LABOPHARM/PURDUE PHARMA SIGN TRAMADOL LICENSING PACT.

Labopharm Inc. (TSX: DDS), Laval, Quebec, and Purdue Pharma L.P., Stamford, Conn., has signed a definitive licensing and distribution agreement under which Labopharm, through its subsidiary, Labopharm Europe Limited, has granted Purdue Pharma Products L.P. the exclusive right to market, sell and distribute Labopharm's once-daily formulation of the analgesic tramadol in the United States, its territories and possessions. Labopharm will retain co-promotion rights for certain medical specialties.

"With our anticipated NDA submission later this year, our number one priority was signing a partner to allow us to commercialize our tramadol product in the world's largest pharmaceutical market," said James R. Howard-Tripp, president and CEO, Labopharm Inc. "We are pleased not only with the terms of the agreement, which include a royalty rate commensurate with our expectations, but also with the collaborative nature of our marketing partnership. As examples, our companies will form a joint marketing team to prepare for the launch of our product. Following launch, Purdue will assist us in achieving one of our key strategic goals by building and training Labopharm's own sales force to allow us to pursue certain specialty markets in the U.S."

Under the terms of the agreement, Labopharm will receive payments of up to US$170 million, including an up-front licensing fee of US$20 million, a payment of up to US$40 million upon regulatory approval of Labopharm's product by the U.S. Food and Drug Administration (FDA), and payments upon the product meeting specified sales targets. Labopharm will receive royalty rates ranging from 20 to 25% of product sales. In addition, the costs of hiring, training and compensating Labopharm's sales force will be borne by Purdue.

"There is a huge unmet need for more medications to manage pain and this once-daily formulation of tramadol may offer a valuable therapeutic option to healthcare professionals and patients with moderate to moderately severe pain," said Michael Friedman, president and CEO of Purdue. "Through this agreement, Purdue reinforces its leadership position in, and commitment to, pain management. Pending FDA approval of this once-daily tramadol formulation, we believe that we would be in a strong position to capture a significant portion of the tramadol market."

"As the premier U.S. marketer of long-acting pain medications, including OxyContin(R) (oxycodone HCl controlled-release) Tablets and MS Contin(R) (morphine sulfate controlled-release) Tablets, and with its extensive patent portfolio related to controlled-release tramadol, Purdue is the ideal partner for our product in the United States," said Dr. Allan Mandelzys, vice president, Business Development, Labopharm Inc. "Purdue has a proven track record of success in the long-acting analgesic market. Prior to the launch of generic products in 2004, annual sales of OxyContin reached approximately US$2 billion."

The agreement is subject to Hart-Scott-Rodino clearance in the United States.

About Labopharm's Commercialization Program for Once-Daily Tramadol

Labopharm is pursuing a global commercialization program for its once-daily formulation of tramadol. In the United States, the company has completed two Phase III clinical studies and is currently engaged in a third. Labopharm is currently compiling its New Drug Application, which it expects to submit to the Food and Drug Administration before year-end. In Europe, Labopharm's once-daily tramadol product has been approved in France and the company is completing the Mutual Recognition Procedure process, which will provide regulatory approval across the European Union. The company anticipates launching its product in Europe before year-end. To date, Labopharm has secured marketing partnerships for 20 European countries, including four of the five largest tramadol markets and covering more than 80% of the total European tramadol market.

About Tramadol

Tramadol is a centrally acting analgesic that is indicated for the treatment of moderate to moderately severe pain in adults. The worldwide market for tramadol is estimated to be valued at US$1.3 billion, and IMS Health estimates that the worldwide sales volume of tramadol has grown at a compounded annual rate of 14% over the past five years. In the United States, where tramadol is currently available only as immediate-release formulations typically requiring four to six doses per day, Verispan estimates that more than 17 million prescriptions were written for tramadol products in 2004 and that the U.S. market for tramadol products has grown at a compounded annual rate of 11% over the last five years.

About Purdue Pharma L.P.

Purdue Pharma L.P. and its associated U.S. companies are privately-held pharmaceutical companies known for pioneering research on persistent pain. Headquartered in Stamford, CT, Purdue is engaged in the research, development, production, and distribution of both prescription and over-the-counter medicines and hospital products.

For more information, visit http://www.purduepharma.com 203/588-8069.

About Labopharm Inc.

Labopharm Inc. (TSX: DDS) is an international, specialty pharmaceutical company focused on the development of drugs incorporating Contramid(R), the company's proprietary advanced controlled-release technology. Labopharm's lead in-house product, a once-daily formulation of the analgesic tramadol, has been approved in France and the company has initiated the Mutual Recognition Procedure process, which will facilitate regulatory approval across the European Union. In the U.S., the company's once-daily tramadol product is in pivotal Phase III clinical trials. The company's pipeline includes a combination of in-house and partnered programs with products both in clinical trials and in preclinical development.

For more information, visit http://www.labopharm.com or call 450\686-1017.