Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 1 of 27

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1 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 1 of 27 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK In re WARNER CHILCOTT LIMITED SECURITIES LITIGATION x : Civil Action No. 06-CV (WHP) CLASS ACTION This Document Relates To: ALL ACTIONS. x CONSOLIDATED AMENDED CLASS ACTION COMPLAINT

2 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 2 of 27 Lead Plaintiffs International Brotherhood of Electrical Workers Local 98 ("IBEW ) and Wesley Ruggles Ltd. II ("Ruggles ) and Plaintiff Marc Weinberg (collectively, "Plaintiffs ), make the following allegations, except as to allegations specifically pertaining to Plaintiffs and Plaintiffs' counsel, based upon the investigation undertaken by Plaintiffs' counsel, which investigation included analysis ofpublicly available news articles and reports, public filings, securities analysts' reports and advisories about Warner Chilcott Limited ("Warner Chilcott or the "Company ), press releases and other public statements issued by the Company, and media reports about the Company and believe that substantial additional evidentiary support will exist for the allegations set forth herein after a reasonable opportunity for discovery. NATURE OF THE ACTION 1. This is a federal securities class action on behalf of a class consisting of all persons other than Defendants who purchased the common stock of Warner Chilcott pursuant and/or traceable to the Company's initial public offering on or about September 20, 2006 (the "IPO or the "Offering ) through September 26, 2006, seeking to pursue remedies under the Securities Act of 1933 (the "Securities Act ). Warner Chilcott issued at least 70.6 million shares of common stock and raised more than $1 billion in the IPO. 2. Prior to, and at the time of, the IPO, Ovcon 35 was one of Warner Chilcott's most important products. The Prospectus issued in connection with the IPO, which made up part of the Registration Statement, disclosed the significant contributions that sales of Ovcon 35 had on Warner Chilcott' s financial performance. Additionally, in the years prior to the IPO, Warner Chilcott ensured that it would not face generic competition for Ovcon 35. Specifically, the Company had entered into an agreement with Barr Pharmaceuticals, Inc. ("Barr ) - who was soon to obtain FDA approval to sell a generic Ovcon 35 - which granted the Company the exclusive right to distribute a generic equivalent of Ovcon 35, thereby eliminating generic competition. -1-

3 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 3 of The Prospectus issued in connection with the IPO was negligently prepared and, as a result, contained untrue and inaccurate statements of material fact, omitted to state other facts necessary to make the statements made not misleading and was not prepared in accordance with the rules and regulations governing its preparation. Warner Chilcott had stopped shipping Ovcon 35 to customers in September 2006, prior to the IPO, and replaced Ovcon 35 with a new chewable form of Ovcon 35 ("Ovcon Chewable ). Furthermore, at the time of the IPO, Warner Chilcott was considering waiving its exclusive right to sell a generic Ovcon 35 which would permit generic competition for the drug. The Prospectus negligently failed to disclose that the Company had already ceased shipments of Ovcon 35 at the time of the IPO, thereby eliminating a primary revenue stream for the Company. The Prospectus also negligently failed to disclose that the Company was considering waiving its exclusive right to sell Ovcon 35, thereby clearing the way for Barr to immediately launch a generic version of Ovcon On September 26, 2006, Warner Chilcott disclosed that it had stopped shipments of Ovcon 35 prior to the IPO and that it had waived its exclusivity agreement with Barr for a generic Ovcon 35, enabling Barr to sell a generic version. In response to this news, the price of Warner Chilcott stock dropped by approximately 16%, from a closing price of $15 per share to $12.60 per share, on extremely heavy volume of almost 15 million shares. JURISDICTION AND VENUE 5. The claims asserted herein arise under and pursuant to Sections 11, 12(a)(2) and 15 of the Securities Act [15 U.S.C. 77k, 771(a)(2) and 77o]. This Court has jurisdiction over this action pursuant to Section 22 of the Securities Act [15 U.S.C. 77v] and 28 U.S.C and Venue is properly laid in this District pursuant to Section 22 of the Securities Act and 28 U.S.C. 1391(b) and (c). The acts and conduct complained of herein occurred in substantial part -2-

4 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 4 of 27 in this District and the IPO was marketed and sold by Defendants in this District. Warner Chilcott's common stock is traded over the NASDAQ national market which is based in this District. 7. In connection with the acts and conduct alleged in this Complaint, Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce, including the mails and telephonic communications and the facilities of the NASDAQ Stock Market (the "NASDAQ ), a national securities exchange. PARTIES 8. Lead Plaintiffs IBEW and Ruggles purchased Warner Chilcott common stock pursuant and/or traceable to the IPO, as set forth in their certifications previously submitted in this litigation which are incorporated by reference herein, and were damaged thereby. 9. Plaintiff Marc Weinberg purchased Warner Chilcott common stock pursuant and/or traceable to the IPO, as set forth in his certification previously submitted in this litigation which is incorporated by reference herein, and was damaged hereby. 10. Defendant Warner Chilcott is a specialty pharmaceutical company with its principal executive offices at 100 Enterprise Drive Rockaway, NJ The Company is engaged in the development, manufacture, sale, and marketing ofbranded prescription pharmaceutical products in women's healthcare and dermatology primarily in the United States. Warner Chilcott common stock publicly trades on the NASDAQ under the ticker symbol "WCRX and the Company is organized under the laws of Bermuda. 11. (a) Defendant Roger Boissonneault ("Boissonneault ) was, at all relevant times, President, Chief Executive Officer and a director of Warner Chilcott. Boissonneault signed the Registration Statement. -3-

5 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 5 of 27 (b) Defendant Paul Herendeen ("Herendeen ) was, at all relevant times, Executive Vice President and Chief Financial Officer of Warner Chilcott. Herendeen signed the Registration Statement. (c) Defendants Boissonneault and Herendeen are collectively referred to herein as the "Individual Defendants. 12. Defendant Goldman, Sachs & Co. ("Goldman Sachs ) served as an underwriter for the IPO and as a representative of the underwriters for the IPO. Goldman Sachs entered into an underwriting agreement with the Company. 13. Defendant Credit Suisse Securities (USA) LLC ("Credit Suisse ) served as an underwriter for the IPO and as a representative of the underwriters for the IPO. Credit Suisse entered into an underwriting agreement with the Company. 14. Defendant J.P. Morgan Securities Inc. ("JP Morgan ) served as an underwriter for the IPO and as a representative of the underwriters for the IPO. JP Morgan entered into an underwriting agreement with the Company. 15. Morgan Stanley & Co. Incorporated ("Morgan Stanley ) served as an underwriter for the IPO and as a representative of the underwriters. Morgan Stanley entered into an underwriting agreement with the Company. 16. Defendants Goldman Sachs, Credit Suisse, JP Morgan and Morgan Stanley are collectively referred to herein as the "Underwriter Defendants. The Underwriter Defendants served as the joint book-running managers for the IPO and actively solicited, offered and collectively sold tens of millions of shares of the Company to investors in the IPO. PLAINTIFFS' CLASS ACTION ALLEGATIONS 17. Plaintiffs bring this action as a class action pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3) on behalf of themselves and all persons other than Defendants who -4-

6 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 6 of 27 purchased the common stock of Warner Chilcott pursuant and/or traceable to the IPO on or about September 20, 2006 through September 26, Excluded from the Class are Defendants herein, members of the immediate family of each of the Defendants, any person, firm, trust, corporation, officer, director or other individual or entity in which any Defendant has a controlling interest or which is related to or affiliated with any of the Defendants, and the legal representatives, agents, affiliates, heirs, successors -in-interest or assigns of any such excluded party. 18. The members of the Class are so numerous that joinder of all members is impracticable. Warner Chilcott sold more than 70 million shares of common stock in the IPO. The precise number of Class members is unknown to Plaintiffs at this time but is believed to be in the thousands. In addition, the names and addresses of the Class members can be ascertained from the books and records of Warner Chilcott or its transfer agent or the underwriters to the IPO. Notice can be provided to such record owners by a combination of published notice and first-class mail, using techniques and a form of notice similar to those customarily used in class actions arising under the federal securities laws. 19. Plaintiffs will fairly and adequately represent and protect the interests of the members of the Class. Plaintiffs have retained competent counsel experienced in class action litigation under the federal securities laws to further ensure such protection and intend to prosecute this action vigorously. 20. Plaintiffs' claims are typical ofthe claims of the other members of the Class because Plaintiffs' and all the class members' damages arise from and were caused by the same false and misleading representations and omissions made by or chargeable to Defendants. Plaintiffs do not have any interests antagonistic to, or in conflict with, the Class. -5-

7 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 7 of A class action is superior to other available methods for the fair and efficient adjudication of this controversy. Since the damages suffered by individual class members may be relatively small, the expense and burden of individual litigation make it virtually impossible for the class members to seek redress for the wrongful conduct alleged. Plaintiffs know of no difficulty that will be encountered in the management of this litigation that would preclude its maintenance as a class action. 22. Common questions of law and fact exist as to all members of the Class and predominate over any questions affecting solely individual members of the Class. Among the questions of law and fact common to the Class are: alleged herein; (a) Whether the federal securities laws were violated by Defendants' acts as (b) Whether the Registration Statement and Prospectus issued by Defendants to the investing public in connection with the IPO negligently omitted and/or misrepresented material facts about Warner Chilcott and its business; and (c) The extent of injuries sustained by members of the Class and the appropriate measure of damages. SUBSTANTIVE ALLEGATIONS The IPO 23. Defendant Warner Chilcott is engaged in the development, manufacture, sale, and marketing ofbranded prescription pharmaceutical products in women's healthcare and dermatology primarily in the United States. 24. On or about September 15, 2006, Warner Chilcott filed with the SEC a Form S-1/A Registration Statement (the "Registration Statement ), for the IPO. -6-

8 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 8 of On or about September 20, 2006, the Prospectus (the "Prospectus ) with respect to the IPO, which forms part of the Registration Statement, became effective and, at least, 70.6 million shares of Warner Chilcott's common stock were sold to the public, thereby raising more than $1 billion. Ovcon 35 Was One of Warner Chilcott's Most Important Products Prior to and at the Time of the IPO 26. Ovcon was originally approved by the FDA in In January 2000, Warner Chilcott acquired the rights to Ovcon from Bristol-Myers Squibb Company ("Bristol-Myers ) and Bristol-Myers agreed to supply Ovcon to Warner Chilcott. 27. During 2005 and the first half of 2006, Ovcon 35, a version of Ovcon, was a significant revenue generator for the Company. Ovcon is a product in Warner Chilcott's Oral Contraceptives Group. Warner Chilcott generated approximately $494.3 million in total product net sales and its Oral Contraceptives Group generated approximately $171.5 million, the most sales of any Warner Chilcott group. During 2005, Warner Chilcott generated approximately $90.2 million in sales from Ovcon 35 and Ovcon 50, more than any other product in the Oral Contraceptives Group. Upon information and belief, most of these Ovcon sales were from sales of Ovcon 35. Thus, Ovcon 35 was the biggest revenue generator in Warner Chilcott's most dominant product group in terms of sales. 28. During 2006, Ovcon continued to be vitally important to Warner Chilcott. During the first six months of 2006, Warner Chilcott generated approximately $47.2 million from sales of Ovcon, comprised substantially of sales of Ovcon

9 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 9 of 27 Warner Chilcott Obtains an Exclusive License to Sell Generic Ovcon In September 2001, Barr filed a New Drug Application ("NDA ) with the FDA for approval to manufacture and sell an AB-rated generic version of Ovcon 35. In January 2003, Barr publicly announced its intention to market a generic version of Ovcon 35 by the end of On or about September 10, 2003, Warner Chilcott and Barr executed a letter of intent (the "Letter of Intent ), which provided that Warner Chilcott would pay Barr $20 million and that Barr would agree not to compete in the United States with its generic Ovcon 35 for five years after receiving final FDA approval of its NDA, but instead would agree to be available as a second supplier of Ovcon to Warner Chilcott upon its request. 31. On or about March 24, 2004, Warner Chilcott and Barr signed a final agreement ("Final Agreement ), which implemented the Letter of Intent. Warner Chilcott paid Barr $1 million upon the signing of the Final Agreement and, within 45 days of the FDA's approval of Barr's generic Ovcon NDA, Warner Chilcott could elect to pay the remaining $ 19 million to secure the exclusive license to Barr's NDA for generic Ovcon 35 for five years. 32. On or about April 22, 2004, the FDA approved Barr's NDA to produce and market generic Ovcon 35. On or about April 23, 2004, Barr publicly announced its intention to market generic Ovcon 35 if Warner Chilcott chose not to exercise its exclusive license option. 33. On or about May 6, 2004, Warner Chilcott exercised the exclusive license option under the Final Agreement by paying Barr $19 million. Under the terms of the Final Agreement, Barr was not permitted to sell generic Ovcon in the United States for five years, or until approximately May Warner Chilcott began buying Ovcon 35 from Barr during May

10 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 10 of 27 Warner Chilcott Stopped Shipping Ovcon 35 Before the IPO 34. In early September 2006, Warner Chilcott stopped shipping Ovcon 35 to customers. The Prospectus negligently failed to disclose this material fact. The Prospectus stated that Warner Chilcott "launched a new product, Ovcon 35 Fe, a chewable version of Ovcon 35 ("Ovcon Chewable ) and was "transitioning from Ovcon 35 to Ovcon Chewable. 35. At the time of the IPO, the Company had already stopped shipments of one of its most important products and immediately following the IPO would not be generating the substantial revenues realized historically from this product. Although the Prospectus stated that the Company was "transitioning from Ovcon 35 to Ovcon Chewable, it negligently failed to disclose that prior to the IPO and thereafter the Company would be relying exclusively on a new, unproven product, Ovcon Chewable, to generate or replace all of its Ovcon 35 sales. 36. Furthermore, the elimination of Ovcon 35 from the market exposed Warner Chilcott to greater risk from generic competition than it would have encountered had it continued to sell Ovcon 35 to compete with generic versions of Ovcon 35. The Company also risked losing Ovcon 35 customers that would choose competing products over Ovcon Chewable. The Registration Statement and Prospectus Contained Inaccurate Statements of Material Fact and Omitted Material Information Required to Be Disclosed Therein 37. The Prospectus highlighted the strong performance of Ovcon 35 and its contribution to Warner Chilcott's financial performance but failed to disclose that the Company stopped shipments of Ovcon 35 and was considering waiving its exclusive right to sell generic Ovcon 35. The Prospectus stated in pertinent part as follows: -9-

11 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 11 of 27 Net Sales We generate our revenue primarily from the sale of branded pharmaceutical products in the U.S. market, including our oral contraceptives (Ovcon, Estrostep and Loestrin 24 Fe ), our hormone therapy products (femhrt, Estrace Tablets, Femtrace, Estrace Cream and Femring), our oral antibiotic for the treatment of acne (Doryx), our psoriasis products (Dovonex and Taclonex) and our treatment for premenstrual dysphoric disorder (Sarafem). Our revenue from sales of these products consists primarily of sales invoiced less returns and other deductions. (Emphasis added.) Changes in revenue from sales of our branded pharmaceutical products from period to period are affected by the following factors: changes in the level of competition faced by our products, including the launch of new products by competitors and the introduction of generic equivalents after the expiration ofpatents associated with our products; changes in the level of promotional or marketing support for our products and the size of our sales forces The Prospectus emphasized the beneficial impact that Ovcon had on the Company stating in pertinent part as follows: Our oral contraceptive products, Ovcon and Estrostep, were the primary focus of our sales forces beginning in early 2004 and that promotional effort produced strong growth in prescription demand for both products. Ovcon revenue growth of 26.1% for the year ended December 31, 2005 versus the prior fiscal year was driven primarily by growth in filled prescriptions (a proxy for unit growth) combined with the impact ofprice increases of approximately 11 %. The 31.8% growth of Estrostep sales in 2005 over the prior year was driven by a combination of strong growth in filled prescriptions and the impact of price increases of approximately 11 %. We believe that the sales growth rates of both Ovcon and Estrostep in comparison with the prior year period was reduced due to the contraction of pipeline inventories for the products during the 2005 period relative to The statements referenced above in were each inaccurate statements of material fact because they failed to disclose that the Company had already ceased shipments of Ovcon 35 at the time of the IPO, thereby eliminating a primary revenue stream for the Company. -10-

12 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 12 of 27 The statements referenced above in were each an inaccurate statement of material fact because the Company, at that time, was considering waiving the exclusive license on Ovcon 35, thereby enabling Barr to sell a generic version of Ovcon The Prospectus represented that it launched Ovcon Chewable in September 2006, but it failed to disclose that the Company stopped shipments of Ovcon 35 in September 2006 in connection with that product launch. The Prospectus stated in pertinent part as follows: We launched Femring in June 2003, Doryx delayed-release tablets in September 2005, Femtrace, an oral estrogen therapy product, in November 2005, low dose femhrt in January 2006 and Loestrin 24 Fe and Taclonex in April We launched Ovcon Chewable in September By targeting our research and development efforts on our existing therapeutic categories, we believe we will be able to leverage the professional relationships our sales forces have built with highprescribing specialist physicians. (Emphasis added.) 41. Similarly, the Prospectus states : "In September 2006, we launched Ovcon 35 Fe ("Ovcon Chewable ), the first chewable oral contraceptive to receive FDA approval. 42. The statements referenced above in were each inaccurate statements of material fact because they failed to disclose that the Company had already ceased shipments of Ovcon 35 at the time of the IPO, thereby eliminating a primary revenue stream for the Company. The term "launched was an inaccurate and incomplete statement of material fact because the Company "replaced Ovcon 35 with Ovcon Chewable and did not simply "launch Ovcon Chewable. 43. The Prospectus, under the section entitled "Product and Related Acquisitions, stated in pertinent part as follows: Product and Related Acquisitions We have built and strengthened our pharmaceutical products business since expanding into the U. S. market in September 2000 through the following product and related acquisitions: -11-

13 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 13 of 27 In March 2004, for $1.0 million, Barr granted us an option to acquire a five-year exclusive license under Barr's ANDA for which our Ovcon 35 oral contraceptive is the reference drug. In May 2004, we exercised this option for an additional payment of $19.0 million. The Barr agreement provides us with a reliable source of supply for this product. As a result of the launch of Ovcon Chewable and eventual phase-out of Ovcon 35, we expect to engage in discussions with Barr about the effect of the launch on our agreement. (Emphasis added.) 44. The statements referenced above in 43 were each an inaccurate statement ofmaterial fact because they failed to disclose that the Company had already ceased shipments of Ovcon 35 at the time of the IPO, thereby eliminating a primary revenue stream for the Company. The phrase "launch of Ovcon Chewable was an inaccurate statement of material fact because Ovcon Chewable was not simply being "launched but was replacing Ovcon 35 and "eventual phase-out of Ovcon 35 was an inaccurate statement of material fact because it indicates that Ovcon 3 5 would be phased-out at some point in the future when in fact the Company had already begun the process and stopped shipments of Ovcon 35 prior to the IPO. Further, the phrase "engage in discussions with Barr about the effect of the launch on our agreement was an inaccurate statement of material fact because the Prospectus failed to disclose that the "effect on the agreement with Barr was that the Company, at that time, was considering waiving the exclusive license on Ovcon 35, thereby enabling Barr to sell a generic Ovcon 35. follows: 45. The Prospectus, in the section entitled "Competition, stated in pertinent part as Our branded pharmaceutical products are or may become subject to competition from generic equivalents. Ovcon, Estrace Tablets and Estrace Cream are currently not protected by patents. See "Risk Factors-Risks Relating to Our Business-If generic products that compete with any of our branded pharmaceutical products are approved, sales of our products may be adversely affected. Generic equivalents for some of our branded pharmaceutical products are sold by other pharmaceutical companies at lower prices. As a result, drug retailers have economic incentives to fill prescriptions for branded products with generic equivalents when available. After the introduction of a generic competitor, a significant percentage of the prescriptions written for the branded product may be filled with the generic version at the pharmacy, resulting in a commensurate loss in sales of the branded product. While -12-

14 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 14 of 27 Ovcon 35 is not patent protected, we have an exclusive license to use Barr's ANDA for which Ovcon 35 is the reference product. Upon the expiration or earlier termination of the Barr supply agreement (see "Product and Related Acquisitions "), Barr could launch a generic equivalent. 46. The statements referenced above in 45 were each an inaccurate statement ofmaterial fact because they failed to disclose that the Company had already ceased shipments of Ovcon 35 at the time of the IPO, thereby eliminating a primary revenue stream for the Company. Further, the statements referenced above in 45 were each an inaccurate statement of material fact because the Company, at that time, was considering waiving the exclusive license on Ovcon 35, thereby enabling Barr to sell a generic Ovcon 35. Furthermore, the statements referenced above in 45 were each an inaccurate statement of material fact because the elimination of Ovcon 35 exposed the Company to increased risk from competition than it would encounter if it continued to sell both Ovcon 35 and Ovcon Chewable. 47. The Risk Factors section of the Prospectus were inaccurate, not meaningful, and failed to disclose hard facts critical to appreciating the magnitude of the risks described therein. The Prospectus failed to disclose that the Company stopped shipping Ovcon 35, which exposed the Company to increased risk from both a competing generic Ovcon 35 and an alternative to Ovcon Under the Risk Factors section, the Prospectus stated in pertinent part as follows: Ifgenericproducts that compete with any ofour brandedpharmaceuticalproducts are approved, sales of our products may be adversely affected Our branded pharmaceutical products are or may become subject to competition from generic equivalents because there is no proprietary protection for some of the branded pharmaceutical products we sell or because our patent protection expires or is not sufficiently broad. Ovcon 50, Ovcon 35, Estrace Tablets and Estrace Cream are currently not protected by patents. Generic equivalents for some of our branded pharmaceutical products are sold by other pharmaceutical companies at a lower cost. After the introduction of a generic competitor, a significant percentage of the prescriptions written for the branded -13-

15 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 15 of 27 product may be filled with the generic version at the pharmacy, resulting in a commensurate loss in sales of the branded product. In addition, legislation enacted in the United States allows or, in a few instances, in the absence of specific instructions from the prescribing physician mandates, the use of generic products rather than branded products where a generic equivalent is available. Competition from generic equivalents could have a material adverse impact on our revenues, financial condition, results of operations and cash flows. (Emphasis in original.) 49. The statements referenced above in 48 were each an inaccurate statement ofmaterial fact because they failed to disclose that the Company had already ceased shipments of Ovcon 35 at the time of the IPO thereby eliminating a primary revenue stream for the Company and increasing the negative impact that the introduction of a generic Ovcon 35 would have on the Company. The statements referenced above in 48 were each an inaccurate statement of material fact because the elimination of Ovcon 35 exposed the Company to more risk from competition than it would encounter if it continued to sell both Ovcon 35 and Ovcon Chewable. Since the Company stopped shipping Ovcon 35, a generic form of Ovcon 35 would not encounter any direct competition from the Company. Instead, the Company would only be able to compete with Ovcon Chewable, a brand new product that was untested in the marketplace 50. The Prospectus purported to warn about the risks of legal proceedings stating in pertinent part as follows: FTC Lawsuits Regarding Exercise of Option for a Five-Year Exclusive License to ANDA Referencing Ovcon 35 We are contesting these lawsuits vigorously. Although it is impossible to predict with certainty the outcome of any litigation, an unfavorable outcome in these proceedings is not anticipated by us. An estimate of the range of potential loss, if any, to us relating to these proceedings is not possible at this time. Notwithstanding our belief that an unfavorable outcome is unlikely, if the plaintiffs in these private lawsuits are ultimately successful, we may be required to pay damages which could have an adverse impact on our results of operations and cash flows. Also, an adverse result in the FTC and state actions could adversely affect our profits and cash flows by, for example, making it more difficult for us to obtain a supply of Ovcon or facilitating generic competition for this product. (Emphasis added.) -14-

16 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 16 of The statements referenced above in 50 were each an inaccurate statement ofmaterial fact because the Company, at that time, was considering waiving the exclusive license on Ovcon 35, thereby enabling Barr to sell a generic Ovcon 35. The statement "making it more difficult for us to obtain a supply of Ovcon was an inaccurate statement of material fact because it indicated that the Company still had strong demand for Ovcon 35 when it had stopped shipping that product. 52. Under applicable SEC rules and regulations governing the preparation of the Registration Statement and Prospectus, the Registration Statement and Prospectus were required to disclose both that the Company had stopped shipping Ovcon 35 and also the impact that this would have on the Company in the near future. The Prospectus failed to contain any such disclosure. Specifically: (a) Pursuant to Item 11(h) of Form S-1, the Registration Statement was required to furnish the information required by Item 303 ofregulation S-K. Under Item 303 (a) of Regulation S-K an issuer is required to, among other things, "describe any known trends or uncertainties that have had or that the registrant reasonably expects will have a material favorable or unfavorable impact on net sales or revenues or income from continuing operations. According to the Instructions to Paragraph 303 (a), "[t]he purpose ofthe discussion and analysis shall be to provide to investors and other users information relevant to an assessment ofthe financial condition and results of operations of the registrant as determined by evaluating the amounts and certainty of cash flows from operations and from outside sources. The fact that the Company halted shipments of Ovcon 35 prior to, and at the time of, the IPO had, and would continue to have, an unfavorable impact on the Company's net sales and income from continuing operations and, therefore, was required to be disclosed in the Registration Statement but was not. Further, since the Company halted shipments of Ovcon 35, it exposed itself to greater risk from competition. This risk materialized shortly after the -15-

17 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 17 of 27 IPO when it was disclosed that the Company waived its exclusivity on Ovcon 35, which the Company was considering prior to the IPO but failed to disclose to investors. This information would have provided investors with information relevant to an assessment of the Company's financial condition and results of operations; and (b) Pursuant to Item 3 of Form S-1, the Registration Statement was required to furnish the information required by Item 503 of Regulation S-K. Under Item 503(c) of Regulation S-K, an issuer is required to, among other things, provide a "discussion of the most significant factors that make the offering risky or speculative. The fact that the Company had stopped shipments of Ovcon 35 and was attempting to transition to Ovcon Chewable by removing Ovcon 35 from the marketplace and only offering Ovcon Chewable to customers, exposed the Company to increased risk to competition. The fact that the Company stopped shipments of Ovcon 35 was a "significant factor that made the IPO "risky or speculative and was required to be disclosed in the Registration Statement but was not. This risk materialized shortly after the IPO when it was disclosed that the Company stopped shipping Ovcon 35 and waived its exclusivity agreement on Ovcon 35, which the Company was considering prior to the IPO but failed to disclose. Post-IPO Developments 53. On September 26, 2006, Warner Chilcott filed a supplement to the Prospectus on Form 424B3 (the "Prospectus Supplement ) and announced that it had ceased shipments of Ovcon 35 in September 2006 when it launched Ovcon Chewable. The Company also revealed that "transitioning to Ovcon Chewable and "eventual phase-out of Ovcon 35 actually meant replacing Ovcon 35 with Ovcon Chewable immediately as opposed to over time. The Prospectus Supplement revealed that the Company waived its exclusive right to sell generic Ovcon 35, enabling Barr to compete with a generic version of Ovcon 35 immediately. -16-

18 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 18 of The Prospectus Supplement stated in relevant part: In August 2006, we completed manufacturing validation for a chewable version of Ovcon 35, Ovcon Chewable. In September of 2006, we launched Ovcon Chewable and stopped shipping Ovcon 35 to consumers as we began the process of transitioning from Ovcon 35 to Ovcon Chewable. As disclosed in our Prospectus dated September 20, 2006, we are currently party to litigation with the FTC and 34 states plus the District of Columbia relating to our agreements with Barr for the supply of Ovcon 35. At issue in the litigation are the exclusivity provisions in these agreements, which provide that Barr exclusively supply Ovcon 35 to us, and the alleged anti-competitive effects ofthese provisions. Barr is our sole source of supply for Ovcon 35. In August 2006, we completed manufacturing validation for a chewable version of Ovcon 35, Ovcon Chewable. In September of 2006, we launched Ovcon Chewable and stopped shipping Ovcon 35 to consumers as we began the process of transitioning from Ovcon 35 to Ovcon Chewable. On September 25, 2006, the FTC filed a new motion in the ongoing litigation alleging that our transition from Ovcon 35 to Ovcon Chewable would impede the market for a generic version of Ovcon 35. The FTC's motion seeks a preliminary injunction that, if granted, would require us to continue to supply Ovcon 35 on a basis comparable to Ovcon Chewable, including with respect to pricing, sampling and availability, in order to enable the possible entrance of a generic version of Ovcon 35 into the marketplace. The FTC's motion does not seek to restrain our continuing roll out of Ovcon Chewable. We believe the new relief requested by the FTC is without merit and we intend to contest the FTC's motion vigorously. As disclosed in our Prospectus dated September 20, 2006, as a result of the launch of Ovcon Chewable and our eventual phase-out of Ovcon 35, we had expected to engage in discussions with Barr about the effect of the launch on our agreements. On September 25, 2006, following a review of our agreements with Barr relating to Ovcon 35, we signed a waiver which terminated the exclusivity provisions contained therein. The remaining provisions of the Barr agreements remain unchanged. Since the principal equitable relief sought in the initial Ovcon 35 FTC litigation referred to above was the termination of these exclusivity provisions, we intend to promptly file a motion to dismiss this litigation. While Ovcon 35 is not patent protected, the agreements with Barr granted us an exclusive license to use their ANDA for which Ovcon 35 is the reference product. As a result of terminating the exclusivity provision, Barr could launch a generic equivalent. While we believe the FTC's motion is without merit, it is impossible to predict with any certainty the outcome of any litigation. If the FTC's motion is granted, it could delay the migration from Ovcon 3 5 to Ovcon Chewable or, in the event that a generic -17-

19 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 19 of 27 equivalent of Ovcon 3 5 is introduced, could result in reduced migration of consumers to Ovcon Chewable. 55. Also on September 26, 2006, Barr announced that it would start selling a generic version of Ovcon 35 during October Following the announcement that Barr would start selling a generic version of Ovcon 35, Warner Chilcott held a conference call with investors on September 27, 2006, and acknowledged the material impact resulting from Warner Chilcott's halting of shipments of Ovcon 35 during September Warner Chilcott also acknowledged that since it had stopped shipments of Ovcon 35, it was vulnerable to competition from a generic Ovcon 35 since it did not have a directly-competing product. Instead, Warner Chilcott halted shipments of Ovcon 3 5 and replaced it with Ovcon Chewable, a new and unproven product. On the conference call, Defendant Boissonneault stated that "the conversion ofthe oral Ovcon 35 franchise to Ovcon FE Chewable will not be the straightforward process we had been expecting and added that: As a result, we are evaluating our sales and profit expectations for the next several years based on the expectation of a generic competitor to Ovcon 35 beginning in late October and a slower ramp of new prescriptions and total prescriptions market share for our new Ovcon FE Chewable product. 57. On September 26, 2006, in response to the Company' s disclosures, the price of Warner Chilcott common stock plunged by approximately 16% from a closing price of $15.00 per share the day before the announcement to $12.60 per share, on extremely heavy trading volume of almost 15 million shares. -18-

20 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 20 of 27 forth herein. COUNT I Violation of Section 11 of the Securities Act Against All Defendants 58. Plaintiffs repeat and reallege each and every allegation contained above as if fully set 59. This Count is brought pursuant to Section 11 of the Securities Act, 15 U.S.C. 77k, and is asserted against all Defendants. 60. The Registration Statement for the IPO was inaccurate and misleading, contained untrue statements of material facts, omitted facts necessary to make the statements made therein not misleading, and omitted to state material facts required to be stated therein. 61. Warner Chilcott is the registrant for the IPO. As issuer ofthe shares, Warner Chilcott is strictly liable for the materially inaccurate statements contained in the Registration Statement and the Prospectus and the failure of the Registration Statement and Prospectus to be complete and accurate. 62. The Individual Defendants each signed the Registration Statement either personally or through an Attorney-in-Fact and/or caused its issuance. The Individual Defendants each had a duty to make a reasonable and diligent investigation of the truthfulness and accuracy of the statements contained in the Registration Statement. They had a duty to ensure that such statements were true and accurate, that there were no omissions of material fact that would make the statements misleading and that the documents contained all facts required to be stated therein. In the exercise of reasonable care, the Individual Defendants should have known of the material misstatements and omissions contained in the Registration Statement and also should have known of the omissions of material fact necessary to make the statements made therein not misleading. As such, the Individual Defendants are liable to the Plaintiffs and the Class. -19-

21 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 21 of The Underwriter Defendants were each underwriters, as that term is used in Section 11(a)(5) of the Securities Act, with respect to the IPO and the Company' s securities sold through the Registration Statement. The Underwriter Defendants were required to investigate with due diligence the representations contained therein to confirm that they did not contain materially misleading statements or omit material facts. None of the Underwriter Defendants made a reasonable investigation or possessed reasonable grounds for the belief that the statements described herein, which were contained in the Registration Statement and Prospectus, were true, were without omission of any material facts, and/or were not misleading. 64. By reasons of the conduct herein alleged, each Defendant violated Section 11 of the Securities Act. 65. Plaintiffs acquired Warner Chilcott shares traceable to, and in reliance on, the Registration Statement and without knowledge of the untruths and/or omissions alleged herein. Plaintiffs and the Class sustained damages when the price of Warner Chilcott's stock declined substantially due to material misstatements in the Registration Statement and Prospectus. forth herein. COUNT II Violation of Section 12(a)(2) of the Securities Act Against All Defendants 66. Plaintiffs repeat and reallege each and every allegation contained above as if fully set 67. This Count is brought pursuant to Section 12 (a)(2) of the Securities Act, 15 U.S.C. 771, on behalf of Plaintiffs and the Class, against all Defendants. 68. Defendants were sellers and offerors and/or solicitors of purchasers of the shares offered pursuant to the Prospectus. Defendants issued, caused to be issued, and/or signed the Registration Statement in connection with the IPO. The Registration Statement contained a -20-

22 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 22 of 27 Prospectus which was used to induce investors, such as the Plaintiffs and the other members of the Class, to purchase Warner Chilcott's common stock. 69. The Prospectus contained untrue statements of material fact, omitted to state other facts necessary to make the statements made not misleading, and omitted material facts required to be stated therein. The Individual Defendants' actions of solicitation included participating in the preparation of the false and misleading Prospectus and in "Road Shows to promote the IPO. Warner Chilcott and the Underwriter Defendants, acting through their employees, agents and others, solicited such purchases for their personal financial gain through the preparation and dissemination of the Prospectus. 70. Pursuant to the Underwriting Agreement, the Underwriter Defendants purchased a total of at least 70.6 million shares of Warner Chilcott common stock at the public offering price, less an underwriting discount in the IPO. 71. The Underwriter Defendants participated in the preparation and dissemination of the false and misleading Prospectus for their own financial benefit. But for their participation in the IPO, including their solicitation as set forth herein, the IPO could not and would not have been accomplished. Specifically, the Underwriter Defendants: (a) made the decision to conduct the IPO and do it at the price set forth in the offering documents. The Underwriter Defendants drafted, revised and/or approved the Prospectus. The Prospectus was calculated to create interest in Warner Chilcott shares and was widely distributed by or on behalf of these Defendants for that purpose; (b) finalized the Prospectus and caused it to become effective; and -21-

23 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 23 of 27 (c) conceived and planned the IPO and orchestrated all activities necessary to affect the sale of these securities to the investing public, by issuing securities, promoting the securities and supervising their distribution and ultimate sale to the investing public. 72. As set forth more specifically above, the Prospectus contained untrue statements of material fact and omitted to state material facts necessary in order to make the statements, in light of circumstances in which they were made, not misleading. 73. Plaintiffs and the other class members did not know, nor could they have known, of the untruths or omissions contained in the Prospectus. 74. The Defendants named in this Count were obligated to make a reasonable and diligent investigation of the statements contained in the Prospectus to ensure that such statements were true and that there was no omission of material fact required to be stated in order to make the statements contained therein not misleading. None of the Defendants named in this Count made a reasonable investigation or possessed reasonable grounds for the belief that the statements contained in the Prospectus were accurate and complete in all material respects. Had they done so, these Defendants would have known of the material misstatements and omissions alleged herein. 75. By reason of the misconduct alleged herein, the Defendants named in this Count violated Section 12(a)(2 ) of the Securities Act and are liable to Plaintiffs and class members who purchased or acquired Warner Chilcott shares in the IPO pursuant to the Prospectus, each of whom has been damaged as a result of such violation. forth herein. COUNT III Violation of Section 15 of the Securities Act Against the Individual Defendants 76. Plaintiffs repeat and reallege each and every allegation contained above as if fully set -22-

24 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 24 of This Count is brought pursuant to Section 15 of the Securities Act against the Individual Defendants. 78. Each of the Individual Defendants acted as controlling persons of Warner Chilcott within the meaning of Section 15 of the Securities Act by virtue of his position as a director and/or senior officer of Warner Chilcott. By reason of their senior management positions and/or directorships at the Company, as alleged above, these Individual Defendants, individually and acting pursuant to a common plan, had the power to influence and exercised the same to cause Warner Chilcott to engage in the conduct complained of herein. By reason of such conduct, the Individual Defendants are liable pursuant to Section 15 of the Securities Act 79. Each of the Individual Defendants was a culpable participant in the violations of Sections 11 and 12(a)(2) of the Securities Act alleged in Counts I and II above, based on their having signed the Registration Statement and having otherwise participated in the process which allowed the IPO to be successfully completed. PRAYER FOR RELIEF WHEREFORE, Plaintiffs, on behalf of themselves and the Class, pray for judgment as follows: A. declaring this action to be a class action properly maintained pursuant to Rule 23 (a) and (b)(3) of the Federal Rules of Civil Procedure; B. awarding Plaintiffs and other members of the Class damages together with interest thereon; C. with respect to Count II, ordering that the IPO be rescinded; D. awarding Plaintiffs and other members of the Class their costs and expenses of this litigation, including reasonable attorneys' fees and experts' fees and other costs and disbursements; and -23-

25 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 25 of 27 E. awarding Plaintiffs and other members of the Class such other and further relief as may be just and proper under the circumstances. JURY TRIAL DEMANDED Plaintiffs hereby demand a trial by jury. DATED: May 4, 2007 LERACH COUGHLIN STOIA GELLER RUDMAN & ROBBINS LLP SAMUEL H. RUDMAN (SR-7957) 7,KAUFMAN (EK-804 SAMUEL H. RUDMAN 8 South ervice Road, Suite 200 e, NY Telephone: 631/ / (fax) ABRAHAM FRUCHTER & TWERSKY LLP JACK G. FRUCHTER One Pennsylvania Plaza, Suite 2805 New York, NY Telephone: 212/ / (fax) Lead Counsel for Plaintiffs MARINO & CONROY LLC STEVEN F. MARINO 301 Wharton Street Philadelphia, PA Telephone: 215/ / (fax) ZWERLING, SCHACHTER & ZWERLING, LLP RICHARD A. SPEIRS 41 Madison Avenue New York, NY Telephone: 212/ / (fax) Additional Counselfor Plaintiffs -24-

26 Case 1 : 06-cv WHP Document 28 Filed 05/04/2007 Page 26 of 27 CERTIFICATE OF SERVICE I hereby certify that on May 4, 2007, a copy of the foregoing Consolidated Amended Class Action Complaint was sent, via U.S. Mail, postage prepaid to the following parties on the attached service list.

27 Case 1:06-cv WHP Document 28 Filed 05/04/2007 Page 27 of 27 WARNER CHILCOTT (LEAD) Service List - 5/4/2007 ( ) Page 1 of 1 Counsel For Defendant(s) Richard A. Rosen Robyn Tarnofsky Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, NY / / (Fax) Counsel For Plaintiff(s) Jack G. Fruchter Lawrence D. Levit Abraham, Fruchter & Twersky One Pennsylvania Plaza, Suite 2805 New York, NY / / (Fax) Samuel H. Rudman David A. Rosenfeld Lerach Coughlin Stoia Geller Rudman & Robbins LLP 58 South Service Road, Suite 200 Melville, NY / / (Fax) Steven F. Marino Marino & Conroy LLC 301 Wharton Street Philadelphia, PA / / (Fax) Richard A. Speirs Shaye J. Fuchs Zwerling, Schachter & Zwerling, LLP 41 Madison Avenue, 32nd Floor New York, NY / / (Fax)