Bioprogress Future2

BioProgress plc

BioProgress plc ('BioProgress', the 'Company' or 'Group') announces
Acquisition, Joint Venture, Fundraising and Trading Update

March, Cambridgeshire, 21 December 2005: The Board of BioProgress plc (AIM:
BPRG; NASDAQ: BPRG), the provider of innovative delivery mechanisms for the
pharmaceutical and medical device markets, is pleased to announce that it has
entered into an agreement to acquire the whole issued share capital of Dexo
S.A. ('Dexo'), a French speciality pharmaceutical company. This acquisition,
through a newly formed vehicle Dexo BioPharm Ltd ('Dexo BioPharm'), signals a
significant change from a drug delivery and material sciences company into an
integrated speciality pharmaceutical and healthcare business, which can develop
and market its core technologies in combination with other innovative products.

The consideration for the acquisition of Dexo is €12.5m, €8m of which will be
paid in cash and €4.5m in sterling denominated ordinary shares, representing
5,866,791 new ordinary shares (the 'Consideration Shares'), to be issued at the
time of completion. 2,607,463 Consideration Shares will be held in escrow as
security for the warranties given pursuant to the agreement. The holders of the
Consideration Shares will undertake on completion of the acquisition that they
will not transfer or dispose of any Consideration Shares until the date falling
1 month from the date of completion of the agreement; that they will not
transfer or dispose more than 1,303,731 Consideration Shares prior to the date
falling 12 months from the date of completion of the agreement; and that they
will not transfer or dispose more than an additional 1,303,731 Consideration
Shares prior to the date falling 36 months from the date of completion of the
agreement. The Consideration Shares will also be subject to an orderly market
agreement. It is expected that the completion of the acquisition will take
place on 5 January 2006.

The Consideration Shares represent approximately 4.77 per cent. of the issued
share capital of the Company and will rank pari passu in all respects with the
existing ordinary shares of the Group.

Dexo is a long standing profitable private company with specific expertise in
registering and marketing innovative branded products into the French
healthcare system. It operates in the area of registered pharmaceuticals, and
specialises in medicines to treat gastrointestinal illness, and products for
ear, nose and throat ailments, along with a treatment for Wilson's Disease (a
fatal disorder caused by excessive copper accumulation in the liver and brain,
affecting one in 30,000 people world wide). Dexo is currently run by Mr
Jean-Francois Sfarti, the former CEO of Sanofi Pharma France who will remain as
president of Dexo, along with the current team, running the operations in
France. To assist the current Dexo team and to coordinate the Group's
reorganisation and expansion into new markets, BioProgress has recruited
additional management experienced in the pharmaceutical field, including a
practising pharmacist to act as the Company's responsible pharmacist, and a
medical consultant.

For the year ended 31 December 2005, Dexo is expected to generate turnover of
approximately €6.5 million (2004: €6.2 million) with normalised net margins
above 30 per cent. Net assets of Dexo at completion are expected to be around €
3.0 million.

Through the creation of the new pharmaceutical division BioProgress will be
able to apply its technologies to Dexo's products, develop new products and
market the enhanced products directly. This capability is expected to
demonstrate to consumers and partners the benefits of its technologies such as
XGEL. The new Dexo BioPharm division will be immediately accretive in cash
terms and creates the potential for near-term Group profitability.

Richard Trevillion, CEO of BioProgress, said: 'I am delighted to welcome the
management and staff of Dexo into the BioProgress group. Our technology lends
itself to rapid brand differentiation and improvement, particularly in areas of
patient compliance and product life cycle extension. With France's well known
history of accepting innovative pharmaceutical formulations, we see this as a
significant springboard to see maximum value for our company's technologies.'

Jean-Francois Sfarti said: 'Dexo is very pleased to be joining BioProgress.
BioProgress' platform technologies will allow us to add significant value to
our existing range of products and will enable us to access new product areas
with significantly improved product profiles and differentiation.'

The Group also today announces a new joint venture, fundraising and trading
update:

Joint Venture with Crescent Pharma

In parallel with the above acquisition, BioProgress has, through its
newly-formed pharmaceutical division Dexo BioPharm, entered into a joint
venture (JV) named Dexo BioGenerics Limited which is 75.1% owned by the Group.
The JV partner is a private generics supplier, Crescent Pharma Limited, part of
the General Mediterranean Group based in Basingstoke, which supplies a wide
range of generic and OTC medicines in the UK. This JV brings significant new
skill sets to the Group including manufacturing and regulatory know-how and a
wide range of product licences for generic medicines including NSAIDs,
simvastatin and diazepam. These will be combined with the Group's core oral
delivery technologies for rapid commercialisation.

There is no consideration payable on the formation of the JV. The development
and marketing of enhanced generics will be funded by Dexo BioPharma and the JV.
Marketing and administrative resources will be provided to the JV by Crescent
and the BioProgress Group.

Richard Trevillion, CEO of BioProgress, said: 'The combination of the JV with
the acquisition of Dexo S.A. brings to the Group instant cross border business
reach in two distinct markets, those of branded medicines and generic products.
The acquisition and JV are significant steps for the Company, changing its
overall structure into a focused integrated speciality healthcare business with
multiple revenue streams and solid partnerships.'

Mr Mohammed Al-Doori, Chief Executive of Crescent Pharma Limited, said: 'Dexo
BioGenerics, a joint venture between Dexo Biopharm and Crescent, will offer
patients an exciting new range of medicines by combining Crescent's range of
well established generic drugs with BioProgress' cutting edge delivery
technology. Crescent's market experience will assist in ensuring the commercial
success of the new product range.'

Fundraising

The Company also announces today the placing of 12,285,328 new ordinary shares
of 1p each with institutional and other investors (the 'New Ordinary Shares'),
representing approximately 9.99% of the current issued share capital of the
Company, at 47p per New Ordinary Share (representing a 12% discount to the
volume-weighted average share price as on 19 December 2005), under the
provisions of s.95 of the Company's Act 1985 as amended.

It is intended that the proceeds from the fundraising will be used to refinance
the cash consideration for the acquisition of Dexo and to provide additional
working capital for the Company, although the acquisition of Dexo by the
Company is not conditional on the fundraising.

The New Ordinary Shares will rank pari passu in all respects with the existing
ordinary shares of the Group. It is expected that admission to trading and
dealings in the New Ordinary Shares will commence on 3 January 2006.

Trading Update