##### 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,
    2009oro

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


56ITEM 5.


OPERATING AND FINANCIAL REVIEW AND PROSPECTS


57ITEM 6.


DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES


74ITEM 7.


MAJOR SHAREHOLDERS AND RELATED PARTY
    TRANSACTIONS


87ITEM 8.


FINANCIAL INFORMATION


89ITEM 9.


THE OFFER AND LISTING


90ITEM 10.


ADDITIONAL INFORMATION


91ITEM 11.


QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
    MARKET RISK


99ITEM 12.


DESCRIPTION OF SECURITIES OTHER THAN EQUITY
    SECURITIES


99PART II


99ITEM 13.


DEFAULTS, DIVIDEND ARREARAGES AND
    DELINQUENCIES


99ITEM 14.


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


99ITEM 15.


CONTROLS AND PROCEDURES


99ITEM 16A.


AUDIT COMMITTEE FINANCIAL EXPERT


101ITEM 16B.


CODE OF ETHICS


101ITEM 16C.


PRINCIPAL ACCOUNTANT FEES AND SERVICES


101ITEM 16D.


EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT
    COMMITTEES


102ITEM 16E.


PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND
    AFFILIATED PURCHASERS


102ITEM 16F.


CHANGES IN CERTIFYING ACCOUNTANT


102ITEM 16G.


CORPORATE GOVERNANCE


102PART III


102ITEM 17.


FINANCIAL STATEMENTS


102ITEM 18.


FINANCIAL STATEMENTS


102ITEM 19.


EXHIBITS


102EX-8EX-12.1EX-12.2EX-13.1EX-13.2EX-15.1




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FORWARD-LOOKING
    INFORMATION  Form 20-F
  
    our ability to market, commercialize and achieve market
    acceptance for
    ZENPEP®

    or any of the products that we are developing, commercializing
    or may develop or commercialize in the future, including the
    growth and establishment of specialty sales, marketing and
    distribution capabilities in the U.S. 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;
    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, and the estimates of others, including research
    analysts, of our future performance; and
    our estimates, and the estimates of others, including research
    analysts, regarding our anticipated future revenue, expenses,
    operating losses, capital requirements and our needs for
    additional financing.    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
  Years Ended December 31,2005


2006


2007


2008


2009


2009(In thousands, except per share amounts)Selected Consolidated Statements of Operations Data:Product sales


63,139



69,771



71,076



79,932



99,009


$
141,900Royalties


3,730



3,896



4,373



8,140



10,705



15,342Development fees


5,386



9,182



9,372



10,464



10,885



15,600Total revenues


72,255



82,849



84,821



98,536



120,599



172,842Operating expensesCost of goods sold


(44,150
)


(47,558
)


(49,439
)


(53,811
)


(61,223
)


(87,745
)Research and development(1)


(14,513
)


(16,287
)


(17,110
)


(20,291
)


(23,567
)


(33,776
)Selling, general and administrative


(11,537
)


(14,786
)


(21,497
)


(30,516
)


(37,398
)


(53,599
)Income from litigation settlement














24,404







Amortization of intangibles


(720
)


(727
)


(788
)


(1,361
)


(1,368
)


(1,960
)Other (expenses) income


(973
)


354



(93
)


(50
)


(415
)


(595
)Operating income (loss)


362



3,845



(4,106
)


16,911



(3,372
)


(4,833
)Interest (expense) income, net


(7,214
)


(7,261
)


(1,532
)


436



360



516Foreign exchange gains (losses), net


(327
)


12



104



(79
)


(199
)


(285
)(Loss) income before taxes


(7,179
)


(3,404
)


(5,534
)


17,268



(3,211
)


(4,602
)Income tax expense


(1,100
)


(1,593
)


(1,140
)


(3,639
)


(2,693
)


(3,860
)Net (loss) income


(8,279
)


(4,997
)


(6,674
)


13,629



(5,904
)

$
(8,462
)Basic net (loss) income per share


(3.74
)


(2.19
)


(0.24
)


0.30



(0.13
)

$
(0.18
)Diluted net (loss) income per share


(3.74
)


(2.19
)


(0.24
)


0.29



(0.13
)

$
(0.18
)Weighted average shares used to compute basic net (loss) income
    per share


2,215



2,278



28,367



44,921



46,137



46,137  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:  Years Ended December 31,2005


2006


2007


2008


2009


2009(In thousands)Expenses attributable to development fees


3,807



5,590



5,432



5,892



6,345


$
9,094Other research and development expenses


10,706



10,697



11,678



14,399



17,222



24,682Research and development expenses


14,513



16,287



17,110



20,291



23,567


$
33,776   As of December 31,2005

2006

2007

2008

2009

2009(In thousands, except per share amounts)Selected Consolidated Balance Sheet Data:Cash and cash equivalents


3,423



5,810



12,541



19,146



16,893


$
24,211Marketable securities














3,592



23,049



33,034Total assets


110,094



102,946



109,508



133,959



157,889



226,287Total debt(s)


95,450



63,144



1,551



186



207



297Total liabilities


116,823



90,213



28,441



31,857



46,315



66,379Series A redeemable preference shares convertible into
    ordinary shares


26,844



26,844















Series C redeemable preference shares convertible into
    ordinary shares






23,000















Total shareholders equity (deficit)(1)


(33,573
)


(37,111
)


81,067



102,102



111,574



159,908     (1)
    
    Our capital stock of 479,000 at December 31, 2009
    consisted of 47,856,976 ordinary shares with par value of
    0.01 per share compared to 458,000 at
    December 31, 2008 consisting of 45,751,997 such shares. The
    increase was the result of the issuance of 2,000,000 ordinary
    shares in a secondary public offering and the issuance of
    104,979 ordinary shares due to the exercise of options under our
    equity compensation plan for employees.  Exchange
    Rate Information
  Form 20-F
   3




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U.S. Dollar Per EuroPeriodYear Ended December 31,

High

Low

Average

End2004


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



1.39192009


1.5100



1.2547



1.3957



1.4332         U.S. Dollar Per EuroPeriodMonth in 2009

High

Low

Average

EndSeptember


1.4795



1.4235



1.4575



1.4630October


1.5029



1.4532



1.4821



1.4755November


1.5085



1.4658



1.4909



1.4994December


1.5100



1.4243



1.4579



1.4332Month in 2010January


1.4536



1.3870



1.4266



1.3870February


1.3955



1.3476



1.3680



1.3660         Capitalization
    and Indebtedness
    Reasons
    For the Offer and Use of the 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
    ZENPEP®
  We
    currently have limited internal sales and marketing
    capabilities. If we are unable to develop our sales and
    marketing capabilities on our own, or through contract sales
    forces or acquisition, we will not be able to fully exploit the
    commercial potential for
    ZENPEP®

    in the U.S.
     5




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
    continuing to develop our own commercial team to support ZENPEP
    consistent with the uses within its indication could be
    expensive and time-consuming and could result in high cash burn
    or reduced profitability;
    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;
    unforeseen costs and expenses associated with creating or
    acquiring and sustaining an independent sales and marketing
    organization;
    incurrence of costs in advance of anticipated revenues and
    subsequent failure to generate sufficient revenue to offset
    additional costs; and
    failure to understand the nature or needs of the market.  PEPs
    are lifesaving drugs. The FDA may not remove existing unapproved
    PEPs from the market in April 2010 even if they have not
    been FDA-approved. This would cause the level of competition in
    the PEP market to be significantly greater than we
    anticipate.
          ZENPEP®

    competes with currently marketed products for exocrine
    pancreatic insufficiency, to the extent such products are either
    approved or permitted to remain on the market, and our
    competitors may have more resources available to them than
    us.
   6




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®
  If we
    or our collaboration partners outside of the U.S. are unable to
    commercialize
    ZENPEP®

    or experience significant delays in doing so, our growth
    prospects will be materially harmed.
    
    our ability to find commercial partners with the appropriate
    resources to efficiently commercialize the product and enter
    into agreements 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 U.S.; and
    obtaining commercial acceptance of ZENPEP from the medical
    community and third-party payors.    Even
    though
    ZENPEP®

    has received regulatory approval for marketing in the U.S., and
    we have met significant milestones necessary to achieve
    marketing authorization in several venues, we may not succeed in
    obtaining regulatory approval for ZENPEP from other regulatory
    agencies. Without regulatory approval from other regulatory
    agencies, we will be unable to commercialize ZENPEP to its full
    potential and our growth prospects will be materially
    impaired.
     7




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
    our failure to demonstrate to the satisfaction of the EMEA or
    any other applicable regulatory authority that ZENPEP is safe
    and effective for a particular indication;
    our inability to demonstrate that the benefits of ZENPEP
    outweigh its risks;
    disagreement of the EMEA or any other applicable regulatory
    authorities with the manner in which we interpret the results
    from clinical trials;
    failure of 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 EMEA or
    any other applicable regulatory authority, or a change in the
    laws governing the approval process.  If we
    are unable to obtain adequate reimbursement for
    ZENPEP®

    from government health administration authorities, private
    health insurers and other organizations, ZENPEP may be too
    costly for regular use and our ability to generate revenues
    would be harmed.
     8




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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.
      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.
    We
    have a few key suppliers and the loss of one of these suppliers
    could interrupt the manufacturing of one or more of our
    products. Some of such suppliers are our sole source for key
    materials.
   9




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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.
     10




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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;
    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; 11




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
    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;
    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.   12




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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.
        Even
    if our product candidates receive regulatory approval or do not
    require regulatory approval, they may not become commercially
    viable products.
   13




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
    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 coverage or 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; and
    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.
    
    restrictions on the products, manufacturers or manufacturing
    processes;
    warning letters and untitled letters;
    civil penalties and criminal prosecutions and penalties;
    fines;
    injunctions; 14




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
    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.
           15




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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.
     16




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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
  ®
 17




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If we
    are not successful in establishing and maintaining additional
    co-development relationships, our growth prospects will be
    materially harmed.
    We
    rely on our collaboration partners and licensees to successfully
    commercialize products using certain of 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       18




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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 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 U.S., including labor and tax laws;
    customers outside of the U.S. may have longer payment
    cycles;
    changes in laws and regulations of jurisdictions outside of the
    U.S.; and
    terrorist acts and natural disasters.   19




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Currency
    exchange rate fluctuations may have a negative effect on our
    financial condition.
  period-to-period
    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.
    ® ® tm
     20




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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.
    Approximately
    61% 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.
    ® ® ® tm
 21




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Although
    we have sought to enhance our proprietary position for
    ZENPEP®,

    particularly our regulatory exclusivity and patent position, we
    may not ultimately receive additional 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.
   22




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##### Table of Contents



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.
        We may
    be subject to other patent-related litigation or proceedings
    that could be costly to defend and uncertain in their
    outcome.
    ® and/or ® ®
 23




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##### Table of Contents




    EP 1058538 for Fast Disintegrating Tablets;
    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. In addition, there
    are substantial healthcare regulatory reform proposals under
    consideration in the U.S. which, if approved, could
    significantly affect our business.
    
    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 U.S.;
    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;
    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;
    state law equivalents and comparable laws in countries outside
    of the U.S., including laws regarding pharmaceutical company
    marketing compliance, reporting and disclosure
    obligations; and
    laws governing manufacturing and clinical testing of products.   24




---



##### Table of Contents



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.
  out-of-pocket
    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.
    We may
    be exposed to product liability claims, which could result in
    financial loss.
   25




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##### Table of Contents




    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 and/or give rise to
    significant liabilities.
       26




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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, implement MSR evaluation
    and mitigation programs, 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 products, sales of
    those products may be adversely affected.
    Our
    development of formulations with generic drugs may expose us to
    litigation.
   27




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##### Table of Contents



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.
    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 products we or others develop;
    general market conditions;
    success of research and development projects;
    changes in government regulations or patent decisions;
    our or a competitors announcement of regulatory approval,
    delays or problems;
    the estimates of others, including research analysts, regarding
    our future performance, anticipated future revenues, expenses,
    operating losses, capital requirements and our need for
    additional financing;
    actions by our competitors; and
    developments by our collaboration partners. 28




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##### Table of Contents



Sales
    of substantial amounts of our ordinary shares in the public
    market could depress our share price.
    Raising
    additional capital by issuing securities may cause dilution to
    existing shares.
    
    the failure to achieve commercial success of ZENPEP or costs
    incurred to launch ZENPEP in the U.S.;
    the failure to obtain regulatory approval of ZENPEP in markets
    outside of the U.S.;
    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 any of our
    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   29




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##### Table of Contents



Warburg,
    Pincus Equity Partners, L.P., Warburg, Pincus Ventures
    International, L.P. and their affiliates, our major
    shareholders, control approximately 54.8% 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, our executive officers, our
    directors or some of our named experts in the U.S.
  and/or
    We do
    not anticipate paying dividends on our ordinary shares, which
    could reduce the return on your investment.
   30




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##### Table of Contents



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
    incur significant costs as a result of operating as a public
    company, and our management is 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.
    ITEM 4.
    INFORMATION
    ON THE COMPANY  History
    and Development of the Company
   31




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##### Table of Contents



20-673 Form 20-F.
  www.eurand.com
  Business
    Overview
    ® ®
    EUR-1008
    or
    ZENPEP®

    (pancrelipase) Delayed-Release Capsules
   32




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##### Table of Contents



th th ®
  ages 1-6 years.
    agreed-upon tm
    SourceCF
    Product Portfolio
  U.S.-based ® ®
  EUR-1002
    or
    Amrix®
  ® ® once-a-day,
 33




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##### Table of Contents



once-a-day scale-up,
        EUR-1048
    or
    Lamictal®

    ODTtm
  ® tm ® ® ® tm ® tm scale-up,
  EUR-1037
    or
    Unisom®

    Sleepmelts
  ® ® over-the-counter, ®
 34




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##### Table of Contents



Proprietary
    Pipeline Products
  ®
  
    EUR-1025, an OAD 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-1025 achieved positive results
    in two pivotal pharmacokinetic studies. Single and multiple dose
    oral administrations of 24 mg of the product resulted in a
    similar rate and extension of exposure as 8 mg of the
    branded product dosed three times a day. We recently met with
    the FDA to review the data on EUR-1025, and we are currently
    working on the protocol for a single Phase III study in
    post-operative nausea and vomiting, that we expect to submit to
    the FDA for review, in the first half of 2010.
    EUR-1073 is an enteric coated, controlled release formulation of
    beclomethasone diproprionate currently marketed in certain
    European countries under the tradename
    Clippertm,

    where it is indicated for the treatment of inflammatory bowel
    disease (IBD) and ulcerative colitis and for which we may be
    seeking marketing authorization in the U.S. The sustained
    release technology targets the lower gastrointestinal tract and
    potentially reduces side effects. We acquired the exclusive
    North American rights to market EUR-1073 from Chiesi
    Pharmaceutici SpA in April 2008. We received an orphan drug
    designation for this product candidate in the first quarter of
    2009 for intended use in pediatric ulcerative colitis. Chiesi
    has completed a Phase IIIb clinical trial for this product in
    Europe and the data show that
    Clippertm

    met the primary efficacy endpoint of non-inferiority to
    prednisolone, the current standard of care in ulcerative
    colitis. We are currently evaluating the results to decide
    whether to take this product forward in development.    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; and
    Bioavailability enhancement technologyto improve drug
    absorption, resulting in dose reduction and improved onset of
    action and improved bioavailability.  Our
    Strategy
    
    Establish a U.S. specialty sales and marketing
    organization.  We have established a specialty
    sales and marketing organization to commercialize our lead
    product,
    ZENPEP®

    (pancrelipase) Delayed-Release Capsules, in the U.S. We are
    marketing ZENPEP through our own sales force of 16 sales
    representatives targeting the approximately 120 Cystic Fibrosis
    Treatment Centers and office-based pulmonologists who 35




---



##### Table of Contents



treat CF patients. This specialty sales group also targets
    selected gastroenterologists, who are high volume prescribers of
    branded enzymes. In addition, Eurand has deployed 49 sales
    professionals, contracted through Innovex, to target prescribers
    of pancreatic enzymes, consistent with the approved indication
    of exocrine pancreatic insufficiency associated with other
    conditions, such as chronic pancreatitis, gastrointestinal
    surgery and pancreatic cancer. The commercial effort is being
    expanded through non-personal promotional elements to address
    all groups and potentials that treat EPI for each of the target
    patient populations.  
    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 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. In 2009, our lamotrigine formulation,
    Lamictal®

    ODTtm,

    developed using our technologies and outlicensed to GSK,
    received FDA approval, and GSK launched the product in late June
    2009. Additionally, through the application of our formulation
    technologies and development and manufacturing expertise, we
    believe ZENPEP has overcome a number of the challenges facing
    current EPI therapies and satisfied the requirements established
    by the FDA for such products.
    Enter into additional development agreements with
    collaboration partners.  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,
    products, and technologies based upon our regulatory,
    manufacturing and development expertise. Examples of our past
    successes include the acquisition of the rights to 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; 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
    Commercialized Product  EUR-1008 or
    ZENPEP®

    (pancrelipase) Delayed-Release Capsules
  ® ages 1-6 years
  Exocrine
    Pancreatic Insufficiency: Overview and Market
    Opportunity
   36




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##### Table of Contents



Cystic Fibrosis.
  Chronic Pancreatitis. ®
  FDA
    Guidelines to Improve Existing Pancreatic Enzyme
    Products
  over-the-counter
    
    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. 37




---



##### Table of Contents




    Stability.  Due to the inherent instability
    observed in currently available PEPs, stability results are
    required to support the recommended shelf life of the product.        Characteristics
    of EUR-1008 or
    ZENPEP®(pancrelipase) Delayed-Release Capsules
    
    Provides a consistent amount of lipase dose after dose.
    Significantly improves CFA, a key indicator of nutrient
    absorption, and reduces GI symptoms:  
    The average dose of ZENPEP was half the CFF maximum recommended
    dose;
    Results achieved without concomitant agents such as PPIs,
    H2  antagonists, and mobility agents.  
    Offers a proven safety profile as demonstrated in adults,
    adolescents, and children as young as 1 year.
    Is easy to switch to, easy to start, and easy to take with four
    strengths for greater precision:  
    ZENPEP is not interchangeable with any other pancrelipase
    product, and requires a new prescription and titration for
    symptom control;
    Patients switched from unapproved branded products experienced
    enhanced symptom control.  
    Pancreatic enzyme products, including ZENPEP, may increase the
    chances of having a rare but serious bowel disorder called
    fibrosing colonopathy which may require surgery. The risk of
    having this condition may be reduced by following the dosing
    instructions provided to patients by healthcare practitioners. 38




---



##### Table of Contents



Although it has never been reported it is theoretically possible
    for a person to get a viral infection from taking pancreatic
    enzyme products that come from pigs, including ZENPEP.  
    The most common adverse events (>6% of patients
    treated with ZENPEP) are abdominal pain, flatulence, headache,
    cough, decreased weight, early satiety, and contusion. The most
    serious adverse reactions reported with different pancreatic
    enzyme preparations of the same active ingredient (pancrelipase)
    include fibrosing colonopathy, hyperuricemia, and allergic
    reactions.  Overview
    of Our Completed Pivotal and Supportive Phase II/III Clinical
    Trials for
    ZENPEP®
  Phase III
    Clinical Trials in Patients with EPI due to CF
            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  39




---



##### Table of Contents



72-hour 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


16.60kg



16.75kg



16.63kgStools per day


1.82



1.64



1.45     Bioavailability
    Study
    Phase
    II/III Clinical Study in Patients with EPI due to
    CP
  £
 40




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##### Table of Contents



72-hour
  mild-to-moderate
      Clinical
    Development of
    ZENPEP®

    in Europe
    Proprietary
    Position of
    ZENPEP®
    Commercialization
    of EUR-1008 or
    ZENPEP®
  Commercialization
    of ZENPEP outside the U.S.
   41




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##### Table of Contents



Commercialization
    of ZENPEP in the U.S.
      U.S.-based
  AG
    Strategy
  tm
  CF
    Specialty Sales Force
  ® ® ® ®
  GI
    Sales Force
   42




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##### Table of Contents



Established
    Business
        ® ® ® ® tm
  
    Customized release.  Innopran
    XL®,

    Amrix®,

    Unisom®

    and
    Ultrase®
    Tastemasking/ODT.  Lamictal®

    ODTtm,

    Childrens
    Tylenol®,

    Cibalginadue and Rulide
    Bioavailability enhancement.  Nimedex  ®
 43




---



##### Table of Contents



Multinational Operations. Form 20-F.
  Proprietary
    Pharmaceutical Technology Products Marketed and in
    Development
  ® ® ®
  EUR-1025
  once-a-day
  EUR-1073
  tm tm
  EUR-1002
    or
    Amrix®
  ® ® once-a-day ® once-a-day scale-up,
 44




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##### Table of Contents



® ®
    and/or and/or
  EUR-1037
    or
    Unisom®

    Sleepmelts
  ® ® over-the-counter ®
  EUR-1048
    or
    Lamictal®

    ODTtm
  ® tm ® ® ® tm ® tm scale-up,
 45




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##### Table of Contents



EUR-1000
  scale-up,
  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
  ® ® ® ®
 46




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##### Table of Contents




    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.
    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 difficulty swallowing, such as pediatric and
    geriatric populations, or patients with severe clinical
    conditions. Using our Liquitard technology, we can 47




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incorporate both our taste-masking and controlled-release
    technologies into permanent or temporary suspensions.  Bioavailability
    Enhancement
      Research
    and Development
        Manufacturing
      scale-up
 48




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##### Table of Contents




    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.    Intellectual
    Property
    Patents
    and Proprietary Technology
    ® ® ® ® ® ® ®
  ® ® ® ® ®
  ®
 49




---



##### Table of Contents



tm
      ® ® ®
  ®
         50




---



##### Table of Contents



Trademarks
    Know-how
    Competition
         51




---



##### Table of Contents



®
    ®
      Government
    Regulation and Price Constraints
   52




---



##### Table of Contents



United
    States
    Clinical
    Trials
    New
    Drug Application (NDA)
    cGMP
    Regulations
   53




---



##### Table of Contents



Post-marketing
    Requirements
      Drug
    Distribution Requirements
    Additional
    Requirements
     54




---



##### Table of Contents



Outside
    of the U.S.
    and/or across-the-board and/or
    Property,
    Plants and Equipment
  Insurance
    Environmental
    Matters
   55




---



##### Table of Contents



on-site
  Properties
    and Infrastructure
                Employees
    ITEM 4A.
    UNRESOLVED
    STAFF COMMENTS   56




---



##### Table of Contents



ITEM 5.
    OPERATING
    AND FINANCIAL REVIEW AND PROSPECTS    Overview
  ® ®
      
    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; and
    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
    ZENPEP®. 57




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##### Table of Contents



®
      ® ® ® ® tm
  
    Customized release.  Innopran
    XL®,

    Amrix®,

    Unisom®

    and
    Ultrase®
    Tastemasking/ODT.  Lamictal®

    ODTtm,

    Childrens
    Tylenol®,

    Cibalginadue and Rulide.
    Bioavailability enhancement.  Nimedex.    Financial
    Operations Overview
  Revenues
  ® ®
 58




---



##### Table of Contents



®
    Total RevenuesYears Ended December 31,2009(1)


2008(1)


2007(1)United States


60.9
%


47.9
%


40.3
%Germany


9.0
%


16.7
%


21.0
%United Kingdom


8.3
%


10.1
%


11.5
%Japan


3.8
%


4.9
%


6.9
%Italy


3.4
%


6.2
%


4.8
%Switzerland


2.6
%


2.1
%


3.7
%Netherlands


2.2
%


2.3
%


1.2
%Spain


1.8
%


1.6
%


2.1
%France


1.8
%


2.1
%


2.4
%Canada


1.5
%


1.4
%


1.3
%Other


4.7
%


4.7
%


4.8
%100
%


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 on
    Form 20-F.    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. 59




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##### Table of Contents



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. 60




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##### Table of Contents



Years Ended December 31,2007

2008

2009(In thousands)Research and development expenses attributable to development
    fees


5,432



5,892



6,345Other research and development expenses(1)


11,678



14,399



17,222Research and development expenses


17,110



20,291



23,567     (1)
    
    In our consolidated statement of operations, we refer to
    internal research and development expenses as other research and
    development expenses.        
    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.
   61




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##### Table of Contents



Equity-Based Compensation.
  Years Ended December 31,2005

2006

2007

2008

2009(In thousands)Included in the statement of operations as:Cost of goods sold






(5
)


269



188



280Research and development expenses


4



(36
)


240



225



450Selling, general and administrative expenses


46



(24
)


750



1,477



1,685Stock option expense


50



(65
)


1,259



1,890



2,415     Foreign Exchange Gains and Losses.
  Other Operating Expenses
  Interest Income and Interest Expense.
  Income
    Taxes
     62




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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. 63




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##### Table of Contents



Revenue
    Recognition
  Revenue
    Recognition
    
    Product sales are generally recognized when title transfers,
    when the other criteria for revenue recognition are met, and
    when product returns can be estimated at that time, 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.
    For Pancrelipase (the Companys marketed, low cost
    pancreatic enzyme replacement product) revenue was deferred at
    the time the product was shipped to customers. Pancrelipase was
    sold through the Companys distributor, X-Gen
    Pharmaceuticals, Inc. (X-GEN). Pursuant to the
    agreement with X-GEN, under certain circumstances, customers
    have the right to return Pancrelipase to the Company and receive
    a refund. The Company recognized revenue on product shipped when
    the Company determined that the product would not be returned,
    and the Company deferred revenue on shipments in excess of this.
    The Company has established reliable return estimate for
    Pancrelipase using both historical returns data from the product
    when it was marketed under a different brand name through a
    different distributor in the same market, and from data of a
    similar pancreatic enzyme replacement product in the same
    market. In addition to historical return rates, the Company
    considered levels of inventory in the supply chain and levels of
    patient consumption, based on third party data. These were
    monitored in comparison to other pancreatic replacement products
    in the same market
    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.
    Up-front payments related to licensing agreements are deferred
    and recognized ratably over the life of the licensing agreement.  Pre-Launch
    Inventories
   64




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##### Table of Contents




    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.    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
  Compensation  Stock
    Compensation Accounting for Stock Issued to Employees
   65




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66




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##### Table of Contents



Income
    Taxes
        Valuation
    of Goodwill and Other Intangible Assets
    Intangibles  Goodwill and Other
    
    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. 67




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##### Table of Contents



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.  and
    Hedging
  Recent
    Accounting Developments
    Results
    of Operations
  Year
    ended December 31, 2009 Compared to Year ended
    December 31, 2008
  Revenues. ® ®
        Cost of Goods Sold.
 68




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Research and Development Expenses.
  Research and Development Expenses Attributable to Development
    Fees.
  Other Research and Development Expenses. ®
  Selling, General and Administrative
    Expenses.
  Income tax expense.
   69




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##### Table of Contents



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.
 70




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##### Table of Contents




    $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.
  Financial
    Condition, Liquidity and Capital Resources
         71




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##### Table of Contents



Net Cash Provided by Operating Activities.
    Net Cash Used in Investing Activities.
    Net Cash Provided by Financing Activities.
      
    the costs, timing and outcome of regulatory review of our
    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; 72




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
    the costs of preparing, filing and prosecuting patent
    applications, maintaining and enforcing our issued patents and
    defending other intellectual property-related claims;
    the degree of commercial success of our lead product ZENPEP;
    the costs of maintaining adequate sales, marketing and
    distribution capabilities, for ZENPEP and other products in
    development;
    the success in establishing new co-development contracts with
    collaborators;
    the success of our collaboration partners in obtaining and
    maintaining regulatory approvals for products which utilizing
    our technologies;
    the success of our collaboration partners in selling products
    utilizing our technologies;
    the costs of financing unanticipated working capital
    requirements and responding to competitive pressures; and
    the extent to which we acquire or invest in businesses, products
    or technologies and other strategic relationships.  Off-Balance
    Sheet Arrangements
    Contractual
    Commitments
    Cash Payments Due by Period(1)(2)Less Than








More ThanTotal


1 Year


1-3 Years


3-5 Years


5 Years(In thousands)Operating lease obligations


1,284



562



666



56



Construction and other capital commitments


213



231











Total contractual obligations


1,497



775



666



56



     (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 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. Out of
    $1,250,000 the amount of $500,000 remained unpaid as of
    December 31, 2009.(2)
    
    Additionally the table above does not include certain
    commitments to Chiesi Farmaceutici S.p.A, or Chiesi, that are
    contingent on events for which the timing is uncertain. In April
    2008, we entered into a license agreement with Chiesi, under
    which we received an exclusive, non-transferable license in the
    U.S. (including the U.S. Virgin Islands and Puerto Rico) and
    Canada to develop and commercialize a finished pharmaceutical
    product containing Beclomethasone dipropionate. We also received
    a non-exclusive license to develop and then commercialize the
    product outside of the U.S. and Canada, but only for the
    subsequent export of the product in the U.S. and/or Canada for
    resale. Under the license agreement, we are required to take all
    commercially 73




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##### Table of Contents



reasonable steps to obtain and maintain regulatory approval for
    any product developed and/or commercialized under the license
    agreement. In the years 2008 and 2009 we paid Chiesi $500,000.
    If certain milestones are achieved, we will be obligated to pay
    Chiesi up to an aggregate of an additional $4,000,000 in
    milestone payments if and when certain commercial sales targets
    are achieved. In addition to these milestone payments, we are
    required to make royalty payments to Chiesi based on a low to
    mid single digit percentage of our net sales of the product. The
    license agreement will remain in effect for ten years from the
    date any product is first commercialized, on a
    country-by-country
    basis, unless earlier terminated.    ITEM 6.
    DIRECTORS,
    SENIOR MANAGEMENT AND EMPLOYEES    Name

Age

Position

Expiration of Term of OfficeDirectorsGearóid M. Faherty


50


Chairman & Chief Executive Officer, Executive Director

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


64


Non-Executive Director

2010 Annual General Meeting of ShareholdersJonathan J. Cosgrave


32


Non-Executive Director

2013 Annual General Meeting of ShareholdersWilliam J. Jenkins, M.D.(1)(3)


62


Non-Executive Director

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


48


Non-Executive Director

2010 Annual General Meeting of ShareholdersSimon Turton(2)(3)


42


Non-Executive Director

2013 Annual General Meeting of ShareholdersExecutive OfficersMario P. Crovetto


56


Chief Financial OfficerJohn J. Fraher


44


Chief Commercial OfficerManya S. Deehr


44


Chief Legal Officer, Corporate SecretaryKey EmployeesMichael Walters


50


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


52


Chief Medical Officer, Eurand Pharmaceuticals, Inc.Robert Becker, M.D.


54


Chief Research Officer     (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
 74




---



##### Table of Contents



Rolf A. Classon
  Jonathan J. Cosgrave
  William J. Jenkins
  Angelo C. Malahias
  Dr. Simon Turton 10-year
 75




---



##### Table of Contents



Executive
    Officers
  Mario P. Crovetto
  Manya S. Deehr
  John J. Fraher
  Key
    Employees
  Michael J. Walters ® ®
  Ruth Thieroff-Ekerdt, M.D.
  Robert Becker
 76




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##### Table of Contents



Compensation
    of Directors
    Non-Executive Directors of our Board

Directors Fees, grossRolf A. Classon


43,500Jonathan J. Cosgrave (appointed June 4, 2009)


20,500William J. Jenkins


41,250Nicholas J. Lowcock (resigned June 4, 2009)


17,750Angelo C. Malahias


53,500Simon Turton (appointed June 4, 2009)


22,750Total


199,250         Sole Executive Director of Our Board and CEO

Salary(1)

Bonus(2)

Non-Cash Benefits(3)

TotalGearóid M. Faherty


567,736



262,578



10,099



840,413     (1)
    
    The non-executive members of our Board, upon the recommendation
    of our Compensation Committee, approved an annual base salary
    for 2009 for our CEO of 567,736.(2)
    
    The bonus payable in March 2010 to the sole executive member of
    our Board and CEO in relation to the 2009 financial year was
    approved by the Compensation Committee, and approved by the
    non-executive members of our Board in respect of the 2009
    financial year, based on fulfillment of a number of pre-defined
    objectives for 2009.(3)
    
    Includes use of a company car and additional medical coverage. 77




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##### Table of Contents



Stock
    Options
    Number

Exercise

2009

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


$
15.05







90,000



03/4/201890,000


$
9.15







90,000



11/05/2018Rolf A. Classon


10,000


$
12.88







10,000



8/29/201711,000


$
13.17
(1)






11,000



6/4/2019Jonathan J. Cosgrave


11,000


$
13.17
(1)






11,000



6/4/2019William J. Jenkins


15,000


$
6.67







15,000



7/5/201010,000


$
16.00







10,000



5/16/201711,000


$
13.17
(1)






11,000



6/4/2019Angelo C. Malahias


15,000


$
12.88







15,000



8/29/201711,000


$
13.17
(1)






11,000



6/4/2019Simon Turton


11,000


$
13.17
(1)






11,000



6/4/2019     (1)
    
    Options granted in 2009 pursuant to the Eurand N.V. Equity
    Compensation Plan  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;
    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 78




---



##### Table of Contents




    performing such other functions as the Board believes
    appropriate or necessary, or as otherwise prescribed by rules or
    regulations.        ( )
    Corporate
    Governance
         79




---



##### Table of Contents




    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.   80




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##### Table of Contents



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;
    reporting on compensation arrangements and incentive grants to
    the Board; and
    drawing up an annual Remuneration Report.  One-tier Board
      Independence
   81




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Conflicts
    of interests
    Remuneration
      and/or
  Share
    Ownership
  and/or
  Retirement
    of Board members
    Reporting
    of trading in Netherlands listed companies
   82




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##### Table of Contents



Code of
    Business Conduct and Whistleblowing Policy
    Employment
    Agreements
  Employment
    Agreement with Gearóid M. Faherty
    Employment
    Agreements Senior Management
    Employees
     83




---



##### Table of Contents



Share
    Ownership
  and/or
  Equity
    Compensation Plan
           84




---



##### Table of Contents



The Wall Street Journal
          and/or and/or and/or
   85




---



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and/or
         86




---



##### 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)


13,103,727



27.38
%Warburg, Pincus Ventures International, L.P.(1)


13,103,725



27.38
%Wellington Management Company, LLP


2,385,706



4.98
%Executive Officers and DirectorsDirectorsRolf A. Classon(2)


6,667Gearóid M. Faherty(3)


2,423,523



4.99
%William J. Jenkins, M.D.(4)


23,125Simon Turton, Ph.D(5)


26,207,452



54.75
%Jonathan J. Cosgrave(6)


26,207,452



54.75
%Angelo C. Malahias(7)


10,000Executive OfficersMario P. Crovetto(8)


320,092Manya S. Deehr(9)


118,158John J. Fraher(10)


494,139



1.03
%All Directors and Executive Officers as a group (10 persons)


29,603,155



60.14
%     *
    
    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 87




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##### Table of Contents



sole member of WP Partners, and Managing Members and
    Co-Presidents 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 Warburg
    Pincus. The address of the Warburg Pincus entities is 450
    Lexington Avenue, New York, New York 10017. Warburg Pincus,
    in the aggregate, beneficially own approximately 54.8% of our
    outstanding ordinary shares.(2)
    
    Includes options which are fully vested to purchase 6,667
    ordinary shares under our equity compensation plan.(3)
    
    Includes options which are fully vested to purchase 662,500
    ordinary shares under our equity compensation plan.(4)
    
    Includes options which are fully vested to purchase 23,125
    ordinary shares under our equity compensation plan.(5)
    
    Dr. Turton, one of our directors, is a managing director of
    Warburg Pincus International LLC. All shares indicated as owned
    by Dr. Turton are included because of his affiliation with
    the Warburg Pincus entities. Dr. Turton disclaims
    beneficial ownership of all shares owned by the Warburg Pincus
    entities.(6)
    
    Mr. Cosgrave, one of our directors, is a principal of
    Warburg Pincus International LLC. All shares indicated as owned
    by Mr. Cosgrave are included because of his affiliation
    with the Warburg Pincus entities. Mr. Cosgrave disclaims
    beneficial ownership of all shares owned by the Warburg Pincus
    entities.(7)
    
    Includes options which are fully vested to purchase 10,000
    ordinary shares under our equity compensation plan.(8)
    
    Includes options which are fully vested to purchase 270,042
    ordinary shares under our equity compensation plan.(9)
    
    Includes options which are fully vested to purchase 117,758
    ordinary shares under our equity compensation plan.(10)
    
    Includes options which are fully vested to purchase 270,042
    ordinary shares under our equity compensation plan.  non-U.S. beneficial
  Related
    Party Transactions
    Management
    Affiliations
   88




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Loans
  Loans
    from Shareholders
      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,
  
    $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. 89




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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


$
9.652008Year 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


$
6.172009Year Ended December 31, 2009

$
15.53


$
8.76First Quarter

$
13.27


$
8.76Second Quarter

$
15.00


$
10.04Third Quarter

$
15.53


$
12.39Fourth Quarter

$
15.21


$
11.242010January 2010

$
13.37


$
10.08February 2010

$
10.91


$
8.84March 2010 (through March 2)

$
9.45


$
8.55  90




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##### Table of Contents



ITEM 10.
    ADDITIONAL
    INFORMATION  Share
    Capital
  Form 20-F.
    Ordinary
    Shares
    Dividends
  called-up
  Form 20-F.
  Memorandum
    and Articles of Association
  Form F-3/A Form F-3
  Material
    Contracts
   91




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##### Table of Contents



Chiesi
    Agreement
  U.S. and/or and/or country-by-country
  SourceCF
    Securities Purchase Agreement
    Nordmark
    Agreement
    Form 20-F Form 20-F Form 6-K/A
 92




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##### Table of Contents



Exchange
    Controls
    Taxation
    Material
    Netherlands Tax Consequences for Holders of Ordinary
    Shares
    (Wet inkomstenbelasting 2001)
  Wet op de
    vennootschapsbelasting 1969 paid-up
    fiscale
    beleggingsinstellingen vrijgestelde beleggingsinstellingen
  Withholding
    Tax
    
    distributions in cash or in kind, deemed and constructive
    distributions and repayments of paid-in capital not recognized
    for Netherlands dividend withholding tax purposes;
    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 93




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##### Table of Contents



average capital paid into those shares as recognized for
    Netherlands dividend withholding tax purposes, unless a certain
    exemption applies;  
    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,
    recognized for Netherlands dividend withholding tax purposes has
    been made or will be made; 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 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.            
    3% of the portion of the distribution paid by us that is subject
    to The 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 reductions.   94




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##### Table of Contents



Wet op de
    dividendbelasting 1965
  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
    the holder of the ordinary shares is considered to perform
    activities with respect to the shares that go beyond ordinary
    asset management ( normaal actief 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.
  Nonresidents of The Netherlands.
  
    such holder does not have an interest in an enterprise or a
    deemed enterprise (statutorily defined term) 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 asset management (
    normaal actief 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 95




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##### Table of Contents



Gift and
    Inheritance Taxes
  Residents of The Netherlands. his/her
  Non-residents of 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;   96




---



##### Table of Contents



Taxation
    of Dividends
            Sale or
    Other Disposition of the Ordinary Shares
   97




---



##### Table of Contents



Passive
    Foreign Investment Company
  non-U.S. corporation
      Backup Withholding and Information
    Reporting. U.S.-related
    Documents
    on Display
  (http://www.sec.gov)
 98




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##### Table of Contents



ITEM 11.
    QUANTATIVE
    AND QUALITATAIVE 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 No. 333-142481) Form 20-F.
 ITEM 15.  CONTROLS
    AND PROCEDURES  Disclosure
    Controls and Procedures
   99




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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        Form 20-F.
  Changes
    in Internal Control over Financial Reporting
  Rules 13a-15(f) 15d-15(f)
 100




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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    2008


2009Audit fees


769



1,030Audit-Related fees


17



12Tax fees


119



110Other fees






Total


905



1,152   Audit
    fees
  Form 6-K
  Form 6-K.
  Audit-Related
    fees
    Tax
    fees
    Other
    fees
    Non-audit
    services
   101




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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  1
.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.*1
.4

Amended Articles of Association of Eurand N.V. (Incorporated by
    reference to Exhibit 3.2 to the Companys Registration
    Statement on
    Form F-3
    filed on September 28, 2009)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.* 102




---



##### Table of Contents



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 Beechman 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 (Incorporated
    by reference to Exhibit 4.20 to the Companys Annual Report
    on Form 20-F filed on March 31, 2009). 4
.21

Supply Contract, dated as of January 3, 2006, by and among
    Eurand S.p.A. and Nordmark Arzneimittel GmbH & Co.
    (Incorporated by reference to Exhibit No. 10.1 to the Report on
    Form 6-K/A filed on September 21, 2009)8


Subsidiaries of the Company**12
.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**     
    
    Translated into English as required by Rule 306 of
    Regulation S-T.
    In this translation, an attempt has been made to be as literal
    as possible, without jeopardizing the overall continuity.
    Inevitably, differences may occur in translation, and if so, the
    Dutch text will govern.
    
    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 103




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##### Table of Contents



Signatures
  Form 20-F
  EURAND, N.V.
  By:
    /s/  Gearoid
    M. Faherty   Title:
    Chairman and Chief Executive Officer   104




---



##### 



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


F-2Consolidated Balance Sheets as of
    December 31, 2009 and 2008


F-4Consolidated Statements of Operations for the
    years ended December 31, 2009, 2008 and 2007


F-6Consolidated Statements of Shareholders
    Equity for the years ended December 31, 2009, 2008 and
    2007


F-7Consolidated Statements of Cash Flows for the
    years ended December 31, 2009, 2008 and 2007


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.
  Form 20-F
                 F-2




---



##### Table of Contents



Report of
    Independent Registered Public Accounting Firm
  To the
    Board of Directors and Shareholders of Eurand N.V.
               F-3




---



##### Table of Contents



EURAND
    N.V.CONSOLIDATED BALANCE SHEETS December 31, 2009 and 2008
  2009


2008(In thousands of euros)ASSETSCurrent AssetsCash and cash equivalents


16,893



19,146Marketable securities


23,049



3,592Accounts receivable, less allowance for doubtful accounts of
    436 and 275, respectively


21,331



13,335Inventories, net


15,633



13,923Prepaid expenses and other current assets


9,041



6,093Deferred income taxes


2,086



1,693Total Current Assets


88,033



57,782Property, plant and equipment, net


35,596



37,294Goodwill


26,818



27,000Other intangible assets, net


6,288



7,784Deferred income taxes


1,133



432Other non current assets


21



3,667Total Assets


157,889



133,959    F-4




---



##### Table of Contents



EURAND
    N.V.
    CONSOLIDATED BALANCE
    SHEETS  (Continued) December 31, 2009 and 2008
  2009


2008(In thousands of euros, except share and per share
    amounts)LIABILITIES AND SHAREHOLDERS EQUITYCurrent LiabilitiesShort-term borrowings


207



186Accounts payable


12,628



9,152Income taxes payable


3,260



129Accrued expenses and other current liabilities


20,158



11,606Total Current Liabilities


36,253



21,073Employees severance indemnities


3,932



4,081Other non-current liabilities


3,192



2,997Deferred income taxes


2,938



3,706Total Non-Current Liabilities


10,062



10,784Commitments and contingencies (Note 16)Shareholders EquityOrdinary shares par value 0.01, authorized 130,000,000 as
    of December 31, 2009 and 2008, 47,856,976 and 45,751,997
    issued and outstanding, as of December 31, 2009 and 2008,
    respectively


479



458Additional paid-in capital


150,976



134,643Accumulated deficit


(44,286
)


(38,382
)Accumulated other comprehensive income


4,405



5,383Total Shareholders Equity


111,574



102,102Total Liabilities and Shareholders Equity


157,889



133,959    F-5




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##### Table of Contents



EURAND
    N.V.CONSOLIDATED STATEMENTS OF OPERATIONSYears ended December 31, 2009, 2008 and
    2007
  2009


2008


2007(In thousands of euros, except share and per share
    amounts)Product sales


99,009



79,932



71,076Royalties


10,705



8,140



4,373Development fees


10,885



10,464



9,372Revenues


120,599



98,536



84,821Cost of goods sold


(61,223
)


(53,811
)


(49,439
)Research and development expenses attributable to development
    fees


(6,345
)


(5,892
)


(5,432
)Other research and development expenses


(17,222
)


(14,399
)


(11,678
)Selling, general and administrative expenses


(37,398
)


(30,516
)


(21,497
)Income from litigation settlement






24,404



Amortization of intangibles


(1,368
)


(1,361
)


(788
)Other expense


(415
)


(50
)


(93
)Operating income (loss)


(3,372
)


16,911



(4,106
)Interest expense


(2
)


(176
)


(2,024
)Interest income


362



612



492Foreign exchange gains (losses), net


(199
)


(79
)


104Income (loss) before taxes


(3,211
)


17,268



(5,534
)Income tax expense


(2,693
)


(3,639
)


(1,140
)Net income (loss)


(5,904
)


13,629



(6,674
)Net income (loss) per share:Basic net income (loss) per share


(0.13
)


0.30



(0.24
)Diluted net income (loss) per share


(0.13
)


0.29



(0.24
)Weighted average shares used to compute basic net income (loss)
    per share


46,136,546



44,921,051



28,367,118Weighted average shares used to compute diluted net income(loss)
    per share


46,136,546



46,377,076



28,367,118    F-6




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##### Table of Contents



EURAND
    N.V.CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITYYears ended December 31, 2009, 2008 and
    2007
  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, 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



102,102Comprehensive loss:Net loss














(5,904
)






(5,904
)Cumulative exchange translation adjustment


















(978
)


(978
)Comprehensive loss






















(6,882
)Secondary public offering


2,000,000



20



13,586











13,606Tax loss of stock option plans










(9
)










(9
)Stock option compensation










2,415











2,415Exercise of stock options


104,979



1



341











342As at December 31, 2009


47,856,976



479



150,976



(44,286
)


4,405



111,574    F-7




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##### Table of Contents



EURAND
    N.V.CONSOLIDATED STATEMENTS OF CASH FLOWSYears ended December 31, 2009, 2008 and
    2007
  2009


2008


2007(In thousands of euros)Operating ActivitiesNet income (loss)


(5,904
)


13,629



(6,674
)Adjustments to reconcile net loss to net cash provided by
    operating activities:Depreciation


6,932



6,837



7,074Amortization


1,368



1,361



788Non-cash interest expense










201Accrued employees severance indemnities


37



20



180Unrealized foreign exchange losses


34



1,503



655Stock compensation


2,415



1,860



1,309Deferred income taxes


(1,215
)


451



146Other non-cash items


408



266



93Changes in operating assets and liabilities:Accounts receivable, net


(8,408
)


478



(673
)Inventories, net


(1,866
)


(3,884
)


(2,263
)Prepaid expenses and other current assets


(3,171
)


(3,621
)


1,675Other non-current assets


3,415



(3,509
)


987Accounts payable


3,440



952



(36
)Accrued expenses and other current liabilities


8,411



924



101Income taxes


3,050



(11
)


(430
)Other non current liabilities


607



8



(1,335
)Cash provided by operating activities


9,553



17,264



1,798Investing ActivitiesPurchase of marketable securities


(32,972
)


(3,701
)


Maturity of marketable securities


14,202







Foreign exchange gains on marketable securities


(447
)






Purchases of property, plant and equipment


(6,287
)


(7,850
)


(4,091
)Proceeds from disposals of property, plant and equipment


59



247



Purchase of other intangible assets






(209
)


Acquisition of SourceCF, net of cash acquired










(4,643
)Cash used in investing activities


(25,445
)


(11,513
)


(8,734
)Financing ActivitiesProceeds from the issuance of ordinary shares


13,606







73,977Borrowing 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
)Cash received on termination of interest rate swap










663Net change in short-term borrowings


21



13



179Exercise of stock options


342



1,815



297Cash provided by financing activities


13,969



453



13,811Effect of exchange rates on cash


(330
)


401



(144
)Increase (decrease) in cash and cash equivalents


(2,253
)


6,605



6,731Cash and cash equivalents at beginning of year


19,146



12,541



5,810Cash and cash equivalents at end of year


16,893



19,146



12,541Supplemental disclosures:Cash paid during the period for:Interest






282



14,509Taxes


1,597



1,309



1,224  F-8




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##### 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
    Subsequent
    events
    Use of
    Estimates
    Segment
    information
  ,
    Segment Reporting
 F-9




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Cash
    and Cash Equivalents
    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
  Intangibles  Goodwill and Other
 F-10




---



##### Table of Contents



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




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Revenue
    Recognition
          605-25, Revenue Recognition  Multiple Element
    Arrangements
 F-12




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Research
    and Development Expenses
    Accounting
    for Equity-Based Compensation
  Share-Based
    Payment Compensation
     Stock Compensation
  Accounting for Stock Issued to Employees
    Derivatives
    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
       F-14




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Adoption
    of New Accounting Standards
  Generally
    Accepted Accounting Principles
  Subsequent Events 2010-09 Amendments to Certain
    Recognition and Disclosure Requirements (paragraph 855-10-50-4). 2010-09
  Financial Instruments
  808-10, Collaborative Arrangements 07-1, Accounting for Collaborative Arrangements Related to the
    Development and Commercialization of Intellectual Property arrangement-by-arrangement
    EITF 03-6-1, Determining Whether Instruments Granted in Share-Based
    Payment Transactions Are Participating Securities Earnings per Share
  2009-05, Measuring Liabilities at Fair Value Fair Value Measurements and Disclosures 2009-05
 F-15




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Recent
    Accounting Pronouncements
  2009-13, Multiple-Deliverable Revenue Arrangements Revenue Recognition 2009-13 2009-13
  2010-06 Improving
    Disclosures about Fair Value Measurements
  3.
    Inventories,
    net  December 31,


December 31,2009


2008Raw materials


9,759



6,872Work in progress


3,174



2,565Finished goods


2,700



4,48615,633



13,923     4.
    Prepaid
    Expenses and Other Current Assets  December 31,


December 31,2009


2008Litigation settlement receivable  current portion
    (note 15)


3,646



3,644Prepayments


2,135



1,429Recoverable amounts for income taxes


1,649



353Recoverable amounts for other taxes


1,053



667Deferred cost of goods sold


558



9,041



6,093  F-16




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   5.
    Other Non
    Current Assets  December 31,


December 31,2009


2008Litigation settlement receivable  long term portion
    (note 15)






3,644Other


21



2321



3,667   6.
    Property,
    Plant and Equipment, net  December 31,


December 31,2009


2008Land


1,717



1,725Buildings


34,897



34,956Machinery and equipment


62,606



61,377Furniture and fittings


6,435



5,657Construction in progress


3,086



1,055108,741



104,770Accumulated depreciation


(73,145
)


(67,476
)35,596



37,294       7.
    Goodwill  There were no goodwill impairments during the
    year.
  As at December 31, 2007


26,251Exchange translation


749As at December 31, 2008


27,000Exchange translation


(182
)As at December 31, 2009


26,818  F-17




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
   8.
    Other
    Intangible Assets, net  December 31, 2009


December 31, 2008Gross





Net


Gross





NetCarrying


Accumulated


Carrying


Carrying


Accumulated


CarryingAmount


Amortization


Amount


Amount


Amortization


AmountPatents


1,647



(1,507
)


140



1,661



(1,291
)


370Licenses


1,548



(1,013
)


535



1,547



(943
)


604Exclusive supply rights


3,250



(1,733
)


1,517



3,250



(1,408
)


1,842Selling and marketing rights


5,563



(1,467
)


4,096



5,751



(783
)


4,968Total


12,008



(5,720
)


6,288



12,209



(4,425
)


7,784         EstimatedAmortizationCharge2010


1,1592011


1,1252012


1,1072013


1,1052014


996Thereafter


7966,288   9.
    Short-Term
    Borrowings      10.
    Income
    Taxes    Year Ended


Year Ended


Year EndedDecember 31,


December 31


December 31,2009


2008


2007Netherlands


591



3,393



2,488Foreign


(3,802
)


13,875



(8,022
)(3,211
)


17,268



(5,534
)  F-18




---



##### Table of Contents



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


Year Ended


Year EndedDecember 31,


December 31,


December 31,2009


2008


2007Current


(5,150
)


(3,188
)


(994
)Deferred


2,457



(451
)


(146
)Income tax (expense) benefit


(2,693
)


(3,639
)


(1,140
)     Year Ended


Year Ended


Year EndedDecember 31,


December 31,


December 31,2009


2008


2007Income tax (expense) benefit at the Dutch statutory tax rate


819



(4,403
)


1,411Effect of Italian IRAP


(1,245
)


(618
)


(665
)Aggregated effect of different foreign tax rates


1,599



(1,023
)


440Change in foreign tax rates






(110
)


(1,094
)Permanent differences:Non deductible expenses


(98
)


(115
)


(120
)Non-taxable items


96



139



53Foreign taxes not deductible


(84
)


53



(17
)Effect of foreign exchange conversions






270



(7
)Stock compensation


(636
)


(472
)


(99
)Cancellation of indebtedness






(347
)


Derecognition of tax benefits (FIN 48)


(121
)


(1,802
)


Reversal of deferred tax liability on revaluation reserve










297Deductible IPO expenses










902Deductible expenses for secondary offering


172







Deductible underwriting fees


214







R&D tax credit


287







Other


(18
)


22



(96
)Change in valuation allowance


(3,678
)


4,767



(2,145
)Effective income tax (expense) benefit


(2,693
)


(3,639
)


(1,140
)       Income
 F-19




---



##### Table of Contents



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


December 31,2009


2008Deferred tax assets:Property, plant and equipment


3,066



3,694Intangible assets


14



20Inventory allowance and write off


2,481



2,709Accrued expenses


2,471



664Foreign exchange


177



292Deferred revenues


1,817



471Accrued interest expense


5,864



4,846Deductible stock compensation


15



41Tax Credits


511



575Net operating loss carry-forwards


7,181



4,459Other






7Total deferred tax assets


23,597



17,778Deferred tax liabilities:Property, plant and equipment






(160
)Intangible assets


(2,645
)


(2,391
)Foreign exchange


(1,266
)


(1,886
)Other


(18
)


(2
)Total deferred tax liabilities


(3,929
)


(4,439
)Less: valuation allowance


(19,387
)


(14,920
)Net deferred tax assets (liabilities)


281



(1,581
)    F-20




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009


2008


2007Balance at January, 1


(14,920
)


(18,244
)


(18,210
)Net valuation allowance (recognized) reversed during the year


(3,678
)


4,767



(2,145
)Change in valuation allowance due to current tax effects on
    opening deferred tax balances


(1,224
)


(713
)


Decrease for recognition of net deferred tax liability on
    acquisition of SourceCF










907Currency translation adjustments


435



(730
)


1,204Balance at December, 31


(19,387
)


(14,920
)


(18,244
)           Italy


2005 through 2009U.S. (Federal)


1999 through 2009France


2005 through 2009Netherlands


2005 through 2009Ireland


2005 through 2009    F-21




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##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    2009


2008Balance, January 1,


1,646



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






1,802Additions for tax positions of prior years


121



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


(57
)


(156
)Balance, December 31,


1,710



1,646Amount of unrecognized tax benefits that, if recognized, would
    affect the effective tax rate


1,710



1,646     11.
    Accrued
    Expenses and Other Current Liabilities  December 31,


December 31,2009


2008Accrued employee compensation


5,436



4,238Accrued expenses


4,388



2,845Accrued product returns


3,595



22Social security and other contributions


1,523



1,711Taxes, other than income taxes


898



1,186Deferred revenues


4,318



526Deferred payments for acquisition






1,07820,158



11,606   12.
    Employees
    Severance Indemnities    13.
    Shareholders
    Equity  Share
    Capital
     F-22




---



##### Table of Contents



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


Term ofNumber of


Average


Options


AggregateOptions


Exercise


Outstanding


IntrinsicOutstanding


Price


(years)


ValueVested and expected to vest at December 31, 2009


3,820,313



7.68



6.2



7,296Exercisable at December 31, 2009


2,617,232



7.31



5.0



6,002  F-23




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  in-the-money
    WeightedAverageNumber of


ExerciseOptions


PriceOutstanding at December 31, 2008


3,738,716



7.57Granted


336,000



8.53Exercised


(104,979
)


3.26Forfeited


(102,444
)


9.69Expired






Outstanding at December 31, 2009


3,867,293



7.72       Year Ended December 31,2009

2008

2007Risk free interest rate

0.3-3.7%

0.8-4.0%

2.9-5.3%Expected dividend yield

0%

0%

0%Expected stock price volatility

75%

50-75%

50%Post vesting forfeiture rate

6%

6%

6%Suboptimal exercise factor

2.0

2.0

2.0    F-24




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##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  in-the-money
      Aggregate
    Stock Based Compensation Cost
    Year Ended December 31,2009


2008


2007Cost of goods sold


280



188



269Research and development expenses attributable to development
    fees


121



65



109Other research and development expenses


329



160



131Selling, general and administrative expenses


1,685



1,477



7502,415



1,890



1,259Capitalized in inventories






(30
)


502,415



1,860



1,309    F-25




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Weighted-AveragePeriod in Years OverWhich Stock OptionCompensation Cost isUnrecognized

Expected to beCompensation Cost

RecognizedStock options


5,414



2.4   Other
    Comprehensive Income
        14.
    Other
    Expense        15.
    Income
    from Litigation Settlement   F-26




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      16.
    Commitments
    and Contingencies    Capital
    Commitments
    Lease
    Commitments
    Year Ended December 31,2010


5622011


4032012


2632013


502014


6Total minimum lease payments


1,284     17.
    Financial
    Instruments  Concentration
    of Credit Risks
      Fair
    Value of Financial Instruments
   F-27




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##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Cash and cash equivalents
  Marketable securities
  December 31, 2009


December 31, 2008Fair Value Measured





Fair Value Measuredat Prices Quoted in





at Prices Quoted inActive Markets for





Active Markets forIdentical Assets





Identical AssetsCarrying Value


(Level 1)


Carrying Value


(Level 1)Marketable securities


23,049



23,013



3,592



3,592     Accounts receivable, net and accounts payable
  Short term borrowings
  18.
    Per Share
    Information    For the Years Ended December 31,2009


2008


2007Numerator:Net income (loss)


(5,904
)


13,629



(6,674
)Denominator:Weighted average shares for basic net income (loss) per share


46,136,546



44,921,051



28,367,118Effect of dilutive securities:Stock options






1,456,025



Convertible preference shares










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


46,136,546



46,377,076



28,367,118  F-28




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    For the Years Ended December 31,2009


2008


2007Numerator:Net income (loss)


(5,904
)


13,629



(6,674
)Denominator:Basic calculation


46,136,546



44,921,051



28,367,118Diluted calculation


46,136,546



46,377,076



28,367,118Basic net income (loss) per share


(0.13
)


0.30



(0.24
)Diluted net income (loss) per share


(0.13
)


0.29



(0.24
)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



     19.
    Segment
    and Geographic Information        Total Revenues


Property, Plant and Equipment,Year Ended December 31,


Net December 31,2009


2008


2007


2009


2008


2007Italy


64,442



58,200



50,748



17,098



17,270



18,225United States


47,649



31,935



26,671



17,155



18,749



16,159France


6,374



6,762



6,989



1,343



1,275



1,257Other


2,134



1,639



413











1120,599



98,536



84,821



35,596



37,294



35,642    F-29




---



##### Table of Contents



EURAND
    N.V.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Total RevenuesYear Ended December 31,2009


2008


2007United States


73,479



47,190



34,188Germany


10,889



16,409



17,782United Kingdom


10,039



9,951



9,731Japan


4,554



4,830



5,839Italy


4,146



6,130



4,044Switzerland


3,147



2,063



3,145Netherlands


2,645



2,306



1,041Spain


2,219



1,580



1,778France


2,153



2,033



1,997Other


7,328



6,044



5,276120,599



98,536



84,821     2009


2008


2007Product salesGastrointestinal(1)


50,640



27,389



18,545Cardiovascular


16,136



19,429



22,090Nutrition


13,276



9,897



11,868Pain(2)


11,627



11,702



9,771Respiratory


2,885



7,629



5,420Other


4,445



3,886



3,382Product sales


99,009



79,932



71,076Royalties


10,705



8,140



4,373Development fees


10,885



10,464



9,372Revenues


120,599



98,536



84,821     (1)
    
    Gastrointestinal products include Ultrase, Pancrelipase and
    ZENPEP®.(2)
    
    Pain products include Amrix. F-30




---



##### 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.*1
.4

Amended Articles of Association of Eurand N.V. (Incorporated by
    reference to Exhibit 3.2 to the Companys Registration
    statement on
    Form F-3
    filed on September 28, 2009)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 Beechman 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
    (Incorporated by reference to Exhibit 4.20 to the
    Companys Annual Report on
    Form 20-F
    filed on March 31, 2009)4
.21

Supply Contract, dated as of January 3, 2006, by and among
    Eurand S.p.A. and Nordmark Arzneimittel GmbH & Co.
    (Incorporated by reference to Exhibit No. 10.1 to the
    Report on
    Form 6-K/A
    filed on September 21, 2009)8


Subsidiaries of the Company**12
.1

Certification of the Chief Executive Officer**




---



##### Table of Contents



Number

Description12
.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**     
    
    Translated into English as required by Rule 306 of
    Regulation S-T.
    In this translation, an attempt has been made to be as literal
    as possible, without jeopardizing the overall continuity.
    Inevitably, differences may occur in translation, and if so, the
    Dutch text will govern.
    
    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