Executive Overview

The following significant events occurred during the first quarter of 2009:

· Sales decreased 2.8% on a reported basis compared to first quarter 2008. Sales, excluding currency impact, increased 8.7%, or $5.3 million.

· Gross margins decreased on a reported basis to 31.9% from 35.5% in the first quarter of 2008. Gross margin, excluding currency impact, decreased to 25.9% versus 35.5% in the first quarter 2008.

· Selling, general and administrative expenses decreased to 15.1% of sales from 18.4% of sales in the first quarter 2008.

Results of Operations

Comparison of First Quarter 2009 versus First Quarter 2008

Gross sales in the first quarter 2009 of $60,000 were $1,706 or 2.8% below the first quarter 2008. Gross sales were unfavorably impacted 11.5% due to exchange rates reflecting a stronger U.S. dollar. Excluding the currency impact, sales increased 8.7%. The increase is primarily due to higher volumes of a gastro-intestinal and a neurological active pharmaceutical ingredient ("API"), higher volumes of controlled substances and slightly higher custom development revenues partially offset by lower sales of generic APIs.

The following table reflects sales by geographic area for the three months ended March 31, 2009 and 2008:

Three months ended March 31,

                         2009                 2008

North America       $       22,017       $       21,286
Europe                      33,491               34,736
Asia                         2,521                3,571
Other                        1,971                2,113
Total Gross Sales   $       60,000       $       61,706

Gross margins decreased to 31.9% in the first quarter 2009 from 35.5% in the first quarter 2008. Lower production levels and the accompanying lower absorption compared to the prior year's first quarter, along with slightly higher production costs were the main drivers of the lower margins. Gross margins were favorably impacted 6.0% due to foreign currency exchange.

Selling, general and administrative expenses of $9,048 or 15.1% of gross sales in the first quarter 2009 decreased from $11,334, or 18.4% in the first quarter 2008. The decrease in expense is due mainly to lower costs as a result of the restructuring of the corporate office, cost savings at the operating sites and a favorable impact from foreign currency.

Research and development ("R&D") expenses of $1,737 were 2.9% of gross sales in the first quarter 2009, compared to $2,256 or 3.7% of gross sales in the first quarter 2008. The decrease is primarily due to the increased utilization of certain R&D personnel on revenue-generating custom development projects resulting in these costs being classified as either inventory or cost of goods sold. The Company's consolidation of its New Jersey technical center with its R&D operations in Iowa also contributed to lower costs.

Results of Operations (continued)

Comparison of First Quarter 2009 versus First Quarter 2008 (continued)

Restructuring expenses for the first quarter 2008 were $634, consisting of rent and related costs at the New Jersey R&D facility and costs associated with the restructuring of the Corporate office.

Strategic alternative costs for the first quarter 2008 were $177, consisting of costs associated with a project to streamline the Company's legal structure, change-in-control benefits and costs associated with the modification of employee stock options due to the payment of the special dividend in connection with the 2007 divestiture of the businesses that comprised the Bioproducts and Biopharma segments.

Operating profit in the first quarter of 2009 was $8,348 compared to $7,528 in the first quarter 2008. The results reflect a favorable impact due to foreign currency and lower operating expenses at the corporate office and operating sites partially offset by lower gross margins as discussed above.

Net interest expense was $1,157 in the first quarter 2009 compared to $706 in the first quarter 2008. The change is due primarily to capitalized interest of $234 versus $604 in the first quarters of 2009 and 2008, respectively. First quarter 2009 results reflect lower interest rates partially offset by higher average debt compared to the first quarter 2008. Interest income was $236 lower in the first quarter 2009 compared to the same period last year as a result of higher cash balances during the first quarter 2008. The average interest rate on debt was 4.1% in the first quarter 2009 versus 5.3% in the first quarter 2008.

The effective tax rate for the first quarter 2009 was 34.7% compared to 38.9% in the first quarter 2008. The tax provision in the first quarter 2009 was $2,520 compared to $2,701 in the first quarter 2008. The decline is due to changes in the geographic mix of pre-tax earnings and the enactment of reduced tax rates in Sweden. The Company maintains a full valuation allowance against its domestic, and certain foreign, net deferred tax assets and will continue to do so until an appropriate level of profitability is sustained or tax strategies can be developed that would enable the Company to conclude that it is more likely than not that a portion of these net deferred assets would be realized. As such, improvements in pre-tax income in the future within these jurisdictions where the Company maintains a valuation allowance may result in these tax benefits ultimately being realized. However, there is no assurance that such improvements will be achieved.

Net income in the first quarter 2009 was $4,738, or $0.16 per diluted share, versus $4,246, or $0.15, per diluted share in the same period a year ago.

Liquidity and Capital Resources

Cash and cash equivalents decreased $823 in the first three months of 2009. During the first three months of 2009, cash used in operations was $1,615 versus $11,612 in the same period a year ago. The reduction in cash outflows in the first three months of 2009 versus the first three months of 2008 is due primarily to the pay down of several year end 2007 accruals in the first quarter 2008, including higher change in control payments and a legal settlement. Higher production levels in the first three months of 2008 compared to the first three months of 2009 also reduced cash outflows comparatively.

Cash flows in the first three months of 2009 related to capital expenditures were $1,002 compared to $5,176 in 2008. The majority of the funds in 2009 were used for a new mid-scale Pharma manufacturing facility in Karlskoga, Sweden which was substantially completed as of March 31, 2009, and capital improvements to existing facilities. The majority of the funds in 2008 were used for the new mid-scale Pharma manufacturing facility in Karlskoga, Sweden, an API purification facility in Milan, Italy and capital improvements to existing facilities.

Results of Operations (continued)

Liquidity and Capital Resources (continued)

Cash flows provided by financing activities in the first three months of 2009 and 2008 of $3,162 and $17,951, respectively, primarily represent net borrowings used for domestic operations, capital expenditures and payments related to certain accruals.

Many of Cambrex's contracts are short-term in duration. As a result, the Company must continually replace its contracts with new contracts to sustain its revenue. In addition, certain of the Company's long-term contracts may be cancelled or delayed by clients for any reason upon notice. The Company currently has a long-term sales contract that accounts for approximately 10% of annual sales that is scheduled to expire at the end of 2013. There is no guarantee that this contract will be renewed. The Company also has a contract for certain drug delivery products that accounted for nearly 4% of annual sales in 2008 that expires in September of 2009. The Company has recently received notification that its customer has filed an objection to the Company's patent in the European Union related to the products sold under this contract. The customer is also seeking a patent for a competing product in certain jurisdictions including the European Union. The Company currently believes it has enforceable intellectual property rights and it intends to enforce these rights. While the outcome of these actions is uncertain, should the customer's objection or patent application be successful, it would unfavorably impact contract renewal negotiations including, among other things, terms related to sales volumes and pricing compared to the existing contract.

The Company believes that cash flows from operations along with funds available from a revolving line of credit will be adequate to meet the operational and debt servicing needs of the Company, but no assurances can be given that this will continue to be the case, especially in light of the recent unprecedented volatility in worldwide credit markets. The Company was in compliance with all financial covenants at March 31, 2009.

Impact of Recent Accounting Pronouncements

Fair Value Measurements

The Company adopted Financial Accounting Standards Board ("FASB") Statement No.
157 "Fair Value Measurements" related to nonfinancial assets and nonfinancial liabilities effective January 1, 2009. This statement defines fair value, establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. This statement applies whenever another standard requires (or permits) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value to any new circumstances. The effect of adopting this pronouncement did not have a material impact on the Company's financial position or results of operations.

Amendment of FAS 133

The Company adopted FASB Statement No. 161 "Disclosures about Derivative Instruments and Hedging Activities-an amendment of FASB Statement No. 133" ("FAS 161") effective January 1, 2009. This statement requires enhanced disclosures about derivative and hedging activities and thereby improves the transparency of financial reporting. FAS 161 encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The effect of adopting this pronouncement did not have an impact on the Company's financial position or results of operations.

Impact of Recent Accounting Pronouncements (continued)

Employers' Disclosures about Postretirement Benefit Plan Assets

In December 2008, the FASB issued FSP 132(R)-1 "Employers' Disclosures about Postretirement Benefit Plan Assets" ("FSP 132(R)-1"). This statement provides guidance on additional disclosures about plan assets of a defined benefit pension or other postretirement plan. This statement is effective for fiscal years ending after December 15, 2009. Upon initial application, the provisions of FSP 132(R)-1 are not required for earlier periods that are presented for comparative purposes. The Company is currently evaluating the disclosure requirements of this new statement.

Forward-Looking Statements

This document may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and Rule 3b-6 under The Securities Exchange Act of 1934, as amended, including, without limitation, statements regarding expected performance, especially expectations with respect to sales, research and development expenditures, earnings per share, capital expenditures, acquisitions, divestitures, collaborations, or other expansion opportunities. These statements may be identified by the fact that they use words such as "expects," "anticipates," "intends," "estimates," "believes" or similar expressions in connection with any discussion of future financial and operating performance. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this Form 10-Q. Any forward-looking statements contained herein are based on current plans and expectations and involve risks and uncertainties that could cause actual outcomes and results to differ materially from current expectations including, but not limited to, global economic trends, pharmaceutical outsourcing trends, competitive pricing or product developments, government legislation and regulations (particularly environmental issues), tax rate, interest rate, technology, manufacturing and legal issues, including the outcome of outstanding litigation disclosed in the Company's public filings, the Company's ability to satisfy the continued listing standards of the New York Stock Exchange, changes in foreign exchange rates, uncollectible receivables, loss on disposition of assets, cancellation or delays in renewal of contracts, lack of suitable raw materials or packaging materials, the Company's ability to receive regulatory approvals for its products and other factors described in Item 1A "Risk Factors" within this Form 10-Q. Any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. New factors emerge from time to time and it is not possible for the Company to predict which will arise. In addition, the Company cannot assess the impact of each factor on its business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

For further details and a discussion of these and other risks and uncertainties, investors are cautioned to review the Cambrex 2008 Annual Report on Form 10-K, including the Forward-Looking Statement section therein, and other filings with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.