Code of Ethics and Business Conduct

1.  Purpose and Scope

It is the policy of DRAXIS Health Inc. (the “Corporation”) to conduct its business affairs honestly, ethically and in full accordance with the law. Conduct that may raise questions as to the Corporation's, or any of its employee's, director's or representative's honesty, integrity, impartiality, or reputation, or activities that could cause embarrassment to the Corporation or damage its reputation is prohibited. Any activity, conduct, or transaction that is or may appear to be unethical, illegal, or improper business conduct must be avoided.

In this Code, “Corporation” shall also include the subsidiaries of the Corporation and “Representative” shall mean the Corporation's President and Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”) or any person performing similar functions, and any other employee, director, officer or consultant engaged by the Corporation or its subsidiaries. All Representatives are subject to this Code. Compliance with this Code is essential to preserving and enhancing the Corporation's reputation as a responsible corporate citizen and ultimately in maximizing shareholder value.

Violation of the Code is a serious matter that could subject Representatives or the Corporation to legal liability and furthermore, in the case of Representatives who are employees, disciplinary sanctions including termination. This Code is not meant to be a complete code of ethics and business conduct covering every eventuality. Consequently, should a Representative be confronted with a situation where further guidance is required, the matter should be discussed with designated persons as set forth in section 6 of this Code.

2.  Conduct and Behaviour

2.1	Each Representative is accountable for observing rules of conduct that are normally accepted as standard in a business enterprise.
2.2	Representatives shall give precedence to ethical principles and obligations in their decisions and actions. They shall respect all ethical obligations deriving from applicable laws, acts and regulations. Representatives shall not condone unethical conduct.

 3.  Conflict of Interest

3.1	It is the policy of the Corporation that transactions with other business entities, universities or other organizations and individuals shall not be influenced or affected by the personal interests or activities of any Representative. Activities or personal interests of the Representatives or their immediate family members which are actually or potentially harmful or detrimental to the best interests of the Corporation or which create the appearance of a conflict of interest should be avoided so as not to reflect negatively on the reputation of the Corporation or its Representatives. All transactions between the Corporation and its affiliates shall be completed on a fair market basis by reference to terms and conditions available from arm's length third parties. Any actual or apparent conflicts of interest between the Corporation and its affiliates shall be resolved on the basis that the Corporation's Representatives must act in the best interests of the Corporation.
3.2	Activities or personal interests of Representatives, including those of their immediate family members, which may or could appear to influence the objective decisions required in the performance of their Corporation responsibilities are considered to be a conflict of interest and are prohibited unless a waiver is granted by the Corporation's Board of Directors or designated committee in accordance with this Code. Such conflicts may create a presumption of favouritism or damage the reputation of the Corporation or its Representatives in the eyes of others with whom the Corporation may transact business, including shareholders and the investment community.
3.3	All Representative s have a responsibility to protect the Corporation's assets against loss, theft, abuse and unauthorized use or disposal. No Representative of the Corporation may use Corporation assets, facilities or positions to promote personal interests.

4.  Integrity of Books and Records and Compliance with Sound Accounting Practices

4.1	Preparation of Books and Records Accuracy and reliability in the preparation of all business records is a critical importance to the decision making process and to the proper discharge of financial, legal and reporting obligations by the Corporation. All business records, expense accounts, invoices, bills, payroll, corporate records and other reports are to be prepared with care and honesty. False or misleading entries are not permitted in the Corporation's books and records.
4.2	Financial Transactions All financial transactions are to be properly recorded in the books of account and accounting procedures are to be supported by the necessary internal controls. All books and records of the Corporation must be available for audit purposes. All Representatives responsible for establishing and managing the Corporation's financial reporting systems must ensure that: all business transactions are properly authorized; all records fairly and accurately reflect the transactions or occurrences to which they relate; all records fairly and accurately reflect in reasonable detail the Corporation's assets, liabilities, revenues and expenses; the Corporation's accounting records do not contain any false or intentionally misleading entries; no transactions are intentionally misclassified as to accounts, departments or accounting periods; all transactions are supported by accurate documentation in reasonable detail and recorded in the proper account and in the proper accounting period; and no information is concealed from the CFO or controller, the independent auditors, the Audit Committee or the Board of Directors.
4.3	Responsibilities of Representatives Full, fair, accurate, timely and understandable disclosure in the reports and other documents that the Corporation files with, or submits to, its regulators and in the Corporation's other public communications must comply fully with the Corporation's obligations under securities laws and other applicable laws and meet expectations of the Corporation's shareholders and other members of the investment community. The highest standard of care must be exercised in preparing such reports, documents and other public communications. In accordance with the guidances set forth below, a Representative must: not intentionally cause Corporation documents to be incorrect in any way; not create or participate in the creation of any records that are intended to conceal anything that is improper; properly and promptly record or cause to be recorded all disbursements of funds; co-operate with the CFO, controller and external auditors; report, in accordance with section 6 of this Code, any knowledge of any untruthful or inaccurate statements or records or transactions that do not appear to serve a legitimate commercial purpose; not make any unusual financial arrangements with a client or a supplier (such as over-invoicing or under-invoicing) for payments on their behalf to a third party; comply with generally accepted accounting principles at all times. However, technical compliance with GAAP may not be sufficient and, to the extent that technical compliance with GAAP would render financial information that the Corporation reports misleading, additional disclosure will be required; comply with the Corporation's system of internal accounting controls at all times. No action designed to circumvent such controls and procedures will be tolerated; and comply with the Corporation's disclosure controls and procedures at all times. No action designed to circumvent such controls and procedures will be tolerated.

5.  Compliance with Laws, Rules and Regulations

5.1

All Representatives are expected to act in full accordance with all domestic and foreign laws, rules and regulations applicable to the business of the Corporation. Violation of laws, rules or regulations or compromise of the Corporation's ethical expectations could result in written reprimands or other disciplinary action, including termination and criminal or civil legal proceedings where applicable.

5.2

The Corporation is involved, from time to time, in matters which are sensitive in nature and important to the Corporation, its Representatives and its shareholders. Securities laws impose certain obligations on the Corporation regarding the disclosure of information to the investing public. To comply with these laws and the regulations promulgated thereunder, the Corporation has established a Disclosure and Insider Trading Policy which is applicable to all Representatives. In addition, the following policies and procedures are applicable to all Representatives: 5.2.1 Confidentiality : The Corporation's ability to effectively discharge its disclosure obligations under the securities laws can be adversely affected by the premature or otherwise unauthorized disclosure of internal information relating to the Corporation. All Representatives, therefore, must make every effort to maintain the confidentiality of the Corporation's internal information. These efforts include securely handling and storing all sensitive documents. Representatives should not communicate internal information to friends, family or other third parties, except as may be required in the ordinary course of business. 5.2.2 Designated Spokesperson : The Corporation designates a limited number of spokespersons responsible for communication with the media, investors and analysts. The President and CEO, the CFO and the Investor Relations Officer (“IRO”) shall be the official spokespersons for the Corporation. Individuals holding these offices may, from time to time, designate others within the Corporation to speak on behalf of the Corporation as back-ups or to respond to specific inquiries from the investment community or the media. Employees who are not authorized spokespersons must not respond under any circumstances to inquiries from the investment community or the media unless specifically asked to do so by an authorized spokesperson. All such inquiries shall be referred to the IRO. Except for discussions with business partners by senior management, employees should refrain from discussing confidential and potentially material affairs of the Corporation with third parties, unless expressly authorized to do so. 5.2.3 Trading of Securities : The Disclosure and Insider Trading Policy of the Corporation sets forth the prohibitions concerning unauthorized trades of the Corporation's securities and other guidelines that must be respected by Representatives with respect to trades of the Corporation's securities.

6.  Reporting of Code Violations (Whistleblowing)

6.1	Representatives have a responsibility to promptly report any conduct or proposed conduct that they reasonably believe to be a violation of this Code. 6.1.1 If a Representative reasonably believes that a violation of the Code has or may occur, they should speak to either: to the Director or Vice President of Human Resources; or if the Representative is uncomfortable in talking to the Director or Vice President of Human Resources, and only in the case of financial and internal controls and accounting matters, to the Chairman of the Audit Committee of the Board of Directors; or if the Representative is uncomfortable in talking to the Director or Vice President of Human Resources, and in the case of non-financial matters, to the General Counsel and Secretary; In either case, the contacted individual will work with the Representative to investigate the concern. In the case of financial and internal controls and accounting matters, if the alleged violation is reported to the Director or Vice President of Human Resources, then that individual will follow the procedures stated in Section 6.2. Reported violations of this Code will be handled promptly, professionally, and with as much confidentiality as possible. All reports will be investigated and forwarded to appropriate members of management or the Board of Directors for follow up. 6.1.2 A Representative accused of violating this Code will be given an opportunity to present his or her version of the events at issue. If it has been determined that a Representative has violated this Code, disciplinary measures may be taken against the Representative. Depending on the nature and severity of the violation, disciplinary action may include termination. Certain violations also may require the Corporation to refer the matter to criminal or civil authorities for investigation or prosecution. 6.1.3 Any supervisor who directs or approves of conduct in violation of this Code, or who has knowledge of such conduct and does not immediately report it, will be subject to disciplinary action, up to and including termination. 6.1.4 In the case of an alleged violation by an executive officer or director, the Chairman of the Board of Directors, the CEO and/or the Audit Committee of the Board of Directors, as applicable, are responsible for determining whether a violation has occurred and, if so, what disciplinary measures are appropriate.
6.2	If a Representative with concerns about questionable accounting, or auditing matters chooses to report such concerns to the Director or Vice President of Human Resources, then the Director or Vice President of Human Resources will forward all concerns to the Audit Committee unless the Director or Vice President of Human Resources first determines that the allegations are without merit. In any event, the Director or Vice President of Human Resources will maintain a comprehensive list of all concerns received regarding accounting, internal accounting controls, and auditing matters and provide it to the Audit Committee each fiscal quarter.
6.3	The Corporation does not consider reporting a known or suspected violation of the Code to be an act of “disloyalty” and it is against Corporation policy to retaliate against any Representative who reports what he reasonably believes to be a violation or suspected violation of this Code. This means that Representatives will not be disciplined, fired, or discriminated against in any way for voicing concern about a violation or potential violation so long as the Representative acts honestly and in good faith. Any reprisal or retaliation against a Representative who has in good faith reported a known or suspected violation of this Code is itself cause for disciplinary action, including termination.

7.  Disclosure & Review

Compliance with this Code will be monitored by the Board of Directors of the Corporation. Where appropriate, either the Nominating and Corporate Governance Committee or the Audit Committee of the Board of Directors is responsible for granting any waivers of this policy. Any waivers granted hereunder to Representatives will be disclosed in a news release containing the information prescribed by law.