PharmEng Reports Reduced Cash Burn, Financing Update, Strategic Update, Board Member Additions, and Third Quarter Earnings for 2008

TORONTO, ONTARIO–(Nov. 30, 2008) – PharmEng International Inc. (TSX VENTURE:PII), a full-service consulting and contract manufacturing company, today reported its results for the period ended September 30, 2008. The Company also announced Board changes and provided an update on the strategic plan involving the integration of the newly commissioned Sydney facility. Readers are encouraged to review the Company’s complete Interim Consolidated Financial Statements and accompanying Management’s Discussion & Analysis which are available under the “investors” section of its website at www.pharmeng.com and on SEDAR at www.sedar.com.Reduced Cash Burn

During the quarter ended September 30, 2008 the Company’s operational use of cash reduced significantly to $1.0 million showing substantial improvement over the previous two quarters burn of $5.9 million. For the nine month period ended September 30, 2008 the Company used $6.9 million in cash from operations. Management believes this improvement is a positive indication that its restructuring efforts implemented in the second quarter of 2008 are beginning to show results.

Financing Update

On November 12, 2008 the Company issued a $1.0 million convertible debenture to a single investor. As part of this financing two new, experienced Board members joined the Company to assist it in its future challenges and developments. Please see further in this release for the backgrounds and experience of the two new Directors.

The Company is actively negotiating term sheets from two of its existing investors for an additional financing which is expected to close before the end of December 2008.

With these sources of financing, the Company believes it will have adequate resources to overcome a short term working capital deficit and provide the necessary funding to support the needs of the Company into 2009.

The Company also continues to explore other financing arrangements, partnering and various strategic options to meet the long term needs of the organization. Management expects that the Company will be able to secure the necessary financing to continue its operations. Nevertheless, there can be no assurance that the Company will be successful in securing the financing or partnering resources necessary to support the operational needs of the Company. Failure to secure these sources of financing could result in the Company’s inability to continue as a going concern.

Given the continued risks associated with a need for financing as well as the need to demonstrate a consistent track record of profitability, the Company has taken a non-cash valuation reserve against previously recognized deferred tax assets in the quarter ended September 30, 2008 of $4.6 million. These assets continue to be available to the Company against future profits and will be recognized as reductions to tax liabilities and expense in future periods when profits are generated.

Strategic Update

Management continues to focus on fundamental changes required to return the Company to profitability as well as opportunities to address the level of indebtedness and interest costs currently impacting the Company.

The acquisition of the Company’s Arnprior facility in December 2007 has created both new opportunities and new challenges for PII. From an opportunity standpoint, Arnprior, has provided an important source of new revenues and positive cash flow to the Company while at the same time it has raised new strategic questions as to how best to integrate and utilize the collective capacities and the Company’s recently commissioned Sydney facility.

The Sydney facility has taken longer than expected to come on line and has experienced start up costs not dissimilar to other newly commissioned pharmaceutical manufacturing facilities. The additional time and cost associated with the construction and start up of the Sydney facility has created additional financing challenges for the organization which management continues to address and monitor closely. The Sydney facility received its Establishment License from Health Canada and became commercially operational in July 2008.

As a result of the significant capacity added through the Arnprior facility acquisition, new manufacturing volumes will now be allocated between two facilities as compared to an original strategy that only entailed the one facility in Sydney receiving new business contracts. As a result, the Company has taken a non-cash impairment provision of $4.2 million against the Company’s Sydney assets in the quarter ended September 30, 2008.

Management is currently assessing the strategic options for its contract manufacturing operations and the capacities offered by its two facilities. Management expects to complete this review with the goal of implementing a definitive action plan by the end of December 2008.

The Company is also closing examining its consulting business to ensure it also is returned to profitability. Restructuring initiatives undertaken in Q2 2008 appear to be providing positive results which will be monitored closely to ensure these continue going forward. The Company is in the process of implementing new tools to monitor staffing utilization, planning, costing and project bidding to improve profitability.

Although the Company has suffered a significant loss in the quarter, management is of the opinion that its underlying assets can generate positive returns going forward.

The Company’s overall level of indebtedness continues to be a significant constraint to the Company’s profitability and cash flow. Management is actively exploring options including additional financing and strategic partnerships that could assist in alleviating this burden.

Board of Director Additions

At a Board meeting held November 25, 2008, Vasu Chanchlani and Aditya Jha joined the Company’s Board of Directors. Both Mr. Chanchlani and Jha are the Board representatives of the investor who recently completed a private placement with the Company on November 12, 2008.

Vasu Chanchlani is the Managing Director and co-founder of Sigma Systems Group, a global IT products and services family of companies with responsibilities including financial management, corporate policy formulation, and overall guidance in the operations of Sigma Group of Companies. Vasu is also Vice-Chair of the Board for Karma Candy Inc, one of the largest private label and contract manufacturer of seasonal confectionery products in Canada. Prior to establishing Sigma, Vasu held a series of senior roles in some of the largest telecommunications and consulting organizations in Canada. Over the past few years, Vasu has been investing in India in areas where he believes India will offer a strategic advantage to global corporations. His current areas of investments include clinical trials and pharmaceutical companies. Vasu holds a masters degree in Industrial and Management Engineering from IIT Kanpur as well as an MBA from the University of Toronto.

Mr. Aditya Jha has more than 20 years of experience in North America and International markets. He has co-founded two software companies, Isopia Inc and Osellus Inc., the former company being acquired by Sun Microsystems. Aditya is currently President & CEO of Karma Candy Inc, one of the largest contract confectionery manufacturers of Canada and has several other business interests. He started his professional career after 4 1/2 years of his Ph.D. studies at the School of Computer & Systems Sciences, Jawaharlal Nehru University, India and worked in various capacities at technology companies in India, Singapore and Canada. Aditya is the Founder & Chairman of POA Educational Foundation, the Chair of UNICEF Canada India HIV/AIDS Campaign, and a federal government appointee to the First Nations Financial Management Board as well as the Government of Ontario’s appointee to Ontario Investment & Trade Advisory Council. Aditya’s foundation runs a unique initiative called Project Beyshick to nurture entrepreneurship amongst Canadian aboriginals and he has set-up endowments at four universities that disburses thirteen scholarships totaling $40,000 annually.

Third Quarter Operational and Financial Summary

– During the quarter ended September 30, 2008 the Company used $1.0 million in cash from operations. For the nine month period ended September 30, 2008 the Company used $6.9 million in cash from operations. The third quarter use of cash shows substantial improvement over the previous 2 quarters which management believes is a positive indication that restructuring efforts implemented in the second quarter are beginning to show results.

– In the third quarter ended September 30, 2008, the Company continued to report significant revenue increases over the comparable periods in 2007:

— For the quarter ended September 30, 2008, the Company had consolidated revenues of $8.3 million representing a 168% increase compared to consolidated revenues in the third quarter of 2007 of $3.1 million. For the nine month period ended September 30, 2008 revenues were $26.9 million as compared to $9.1 million for the period ended September 30, 2007 representing an almost 200% year over year increase. This significant increase in revenues was due to the acquisition and subsequent successful integration of the Arnprior facility from Pfizer Canada which closed on December 31, 2007. The acquisition has impacted the size of the Company dramatically in the areas of mix of revenue sources (the majority of revenue now being generated from contract manufacturing operations verses consulting), number of employees and customer base expansion of multinational pharmaceutical companies.

— Contract manufacturing revenues for the quarter ended September 30, 2008 were $5.8 million, an increase of $5.5 million over the same period last year. Contract manufacturing revenues for the nine month period ended September 30, 2008 were $20.4 million and reflect a $18.9 million increase over revenues for the nine month period ended September 30, 2007 of $1.5 million. The December 2007 acquisition of the Company’s new Arnprior facility accounts for this significant increase in year over year contract manufacturing revenues.

— The consulting division, PTI, provided $2.5 million of revenues during the quarter ended September 30, 2008, down $0.3 million or 11% from the same period last year. Consulting revenues for the nine month period ended September 30, 2008 were $6.5 million, reflecting a 16% reduction over revenues for the nine month period ended September 30, 2007 of $7.7 million. The decrease in revenues was primarily due to slow growth in both Canada and the US markets.

– EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter ending September 30, 2008 includes the previously described non-cash impairment provision for the Sydney manufacturing facility ($4.2 million). For the three and nine month period ended September 30, 2008 EBITDA was a loss of $8.2 million and $9.2 million respectively. EBITDA before the non-cash impairment provision for the three and nine month periods ending September 30, 2008 EBITDA was a loss of $4.0 million and $5.0 million respectively as compared to a loss of $0.1 million and $1.6 million for the comparable periods ended September 30, 2007.

– Net loss for the third quarter ending September 30, 2008 also includes the previously described non-cash valuation provisions for deferred tax assets ($4.6 million) and the Sydney manufacturing facility ($4.2 million) for a loss of $13.8 million ($0.18 per share) compared to a loss of $0.3 million ($0.00 per share) for the third quarter of 2007. Excluding the non-cash provisions of $8.8 million, the net loss for the quarter was $5.0 million for the three months ended September 30, 2008 compared to $0.1 million in the third quarter of 2007.The consolidated loss for the nine month period ended September 30, 2008 was $15.6 million ($0.20 per share) as compared to a loss of $1.9 million ($0.03 per share) for the comparable period in 2007. Net loss excluding these non-cash provisions for the nine months ended September 30, 2008 was $6.8 million compared to a loss of $1.6 million for the nine month period ended September 30, 2007.

– The major contributors to the 2008 losses, in addition to the non- cash provisions for deferred tax assets and asset impairment, include:

— start-up costs including inventory provisions, bad debt provisions and general “scale-up” and “break-in” costs at the Company’s newly commissioned Sydney facility,

— below forecast volumes in both of the Company’s manufacturing facilities resulting in increased excess capacity charges as well as under absorbed overheads,

— reduced consulting volumes and margins reflecting general economic impacts on customer project activities,

— increased debt costs associated with higher borrowing levels,

— foreign exchange losses on the Company’s US $5.0 million term facility,

— increased audit and legal costs associated with the growing size and complexity of the Company’s business.

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