenses


1



46



(24
)


750



1,477Stock option expense


53



50



(65
)


1,259



1,890     Foreign Exchange Gains and Losses.
  Other Operating Expenses
  Interest Income and Interest Expense.
  Income
    Taxes
   66




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Critical
    Accounting Policies
      
    revenue recognition;
    valuation of pre-launch inventory;
    research and development expenses;
    equity-based compensation;
    income taxes;
    valuation of goodwill and intangible assets; and
    derivatives and hedging instruments. 67




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Revenue
    Recognition
      
    Product sales are recognized when title transfers, which
    generally occurs on the date when we ship products to our
    customers. Our policy is not to accept returned goods without
    proof that the returned goods are defective and as a result,
    historically, the value of returned goods has not been material.
    Provisions for any returns and other adjustments related to
    sales are provided in the same period the related sales are
    recorded when historical rates of return indicate such a
    provision is necessary.
    Royalties are based on reported sales of licensed products, and
    revenues are recognized based on contract terms when reported
    sales can be reliably measured and payment is reasonably assured.
    Research and development agreements with collaboration partners
    may provide that development work is compensated at a
    non-refundable hourly rate for a projected number of hours, and
    revenue is then recognized at the hourly rate for the number of
    hours worked.
    Research and development agreements with collaboration partners
    generally contain milestone payments based on performance; where
    milestone payments based on performance are substantive and both
    parties to the agreement are at risk that the milestone will not
    be achieved from the inception of the agreement the payments are
    recognized when performance criteria are met.
    When milestone payments are paid in advance and are not subject
    to forfeiture, the revenues are deferred and subsequently
    recognized as income over the related development phase and in
    accordance with the contract terms.    Pre-Launch
    Inventories
      
    whether the regulatory process and regulatory requirements for
    the product are sufficiently well known that it is likely that
    the product will be approved;
    whether our manufactured lots will likely have sufficient
    remaining commercial shelf life at the time it anticipates that
    the product will be sold; and
    whether our manufacturing process will be in accordance with the
    specifications that will likely be approved for the product. 68




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Research
    and Development Expenses
    
    research and development expenses attributable to co-development
    contracts for which we receive fees from collaborators; and
    research and development expenses attributable to projects
    undertaken to research and develop products and technologies on
    our own behalf.    Equity-Based
    Compensation
        pre-vesting
 69




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Income
    Taxes
       70




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Valuation
    of Goodwill and Other Intangible Assets
        
    feedback from actual and potential collaboration partners on the
    value they attach to a technology or patent;
    preparation of sales forecasts by product;
    internal factors, such as the current focus of our business
    development staff in its search for new development contracts;
    projections of technological viability over the estimated useful
    life of the intangible asset;
    review of
    period-to-period
    actual revenues and profitability by product; and
    a discount rate based on our estimated weighted average
    cost-of-capital.    Derivatives
    and Hedging Instruments
    
    to hedge receivables and payables denominated in foreign
    currency against exchange rate fluctuations by using forward
    exchange contracts; and
    to fix the interest payments on floating rate long-term debt to
    a fixed rate by using interest rate swaps.    Recent
    Accounting Developments
   71




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Results
    of Operations
  Year
    ended December 31, 2008 Compared to Year ended
    December 31, 2007
  Revenues. ® ®
  ® ®
  ®
    Cost of Goods Sold.
  Research and Development Expenses.
  Selling, General and Administrative
    Expenses.
  
    the build out of our marketing and sales organization including
    personnel and infrastructure from our acquisition of SourceCF,
    new hires and pre-launch initiatives;
    costs associated with being a public company, including advisory
    and costs related to the Sarbanes-Oxley Act; and
    higher legal costs, primarily related to litigation brought by
    the company against UCB and the subsequent settlement.  Income from Settlement of Litigation.
 72




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
    $25 million received when the settlement closed;
    $5 million, plus interest, at the first anniversary of the
    closing; and
    $5 million, plus interest, at the second anniversary of the
    closing.    Net interest.
  Income tax expense.
  Year
    ended December 31, 2007 Compared to Year ended
    December 31, 2006
  Revenues.
        Cost of Goods Sold.
 73




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Research and Development Expenses.
  Selling, General and Administrative
    Expenses.
  
    the build out of our EUR-1008 marketing and sales organization
    including new hires and pre-launch initiatives;
    higher legal costs, primarily related to ongoing litigation
    between the company and UCB;
    costs associated with being a public company, including legal
    advisory and costs related to the Sarbanes-Oxley Act; and
    the cost of stock options granted in 2007 for which there was no
    comparable cost in 2006.  Interest Expense.
  
    reduced interest on long term notes payable to shareholders
    after 23.0 million of these notes were converted to
    equity on November 30, 2006;
    further reduced interest expenses, after all the remaining notes
    payable to shareholders and almost all bank debt was repaid on
    May 30, 2007, using proceeds from our IPO; and
    repayment of bank debt which allowed us to terminate an interest
    rate swap, realizing a gain because interest rates had risen
    since the inception of the swap.  Income tax Expense.
  Financial
    Condition, Liquidity and Capital Resources
         74




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Net Cash Provided by Operating Activities.
    Net Cash Used in Investing Activities.
      Net Cash Provided by Financing Activities.
   75




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##### Table of Contents



and/or
  
    the costs, timing and outcome of regulatory review of EUR-1008
    and any of our other product candidates that progress to
    clinical trials or marketing authorization;
    the results of our preclinical studies and clinical trials for
    our earlier-stage product candidates, and any decisions to
    initiate clinical trials if supported by the preclinical results;
    the costs of establishing our specialty sales, marketing and
    distribution capabilities, for EUR-1008 and other products in
    development;
    the costs of preparing, filing and prosecuting patent
    applications, maintaining and enforcing our issued patents and
    defending other intellectual property-related claims;
    the extent to which we acquire or invest in businesses, products
    or technologies and other strategic relationships;
    the costs of financing unanticipated working capital
    requirements and responding to competitive pressures;
    the failure to obtain regulatory approval or achieve commercial
    success of our lead product candidate,
    EUR-1008;
    the success in establishing new co-development contracts with
    collaborators; and
    the success of our collaboration partners in selling products
    utilizing our technologies.  Off-Balance
    Sheet Arrangements
    Contractual
    Commitments
    Cash Payments Due by Period(1)Less Than








More ThanTotal


1 Year


1-3 Years


3-5 Years


5 Years(In thousands)Operating lease obligations


1,656



556



839



261



Construction and other capital commitments


842



842











Total contractual obligations


2, 498



1,398



839



261



     (1)
    
    The table above does not include certain commitments to Kyowa
    Hakko that are contingent on events for which the timing is
    uncertain. In December 2002, we entered into an agreement with
    Kyowa Hakko under which we have a worldwide license to practice
    under patents related to the
    AdvaTab®

    technology. The license is exclusive subject to Kyowa
    Hakkos reservation of certain rights, including, but not
    limited to, rights to maintain certain licensing arrangements
    with companies registered in Japan for development and sale of
    certain products; the use of the technology in products marketed
    by or under the name of Kyowa Hakko or certain of its
    affiliates; Kyowa Hakkos and its affiliates rights
    to have their licensees and sublicensees use the technology for
    products 76




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proprietary to Kyowa Hakko; and the right of Kyowa Hakkos
    and its affiliates sublicensees to use the technology on
    in-licensed products for development of Kyowa Hakkos
    proprietary products. The license agreement provides for
    aggregate payments in an amount up to $1,250,000, which includes
    payments upon signing the license agreement and amounts which
    have been paid or will be payable upon the occurrence of certain
    events. In addition, we must make certain other payments as well
    as pay a calculated royalty.    ITEM 6.
    DIRECTORS,
    SENIOR MANAGEMENT AND EMPLOYEES    Name

Age

Positions

Expiration of Term of OfficeDirectorsGearóid M. Faherty


49


Chairman & Chief Executive Officer, Executive Director

2011 Annual General Meeting of ShareholdersRolf A. Classon(1)(2)


63


Non-Executive Director

2010 Annual General Meeting of ShareholdersWilliam J. Jenkins, M.D.(1)(3)


61


Non-Executive Director

2011 Annual General Meeting of ShareholdersNicholas J. Lowcock(2)(3)


45


Non-Executive Director

2011 Annual General Meeting of ShareholdersAngelo C. Malahias(1)(2)


47


Non-Executive Director

2010 Annual General Meeting of ShareholdersExecutive OfficersMario P. Crovetto


55


Chief Financial OfficerJohn J. Fraher


43


Chief Commercial OfficerManya S. Deehr


43


Chief Legal Officer, Corporate SecretaryKey EmployeesMichael Walters


48


Executive Vice President of Sales and Marketing, Eurand
    Pharmaceuticals, Inc.Ruth Thieroff-Ekerdt, M.D.


51


Chief Medical Officer, Eurand Pharmaceuticals, Inc.     (1)
    
    Member of the Audit Committee.(2)
    
    Member of the Compensation Committee.(3)
    
    Member of the Nominating and Corporate Governance Committee.    Directors
  Gearóid M. Faherty
  Rolf A. Classon
 77




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William J. Jenkins,M.D.
  Nicholas J. Lowcock
  Angelo C. Malahias
  Executive
    Officers
  Mario P. Crovetto
  Manya S. Deehr
 78




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John J. Fraher
  Key
    Employees
  Ruth Thieroff-Ekerdt, M.D.
  Michael J. Walters ®
  Compensation
    of Directors
    Non-Executive Directors of our Board

Directors FeesRolf A. Classon


43,500William J. Jenkins


39,750Nicholas J. Lowcock


23,500Angelo C. Malahias


53,500Total


160,250      79




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Sole Executive Director of Our Board and CEO

Salary(1)

Bonus(2)

Non-cash Benefits(3)

TotalGearóid M. Faherty


551,200



220,480



5,057



776,737     (1)
    
    The non-executive members of our Board, upon the recommendation
    of our Compensation Committee, approved an annual base salary
    for 2008 for our CEO of 551,200(2)
    
    The bonus payable to the sole executive member of our Board and
    CEO in relation to the 2008 financial year was approved by the
    Compensation Committee, and approved by the non-executive
    members of our Board in respect of the 2008 financial year,
    based on fulfillment of a number of pre-defined objectives for
    2008.(3)
    
    Includes use of a company car and additional medical coverage.  Stock
    Options
    Number


Exercise


2008


Number


ExpirationName

Granted


Price


Exercises


Outstanding


DateGearóid M. Faherty


240,000



6.67







240,000



2/28/2012120,000



5.00







120,000



6/23/2013120,000



5.00







120,000



10/26/2015120,000


$
16.00







120,000



5/16/201790,000(1
)

$
15.05







90,000



03/04/201890,000(1
)

$
9.15







90,000



11/05/2018Rolf A. Classon


10,000


$
12.88







10,000



8/29/2017William J. Jenkins


15,000



6.67







15,000



7/5/201010,000


$
16.00







10,000



5/16/2017Angelo C. Malahias


15,000


$
12.88







15,000



8/29/2017     (1)
    
    Options were granted pursuant to the Eurand N.V. Equity
    Compensation Plan in 2008.  Board
    Practices
    
    overseeing the conduct of the Companys business, to
    evaluate whether the business is being properly managed;
    reviewing and, where appropriate, approving the Companys
    major financial objectives, plans and actions;
    reviewing and, where appropriate, approving major changes in,
    and determinations of other major issues respecting, the
    appropriate auditing and accounting principles and practices to
    be used in the preparation of the Companys consolidated
    financial statements;
    reviewing and, where appropriate, approving major changes in,
    and determinations under the Guidelines, Code of Ethics and
    other Company policies;
    reviewing and, where appropriate, approving actions to be
    undertaken by the Company that would result in a material change
    in the financial structure or control of the Company, the
    acquisition or disposition of any business or asset(s) material
    to the Company or the entry of the Company into any major new
    line of business; 80




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
    regularly reviewing and evaluating the performance of the Chief
    Executive Officer and other members of senior management based
    on reports from the Compensation Committee;
    providing advice and counsel to the Chief Executive Officer and
    principal senior executives;
    planning for succession with respect to the position of Chief
    Executive Officer and monitoring managements succession
    planning for other key executives;
    ensuring that the Companys business is conducted with the
    highest standards of ethical conduct and in conformity with
    applicable laws and regulations; and
    performing such other functions as the Board believes
    appropriate or necessary, or as otherwise prescribed by rules or
    regulations.      ( )
    Corporate
    Governance
         81




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
    a Code of Business Conduct and Ethics;
    a Nominating and Corporate Governance Committee Charter;
    a Compensation Committee Charter; and
    an Audit Committee Charter.    Committees
    of the Board of Directors
    Audit
    Committee
      
    integrity of the Companys consolidated financial
    statements, including its system of internal controls;
    the Companys compliance with legal and regulatory
    requirements;
    the independent auditors qualifications and
    independence; and
    the performance of the Companys independent audit function
    and independent auditors,     82




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Nominating
    and Corporate Governance Committee
    
    reviewing the Board structure, size and composition and making
    recommendations to the Board with regard to any adjustments that
    are deemed necessary;
    identifying candidates for the approval of the Board to fill
    Board vacancies as and when they arise as well as developing
    plans for succession, in particular, of the chairman and
    executive officers;
    overseeing the Boards annual evaluation of its own
    performance and the performance of other Board
    committees; and
    developing and recommending to the Board for adoption a set of
    Corporate Governance Guidelines applicable to the Company and to
    periodically review the same.  Compensation
    Committee
    
    establishing and periodically reviewing the Companys
    compensation programs;
    reviewing the performance of directors, officers and employees
    of the Company who are eligible for awards and benefits under
    any plan or program and adjust compensation arrangements as
    appropriate based on performance;
    reviewing and monitoring management development and succession
    plans and activities; and
    reporting on compensation arrangements and incentive grants to
    the Board.  One-tier Board
      Independence
    Conflicts
    of interests
   83




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Remuneration
      and/or
  Share
    Ownership
  and/or
  Retirement
    of Board members
    Reporting
    of trading in Netherlands listed companies
   84




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Code of
    Business Conduct and Whistleblowing Policy
    Employment
    Agreements
  Employment
    Agreement with Gearóid M. Faherty
    Employment
    Agreements Senior Management
    Employees
         85




---



##### Table of Contents



Share
    Ownership
  and/or
  Equity
    Compensation Plan
            The Wall
 86




---



##### Table of Contents



Street Journal
          and/or and/or and/or
    and/or
   87




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88




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##### Table of Contents



ITEM 7.
    MAJOR
    SHAREHOLDERS AND RELATED PARTY TRANSACTIONS  Major
    Shareholders
    
    each person or entity that we know beneficially owns 5% or more
    of our shares of outstanding ordinary shares;
    our chief executive officer and our other members of senior
    management;
    each of our directors; and
    all of our current directors and executive officers as a group.  and/or
  Shares Beneficially OwnedName of Beneficial Owner

Number


PercentagePrincipal ShareholdersWarburg, Pincus Equity Partners, L.P.(1)


16,991,227



37.1
%Warburg, Pincus Ventures International, L.P.(1)


16,991,225



37.1
%Executive Officers and DirectorsDirectorsRolf A. Classon(2)


4,166



*Gearóid M.
    Faherty3


2,487,958



5.3
%William J. Jenkins, M.D.(4)


20,833




*Nicholas J. Lowcock(5)


33,997,452



74.3
%Angelo C. Malahias(6)


6,250




*Executive OfficersMario P. Crovetto(7)


285,716



*
%Manya S. Deehr(8)


71,282



*John J. Fraher(9)


459,813



1.0
%All Directors and Executive Officers as a group (8 persons)


37,333,471



79.6
%     *
    
    Represents beneficial ownership of less than one percent of our
    outstanding ordinary shares.(1)
    
    Warburg, Pincus Equity Partners, L.P. includes two affiliated
    partnerships, Warburg, Pincus Netherlands Equity Partners I C.V.
    and Warburg, Pincus Netherlands Equity Partners III C.V.,
    or, together, WPEP. Warburg Pincus Partners LLC, or WP Partners,
    is the general partner of each of WPEP and Warburg, Pincus
    Ventures International, L.P., or WPVI. Each of WPEP and WPVI is
    managed by Warburg Pincus LLC, or WP LLC. Charles R. Kaye and
    Joseph P. Landy are the managing general partners of Warburg
    Pincus & Co., or WP, the sole member of WP Partners,
    and managing members of WP LLC and may be deemed to control both
    entities. Each of Mr. Kaye and Mr. Landy disclaims
    beneficial ownership of all shares owned by Warburg Pincus
    entities. WPEP, WPVI, WP Partners, WP and WP LLC are
    collectively referred to in this Annual Report as 89




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Warburg Pincus. The address of the Warburg Pincus entities is
    466 Lexington Avenue, New York, New York 10017. Warburg Pincus,
    in the aggregate, beneficially own approximately 74.3% of our
    outstanding ordinary shares. These shareholders could
    effectively control all matters requiring our shareholders
    approval, including the election of directors.(2)
    
    Includes options which are fully vested to purchase 4,166
    ordinary shares under our equity compensation plan.(3)
    
    Includes options which are fully vested to purchase 580,000
    ordinary shares under our equity compensation plan.(4)
    
    Includes options which are fully vested to purchase 20,833
    ordinary shares under our equity compensation plan.(5)
    
    Includes 15,000 shares beneficially owned by
    Mr. Lowcock, one of our directors and a senior advisor to
    Warburg Pincus International LLC. All other shares indicated as
    owned by Mr. Lowcock are included because of his
    affiliation with the Warburg Pincus entities. Mr. Lowcock
    disclaims beneficial ownership of all shares owned by the
    Warburg Pincus entities.(6)
    
    Includes options which are fully vested to purchase 6,250
    ordinary shares under our equity compensation plan.(7)
    
    Includes options which are fully vested to purchase 235,666
    ordinary shares under our equity compensation plan.(8)
    
    Includes options which are fully vested to purchase 70,832
    ordinary shares under our equity compensation plan.(9)
    
    Includes options which are fully vested to purchase 235,666
    ordinary shares under our equity compensation plan.  non-United
  Related
    Party Transactions
    Management
    Affiliations
    Loans
  Loans
    from Shareholders
     90




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Agreements
    with Directors and Officers
  Employment
    Agreements
    Agreements
    with Directors and Officers
    Indemnification
    Agreements
    ITEM 8.
    FINANCIAL
    INFORMATION    Significant Changes. Form 20-F.
  Legal Proceedings. Form 20-F,
           91




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##### Table of Contents



Dividend Policy.
    ITEM 9.
    THE
    OFFER AND LISTING    Trading
    on the NASDAQ Stock Market
    High


Low2007Year Ended December 31, 2007

$
17.40


$
9.65Second Quarter (May 16, 2007 through June 30, 2007)


17.40



14.68Third Quarter


16.52



9.65Fourth Quarter


17.17



11.382008Year Ended December 31, 2008

$
19.60


$
6.17First Quarter


16.00



12.07Second Quarter


17.91



12.85Third Quarter


19.60



13.76Fourth Quarter


18.30



6.172009First Quarter (through March 20, 2009)

$
13.27


$
8.76September 2008


18.93



16.22October 2008


18.30



8.80November 2008


10.67



6.45December 2008


10.05



6.17January 2009


13.27



8.83February 2009


12.70



9.21March 2009 (through March 20, 2009)


12.69



8.76   ITEM 10.
    ADDITIONAL
    INFORMATION  Share
    Capital
  Form 20-F.
 92




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##### Table of Contents



Ordinary
    Shares
    Dividends
  called-up
    Memorandum
    and Articles of Association
  Form 20-F
  Material
    Contracts
    Chiesi
    Agreement
  Chiesi
    Agreement
  Exchange
    Controls
   93




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Taxation
    Material
    Netherlands Tax Consequences for Holders of Ordinary
    Shares
  his/her his/her and/or
  Withholding
    Tax
    
    distributions in cash or in kind;
    liquidation proceeds, proceeds of redemption of ordinary shares,
    or proceeds of the repurchase of ordinary shares by us or one of
    our subsidiaries or other affiliated entities to the extent such
    proceeds exceed the average capital paid into those shares as
    recognized for Netherlands dividend withholding tax purposes;
    an amount equal to the par value of ordinary shares issued or an
    increase in the par value of ordinary shares, as the case may
    be, to the extent that it does not appear that a contribution
    has been recognized for Netherlands dividend withholding tax
    purposes; and
    partial repayment of paid-in capital, recognized for Netherlands
    dividend withholding tax purposes, if and to the extent that we
    have net profits (zuivere winst), unless the general
    meeting of our shareholders has resolved in advance to make such
    repayment and provided that the par value of the ordinary shares
    concerned has been reduced by an equal amount by way of an
    amendment of our articles of association.     94




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##### Table of Contents




    3% of the portion of the distribution paid by us that is subject
    to Netherlands dividend withholding tax; and
    3% of the dividends and profit distributions, before deduction
    of foreign withholding taxes, received by us from qualifying
    foreign subsidiaries in the current calendar year (up to the
    date of the distribution by us) and the two preceding calendar
    years, insofar as such dividends and profit distributions have
    not yet been taken into account for purposes of establishing the
    above-mentioned deductions.      Taxes
    on Income and Capital Gains
  Netherlands Resident Individuals.
  
    the ordinary shares are attributable to an enterprise from which
    The Netherlands resident individual derives a share of the
    profit, whether as an entrepreneur or as a person who has a
    co-entitlement to the net worth of such enterprise, without
    being an entrepreneur or a shareholder, as specified in The
    Netherlands Income Tax Act 2001; or 95




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
    the holder of the ordinary shares is considered to perform
    activities with respect to the shares that go beyond ordinary
    active asset management (normaal vermogensbeheer) or such
    holder derives benefits from the shares that are (otherwise)
    taxable as benefits from other activities (resultaat uit
    overige werkzaamheden).  (rendementsgrondslag)
  Netherlands Resident Entities.
  vrijgestelde
    beleggingsinstelling
  Nonresidents of The Netherlands.
  
    such holder is neither a resident nor deemed to be resident in
    The Netherlands for Netherlands tax purposes and, if such holder
    is an individual, such holder has not made an election for the
    application of the rules of The Netherlands Income Tax Act 2001
    as they apply to residents of The Netherlands;
    such holder does not have an interest in an enterprise or a
    deemed enterprise that, in whole or in part, is either
    effectively managed in The Netherlands or is carried out through
    a permanent establishment, a deemed permanent establishment
    (statutorily defined term) or a permanent representative in The
    Netherlands and to which enterprise or part of an enterprise the
    ordinary shares are attributable; and
    in the event such holder is an individual, such holder does not
    carry out any activities in The Netherlands with respect to the
    ordinary shares that go beyond ordinary active asset management
    (normaal vermogensbeheer) and does not derive benefits
    from the ordinary shares that are (otherwise) taxable as
    benefits from other activities in The Netherlands (resultaat
    uit overige werkzaamheden); and
    such holder does not carry out and has not carried out
    employment activities in the Netherlands with which the holding
    of or income derived from the ordinary shares is connected.  Gift,
    Estate and Inheritance Taxes
  Residents of The Netherlands. his/her
  Non-residents of The Netherlands.
  
    such holder at the time of the gift has or at the time of
    his/her
    death had an enterprise or an interest in an enterprise that, in
    whole or in part, is or was either effectively managed in The
    Netherlands or carried on through a permanent establishment or a
    permanent representative in The Netherlands and to which
    enterprise or part of an enterprise the ordinary shares are or
    were attributable; or 96




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##### Table of Contents




    in the case of a gift of ordinary shares by an individual who at
    the time of the gift was neither resident nor deemed to be
    resident in The Netherlands, such individual dies within
    180 days after the date of the gift while being resident or
    deemed to be resident in The Netherlands.    Other
    Taxes and Duties
    Material
    U.S. Federal Income Tax Consequences
    
    persons subject to the imposition of the U.S. federal
    alternative minimum tax;
    partnerships or other pass-through entities treated as
    partnerships for U.S. federal income tax purposes;
    insurance companies;
    tax-exempt persons;
    financial institutions;
    regulated investment companies;
    dealers in securities;
    persons who hold ordinary shares as part of a hedging, straddle,
    constructive sale or conversion transaction;
    persons whose functional currency is not the U.S. dollar;
    persons owning (directly, indirectly or constructively) 10% or
    more of our voting shares;
    persons who are not U.S. holders (as defined
    below); and
    persons who acquired common shares pursuant to the exercise of
    an employee stock option or otherwise as compensation;     97




---



##### Table of Contents



Taxation
    of Dividends
            Sale or
    Other Disposition of the Ordinary Shares
   98




---



##### Table of Contents



Passive
    Foreign Investment Company
  non-U.S. corporation
  mark-to-market
    Backup Withholding and Information
    Reporting. U.S.-related
    Dividends
    and Paying Agents
    Statement
    by Experts
    Documents
    on Display
  (http://www.sec.gov)
 99




---



##### Table of Contents



ITEM 11.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Exchange
    Rate Risk
        Impact of
    Inflation
    ITEM 12.
    DESCRIPTION
    OF SECURITIES OTHER THAN EQUITY SECURITIES   PART II  ITEM 13.
    DEFAULTS,
    DIVIDEND ARREARAGES AND DELINQUENCIES    ITEM 14.
    MATERIAL
    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS  Form F-1 (Reg.  No. 333-142481) Form 20-F.
  ITEM 15.
    CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
   100




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##### Table of Contents



Managements
    Responsibility for Financial Statements
    Managements
    Report on Internal Control Over Financial Reporting
  Rule 13a-15(f) 15d-15(f)
  
    Pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of our assets;
    Provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that receipts and expenditures of the Company are being made
    only in accordance with authorizations of our management and
    directors; and
    Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of the
    Companys assets that could have a material effect on the
    financial statements.    Internal Control-Integrated Framework.
  Form 20-F pages F-2 F-3
  Changes
    in Internal Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
 101




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##### Table of Contents



ITEM 16A.
    AUDIT
    COMMITTEE FINANCIAL EXPERT    ITEM 16B.
    CODE
    OF ETHICS  http://www.eurand.com.
  ITEM 16C.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES    2007


2008Audit fees


1,398



769Audit-Related fees


75



17Tax fees


83



119Other fees






Total


1,556



905   Audit
    fees
  Form 6-K.
  Form 6-K
  Audit-Related
    fees
    Tax
    fees
    Other
    fees
    Non-audit
    services
   102




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##### Table of Contents



ITEM 16D.
    EXEMPTIONS
    FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES    ITEM 16E.
    PURCHASES
    OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED
    PURCHASERS    ITEM 16F.
    CHANGES
    IN CERTIFYING ACCOUNTANT    ITEM 16G.
    CORPORATE
    GOVERNANCE   PART III  ITEM 17.
    FINANCIAL
    STATEMENTS    ITEM 18.
    FINANCIAL
    STATEMENTS    ITEM 19.
    EXHIBITS  Number

Description1
.1

Articles of Association of Eurand N.V.*1
.2

Form of Amended Articles of Association of Eurand N.V.*1
.3

Form of Amended Articles of Association of Eurand N.V.*4
.1

Eurand N.V. Equity Compensation Plan, amended, restated and
    adopted on May 30, 2008 (Incorporated by reference to the
    Companys Registration Statement on
    Form S-8
    filed on September 12, 2008).4
.2

Form of Indemnification Agreement*4
.3

Form of Investor Rights Agreement*4
.4

Exclusive Development, License and Supply Agreement between
    Eurand International S.p.A and Axcan Scandipharm,
    Inc.*4
.5

Amendment to Exclusive Development, License and Supply Agreement
    between Eurand International S.p.A and Axcan Scandipharm,
    Inc.*4
.6

Development, License and Supply Agreement between Eurand
    America, Inc. and Reliant Pharmaceuticals*4
.7

License Agreement between Kyowa Hakko Kogyo Co., Ltd. and Eurand
    Pharmaceuticals Limited*4
.8

Development, License and Contract Manufacturing Agreement
    between Eurand America, Inc. and ECR Pharmaceuticals*4
.9

Promissory Note between Eurand B.V. and Warburg,
    Pincus & Co., on behalf of Warburg, Pincus Equity
    Partners, L.P., Warburg, Pincus Netherlands Equity Partners I
    C.V., Warburg, Pincus Netherlands Equity Partners II C.V.,
    and Warburg, Pincus Netherlands Equity Partners III C.V.* 103




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##### Table of Contents



Number

Description4
.10

Promissory Note between Eurand B.V. and Warburg, Pincus Equity
    Partners, L.P.*4
.11

Promissory Note between Eurand B.V. and Warburg, Pincus Ventures
    International, L.P.*4
.12

Promissory Note between Eurand B.V. and Warburg, Pincus Ventures
    International, L.P.*4
.13

Promissory Note between Eurand B.V. and Gearóid Faherty*4
.14

Conversion Agreement between Eurand B.V. and Warburg Pincus
    Partners, LLC and Warburg, Pincus Ventures International, L.P.*4
.15

Amendment to Conversion Agreement between Eurand N.V. and
    Warburg Pincus Partners, LLC and Warburg, Pincus Ventures
    International, L.P.*4
.16

Amendment No. 2 to the Development, License and Contract
    Manufacturing Agreement between Eurand, Inc. and E. Clairborne
    Robins Company, Inc. d/b/a ECR Pharmaceuticals, dated
    August 23, 2007 (Incorporated by reference to
    Exhibit 2 to the Current Report on
    Form 6-K
    filed on September 14, 2007).4
.17

Lease Agreement between Hudson-Alpha Institute for Biotechnology
    and Eurand Pharmaceuticals, Inc., dated January 15, 2008
    (Incorporated by reference to Exhibit 4.17 to the
    Companys Annual Report on
    Form 20-F
    filed on March 31, 2008).4
.18

Development and License Agreement between Eurand, Inc. and
    SmithKline Beecham Corporation d/b/a GlaxoSmithKline, dated as
    of April 21, 2006 (Incorporated by reference to
    Exhibit 4.18 to the Companys Annual Report on
    Form 20-F
    filed on March 31, 2008).4
.19

Securities Purchase Agreement by and among Michael J. Walters,
    Norman Stanley, Lonnie S. McMillian, Stoneway LLC and Eurand
    Pharmaceuticals, Inc., dated November 30, 2007
    (Incorporated by reference to Exhibit 4.19 to the
    Companys Annual Report on
    Form 20-F
    filed on March 31, 2008).4
.20

License Agreement by and between Chiesi Farmaceutici S.p.A. and
    Eurand Pharmaceuticals, Inc., dated April 2,
    2008**8


Subsidiaries of the Company**11
.1

Code of Business Conduct and Ethics12
.1

Certification of the Chief Executive Officer**12
.2

Certification of the Chief Financial Officer**13
.1

Certification of the Chief Executive Officer pursuant to
    18 U.S.C. Section 1350 as added by Section 906 of
    the Sarbanes-Oxley Act of 2002**13
.2

Certification of the Chief Financial Officer pursuant to
    18 U.S.C. Section 1350 as added by Section 906 of
    the Sarbanes-Oxley Act of 2002**15
.1

Consent of Independent Registered Public Accounting Firm**     
    
    Certain portions of these exhibits have been omitted and filed
    separately with the Securities and Exchange Commission, pursuant
    to a request for confidential treatment.
    
    Confidential treatment has been requested for certain portions
    of this exhibit, which portions have been omitted and filed
    separately with the Securities and Exchange Commission.*
    
    Previously filed as an exhibit to the Companys
    Registration Statement on
    Form F-1
    (File
    No. 333-142481)
    filed with the SEC and hereby incorporated by reference to such
    Registration Statement.**
    
    Filed herewith. 104




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##### Table of Contents



Signatures
  Form 20-F
  EURAND, N.V.
  By:
    /s/  Gearóid
    M. Faherty   Title:
    Chairman and Chief Executive Officer   105




---



##### 



EURAND
    N.V.
  INDEX TO
    FINANCIAL STATEMENTS
   
 Reports of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    December 31, 2008 and 2007


F-4Consolidated Statements of Operations for the
    years ended December 31, 2008, 2007 and 2006


F-6Consolidated Statements of Changes in
    Shareholders Equity for the years ended December 31,
    2008, 2007 and 2006


F-7Consolidated Statements of Cash Flows for the
    years ended December 31, 2008, 2007 and 2006


F-8Notes to Consolidated Financial Statements


F-9   F-1




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board
    of Directors and Shareholders of Eurand N.V.
          Ernst &
    Young
  
 F-2




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  To the Board
    of Directors and Shareholders of Eurand N.V.
  Form 20-F
            
  Amsterdam,
    Netherlands
    March 31, 2009
 F-3




---



##### Table of Contents



EURAND
    N.V.
  CONSOLIDATED
    BALANCE SHEETS
 December 31,
    2008 and 2007
  2008


2007(In thousands of euros)ASSETSCurrent AssetsCash and cash equivalents


19,146



12,541Marketable securities


3,592



Accounts receivable, less allowance for doubtful accounts of
    275 and 115, respectively


13,335



13,437Inventories, net


13,923



9,750Prepaid expenses and other current assets


6,093



1,960Deferred income taxes


1,693



191Total Current Assets


57,782



37,879Property, plant and equipment, net


37,294



35,642Goodwill


27,000



26,251Other intangible assets, net


7,784



8,894Deferred income taxes


432



791Other non current assets


3,667



51Total Assets


133,959



109,508  F-4




---



##### Table of Contents



EURAND
    N.V.
  CONSOLIDATED BALANCE SHEETS (Continued)
 December 31, 2008 and 2007
  2008


2007(In thousands of euros, except share and per share
    amounts)LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesCurrent portion of long-term debt






499Short-term borrowings


186



179Accounts payable


9,152



8,103Income taxes payable


129



26Accrued expenses and other current liabilities


11,606



10,495Total Current Liabilities


21,073



19,302Long-term debt from banks






873Employees severance indemnities


4,081



4,369Other non-current liabilities


2,997



2,611Deferred income taxes


3,706



1,286Total Non-Current Liabilities


10,784



9,139Commitments and contingencies (Note 17)Shareholders EquityOrdinary shares par value 0.01, authorized 130,000,000 as
    of December 31, 2008 and 2007, 45,751,997 and 44,034,114
    issued and outstanding, as of December 31, 2008 and 2007,
    respectively


458



440Additional paid-in capital


134,643



130,858Accumulated deficit


(38,382
)


(52,011
)Accumulated other comprehensive income


5,383



1,780Total Shareholders Equity


102,102



81,067Total Liabilities and Shareholders Equity


133,959



109,508  F-5




---



##### Table of Contents



EURAND
    N.V.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
 Years
    ended December 31, 2008, 2007 and 2006
  2008


2007


2006(In thousands of euros, except share and per share
    amounts)Product sales


79,932



71,076



69,771Royalties


8,140



4,373



3,896Development fees


10,464



9,372



9,182Revenues


98,536



84,821



82,849Cost of goods sold


(53,811
)


(49,439
)


(47,558
)Research and development expenses attributable to development
    fees


(5,892
)


(5,432
)


(5,590
)Other research and development expenses


(14,399
)


(11,678
)


(10,697
)Selling, general and administrative expenses


(30,516
)


(21,497
)


(14,786
)Income from litigation settlement


24,404







Amortization of intangibles


(1,361
)


(788
)


(727
)Other income (expense)


(50
)


(93
)


354Operating income (loss)


16,911



(4,106
)


3,845Interest expense


(176
)


(2,024
)


(7,401
)Interest income


612



492



140Foreign exchange gains (losses), net


(79
)


104



12Income (loss) before taxes


17,268



(5,534
)


(3,404
)Income tax expense


(3,639
)


(1,140
)


(1,593
)Net income (loss)


13,629



(6,674
)


(4,997
)Net income (loss) per share:Basic net income (loss) per share


0.30



(0.24
)


(2.19
)Diluted net income (loss) per share


0.29



(0.24
)


(2.19
)Weighted average shares used to compute basic net income (loss)
    per share


44,921,051



28,367,118



2,278,147Weighted average shares used to compute diluted net income(loss)
    per share


46,377,076



28,367,118



2,278,147  F-6




---



##### Table of Contents



EURAND
    N.V.



CONSOLIDATED
    STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY

Years
    ended December 31, 2008, 2007 and 2006  AccumulatedAdditional





Other


TotalCommon Stock


Paid-In


Accumulated


Comprehensive


ShareholdersShares


Amount


Capital


Deficit


Income


Equity (Deficit)(In thousands of euros, except share amounts)As at December 31, 2005


2,215,087



22



5,913



(40,340
)


832



(33,573
)Comprehensive loss:Net loss














(4,997
)






(4,997
)Cumulative exchange translation adjustment


















1,700



1,700Change in fair value of hedge instruments


















(177
)


(177
)Comprehensive loss






















(3,474
)Exercise of stock options


124,599



1















1Stock option forfeitures










(65
)










(65
)As at December 31, 2006


2,339,686



23



5,848



(45,337
)


2,355



(37,111
)Comprehensive loss:Net loss














(6,674
)






(6,674
)Cumulative exchange translation adjustment


















(54
)


(54
)Change in fair value of hedge instruments


















(77
)


(77
)Reclassification upon termination of hedge instruments


















(444
)


(444
)Comprehensive loss






















(7,249
)Conversion of Series A Preference shares into 32,487,940
    ordinary shares


32,487,940



325



26,519











26,844Conversion of Series C Preference shares into 2,029,786
    ordinary shares


2,029,786



20



22,980











23,000Issue of 7,000,000 ordinary shares in initial public offering


7,000,000



70



73,907











73,977Stock option compensation










1,028











1,028Employee share award compensation










281











281Exercise of stock options


176,702



2



295











297As at December 31, 2007


44,034,114



440



130,858



(52,011
)


1,780



81,067Comprehensive income:Net income














13,629







13,629Cumulative exchange translation adjustment


















3,603



3,603Comprehensive income






















17,232Tax benefit of stock option plans










128











128Stock option compensation










1,860











1,860Employee shares award issuance


26,100Exercise of stock options


1,691,783



18



1,797











1,815As at December 31, 2008


45,751,997



458



134,643



(38,382
)


5,383



102,102  F-7




---



##### Table of Contents



EURAND
    N.V.



CONSOLIDATED
    STATEMENTS OF CASH FLOWS

Years
    ended December 31, 2008, 2007 and 2006  2008


2007


2006(In thousands of euros)Operating ActivitiesNet income (loss)


13,629



(6,674
)


(4,997
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation


6,837



7,074



7,881Amortization


1,361



788



727Non-cash interest expense






201



4,315Accrued employees severance indemnities


20



180



860Unrealized foreign exchange losses


1,503



655



643Stock compensation


1,860



1,309



(65
)Deferred income taxes


451



146



468Other non-cash items


266



93



(354
)Changes in operating assets and liabilities:Accounts receivable, net


478



(673
)


(383
)Inventories, net


(3,884
)


(2,263
)


1,276Prepaid expenses and other current assets


(3,621
)


1,675



(1,747
)Other non-current assets


(3,509
)


987



587Accounts payable


952



(36
)


(90
)Accrued expenses and other current liabilities


924



101



4,592Income taxes


(11
)


(430
)


(344
)Other non current liabilities


8



(1,335
)


(21
)Cash provided by operating activities


17,264



1,798



13,348Investing ActivitiesPurchase of marketable securities


(3,701
)






Purchases of property, plant and equipment


(7,850
)


(4,091
)


(2,744
)Proceeds from disposals of property, plant and equipment


247







1,326Purchase of other intangible assets


(209
)






Acquisition of Source CF, net of cash acquired






(4,643
)


Cash used in investing activities


(11,513
)


(8,734
)


(1,418
)Financing ActivitiesProceeds from the issuance of ordinary shares






73,977



Borrowing on long term credit facility


6,000







Repayment of borrowing on long term credit facility


(6,000
)






Repayment of principal on long term notes payable to shareholders






(30,105
)


Repayment of long-term debt from banks


(1,375
)


(31,200
)


(6,197
)Cash received on termination of interest rate swap






663



Net change in short-term borrowings


13



179



(3,181
)Exercise of stock options


1,815



297



1Cash provided by (used in) financing activities


453



13,811



(9,377
)Effect of exchange rates on cash


401



(144
)


(166
)Increase in cash and cash equivalents


6,605



6,731



2,387Cash and cash equivalents at beginning of year


12,541



5,810



3,423Cash and cash equivalents at end of year


19,146



12,541



5,810Supplemental disclosures:Cash paid during the period for:Interest


282



14,509



2,946Taxes


1,309



1,224



1,252  F-8




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (In thousands of euros, except share and per share
    amounts)
  1.
    Description
    of Business  20-673
    2.
    Summary
    of Significant Accounting Policies and Basis of
    Presentation  Regulation S-X
  Principles
    of Consolidation
    Use of
    Estimates
    Segment
    information
  , Disclosures about Segments of an Enterprise and
    Related Information
  Cash
    and Cash Equivalents
   F-9




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Marketable
    Securities
    Accounts
    Receivable
    Inventories
      Property,
    Plant and Equipment
    Buildings


18 to 30 yearsMachinery and equipment


8 to 12 yearsFurniture and fittings


3 to 5 years     Goodwill
  Goodwill and Other Intangible Assets
   F-10




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Other
    Intangible Assets
    Impairment
    of Long-Lived Assets
    Short-Term
    Borrowings and Long-Term Debt
    Income
    Taxes
  Accounting
    for Income Taxes ,
  Foreign
    Currency Translation
     F-11




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Revenue
    Recognition
          Research
    and Development Expenses
   F-12




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Accounting
    for Equity-Based Compensation
  Share-Based Payment
  Accounting for Stock Issued to Employees
    Derivatives
    and Hedging Activities
  Accounting for Derivative Instruments
    and Hedging Activities
     F-13




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Statement
    of Cash Flows
    Shipping
    and Handling Costs
    Earnings
    Per Share
    Government
    Grants
        Recent
    Accounting Developments
     F-14




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      EITF 07-3, EITF 07-3 EITF 07-3
    No. 14-1, No. 14-1 No. 14-1
  No. 07-1, (EITF 07-1). EITF 99-19 EITF 07-1
 F-15




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      3.
    Inventories,
    net  December 31,


December 31,2008


2007Raw materials


6,872



4,839Work in progress


2,565



1,732Finished goods


4,486



3,17913,923



9,750    F-16




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  4.
    Prepaid
    Expenses and Other Current Assets  December 31,


December 31,2008


2007Litigation settlement receivable  current portion
    (note 16)


3,644



Prepayments


1,429



750Recoverable amounts for income taxes


353



235Recoverable amounts for other taxes


667



9756,093



1,960   5.
    Other Non
    Current Assets  December 31,

December 31,2008

2007Litigation settlement receivable  long term portion
    (note 16)


3,644



Other


23



513,667



51   6.
    Property,
    Plant and Equipment, net  December 31,


December 31,2008


2007Land


1,725



1,714Buildings


34,956



29,955Machinery and equipment


61,377



57,350Furniture and fittings


5,657



4,953Construction in progress


1,055



2,598104,770



96,570Accumulated depreciation


(67,476
)


(60,928
)37,294



35,642       7.
    Goodwill    As at December 31, 2006


26,956Exchange translation


(705
)As at December 31, 2007


26,251Exchange translation


749As at December 31, 2008


27,000  F-17




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Other
    Intangible Assets, net  December 31, 2008


December 31, 2007Gross





Net


Gross





NetCarrying


Accumulated


Carrying


Carrying


Accumulated


CarryingAmount


Amortization


Amount


Amount


Amortization


AmountPatents


1,661



(1,291
)


370



1,630



(1,038
)


592Licenses


1,547



(943
)


604



1,439



(956
)


483Exclusive supply rights


3,250



(1,408
)


1,842



3,250



(1,083
)


2,167Selling and marketing rights


5,751



(783
)


4,968



5,723



(71
)


5,652Total


12,209



(4,425
)


7,784



12,042



(3,148
)


8,894           EstimatedAmortization Charge2009


1,3672010


1,1832011


1,1482012


1,1302013


1,128Thereafter


1,8287,784   9.
    Short-Term
    Borrowings      10.
    Income
    Taxes    Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2008


2007


2006Netherlands


3,393



2,488



65Foreign


13,875



(8,022
)


(3,469
)17,268



(5,534
)


(3,404
)  F-18




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2008


2007


2006Current


(3,188
)


(994
)


(1,125
)Deferred


(451
)


(146
)


(468
)Income tax


(3,639
)


(1,140
)


(1,593
)     Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2008


2007


2006Income tax (charge) benefit at the Dutch statutory tax rate


(4,403
)


1,411



1,008Effect of Italian IRAP


(618
)


(665
)


(885
)Aggregated effect of different foreign tax rates


(1,023
)


440



213Change in foreign tax rates


(110
)


(1,094
)


(190
)Permanent differences:Non deductible expenses


(115
)


(120
)


(201
)Non-taxable items


139



53



8Foreign taxes not deductible


53



(17
)


(30
)Effect of foreign exchange conversions


270



(7
)


(14
)Stock compensation


(472
)


(99
)


Cancellation of indebtedness


(347
)






Derecognition of tax benefits (FIN 48)


(1,802
)






Reversal of deferred tax liability on revaluation reserve






297



Deductible IPO expenses






902



Other


22



(96
)


(70
)Change in valuation allowance


4,767



(2,145
)


(1,432
)Effective income tax provision


3,639



(1,140
)


(1,593
)      F-19




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,


December 31,2008


2007Deferred tax assets:Property, plant and equipment


3,694



4,364Intangible assets


20



249Inventory allowance


2,709



496Accrued expenses


664



439Foreign exchange


292



462Deferred revenues


471



738Accrued interest expense


4,846



3,805Deductible stock compensation


41



715Tax Credits


575



273Net operating loss carry-forwards


4,459



9,673Other


7



23Total deferred tax assets


17,778



21,237Deferred tax liabilities:Property, plant and equipment


(160
)


(570
)Intangible assets


(2,391
)


(2,163
)Foreign exchange


(1,886
)


(528
)Other


(3
)


(36
)Total deferred tax liabilities


(4,440
)


(3,297
)Less: valuation allowance


(14,920
)


(18,244
)Net deferred tax liabilities


(1,582
)


(304
)     Balance at December 31, 2007


(18,244
)Decrease in valuation allowance recognized in the year


4,767Increase in valuation allowance due to current tax effects on
    opening deferred tax balances


(713
)Currency translation adjustment


(730
)Balance at December 31, 2008


(14,920
)      F-20




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Italy


2004 through 2008U.S. (Federal)


1999 through 2008France


2004 through 2008Netherlands


2003 through 2008Ireland


2004 through 2008           2008


2007Balance, January 1,


5,611Additions based on tax positions related to the current year


1,802



5,611Additions for tax positions of prior years






Reductions for tax positions of prior years


(5,611
)


Reductions for settlements






Reductions due to lapse in statute of limitations






Change attributable to foreign currency translation


(156
)


Balance, December 31,


1,646



5,611    F-21




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  11.
    Accrued
    Expenses and Other Current Liabilities  December 31,


December 31,2008


2007Accrued expenses


2,717



3,298Deferred revenues


526



1,045Accrued costs for termination of operating lease


150



150Social security and other contributions


1,711



1,259Taxes, other than income taxes


1,186



810Deferred payments for acquisition


1,078



Accrued employee compensation


4,238



3,93311,606



10,495     12.
    Long Term
    Debt From Banks      December 31,


December 31,2008


2007Euribor + 1.75% EUR denominated loan due 2010






1,375Less:Deferred financing fees






(3
)



1,372Amount due within one year, net of deferred financing fees of
    nil and 1, respectively






(499
)



873   13.
    Employees
    Severance Indemnities    14.
    Shareholders
    Equity  Share
    Capital
   F-22




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
            Equity
    Based Compensation
           F-23




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        WeightedAverageContractualWeighted


Life ofAverage


Options


AggregateNumber of


Exercise


Outstanding


IntrinsicOptions


Price


(years)


ValueOutstanding at December 31, 2005


3,945,999



3.22



5.7Granted






Exercised


(124,599
)


0.01Forfeited


(107,408
)


5.53Expired






Outstanding at December 31, 2006


3,713,992



3.26



4.7



38,539Granted


957,000



10.73Exercised


(176,702
)


1.40Forfeited


(79,861
)


6.46Expired






Outstanding at December 31, 2007


4,414,429



4.89



4.9



26,228Granted


1,213,750



8.69Exercised


(1,691,783
)


1.06Forfeited


(197,680
)


9.72Expired






Outstanding at December 31, 2008


3,738,716



7.72



6.6



1,939Vested and expected to vest at December 31, 2008


3,601,880



7.67



6.5



1,924Exercisable at December 31, 2008


2,267,717



6.78



4.9



1,786      F-24




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Year Ended December 31,2008

2007Risk free interest rate

0.8-4.0%

2.9-5.3%Expected dividend yield

0%

0%Expected stock price volatility

50-75%

50%Post vesting forfeiture rate

6%

6%Suboptimal exercise factor

2.0

2.0        F-25




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted AverageUnrecognized

Remaining VestingCompensation Cost

Period (Years)Stock options


6,367



1.5     Exercise PriceWeightedAverageExercise price in

Options





OptionsEuro at

Outstanding as of


Weighted Average


Exercisable as ofDecember 31,

December 31,


Remaining Contractual


December 31,Contractual

2008

2008


Life (years)


20080.01

0.01


122,830



1.0



122,830$6.53

4.69


100,000



9.9



5.00

5.00


837,563



5.6



837,563$9.15

6.57


478,250



9.8



6.67

6.67


715,800



2.2



715,800$10.73

7.71


7,303



8.6



636$11.21

8.05


20,550



8.6



3,8838.33

8.33


76,670



2.3



76,670$12.88

9.25


25,000



8.7



8,333$13.50

9.70


20,000



9.1



5,000$13.55

9.73


20,000



8.9



5,417$14.42

10.36


10,000



9.2



$15.05

10.81


482,750



9.2



120,710$15.10

10.85


25,000



9.3



$15.39

11.06


2,500



9.3



$15.71

11.29


2,500



9.3



$15.84

11.38


100,000



8.9



50,000$16.00

11.50


633,000



8.4



316,500$16.34

11.74


15,000



8.7



4,375$16.39

11.78


10,000



9.6



$17.93

12.88


5,000



9.6



$18.40

13.22


25,000



9.6



$18.50

13.29


4,000



9.7



3,738,716



6.6



2,267,717   Aggregate
    Stock Compensation Expenses
   F-26




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Year Ended December 31,2008


2007


2006Cost of goods sold


188



269



(5
)Research and development expenses attributable to development
    fees


65



109



(15
)Other research and development expenses


160



131



(21
)Selling, general and administrative expenses


1,477



750



(24
)1,890



1,259



(65
)Capitalized in inventories


(30
)


50



1,860



1,309



(65
)   Other
    Comprehensive Income
        15.
    Other
    Expense        16.
    Income
    from Litigation Settlement   F-27




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      
    $5 million, plus interest, at the first anniversary of the
    closing,
    $5 million, plus interest, at the second anniversary of the
    closing.    17.
    Commitments
    and Contingencies    Capital
    Commitments
    Lease
    Commitments
    Year ended December 31,2009


5562010


5042011


3352012


2272013


34Total minimum lease payments


1,656     18.
    Financial
    Instruments  Concentration
    of Credit Risks
     F-28




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Fair
    Value of Financial Instruments
    Cash and cash equivalents
  Marketable securities
  Accounts receivable, net and accounts payable
  Short term borrowings
  19.
    Per Share
    Information      For the Years Ended December 31,2008


2007


2006Numerator:Net income (loss)


13,629



(6,674
)


(4,997
)Denominator:Weighted average shares for basic net income (loss) per share


44,921,051



28,367,118



2,278,147Effect of dilutive securities:Stock options


1,456,025







Convertible preference shares










Weighted average shares for diluted net income (loss) per share


46,377,076



28,367,118



2,278,147  F-29




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Years Ended December 31,2008


2007


2006Numerator:Net income (loss)


13,629



(6,674
)


(4,997
)Denominator:Basic calculation


44,921,051



28,367,118



2,278,147Diluted calculation


46,377,076



28,367,118



2,278,147Basic net income (loss) per share


0.30



(0.24
)


(2.19
)Diluted net income (loss) per share


0.29



(0.24
)


(2.19
)Weighted average of stock options that had exercise prices
    adjusted for unrecognized compensation expense equal or higher
    than the average market price of our ordinary shares


1,432,192







     20.
    Segment
    and Geographic Information        Total RevenuesYear Ended December 31,


Property, Plant and Equipment, Net December 31,2008


2007


2006


2008


2007


2006Italy


58,200



50,748



51,328



17,270



18,225



20,332United States


31,935



26,671



22,350



18,749



16,159



18,109France


6,762



6,989



6,557



1,275



1,257



1,439Other


1,639



413



2,614







1



298,536



84,821



82,849



37,294



35,642



39,882    F-30




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Total RevenuesYear Ended December 31,2008


2007


2006United States


47,190



34,188



33,392Germany


16,409



17,782



15,591United Kingdom


9,951



9,731



12,897Italy


6,130



4,044



5,124Japan


4,830



5,839



5,226Netherlands


2,306



1,041



2Switzerland


2,063



3,145



3,057France


2,033



1,997



2,136Spain


1,580



1,778



1,013Canada


1,380



1,134



1,060Other


4,664



4,142



3,35198,536



84,821



82,849  F-31




---



##### Table of Contents



Exhibit Index
  Number

Description1
.1

Articles of Association of Eurand N.V.*1
.2

Form of Amended Articles of Association of Eurand N.V.*1
.3

Form of Amended Articles of Association of Eurand N.V.*4
.1

Eurand N.V. Equity Compensation Plan, amended, restated and
    adopted on May 30, 2008 (Incorporated by reference to the
    Companys Registration Statement on
    Form S-8
    filed on September 12, 2008).4
.2

Form of Indemnification Agreement*4
.3

Form of Investor Rights Agreement*4
.4

Exclusive Development, License and Supply Agreement between
    Eurand International S.p.A and Axcan Scandipharm, Inc.*4
.5

Amendment to Exclusive Development, License and Supply Agreement
    between Eurand International S.p.A and Axcan Scandipharm,
    Inc.*4
.6

Development, License and Supply Agreement between Eurand
    America, Inc. and Reliant Pharmaceuticals*4
.7

License Agreement between Kyowa Hakko Kogyo Co., Ltd. and Eurand
    Pharmaceuticals Limited*4
.8

Development, License and Contract Manufacturing Agreement
    between Eurand America, Inc. and ECR Pharmaceuticals*4
.9

Promissory Note between Eurand B.V. and Warburg,
    Pincus & Co., on behalf of Warburg, Pincus Equity
    Partners, L.P., Warburg, Pincus Netherlands Equity Partners I
    C.V., Warburg, Pincus Netherlands Equity Partners II C.V.,
    and Warburg, Pincus Netherlands Equity Partners III C.V.*4
.10

Promissory Note between Eurand B.V. and Warburg, Pincus Equity
    Partners, L.P.*4
.11

Promissory Note between Eurand B.V. and Warburg, Pincus Ventures
    International, L.P.*4
.12

Promissory Note between Eurand B.V. and Warburg, Pincus Ventures
    International, L.P.*4
.13

Promissory Note between Eurand B.V. and Gearóid Faherty*4
.14

Conversion Agreement between Eurand B.V. and Warburg Pincus
    Partners, LLC and Warburg, Pincus Ventures International, L.P.*4
.15

Amendment to Conversion Agreement between Eurand N.V. and
    Warburg Pincus Partners, LLC and Warburg, Pincus Ventures
    International, L.P.*4
.16

Amendment No. 2 to the Development, License and Contract
    Manufacturing Agreement between Eurand, Inc. and E. Clairborne
    Robins Company, Inc. d/b/a ECR Pharmaceuticals, dated
    August 23, 2007 (Incorporated by reference to
    Exhibit 2 to the Current Report on
    Form 6-K
    filed on September 14, 2007).4
.17

Lease Agreement between Hudson-Alpha Institute for Biotechnology
    and Eurand Pharmaceuticals, Inc., dated January 15, 2008
    (Incorporated by reference to Exhibit 4.17 to the
    Companys Annual Report on
    Form 20-F
    filed on March 31, 2008).4
.18

Development and License Agreement between Eurand, Inc. and
    SmithKline Beecham Corporation d/b/a GlaxoSmithKline, dated as
    of April 21, 2006 (Incorporated by reference to
    Exhibit 4.18 to the Companys Annual Report on
    Form 20-F
    filed on March 31, 2008).4
.19

Securities Purchase Agreement by and among Michael J. Walters,
    Norman Stanley, Lonnie S. McMillian, Stoneway LLC and Eurand
    Pharmaceuticals, Inc., dated November 30, 2007
    (Incorporated by reference to Exhibit 4.19 to the
    Companys Annual Report on
    Form 20-F
    filed on March 31, 2008).4
.20

License Agreement by and between Chiesi Farmaceutici S.p.A. and
    Eurand Pharmaceuticals, Inc., dated April 2,
    2008**8


Subsidiaries of the Company**11
.1

Code of Business Conduct and Ethics12
.1

Certification of the Chief Executive Officer**12
.2

Certification of the Chief Financial Officer**




---



##### Table of Contents



Number

Description13
.1

Certification of the Chief Executive Officer pursuant to
    18 U.S.C. Section 1350 as added by Section 906 of
    the Sarbanes-Oxley Act of 2002**13
.2

Certification of the Chief Financial Officer pursuant to
    18 U.S.C. Section 1350 as added by Section 906 of
    the Sarbanes-Oxley Act of 2002**15
.1

Consent of Independent Registered Public Accounting Firm**     
    
    Certain portions of this exhibit have been omitted and filed
    separately with the Securities and Exchange Commission, pursuant
    to a request for confidential treatment.
    
    Confidential treatment has been requested for certain portions
    of this exhibit, which portions have been omitted and filed
    separately with the Securities and Exchange Commission.*
    
    Previously filed as an exhibit to the Companys
    Registration Statement on
    Form F-1
    (File
    No. 333-142481)
    filed with the SEC and hereby incorporated by reference to such
    Registration Statement.**
    
    Filed herewith.