<PAGE>

                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                    FORM 10-K

(Mark One)

         [x]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                  SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 2001

         [  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from ________ to ________

                          Commission File No. 000-31475

                                ANDRX CORPORATION
             (Exact Name of Registrant as Specified in Its Charter)

                  Delaware                                   65-1013859
----------------------------------------------       --------------------------
(State or Other Jurisdiction of Incorporation             (I.R.S. Employer
              or Organization)                           Identification No.)

              4955 Orange Drive
               Davie, Florida                                   33314
----------------------------------------------       --------------------------
            (Address of Principal                            (Zip Code)
              Executive Offices)

                                 (954) 584-0300
                             ----------------------
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
         Andrx Corporation - Andrx Group common stock, $0.001 par value
        Andrx Corporation - Cybear Group common stock, $0.001 par value

         Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES  X  NO
                                              ---    ---

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]


<PAGE>

         As of March 25, 2002, the aggregate market values of Andrx Group common
stock and the Cybear Group common stock held by non-affiliates (based on the
closing price on such date as reported on the Nasdaq National Market) were $2.6
billion and $2.7 million, respectively. There were 70,589,457 shares of Andrx
Group common stock outstanding and 6,742,694 shares of Cybear Group common stock
outstanding as of March 25, 2002.

                       DOCUMENTS INCORPORATED BY REFERENCE

         None.


<PAGE>

                           FORWARD LOOKING STATEMENTS

         Andrx Corporation cautions readers that certain important factors may
affect Andrx Corporation's actual results and could cause such results to differ
materially from any forward-looking statements which may be deemed to have been
made in this report or which are otherwise made by or on behalf of Andrx
Corporation. For this purpose, any statements contained in this report that are
not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the foregoing, words such as
"may," "will," "to," "expect," "believe," "anticipate," "intend," "plan,"
"could," "would," "estimate," or "continue," or the negative other variations
thereof or comparable terminology are intended to identify forward-looking
statements. Investors are cautioned that all forward-looking statements involve
risk and uncertainties. Andrx common stock and Cybear common stock are classes
of common stock of Andrx Corporation, therefore Andrx and Cybear stockholders
are subject to the risks and uncertainties described in Andrx Corporation's
filings with the U.S. Securities and Exchange Commission.

                                     PART I

ITEM 1.  BUSINESS

INTRODUCTION

         On September 7, 2000, Andrx Corporation completed a reorganization
whereby it acquired the outstanding equity of its Cybear Inc. subsidiary that it
did not own, reincorporated in Delaware, and created two new classes of common
stock:

         -        Andrx common stock, to track the performance of the Andrx
                  Group, which includes Andrx Corporation and its subsidiaries,
                  other than its ownership of the Cybear Group; and

         -        Cybear common stock, to track the performance of the Cybear
                  Group.

         Cybear Group currently includes (i) Cybear Inc. and its subsidiaries,
(ii) certain potential future Internet businesses of Andrx Corporation, (iii)
effective November 22, 2000, AHT Corporation, and (iv) effective April 2, 2001,
Mediconsult.com, Inc. and its subsidiaries.

         In connection with the reorganization, Andrx shareholders exchanged
each share of common stock held for one share of Andrx common stock and .0372
shares of Cybear common stock and Cybear stockholders, other than Andrx,
exchanged each share of common stock held for one share of Cybear common stock.

         On July 31, 2001, Andrx Corporation implemented a one-for-four reverse
stock split of Cybear common stock whereby each four shares of existing Cybear
common stock were exchanged for one share of new Cybear common stock. All share
and per share amounts of Cybear common stock included herein give effect to the
one-for-four reverse stock split.

         On March 28, 2002, Andrx Corporation announced its plans to convert all
of the outstanding shares of Cybear common stock into shares of Andrx common
stock effective May 17, 2002. Each outstanding share of Cybear common stock will
be converted into 0.00964 of a share of Andrx common stock. Following the
conversion, the businesses that comprise Cybear will operate within Andrx and
the Andrx common stock will constitute the only outstanding common stock of
Andrx Corporation. A special committee of Andrx Corporation's board of
directors, which was appointed to represent the interests of the holders of the
Cybear common stock, received an opinion from Raymond James & Associates, Inc.
that the consideration to be received, as provided in Andrx Corporation's
certificate of incorporation, is fair, from a financial point of view, to the
holders of the Cybear common stock.

         The conversion ratio is based upon the relative market values of the
Andrx common stock and Cybear common stock averaged over the period from
February 22, 2002 through March 21, 2002. The conversion ratio includes a 25%
premium on the value of the Cybear common stock, as required by the terms of
Andrx Corporation's certificate of incorporation, which was approved by the
Andrx and Cybear stockholders in the reorganization. The conversion is expected
to result in the issuance of approximately 65,013 shares of Andrx common stock.

                                       1
<PAGE>

         As used in this Andrx Corporation Form 10-K, "Andrx Corporation" or the
"Company" refers to Andrx Corporation and all of its subsidiaries taken as a
whole. "Management" and "board of directors" refer to the management and board
of directors of Andrx Corporation. "Andrx" refers to Andrx Corporation and all
of its subsidiaries other than Cybear Inc. prior to the September 2000
reorganization and to the Andrx Group after the reorganization. "Cybear" refers
to Cybear Inc. and its subsidiaries prior to the reorganization and to Cybear
Group following the reorganization.

         Holders of Andrx common stock and Cybear common stock are stockholders
of Andrx Corporation, have no specific rights to assets designated to Andrx or
Cybear and are subject to all the risks and uncertainties of Andrx Corporation
detailed herein or detailed from time to time in Andrx Corporation's filings
with the Securities and Exchange Commission, or the SEC.

         This Form 10-K contains trademarks held by Andrx Corporation and those
of third parties.

                                BUSINESS OF ANDRX

OVERVIEW

         Andrx commercializes controlled-release oral pharmaceuticals using its
proprietary drug delivery technologies. Andrx has nine proprietary
controlled-release drug delivery technologies that are patented for certain
applications or for which it has filed for patent protection for certain
applications. Andrx uses its proprietary drug delivery technologies and
formulation skills to develop:

         -        bioequivalent versions of selected controlled-release brand
                  name pharmaceuticals; and

         -        brand name controlled-release formulations of existing
                  immediate-release or controlled-release drugs where it
                  believes that the application of Andrx's drug delivery
                  technologies may improve the efficacy or other characteristics
                  of those products.

         Andrx is also developing bioequivalent versions of specialty, niche and
immediate-release pharmaceutical products.

         Bioequivalent pharmaceuticals, commonly referred to as generics, are
the pharmaceutical and therapeutic equivalents of brand name drugs and are
usually marketed under their established nonproprietary drug names rather than
by a brand name. Controlled-release drug delivery technologies generally provide
more consistent and appropriate drug levels in the bloodstream than
immediate-release dosage forms and may improve drug efficacy and reduce side
effects by releasing drug dosages at specific times and in specific locations in
the body. These technologies also allow for the development of "patient
friendly" dosage forms, which reduce the number of times a drug must be taken,
thus improving patient compliance.

         Andrx currently manufactures and sells internally developed products,
including Cartia XT(R), Diltia XT(R), Ketroprofen(R) Extended Release and
Metformin IR(R), respectively, the bioequivalent versions of Cardizem(R) CD,
Dilacor XR(R), Oruvail(R) and Glucophage(R). Andrx also sells other
bioequivalent and brand products which it acquires from third parties.

         Through its distribution operations, Andrx primarily sells
bioequivalent drugs manufactured by third parties primarily to independent
pharmacies, pharmacy chains which do not maintain their own


                                       2
<PAGE>

central warehousing facilities, pharmacy buying groups and physicians' offices.
These operations are also used for the marketing of Andrx's and its
collaborative partners' products.

BUSINESS STRATEGY

         Andrx intends to grow its business primarily through internal research
and development and sales and marketing efforts, but will also evaluate
strategic alliances and acquisitions. Andrx believes that this strategy will
allow it to expand both its branded and bioequivalent product offerings and
distribution operations.

         Research and Development

         Andrx's internal research and development efforts are focused on
developing bioequivalent and branded products using its proprietary drug
delivery technologies and specialty, niche and immediate-release products. For
the fiscal years ended 2001, 2000 and 1999, total research and development
expenses were approximately $52.8 million, $45.5 million and $25.3 million,
respectively. Andrx anticipates that research and development expenses will
increase to approximately $55 million during fiscal 2002, due to continued
spending in research and development of bioequivalent and brand products.
Research and development expenses will be periodically evaluated throughout 2002
to take into consideration, among other things, new product launches, if any,
which may include the bioequivalent versions of Wellbutrin(R), Zyban(R) and
Prilosec(R). Andrx currently expects that its 2002 research and development
expenses will be allocated approximately 55% to bioequivalent products and 45%
to brand products.

         Strategic Acquisitions of Complementary Businesses and Products

         Andrx intends to consider and, as appropriate, acquire additional
complementary businesses and brand products in the future. For example, in
fiscal 2001, Andrx acquired (i) Armstrong Pharmaceuticals, which manufactures
pharmaceutical aerosols, and held an approved Abbreviated New Drug Application,
or ANDA, for Albuterol MDI, (ii) CTEX Pharmaceuticals, Inc., a privately owned
brand pharmaceutical sales and marketing company with approximately 100 sales
and marketing representatives, (iii) Mediconsult.com, Inc., which owns
Physicians' Online, a leading physician Internet portal, (iv) the Entex line of
cough and cold products, and (v) in-licensed the Anexsia pain product line from
the pharmaceutical division of Mallinckrodt, a Tyco healthcare company.

         Strategic Alliances

         Andrx intends to consider and, as appropriate, enter into strategic
alliances with other companies to, among other things, co-develop and/or
manufacture and distribute various pharmaceuticals. Andrx believes that its drug
delivery technologies offer potential partners with improved drug efficacy as
well as with the opportunity to enhance the commercial value of their existing
drug products and new drug candidates.

         Continue to Expand Distribution Operations

         Andrx intends to continue to expand its distribution operations. For
the fiscal years ended 2001, 2000 and 1999, net sales from distributed products
were approximately $495.2 million, $329.1 million and $262.4 million,
respectively. Andrx plans to use its distribution operations for the marketing
of future products. Andrx's distribution operations allow Andrx to observe and
participate directly in the developments and trends in the pharmaceutical
industry.

DEVELOPMENTS IN 2001

         In January 2001, Andrx completed the acquisition of CTEX
Pharmaceuticals, a privately owned brand pharmaceutical sales and marketing
company based in Madison, Mississippi. The purchase price of approximately $29
million consisted of $11 million in cash and 291,400 shares of Andrx common
stock, valued at $18 million. The acquisition was accounted for using the
purchase method of accounting.

         On March 30, 2001, Andrx acquired substantially all of the assets of
Armstrong Pharmaceuticals, based in West Roxbury, Massachusetts. Armstrong
manufactures pharmaceutical aerosols, principally metered dose inhalers, or
MDIs, and holds an ANDA for Albuterol MDI. The purchase price was


                                       3
<PAGE>

approximately $18 million in cash, subject to adjustments. The acquisition was
accounted for using the purchase method of accounting.

         In April 2001, Andrx Corporation completed the acquisition of
Mediconsult.com, Inc., a Delaware corporation based in Tarrytown, New York, that
operates the Physicians' Online portal. In the merger, Mediconsult shares were
exchanged for Cybear common stock on the basis of 0.03575 shares of Cybear
common stock for each share of Mediconsult common stock, valued at $4.8 million.
Mediconsult became part of the Cybear Group. The acquisition was accounted for
using the purchase method of accounting.

         On June 30, 2001, Andrx purchased the Entex line of cough and cold
products and related inventory from an affiliate of Elan Corporation, plc for
$14.8 million and royalties on net sales.

         On July 1, 2001, Andrx entered into an eight-year agreement with
Mallinckrodt for the marketing rights and supply of three hydrocodone pain
products. As part of the agreement, Andrx is to pay Mallinckrodt $1.0 million
upon approval of each of the products and royalties on the net sales of this
product line. Andrx also agreed to pay an annual licensing fee to Mallinckrodt
for use of the trade name Anexsia. Two dosage strengths are currently approved
by the U.S. Food and Drug Administration, or FDA, and were launched under the
newly licensed trade name Anexsia in November 2001, and the third dosage
strength also to be marketed under the trade name Anexsia, which is the highest
strength, is expected to be approved by FDA in 2002.

PRODUCT DEVELOPMENT AND COMMERCIALIZATION

         Research and Development Efforts

          Andrx devotes significant resources to the research and development of
bioequivalent and branded products using its proprietary drug delivery
technologies and specialty, niche and immediate-release products. For the fiscal
years ended 2001, 2000 and 1999, total research and development expenses were
approximately $52.8 million, $45.5 million and $25.3 million, respectively.
Research and development expenses for bioequivalent development activities
include personnel costs, overhead costs, costs paid to third party contract
research organizations for conducting bioequivalence studies and costs for raw
materials used in developing the products. Brand  research and development
expenses include personnel costs, overhead, and costs of raw materials, but
primarily include the cost of third party clinical research organizations that
are responsible for conducting the clinical trials required to support a product
application with FDA. Andrx anticipates that research and development expenses
will increase to approximately $55.0 million during fiscal 2002, due to
continued spending in research and development of bioequivalent and brand
products. Research and development expenses will be periodically evaluated
throughout 2002 to take into consideration, among other things, new product
launches, if any, which may include the bioequivalent versions of Wellbutrin,
Zyban and Prilosec. Andrx currently expects that its 2002 research and
development expenses will be allocated approximately 55% to bioequivalent
products and 45% to brand products.

         Andrx's research and development strategy focuses on:

                  -        the development of drug delivery technologies;

                  -        the application of Andrx's drug delivery technologies
                           to the research and development of selected
                           bioequivalent versions of controlled-release brand
                           name pharmaceuticals;

                  -        the application of Andrx's drug delivery technologies
                           to the research and development of brand name
                           controlled-release formulations of existing
                           immediate-release or controlled-release drugs; and


                                       4
<PAGE>

                  -        the research and development of bioequivalent
                           versions of specialty, niche and immediate-release
                           pharmaceuticals.

         Bioequivalent Controlled-Release Pharmaceuticals

         Andrx applies its proprietary drug delivery technologies and
formulation skills to develop bioequivalent versions of selected
controlled-release brand name pharmaceuticals. Specifically, Andrx applies its
proprietary processes and formulations to develop a product that will reproduce
the brand product's physiological characteristics but not infringe upon the
patents of the owner of the brand's new drug application, or NDA, or other
innovator. In connection with this process, Andrx conducts studies to establish
that its product is bioequivalent to the brand product, and obtains legal advice
that its products do not infringe the NDA owner's or the innovator's patents or
that such patents are invalid or unenforceable. As required by the Drug Price
Competition and Patent Restoration Act of 1984, known as the Waxman-Hatch
Amendments, Andrx then assembles and submits an Abbreviated New Drug
Application, or ANDA, to FDA for review. If Andrx believes that its product does
not infringe a patent associated with the brand product which has been listed in
FDA's Approved Drug Products with Therapeutic Equivalence Evaluation Book,
commonly referred to as the "Orange Book," or that such patent is invalid or
unenforceable, Andrx is required to make such a certification. This is called a
Paragraph IV certification.

         Once Andrx's ANDA is accepted for filing by FDA, Andrx must also send
notice of a Paragraph IV certification to the NDA owner and patent holder. The
NDA owner or patent holder may then initiate a legal challenge for patent
infringement. If they do so within 45 days of their receipt of notice of Andrx's
Paragraph IV certification, that ensuing lawsuit will automatically prevent FDA
from approving Andrx's ANDA until the earlier of 30 months, expiration of the
patent, or when the infringement case is decided in Andrx's favor. Brand name
companies may obtain additional patents after an ANDA has been filed, but before
it has received final marketing approval, which may result in a new legal
challenge and may require the submission of a new Paragraph IV certification and
trigger a new notice and waiting period requirements. Thus, the developer of
bioequivalent products may invest a significant amount of time and expense in
the development of these products only to be subject to significant delay and
the uncertain results of patent litigation before its products may be
commercialized. Additionally, brand companies may attempt to, among other
things, offer their products over-the-counter, switch patients to other products
they are promoting, obtain additional exclusivities under the law, and
otherwise delay the advent of generic competition for their products or
otherwise reduce the amount of revenue that can be generated by bioequivalent
versions of their products.

         The Waxman-Hatch Amendments also provide an economic incentive for the
early development of bioequivalent pharmaceuticals. The developer of a
bioequivalent product having the first ANDA containing a Paragraph IV
certification accepted for filing by FDA is awarded a 180-day period of
marketing exclusivity against other companies that subsequently file ANDAs
containing Paragraph IV certifications for the same drug. This marketing
exclusivity begins with the commercial marketing of the product, a court
determination that the relevant patents are invalid, unenforceable or not
infringed or upon the occurrence of certain other events. A court decision
triggering the 180-day period can occur either in litigation involving the first
Paragraph IV filer or a subsequent filer. Until the first developer's 180-day
period of marketing exclusivity has expired or has been waived, FDA may not
approve the marketing of another ANDA containing a Paragraph IV certification
for that same product.

         Andrx believes this period of marketing exclusivity provides an
opportunity for the successful patent challenger to build its market share, to
recoup the expense of the lawsuit and to realize greater profit margins. In
addition, once that exclusivity period has lapsed, Andrx believes that the
marketer of the first commercialized product may more effectively defend its
market share position against future competition. Andrx's ability to secure the
benefit of this exclusivity period, however, depends on a variety of factors
beyond Andrx's control, such as whether the brand product is marketed either
before or during such exclusivity period as a bioequivalent version, the
relative dates of filing of ANDAs, the speed and results of litigation involving
other ANDA filers, and proposed changes or litigation resulting in


                                       5
<PAGE>

changes in FDA regulations which may, for certain ANDA filings, decrease the
value of the exclusivity period, as described in "Government Regulation-ANDA
Process." Therefore, even if Andrx qualifies for this market exclusivity for a
particular product, Andrx may not be able to benefit from some or any of the
180-day period.

         Andrx has been sued for patent infringement on many of the products for
which Andrx has filed ANDAs. See "Patent Litigation and Proprietary Rights" for
a discussion of this litigation.

         Andrx or one of its collaborative partners, from time to time, files or
may file ANDA's that may not include Paragraph IV certifications.

         Andrx manufactures and sells bioequivalent versions of the following
products that it has developed:

Dilacor XR                 In October 1997, Andrx received FDA approval and
                           commenced selling Diltia XT, its bioequivalent
                           version of Dilacor XR. Dilacor XR is used for the
                           treatment of hypertension and chronic stable angina
                           and is currently being marketed by Watson
                           Pharmaceuticals, Inc. Andrx's marketing exclusivity
                           expired in April 1998. Besides Andrx, there currently
                           are three competitors for this bioequivalent product.

Cardizem CD                In July 1998, Andrx received FDA approval to sell its
                           bioequivalent version of Cardizem CD. Cardizem CD is
                           used for the treatment of hypertension and chronic
                           stable angina and was being marketed by Aventis S.A.,
                           formerly Hoechst Marion Roussel, Inc., until January
                           2000 when Biovail Corporation acquired the rights to
                           Cardizem CD and is now marketing Cardizem CD.
                           Although approved by FDA, Andrx did not market this
                           product due to the then pending patent infringement
                           litigation against Andrx with respect to this
                           product. In June 1999, the litigation was settled and
                           Andrx commenced selling Cartia XT, a reformulated
                           version of Andrx's bioequivalent version of Cardizem
                           CD. Andrx's marketing exclusivity expired on December
                           19, 1999 and besides Andrx, there are currently two
                           competitors for this bioequivalent product.

Glucophage                 In January 2002, Andrx received FDA approval and
                           commenced selling Metformin IR, its bioequivalent
                           version of Glucophage. Glucophage is used in the
                           management of Type 2 diabetes and is currently being
                           marketed by Bristol-Myers Squibb. Besides Andrx,
                           there are currently approximately 13 competitors for
                           this bioequivalent product.

Oruvail                    In March 1999, ANCIRC received FDA approval to sell
                           its bioequivalent version of Oruvail. Oruvail is used
                           for the treatment of patients with rheumatoid
                           arthritis and osteoarthritis. This product is part of
                           ANCIRC, Andrx's joint venture with Watson
                           Pharmaceuticals, Inc. Besides Andrx, there are
                           currently two competitors for this bioequivalent
                           product.

         Andrx also sells a bioequivalent version of Trental(R). Trental is used
for the treatment of intermittent claudication. This product is part of ANCIRC,
and is manufactured by Watson.

         Andrx also manufactures and sells an Albuterol MDI, a bioequivalent
version of Ventolin. Ventolin is used to treat asthma and is currently being
marketed by Glaxo SmithKline. Andrx acquired this product in March 2001. Besides
Andrx, there are currently four competitors of this bioequivalent product.

         Andrx received final marketing approval for its bioequivalent version
of Lodine(R) XL in November 2001, and is currently evaluating, when and if, to
begin marketing this product. Lodine XL is used to treat both osteoarthritis and
rheumatoid arthritis and is currently being marketed by Wyeth. There


                                       6
<PAGE>

are currently two competitors of this bioequivalent product, and the potential
market for the Andrx product may not warrant its launch.

         The Andrx bioequivalent products described above are sold principally
through an internal sales team primarily to warehousing pharmacy chains,
wholesalers and large managed care customers. This sales effort is complimented
by Andrx's distribution operation which distributes Andrx's and other
bioequivalent manufacturers' products primarily to independent pharmacies,
non-warehousing pharmacy chains and buying groups. Securing and maintaining
these customers for bioequivalent products is highly competitive, and
significant price declines often result from current and/or new competitors
attempting to obtain market share. Moreover, as a few warehousing pharmacy
chains, wholesalers, and managed care customers control a large share of this
market, Andrx's business may be adversely affected by the loss of any of its
customers. In an effort to reduce this risk, Andrx has entered into long-term
supply arrangements with some of these customers for certain of its products.

         Since the launch of Andrx's bioequivalent versions of Dilacor XR in
1997 and Cardizem CD in 1999, each with 180-days of marketing exclusivity, there
have only been three and two additional bioequivalent competitors, respectively,
for each of the products. As a result, these products continue to generate
significant sales and significantly contribute to Andrx's overall profitability.
If these Andrx products and particularly Andrx's bioequivalent version of
Cardizem CD were to experience increased competition from existing and/or new
competitors with accompanying price reductions and/or reduced market shares,
Andrx's operating results would be significantly adversely affected.


                                       7
<PAGE>

Andrx has 26 ANDAs pending at FDA, including the following bioequivalent
versions of:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                           FDA 180-DAY               U.S. ESTIMATED
BRAND                                                           PATENT INFRINGEMENT        EXCLUSIVITY               BRAND SALES
NAME          BRAND HOLDER          FDA APPROVAL STATUS          LITIGATION STATUS         PERIOD STATUS             2001 ($) (1)
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
<S>           <C>                   <C>                         <C>                        <C>                       <C>
Prilosec      AstraZeneca plc       Final FDA approval          Patent infringement suit   Co-exclusivity on 10mg    $4.6 billion
                                    received in November 2001   on-going against Andrx.    and 20mg.                 (3)
                                                                                           Exclusivity on 40mg.
                                                                                           (2)
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Naprelan(R)   Elan Corporation      Tentative FDA approval      Patent infringement suit   No. (4)                   $31 million
              plc                   received in July 2001.      on-going against Andrx.
                                    Final approval awaiting     Favorable lower court
                                    expiration of exclusivity   decision received. Elan
                                    rights, if any, in favor    has requested that
                                    of first ANDA filer.        the lower court to
                                                                reconsider and reverse
                                                                its ruling.
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Tiazac(R)     Biovail Corporation,  Tentative FDA approval      Patent infringement suit   Yes. (2)                  $275 million
              but marketed          received in September       on-going against Andrx.                              (3)
              by Forest             2000.  Final approval       Tentative settlement
              Laboratories, Inc.    requires that Andrx         achieved.
                                    satisfactorily respond to
                                    certain issues
                                    subsequently raised by
                                    FDA.
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Wellbutrin    Glaxo SmithKline      FDA accepted ANDA for       Patent infringement suit   Yes on 150mg strength.  $1.1 billion
SR                                  review in August 1999.      on-going against Andrx.    Unsure on other mg
                                                                Favorable lower court      strength. (2)
                                                                decision received.
                                                                Glaxo has appealed.
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Zyban         Glaxo SmithKline      FDA accepted ANDA for       Patent infringement suit   Yes. (2)                   $93 million
                                    review in August 1999.      on-going against Andrx.
                                                                Favorable lower court
                                                                decision received.
                                                                Glaxo has appealed.
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
K-Dur(R)      Schering-Plough       FDA accepted ANDA for       None.                      No. However, the          (5)
              Corporation           review in May 1999.                                    180-day marketing
                                                                                           exclusivity for the
                                                                                           first ANDA filer has
                                                                                           expired.
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Claritin      Schering-Plough       FDA accepted ANDA for       Patent infringement suit   Yes. (2)                  $526 million
D-24(R)       Corporation           review in December 1999.    on-going against Andrx.                              (6)
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Depakote(R)   Abbott Laboratories   FDA accepted ANDA for       Patent infringement suit   No. (4)                   $852 million
              Inc.                  review in December 1999.    on-going against Andrx,
                                    FDA determined that the     but on "hold", pending
                                    active ingredient in        resolution of FDA issues.
                                    Andrx's bioequivalent
                                    version of Depakote is
                                    not identical to the
                                    active ingredient in
                                    Depakote.  Andrx has
                                    requested a written
                                    explanation of FDA's
                                    decision and intends
                                    to appeal an adverse
                                    conclusion.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       8
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                           FDA 180-DAY               U.S. ESTIMATED
BRAND                                                           PATENT INFRINGEMENT        EXCLUSIVITY               BRAND SALES
NAME          BRAND HOLDER          FDA APPROVAL STATUS          LITIGATION STATUS         PERIOD STATUS             2001 ($) (1)
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
<S>           <C>                   <C>                         <C>                        <C>                       <C>
Procardia(R)  Pfizer, Inc.          FDA accepted ANDA for       A patent infringement      No.                       (3)(5)
XL                                  review in August 2000.      suit was commenced and
                                                                settled.
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Caliritin     Schering-Plough       FDA accepted ANDA for       Patent infringement suit   Yes. (2)                  $331 million
Reditabs(R)   Corporation           review in September 2000.   on-going against Andrx.                              (6)
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Accupril(R)   Pfizer, Inc.          FDA accepted ANDA for       No patent infringement     No.                       $440 million
                                    review in December 2000.    suit has been commenced
                                                                against Andrx.
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Paxil(R)      Glaxo SmithKline      FDA accepted ANDA for       Patent infringement suit   No.                       $2.1 billion
                                    review in April 2001.       on-going against Andrx.
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Claritin      Schering-Plough       FDA accepted ANDA for       Patent infringement suit   Yes. (2)                  $395 million
D-12(R)       Corporation           review in July 2001.        on-going against Andrx.                              (6)
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Glucotrol     Pfizer, Inc.          FDA accepted ANDA for       Patent infringement suit   Yes. (2)                  $306 million
XL(R)                               review in April 2001.       on-going against Andrx.                              (3)
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Glucophage    Bristol-Myers         FDA accepted ANDA for       No patent infringement     No, there are no          $223 million
XR(R)         Squibb Company        review in May 2001.         suit has been commenced    patents listed in the
                                                                against Andrx.             Orange Book.  Andrx is
                                                                                           not aware of any other
                                                                                           ANDA applicants for
                                                                                           this product.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

--------------

(1) According to IMS Health Incorporated.

(2) Andrx believes its ANDA application will be granted first-filer status upon
final marketing approval. FDA does not generally comment on this status.

(3) Upon commercialization, these products are potentially subject to a royalty
or other payment arrangement in connection with agreements with Genpharm,
counsel for Andrx, Watson, Biovail, or Pfizer (see Consolidated Financial
Statements, Note 12 with respect to Genpharm, counsel for Andrx, and Watson and
Note 17 with respect to Biovail and Pfizer). In some cases, the payment of such
royalty is uncertain, as it is dependant upon certain contingencies reflected in
such agreements, including receipt of regulatory approval or the waiver by Andrx
of such requirement.

(4) The first ANDA filed was found to infringe the patent holder's patent.

(5) Product currently available to consumers in a bioequivalent form.

(6) Schering-Plough has announced that it is seeking FDA approval to offer its
entire line of Claritin products to consumers without a prescription (i.e.,
over-the-counter).

         See "Patent Litigation and Proprietary Rights" for a more detailed
discussion of the pending patent litigation and Andrx's and other parties'
exclusivity rights.

         Bioequivalent Product Pipeline

         Andrx is continually evaluating potential bioequivalent product
candidates. Such products have historically been controlled-release products
utilizing Andrx's drug delivery technologies, but under


                                       9
<PAGE>

appropriate circumstances, Andrx will also develop specialty, niche and
immediate-release pharmaceutical products.

         Brand Name Pharmaceuticals

         Andrx is researching and developing brand name controlled-release
pharmaceutical formulations by applying Andrx's proprietary drug delivery
technologies to existing immediate-release and controlled-release drugs. Andrx
believes that the application of Andrx's drug delivery technologies will improve
the characteristics of these products, for example, by decreasing undesired side
effects or reducing the frequency of administration. The results of Andrx's
research and development activity may also enable Andrx to gain approval of new
therapeutic indications. In selecting the product candidates, Andrx focuses on
high sales volume pharmaceuticals that will lack patent protection for the
active drug at the time Andrx plans to market the product. Andrx is continually
evaluating potential product candidates for this program. Andrx also markets
brand name immediate-release products acquired from third parties.

         Andrx formulates and develops brand name products on its own and uses
contract research organizations for clinical studies, in order to facilitate
development of brand name products. These potential products generally require
Andrx to file an Investigational Drug Application, or IND, with FDA before
commencing clinical trials and a New Drug Application, or NDA, in order to
obtain FDA approval. Andrx believes that the Section 505(b)(2) NDA approval
process that Andrx currently intends to utilize brand name controlled-release
formulations will be simpler than that typically associated with most NDAs for
new chemical entities because Andrx's development efforts involve chemical
entities which have been previously approved by FDA. Andrx may receive certain
marketing exclusivity rights for a controlled-release product Andrx develops in
its new drug program. Conversely, marketing exclusivity rights awarded to
another product may delay approval of Andrx's new drug.

         Andrx has submitted INDs for six brand products and one NDA for a brand
product. Andrx's lead brand products include:

Altocor(TM)       Altocor, is a newly developed extended-release tablet form of
                  lovastatin, that employs one of Andrx's patented drug delivery
                  technologies (SCOT(TM)) to treat elevated cholesterol or
                  hypercholesterolemia. Merck & Co., Inc. markets lovastatin
                  immediate-release oral tablets under the brand name
                  Mevacor(R), and others are marketing bioequivalent versions of
                  Mevacor. Mevacor immediate-release tablets are currently
                  marketed in 10 mg, 20 mg and 40 mg strengths and are
                  administered once a day. The usual recommended starting dose
                  is 20 mg once a day. The recommended dosing range is 10 mg to
                  80 mg per day in one or two doses. Mevacor belongs to a class
                  of drugs known as statins. Statin products had approximately
                  $12 billion in U.S. sales in 2001, of which Mevacor sales were
                  approximately $220 million.

                  Andrx's patent protected tablet formulation includes 10 mg, 20
                  mg, 40 mg and 60 mg dosage strengths. In June 1999, Andrx
                  initiated Phase III studies of Altocor with over 400 targeted
                  patients in over 40 centers to further evaluate the efficacy
                  and safety of Andrx's product. The Phase III studies were
                  completed in November 2000. Based on the results from these
                  studies, Altocor 60 mg compares favorably with other commonly
                  employed starting doses of currently marketed products with
                  respect to its ability to lower LDL ("bad cholesterol"). Andrx
                  filed an NDA in March 2001. In January 2002, Andrx received an
                  approvable letter from FDA for Altocor and anticipates a 2002
                  launch. Andrx intends to apply for approval to sell Altocor in
                  certain countries outside of the United States.

Metformin XT(TM)  Andrx is developing Metformin XT, an oral extended-release
                  dosage form of metformin using one of Andrx's patented drug
                  delivery technologies (SCOT), to treat non-insulin-dependent
                  diabetes mellitus, commonly referred to as Type 2 diabetes.


                                       10
<PAGE>

                  Bristol-Myers Squibb markets metformin as an immediate-release
                  tablet under the brand name, and in October 2000 received FDA
                  marketing approval for a once-a-day metformin product,
                  Glucophage XR. Glucophage XR was granted "new dosage form"
                  marketing exclusivity for a period of three years. There were
                  over $5 billion of U.S. sales of glucose-lowering products in
                  2001 including Glucophage XR, Glucophage, Glucotrol XL(R)and
                  Glynase(R).

                  Andrx successfully completed Phase III clinical studies of
                  Metformin XT in the second quarter of 2001. Andrx believes
                  that other companies may also be developing once-a-day
                  metformin products for NDA filings. Andrx anticipates filing
                  an NDA in 2002. Depending upon how FDA interprets the
                  exclusivity covering Glucophage XR, the agency may not be able
                  to approve Metformin XT for marketing until October 2003, or
                  later, if Bristol-Myers Squibb later obtains pediatric or
                  additional exclusivity for its product. Andrx also intends to
                  apply for approval to sell Metformin XT in certain countries
                  outside of the United States.

Lovastatin AD     Andrx is also conducting Phase II studies on the use of
                  Andrx's controlled-release formulation of lovastatin for the
                  treatment of Alzheimer's disease. As the studies for this
                  product for the Alzheimer's indication are still in its early
                  stages, significant financial resources will be required to
                  commercialize this product. Accordingly, this product is a
                  likely candidate for a co-development agreement as described
                  in the following paragraph.

         As the development and marketing processes for branded pharmaceuticals
are costlier than those for its bioequivalent products, and could involve
synergies with products currently being marketed or developed by other
pharmaceutical companies, Andrx will, from time to time, evaluate or seek to
enter into collaborative arrangements with other pharmaceutical companies to
wholly or partially underwrite, assist in or undertake further research and
development or commercialization of Andrx's products or products being
considered for development by those companies.

         Andrx presently markets the following brand products acquired from
third parties:

Entex(R)          A line of cough and cold products acquired from an affiliate
                  of Elan began marketing the product line in September 2001.

Anexsia(R)        Three hydrocodone pain products in-licensed from Mallinckrodt
                  in July 2001, through an eight-year marketing and supply
                  agreement. Two dosage strengths were launched in November
                  2001, and a third dosage strength is expected to be launched
                  in 2002, following its approval by FDA.

Histex(R)         A line of cough and cold products acquired from CTEX in
                  January 2001. Andrx marketed the Histex products immediately
                  upon their purchase.

Embrex(R)         A pre-natal vitamin acquired in the acquisition of CTEX
                  Pharmaceuticals in January 2001. Andrx marketed the Embrex
                  product immediately upon the acquisition of CTEX
                  Pharmaceuticals.


                                       11
<PAGE>
         Brand Sales and Marketing Strategy

         Andrx has established its own sales organization and related
infrastructure to support and manage Andrx's brand sales and marketing effort.
Andrx, however, is also contemplating the licensing of Andrx's brand name
products to other pharmaceutical companies with sales organizations sufficient
to support Andrx's products, entering into co-promotion or contract sales
arrangements with respect to its products, or a combination of the above.
Whichever strategy or combination of strategies Andrx pursues, Andrx expects
that it will have a sales organization in place when its brand name
pharmaceuticals are ready to be launched. This brand sales force may be
supported and supplemented by co-promotion arrangements, telemarketing and
direct mail, as well as through advertising in trade publications and
representation at regional and national medical conventions. As of March 2002,
Andrx's brand product sales force consists of approximately 300 sales and
marketing representatives. Andrx is currently considering increasing its sales
force to 500 sales and marketing representatives within 18 months after the
anticipated launch of Altocor and is exploring co-promotional arrangements.
Andrx is also considering the acquisition of additional brand products for its
sales force to promote, both while it is awaiting the launch of its internally
developed brand name controlled-release pharmaceuticals and thereafter. Andrx's
sales force will focus on primary-care physicians. Andrx also expects to have
the ability to access doctors through Cybear's Physicians' Online web portal and
other Internet applications.

ANDRX'S PROPRIETARY DRUG DELIVERY TECHNOLOGIES

         Both Andrx's bioequivalent pharmaceuticals and brand name
controlled-release pharmaceuticals generally utilize Andrx's proprietary drug
delivery technologies to control the release characteristics of a variety of
orally administered drugs. Controlled-release products are formulations that
release active drug compounds in the body gradually and predictably over a 12 or
24-hour period and therefore need be taken only once or twice daily.
Controlled-release products typically provide numerous benefits over
immediate-release drugs, including:

         -        greater effectiveness in the treatment of chronic conditions;

         -        reduced side effects;

         -        greater convenience (only once or twice a day); and

         -        higher levels of patient compliance due to a simplified dosing
                  schedule.

         Andrx has nine proprietary drug delivery technologies that have been
patented for certain applications or for which Andrx has filed for patent
protection for certain applications. Andrx has been issued or has received
notices of allowances for 32 patents with respect to these technologies.

         Andrx's drug delivery technologies utilize a variety of polymers and
other materials to encapsulate or entrap the active drug compound and to release
the drug at varying rates at predetermined locations in the gastrointestinal
tract. In applying an appropriate drug delivery technology to a particular drug
candidate, Andrx considers such factors as:

         -        the desired release rates of the drug;

         -        the physio-chemical properties of the drug;

         -        the physiology of the gastrointestinal tract and the manner in
                  which the drug will be absorbed during passage through the
                  gastrointestinal tract; and

         -        the effect of food on the absorption rate and transit time of
                  the drug.

                                       12
<PAGE>

         The following summarizes Andrx's drug delivery technologies:

<TABLE>
<CAPTION>
Drug Delivery Technology                                Description
------------------------                                -----------
<S>                                                     <C>
Pelletized Pulsatile Delivery System(TM)
("PPDS")                                                PPDS is designed for use with products that
                                                        require a pulsed release of the drug. This
                                                        technology uses pellets that are coated with
                                                        specific polymers and agents to control the
                                                        release rate of the microencapsulated drug.
                                                        By varying the proportion and composition of
                                                        the Polymer mixtures, the release rate of
                                                        the drug may be specifically controlled.



Single Composition Osmotic Tablet(TM) System
("SCOT")
                                                        SCOT utilizes various osmotic modulating
                                                        agents as well as polymer coatings to
                                                        provide a zero-order release of a drug (a
                                                        constant rate of release).

Solubility Modulating Hydrogel(TM)System                SMHS is designed for products utilizing a hydrogel-based
("SMHS")                                                dosage system that provides for sustained release without
                                                        the need to use special coatings or structures, which add
                                                        to the cost of  manufacturing. This technology avoids the
                                                        "initial burst effect" commonly observed with other
                                                        sustained-release hydrogel formulations.

Delayed Pulsatile Hydrogel System(TM)
("DPHS")                                                DPHS is designed for use with hydrogel
                                                        matrix products that are characterized by an
                                                        initial zero-order release of drug followed
                                                        by a rapid release. This release profile is
                                                        achieved by the blending of selected
                                                        hydrogel polymers to achieve a delayed
                                                        pulse.

Stabilized Pellet Delivery System(TM)
("SPDS")                                                SPDS is designed specifically for unstable
                                                        drugs, incorporating a pellet core of drug
                                                        and protective polymer outer layer(s).

Stabilized Tablet Delivery System(TM)
("STDS")                                                STDS employs a dual layer coating technique
                                                        that avoids the need to use a coating layer
                                                        to separate omeprazole core from the enteric
                                                        coating layer.


Granulated Modulating Hydrogel System(TM)
("GMHS")                                                GMHS incorporates hydrogel and binding
                                                        polymers with the drug, which is formed into
                                                        granules and then pressed into tablet form.
</TABLE>

                                       13
<PAGE>

<TABLE>
<S>                                                     <C>
Pelletized Tablet System(TM)
("PELTAB")                                              PELTAB utilizes polymer-coated drug pellets
                                                        or drug crystals which are manufactured into
                                                        tablets. In order to provide a
                                                        controlled-release, a water insoluble
                                                        polymer is used to coat discrete drug
                                                        pellets or crystals, which then can resist
                                                        the action of fluids in the gastrointestinal
                                                        tract. This technology incorporates a strong
                                                        polymer coating enabling the coated pellets
                                                        to be compressed into tablets without
                                                        significant breakage.

Porous Tablet System(TM)
("PORTAB")                                              PORTAB is designed for controlled-release
                                                        dosage forms that utilize an osmotic core,
                                                        typically containing a water soluble drug.
                                                        The core includes a water soluble component
                                                        and a continuous polymer coating. The
                                                        purpose of the soluble agent is to expand
                                                        the core and thereby create microporous
                                                        channels through which the drug is released.
</TABLE>

COLLABORATIVE ARRANGEMENTS

         Andrx has entered into the following collaborative arrangements:

         ANCIRC

         ANCIRC is a joint venture between Andrx and Watson Pharmaceuticals,
Inc. established in 1994 for the development, manufacture and sale of up to six
bioequivalent controlled-release pharmaceuticals and subsequently amended to
include up to eight bioequivalent controlled-release pharmaceuticals. Capital
contributions, distributions and net income or losses are allocated equally
between Andrx and Watson. Capital contributions are utilized by ANCIRC to pay
outside vendors, services rendered by Watson or Andrx to ANCIRC, and to purchase
finished goods inventory manufactured by Watson or Andrx on ANCIRC's behalf.
Andrx is currently marketing two ANCIRC products, bioequivalent versions of
Trental and Oruvail. Effective November 2000, the remaining six products for
which ANCIRC had not yet submitted ANDAs were removed from ANCIRC, and Andrx
became solely responsible for all of the additional costs to research and
develop, manufacture and sell those products. Watson became entitled to a
potential royalty on net sales, based on certain conditions, from the
commercialization of those products, including Andrx's ANDAs for Procardia XL
and Glucotrol XL, which were accepted for filing by FDA in August 2000 and May
2001, respectively. Andrx may elect to discontinue its efforts to develop any of
the remaining products at any time. The joint venture relationship for the two
previously approved products, bioequivalent versions of Trental and Oruvail, is
continuing except that effective November 1, 2000, the profits generated by
ANCIRC are allocated 75% to Andrx and 25% to Watson until each company's capital
account activity has been equalized.

         CARAN

         In August 2000, Andrx entered into CARAN, a 50/50 joint venture with
Carlsbad Technologies, Inc. to develop, manufacture and sell three bioequivalent
pharmaceutical products, for which ANDAs have been filed with FDA, including
bioequivalent versions of Pepcid(R) and Prozac(R). These products were developed
and will be manufactured by Carlsbad and distributed by Andrx.


                                       14
<PAGE>

         In April 2001, FDA awarded final approval for Carlsbad's bioequivalent
versions of Pepcid, which is used for the treatment of ulcers, gastroesophageal
reflux disease and pathological hypersecretory conditions. In July 2001, Richter
Gedeon Vegyeszeti Gyar RT filed an action against CARAN, Andrx, Carlsbad and
seven other defendants, including the foreign supplier, for alleged infringement
of five patents related to Pepcid. Carlsbad has agreed to indemnify and hold
harmless Andrx for non-infringement and invalidity.

         In February 2002, FDA awarded final marketing approval for Carlsbad's
bioequivalent version of Prozac, which is used for the treatment of depression.
As this approval came subsequent to the launch of other bioequivalent versions
of Prozac, Andrx is currently not selling this CARAN product.

LICENSING AGREEMENTS

         In June 1999, Andrx entered into an agreement with Geneva
Pharmaceuticals, Inc., a member of the Novartis pharmaceutical group, for the
development, sale and marketing of specified products. Geneva agreed to make
monthly license payments of $1.0 million for 40 months to fund the development
costs of certain controlled-release products that Andrx is developing for
submission as NDAs in exchange for exclusive marketing rights to those products
in specified territories. Under this arrangement, one of Andrx's NDA products
has been out-licensed for the U.S. Upon receiving approval from FDA or other
regulatory agencies, Andrx would receive certain minimum guaranteed royalties in
the first five years from the sale of these products in the specified
territories. In June 2000, the agreement with Geneva was amended to, among other
things, provide for an additional $6.0 million in license payments for certain
controlled-release dosage forms of existing products that Andrx is developing
for submission as NDAs. During the term of this agreement with Geneva, Andrx
received $34.0 million. Andrx committed to continuing to sell Geneva's
bioequivalent products in its distribution operations.

         On October 24, 2001, Andrx terminated its 1999 agreement with Geneva,
and reacquired all of Geneva's marketing rights for two brand products under
development by Andrx, consisting of U.S. and selected international marketing
rights for Metformin XT, a controlled-release formulation of metformin, and
selected international marketing rights to Altocor, a high-potency,
extended-release lovastatin. In return for relinquishing Geneva's marketing
rights to these products back to Andrx, Geneva will not make the 12 remaining
monthly payments to Andrx of $1.0 million, and Andrx will pay Geneva certain
milestone payments and a royalty on net sales in the U.S. for Metformin XT for a
period of five years. Pursuant to the termination agreement, Andrx made its
first milestone payment of $2.0 million to Geneva in December 2001. Andrx's
distribution operations will continue to distribute Geneva products in the
normal course of business.

         In March 2001, Health Canada, Canada's health regulatory authority,
approved the sale of Andrx's bioequivalent version of Cardizem CD in Canada and
Rhoxalpharma, Inc., Andrx's licensee under a December 1997 agreement, commenced
the sale of this product. Andrx and Rhoxalpharma have entered into other
agreements relating to the sale in Canada of controlled-release products
developed by Andrx, including a bioequivalent version of Prilosec.

         Andrx may enter into additional development and licensing agreements
covering bioequivalent pharmaceuticals with U.S. and foreign pharmaceutical
companies. Under such an agreement, the licensees typically will fund the cost
of product development and will pay Andrx royalties in exchange for a license to
market the products for a specified period in a specified territory.

         In the past, Andrx has worked with other pharmaceutical companies to
formulate controlled-release versions of existing commercialized drugs and drugs
they are developing using Andrx's proprietary drug delivery technologies. In
addition to improving drug efficacy, Andrx believes that its

                                       15
<PAGE>

drug delivery technologies can provide these pharmaceutical companies with the
opportunity to enhance the commercial value of their existing drug products and
new drug candidates. Andrx may enter into such relationships in the future.

RAW MATERIALS

         The active chemical raw materials, essential to Andrx's business, are
generally readily available from multiple sources in the U.S. and throughout the
world. Certain raw materials used in the manufacture of Andrx's products are,
however, available from limited sources, and in some cases, a single source. Any
curtailment in the availability of such raw materials could be accompanied by
production or other delays, and, in the case of products for which only one raw
material supplier exists or has been approved by FDA, could result in a material
loss of sales, with consequent adverse effects on Andrx's business and results
of operations. In addition, because raw material sources for pharmaceutical
products must generally be identified and approved by regulatory authorities,
changes in raw material suppliers may result in production delays, higher raw
material costs and loss of sales and customers. Andrx obtains a significant
portion of its raw materials from foreign suppliers, and its arrangements with
such suppliers are subject to, among other risks, FDA approval, governmental
clearances, export duties, political instability, and restrictions on the
transfer of funds.

         In addition, recent changes in patent laws in foreign jurisdictions may
make it increasingly difficult to obtain raw materials for research and
development prior to the expiration of the applicable United States or foreign
patents. Any inability to obtain raw materials on a timely basis, or any
significant price increases that cannot be passed on to customers, could have a
material adverse effect on Andrx.

         To date, Andrx has not experienced any significant delays from lack of
raw material availability. However, significant delays may occur in the future.

MANUFACTURING

         Andrx presently has manufacturing facilities in Florida and
Massachusetts. In order to have sufficient manufacturing capacities for the
anticipated quantities of the products it expects to launch, Andrx is continuing
to expand its existing manufacturing facilities in Davie, Florida, by converting
portions of its existing space into additional manufacturing operations and
related warehousing space, and by completing the construction of a new
manufacturing facility in Weston, Florida. Following the completion of these
projects, Andrx will have approximately 250,000 square feet for the manufacture
and related warehousing of its products. If Andrx is unable to complete its
construction and conversion projects in a timely manner, its business could
suffer.

         Andrx's manufacturing and other processes utilize sophisticated
equipment that at times requires a significant amount of time to obtain and
install. Although Andrx endeavors to properly maintain its equipment, and to
maintain spare parts on hand, Andrx's business could suffer if certain
manufacturing or other equipment, or all or a portion of its facilities, were to
become inoperable for a period of time. This could occur for various reasons,
including catastrophic events such as a hurricane or explosion. Moreover, FDA
approval is generally required before any new facility or equipment can be
utilized for the manufacture of pharmaceuticals.

PHARMACEUTICAL DISTRIBUTION OPERATIONS

         Andrx distributes predominantly bioequivalent pharmaceuticals
manufactured by third parties through its Anda Inc. and Valmed Pharmaceuticals,
Inc. subsidiaries. Andrx purchases pharmaceuticals directly from manufacturers
and wholesalers and primarily markets them through Andrx's in-house
telemarketing staff primarily to independent pharmacies, pharmacy chains which
do not maintain their own central warehousing facilities, pharmacy buying groups
and physicians offices. Andrx offers next day delivery, competitive pricing,
quality products and responsive customer service for its more than 4,000 shelf
keeping units, or SKUs, which Andrx believes are the critical elements to
competing effectively in this market. Andrx's telemarketing staff currently has
approximately 240 persons who make 65,000 calls per week to 16,000 active
accounts and who are supplemented by sales executives who are responsible for
national accounts. Additionally, Andrx's customers can place orders through
Andanet,



                                       16
<PAGE>

Andrx's internally developed proprietary Internet ordering software, and through
AndaConnect, Andrx's hand-held ordering device. Andrx's telemarketers are
located in Weston, Florida and Grand Island, New York.

         Andrx currently utilizes its telemarketing operations for the sales and
marketing of its and its collaborative partners' products. Andrx plans to use
its distribution operations for the marketing of future products. Andrx's
distribution operations allow Andrx to observe and participate directly in
developments and trends in the pharmaceuticals industry. While Andrx presently
distributes products out of its Florida and New York distribution centers, in
the second half 2002, Andrx is opening a centralized distribution center in
Columbus, Ohio, which it believes will allow additional distribution
opportunities across the nation.

         Andrx purchases bioequivalent products and certain other products for
resale from a number of pharmaceutical manufacturers and wholesalers. Andrx
believes it is not dependent upon any particular supplier and that alternative
sources of supply for most of Andrx's products are available, if required.

COMPETITION

         The pharmaceutical industry is highly competitive and is affected by
new technologies, new developments, government regulations, healthcare
legislation, availability of financing and other factors. Many of Andrx's
competitors have longer operating histories and greater financial, research and
development, marketing and other resources than Andrx. Andrx expects to be
subject to competition from numerous other entities that currently operate or
intend to operate in the pharmaceutical industry, including companies that are
engaged in the development of controlled-release drug delivery technologies and
products, and other manufacturers that may decide to undertake development of
these products. Andrx also faces competition for the acquisition or licensing of
new product opportunities from other companies.

         In Andrx's sales efforts for its brand products, Andrx will compete
with large domestic and international brand pharmaceutical companies with
significantly larger and more experienced sales forces and significantly larger
financial resources to support their products.

         In Andrx's sales efforts for its bioequivalent products, Andrx competes
with domestic and international companies and bioequivalent divisions of large
brand pharmaceutical companies. Many of these competitors offer a wider variety
of bioequivalent products to their customers.

         In Andrx's pharmaceutical distribution business, Andrx competes with a
number of large wholesalers and other distributors of pharmaceuticals. Andrx
believes that consolidation among wholesalers, the growing role of managed care
organizations, the formation of buying groups and competition between
distributors have resulted in pricing pressures. Additionally, these large
wholesalers have greater financial and other resources than Andrx.

GOVERNMENT REGULATION

         Drug manufacturers are required to obtain approval from FDA and
possibly other health authorities before marketing their new drug product
candidates. This approval process is often costly, time consuming and the
outcome may be uncertain. Andrx cannot assure you that any drug application will
be approved timely by FDA or any other health authority, if at all.

         ANDA Process

                                       17
<PAGE>

         FDA approval is required before a bioequivalent version of a previously
approved drug or certain new dosage forms of an existing drug can be marketed.
Approval for such products generally is sought using an ANDA. Complete clinical
studies are not required in support of an ANDA, although typically
bioavailability and bioequivalence studies must be conducted. Bioavailability
indicates the rate and extent of absorption and levels of concentration of a
drug product in the blood stream. Bioequivalence compares the bioavailability of
one drug product with another and, when established, indicates that the rate and
extent of absorption and levels of concentration of a bioequivalent drug in the
body are substantially equivalent to the previously approved drug. An ANDA may
be submitted for a drug on the basis that it is the equivalent of a previously
approved drug or, in the case of a new dosage form, is suitable for use for the
indications specified without the need to conduct additional safety or
effectiveness testing.

         Under the Waxman-Hatch Amendments, the developer of a bioequivalent
drug which is the first to have its ANDA accepted for filing by FDA and includes
a Paragraph IV certification is awarded a 180-day period of marketing
exclusivity against subsequent ANDA filers. This means that FDA may not approve
another ANDA containing a Paragraph IV certification for that product until the
first developer's 180-day period of marketing exclusivity has expired or has
been waived. This marketing exclusivity period begins with the commercial
marketing of the product or a court determination that the relevant patents are
invalid, unenforceable or not infringed. A court decision triggering the 180-day
period can occur either in litigation involving the first Paragraph IV filer or
a subsequent filer.

         Until recently, FDA has interpreted the reference to a court decision
to mean a court decision which is final and non-appealable. This interpretation
was challenged in litigation in which the courts disagreed with FDA's
interpretation. Prompted in part by those decisions, FDA issued guidelines in
March 2000 in which it announced a change in its prospective interpretation of
the law governing ANDAs. The new guidelines state that FDA now will view a court
decision to be the first court decision which finds a patent at issue to be
invalid, unenforceable or not infringed. FDA stated that when a lower court
renders such a decision, FDA may approve an ANDA as of the date of that decision
and the 180-day exclusivity period will commence on that date, unless the
marketing of the product has already commenced. If the lower court decision
finds a patent to be infringed, but the decision is reversed on appeal, FDA may
approve the ANDA on the date a judgment is entered that the patent is invalid,
unenforceable or not infringed. FDA stated that neither a stay nor a reversal of
a district court decision finding the patent invalid, unenforceable or not
infringed will affect the approval of an ANDA or the beginning, or continued
running, of the exclusivity period.

         FDA's revised interpretation of the statute may substantially decrease
the value of the 180-day exclusivity period. A patent holder whose patent is
found invalid, unenforceable or not infringed in a lower court decision may seek
to reverse such a ruling on appeal. Under the new FDA interpretation, however,
even if such an appeal is taken, the bioequivalent product's 180-day exclusivity
period would start to run at the time the lower court rendered its decision. The
developer of the bioequivalent product would thus be faced with the prospect of
beginning marketing of its product despite the pending appeal and lack of final
resolution of the litigated issue or delaying marketing at a time when the
180-day exclusivity period had started. A decision to delay marketing of the
product following a lower court decision which is subject to an appeal would
mean that the developer of the product would have fewer than 180 days, and
possibly no days, in which to be the exclusive marketer of that bioequivalent
product. Andrx is unable to predict what impact, if any, FDA's new guidelines
may have on its business or financial results.

         A recent tactic employed by some brand drug companies to delay the
availability of bioequivalent alternatives has been to list newly issued patents
in FDA's Orange Book as "covering" their products, thereby requiring the ANDA
applicant for a product that does have final marketing approval to make yet



                                       18
<PAGE>

another Paragraph IV certification, and potentially obtaining additional 30
month "stays" of FDA approval through the commencement of additional litigation
with respect to that patent. During 2001, Biovail and AstraZeneca listed
additional patents in the Orange Book, while Andrx was engaged in patent
litigation against those companies in connection with Tiazac and Prilosec,
respectively. Biovail commenced additional litigation with respect to the newly
listed patent. AstraZeneca did not. While Andrx has filed, and will likely
continue to file, lawsuits and take other actions to enjoin or prohibit the
listing of certain of these patents or to preclude the imposition of additional
30 month "stays" of FDA approval for these newly issued patents, it is unclear
as to how or whether the courts, FDA or Congress will ultimately change this
practice.

         In 1997, Congress enacted legislation to reward branded pharmaceutical
companies for conducting research in the pediatric population. If a branded
company has a patent or other market exclusivity protecting the product that is
either unchallenged or whose validity is upheld by a court, it is eligible to
apply for an additional six months of protection. This is known as "pediatric
exclusivity." Thus, where pediatric exclusivity is requested by a branded
company and granted by FDA, final marketing approval could possibly be delayed
by six months.

          Andrx believes that FDA's abbreviated ANDA procedures will apply to
Andrx's bioequivalent drugs. Andrx cannot assure you that its bioequivalence
studies and other data will result in FDA approval to market its drug products.
Moreover, since Andrx sometimes files it ANDA based on study results utilizing
product batches which are smaller than what Andrx anticipates may be required
for the commercial launch of that product, Andrx is required to "scale-up" its
product to larger equipment in accordance with FDA regulations. While Andrx has
successfully scaled-up all of its products in the past, Andrx cannot assure you
that all of its scale-up efforts will prove successful or that, even if
successful, the launch of its product will not be delayed by the process. Even
if marketing approval is received, Andrx could recall a product it has sold,
either on its own or pursuant to an FDA request, under certain circumstances,
including the failure of the product to continue to meet the requirements of its
approved ANDA.

         Certain ANDA procedures for bioequivalent controlled-release drugs and
other products are presently the subject of petitions filed by brand name drug
manufacturers, which seek changes from FDA in the approval process for
bioequivalent drugs. Andrx cannot predict at this time whether FDA will make any
changes to the ANDA procedures as a result of such petitions, ongoing
rulemakings, or litigation or the effect that such changes may have on Andrx.
Any changes in FDA regulations or policies may make ANDA approvals more
difficult and, thus, may have a material adverse effect on Andrx's business.

         Patent certification requirements for various drugs could also result
in significant delays in obtaining FDA approval if patent infringement
litigation is initiated by the holder or holders of the brand name patents.
Delays in obtaining FDA approval of ANDAs and certain NDAs can also result from
a marketing exclusivity period and/or an extension of patent terms. If some of
Andrx's drugs do not qualify for ANDA procedures, as will be the case with
certain of Andrx's controlled-release formulations, FDA approval process may
require time consuming and expensive clinical studies and NDA filings.

         NDA Process

         An NDA is a filing submitted to FDA to obtain approval of a drug that
is not eligible for an ANDA and must contain complete pre-clinical and clinical
safety and efficacy data or reference to such data. Before clinical testing can
begin, stringent government requirements for pre-clinical evaluation must be
satisfied. Pre-clinical data are typically obtained from studies in animal
species, as well as laboratory studies, and are submitted to FDA in an IND. The
pre-clinical data must provide an adequate basis for evaluating both the safety
and the scientific rationale for the initiation of clinical trials (i.e., trials
in humans).

                                       19
<PAGE>

         Clinical trials are typically conducted in three sequential phases,
although the phases may overlap. The process of completing clinical trials for a
new drug may take several years and requires the expenditure of substantial
resources. Preparing a NDA involves considerable data collection, verification,
analysis and expense, and Andrx cannot guarantee that FDA or any other health
authority will approve any of Andrx's NDA products on a timely basis, if at all.
The approval process is affected by a number of factors, primarily the risks and
benefits of a drug product as demonstrated in clinical trials, the severity of
the target disease or health condition and the availability of alternative
treatments. FDA or other health authorities may deny a NDA if the regulatory
criteria are not satisfied, or may require additional testing or information
before an NDA will be approved.

         Andrx currently intends to seek approval of its brand name
controlled-release pharmaceutical products using a type of NDA referred to as a
Section 505(b)(2) NDA. Section 505(b)(2) NDAs may rely, in whole or in part, on
safety or efficacy data that are publicly available, but to which the applicant
does not have a right to reference the underlying studies (such as certain data
published in the scientific literature). Section 505(b)(2) NDAs also may rely on
prior FDA determinations that related products are safe and effective (e.g.,
approval of a controlled-release version of a previously approved
immediate-release drug product). Thus, the Section 505(b)(2) NDA process may
significantly reduce the time and expense of new drug development by eliminating
the need for certain duplicative testing.

         There are limitations on the use of Section 505(b)(2) NDAs, however.
First, patent listing/certification requirements and market exclusivity awarded
to reference or competitor products may result in the lengthy and uncertain
delay of approvals similar to those described above for ANDAs. Second, there is
current uncertainty concerning the extent to which Section 505(b)(2) NDAs may
rely upon prior FDA findings that reference drugs are safe and effective for
approved uses. There may therefore be limitations on a 505(b)(2) NDA applicant's
ability to innovate without conducting substantial clinical testing.

         NDA products, including Section 505(b)(2) NDAs, may qualify for
specific patent and market exclusivity protections against competitive products
submitted for approval via the 505(b)(2) NDA or ANDA processes.

         Antitrust

         The federal antitrust authorities, including the Federal Trade
Commission, or the FTC, have initiated a broad inquiry into alleged
anti-competitive practices in the entire pharmaceutical industry, including
practices relating to patent challenges and settlements. The FTC has indicated
that the study will enable it to provide a more complete picture of how
bioequivalent drug competition has developed under the Waxman-Hatch Amendments.
The FTC has already investigated several cases in which manufacturers of
pharmaceutical drug products and potential bioequivalent competitors have
allegedly entered into anti-competitive agreements to delay bioequivalent entry,
and has taken enforcement action against some alleged anti-competitive
agreements. The FTC has indicated that its broader study is designed to shed
light on matters such as whether the agreements the FTC has found are isolated
instances and whether particular provisions of the Waxman-Hatch Amendments have
operated appropriately to balance the legitimate interests of pharmaceutical
companies in providing competition. In early 2001, the FTC issued special orders
to approximately 100 pharmaceutical companies. The FTC has stated that it plans
to compile the requested information to provide a factual description of how the
180-day marketing exclusivity and 30-month stay provisions of the Waxman-Hatch
Amendments have influenced the development of bioequivalent drug competition.

         One of the investigations noted above involved the 1997 stipulation and
agreement which Andrx entered into with Aventis in connection with the patent
infringement litigation brought by Aventis


                                       20
<PAGE>

relating to the sale of Andrx's bioequivalent version of Cardizem CD. That
investigation resulted in the filing of an administrative action against Andrx
in March 2000. In April 2001, Andrx and Aventis entered into a consent agreement
with the FTC, in which Andrx did not admit to any violation of the law and was
not subject to any fine, penalty or other monetary obligation. Instead, Andrx
agreed to refrain from taking certain future actions, which FTC alleged may have
the capacity or potential to be anti-competitive, without first notifying the
FTC. In concluding the proceedings against Andrx, the FTC stated: "Based on the
FTC's investigation, it does not appear that there was any delay in the entry
into the market of a generic version of Cardizem CD by Andrx or any other
potential manufacturer, or that the conduct or agreement at issue delayed
consumer access to a generic version of Cardizem CD."

         In the context of its overall investigation, it is possible that the
FTC may take no action, may make recommendations to FDA or others, may adopt
procedural notification devices, or may bring enforcement actions as to specific
agreements it concludes are anti-competitive. As the above noted consent
agreement obligates Andrx to notify the FTC in connection with certain of its
ANDA filings, Andrx does not believe the FTC's investigation will adversely
affect its business. However, because the FTC has not concluded its
investigation and published its views in this area, it remains unclear as to how
Andrx, and companies like it, can conclude transactions which they view as both
making commercial sense and pro-competitive, without later risking inquiry as to
whether that transaction is anti-competitive. Andrx has brought two potential
transactions to the attention of the FTC as part of an informal effort to obtain
guidance, one involving the respective exclusivity rights of Andrx and Genpharm
to Andrx's bioequivalent version of Prilosec and the other, the resolution of
certain ongoing litigation between Andrx and Biovail with respect to the
bioequivalent versions of Tiazac and Cardizem CD. Andrx has thus far been
unsuccessful in getting informal or formal approval from FTC on these
transactions.

         cGMP Standards

         FDA regulates the development, manufacture, distribution, labeling and
promotion of prescription drugs, and has the authority to inspect manufacturing
facilities for compliance therewith. FDA requires that certain records be kept
and reports be made for the registration of drug manufacturers and their
products, and the compliance with FDA's current Good Manufacturing Practices
(cGMP) standards. To comply with cGMP standards, Andrx must continue to expend
significant time, money and effort in the areas of production, quality control
and quality assurance. Andrx believes that its manufacturing facilities are in
compliance with cGMP standards, but could be materially adversely affected by
any failure to comply with these standards.

         DEA

         Because Andrx distributes and is attempting to develop products
containing controlled substances, it must meet the requirements and regulations
of the Controlled Substances Act which are administered by the Drug Enforcement
Administration, or the DEA. These regulations include stringent requirements for
manufacturing controls and security to prevent diversion of or unauthorized
access to the drugs in each stage of the production and distribution process.
The DEA also regulates allocation to Andrx of raw materials used in the
production of controlled substances based on historical sales data. Andrx
believes that it is currently in compliance with applicable DEA requirements,
but could be materially adversely affected by any failure to comply with these
requirements.

         State Licensure and Other Requirements

         As a manufacturer and distributor of pharmaceuticals, Andrx is subject
to state licensure and other requirements pertaining to the manufacture and/or
wholesale distribution of prescription drugs, including the Controlled
Substances Act, the Prescription Drug Marketing Act and similar state laws,



                                       21
<PAGE>

which regulate the marketing, purchase, storage and distribution of prescription
drugs. Andrx believes that its state licensure and other requirements are in
compliance with applicable laws, but Andrx could be materially adversely
affected by any failure to comply with licensing and other requirements.

         Post-Marketing Regulatory Action

         FDA has the authority to withdraw approvals of previously approved
pharmaceutical drugs for cause, to request recalls of products, to debar
companies and individuals from future regulatory submissions and, through action
in court, to seize products, institute criminal prosecution, seek civil
penalties or close manufacturing plants in response to violations. The DEA has
similar authority. Andrx could be materially adversely affected by any such FDA,
DEA or comparable state regulatory agencies' actions.

         Environmental Matters

         Andrx's operations are subject to numerous and increasingly stringent
federal, state and local environmental laws and regulations concerning, among
other things, the generation, handling, storage, transportation, treatment and
disposal of toxic and hazardous substances and the discharge of pollutants into
the air and water. Environmental permits and controls are required for some of
Andrx's operations and these permits are subject to modification, renewal and
revocation by the issuing authorities. Andrx believes that its facilities are in
substantial compliance with its permits and environmental laws and regulations
and does not believe that future environmental compliance will have a material
adverse effect on its business, financial condition or results of operations.
Andrx's environmental capital expenditures and costs for environmental
compliance may increase in the future as a result in changes in environmental
laws and regulations or as a result of increased manufacturing activities at any
of its facilities. Andrx has hazardous waste hauling agreements with licensed
third parties to properly dispose of hazardous wastes. Andrx could be materially
adversely affected by any failure to comply with environmental laws, including
the costs of undertaking a clean up at a site to which its wastes were
transported.

         Bioequivalent Substitution and Reimbursement

         The cost of human health care products continues to be a subject of
investigation and action by governmental agencies, legislative bodies and
private organizations in the United States and other countries. In the United
States, most states have enacted bioequivalent substitution legislation
requiring or permitting a dispensing pharmacist to substitute a different
manufacturer's version of a drug for the one prescribed. Federal and state
governments continue to pursue efforts to reduce costs of Medicare and Medicaid
programs, including restrictions on amounts agencies will reimburse for the use
of products. Under the Omnibus Budget Reconciliation Act of 1990, manufacturers
must pay certain statutorily-prescribed rebates on Medicaid purchases for
reimbursement on prescription drugs under state Medicaid plans. Federal Medicaid
reimbursement for drug products of original NDA holders is denied if less
expensive bioequivalent versions are available from other manufacturers.

PATENT LITIGATION AND PROPRIETARY RIGHTS

         General

         Andrx believes that its future will depend in part on its ability to
obtain patents, maintain trade secret protection and operate without infringing
the proprietary rights of others. Andrx has filed and been issued numerous U.S.
and foreign patents and notices of allowances relating to its drug delivery

                                       22
<PAGE>

technologies and formulations. Andrx expects to apply for additional U.S. and
foreign patents in the future. Although the issuance of a patent is not
conclusive as to its validity or as to the enforceable scope of the claims of
the patent, Andrx depends on its patents and the maintenance of its trade
secrets. The infringement by Andrx of the patent or proprietary rights of others
or the failure or inability to protect Andrx's patent rights could have a
material adverse effect on Andrx's results of operations and financial position.

         Patent Infringement Litigation

         Most of the brand name controlled-release products for which Andrx is
researching and developing bioequivalent versions are covered by one or more
patents, and the process by which Andrx is able to market its bioequivalent
products and protect its brand products involves substantial litigation. Under
the Waxman-Hatch Amendments, when a drug developer files an ANDA for a
bioequivalent drug, or files a Section 505(b)(2) NDA for a new drug based upon
reference to a previously approved product, which has a patent listed in the
Orange Book, the developer must make a certification to FDA as to whether the
developer believes that any unexpired patent which has been listed with FDA as
covering the relevant brand-name product will be infringed by the developer's
product or is invalid or unenforceable. If the developer believes that its
product does not infringe the brand product's patents or that any unexpired
patent is invalid or unenforceable, it provides a Paragraph IV certification to
FDA and a notice to the NDA owner and the patent holder, who may then challenge
the developer's Paragraph IV certification by filing a lawsuit for patent
infringement. If a lawsuit is filed within 45 days from the day the NDA owner
and patent holder received notice of the Paragraph IV certification, FDA can
review and tentatively approve the ANDA or Section 505(b)(2) NDA, but cannot
make the marketing approval effective until a judgment in the action has been
rendered in favor of the developer, 30 months have passed from the date the
patent holder received the Paragraph IV certification, or when the patent
expires, whichever is sooner. Brand name pharmaceutical companies may obtain
additional patents after an ANDA or Section 505(b)(2) NDA has been filed, but
before it has been approved, which may require the submission of a new Paragraph
IV certification and trigger additional notification and litigation waiting
period requirements. The outcome of patent litigation or any litigation is
difficult to predict because of the uncertainties inherent in litigation.

         Numerous actions have been filed against Andrx. The litigation
challenging Andrx's bioequivalent version of Dilacor XR was dismissed without
prejudice; the litigation relating to Andrx's bioequivalent version of Cardizem
CD was dismissed with prejudice; the trial and appellate courts both found in
Andrx's favor in the first action relating to Andrx's bioequivalent version of
Tiazac and a second action involving a different patent listed as covering
Tiazac is in the process of being settled. Additionally, Andrx has prevailed in
the trial court's with respect to its bioequivalent versions of Wellbutrin SR,
Zyban and Naprelan, although appeals or motions for reconsideration are
underway. Other actions relating to Andrx's ANDAs for bioequivalent versions of
Prilosec, Depakote, Claritin D-24, Claritin D-12 and Claritin Reditabs, Paxil,
and Glucotrol XL are pending. Patent litigation is also pending against Andrx
and Carlsbad Technology, Inc., one of Andrx's collaborative partners, with
respect to the bioequivalent version of Pepcid that Carlsbad developed and Andrx
sells. Andrx anticipates that additional actions may be filed as Andrx or its
collaborative partners file additional ANDAs containing Paragraph IV
certifications. Patent litigation may also affect NDAs that Andrx files in the
future. Andrx's business could be harmed by the delay in obtaining FDA approval
to market Andrx's products as a result of patent litigation (both with respect
to patents listed with FDA when the ANDA was filed and thereafter), the delay in
obtaining judicial decisions in such litigation, the expense of litigation
whether or not Andrx is successful, or an adverse outcome in such litigation.
Moreover, as described below, this litigation may precipitate additional
litigation affecting the marketing of Andrx's products.

                                       23
<PAGE>

         Andrx often encounters substantial delay in obtaining judicial
decisions in ANDA Paragraph IV litigation. The delay may be the result of patent
listings in the Orange Book, sometimes dubious, subsequent to those originally
certified to in the ANDA filing, but before final FDA approval, or it may be
inherent in the U.S. judicial system. Whatever the cause, such delay may cause
Andrx in the future to decide to launch a product prior to final resolution of
the pending litigation. The risk involved in doing so can be substantial because
the remedies available to the owner of a patent for infringement include, among
other things, damages measured by the profits lost by the patent owner and not
by the profits earned by the infringer. In the case of a willful infringer, the
definition of which is unclear, such damages may be trebled. Moreover, because
of the discount pricing typically involved with bioequivalent products, patented
brand products generally realize a substantially higher profit margin than
bioequivalent products.

         Andrx believes that this profit differential can act as a disincentive
to the settlement of patent litigation on terms that will allow the Andrx
products to be marketed upon the settlement of patent litigation. Thus, Andrx
has faced, and will continue to be faced with, the decision of whether it should
launch its product prior to the conclusion of patent litigation, or to
discontinue selling its product in the face of new patent litigation. In making
these determinations, Andrx intends to consider what it then believes will be
all relevant considerations and factors, including: (i) balancing the risk that
the Andrx product will be found to infringe the brand product considering the
size of the market, and the claim for damages which could result from the sale
of an infringing product; (ii) balancing the potential claim for damages which
could result from the sale of an infringing product against the current capital
resources, and future capital needs, of Andrx; (iii) the risk of being enjoined
from making such sales and thereby losing Andrx's exclusivity rights for such
product; and (iv) the possibility that launching the product may increase the
incentive for the owner of the patented brand product to settle the pending
litigation on a basis that would allow Andrx to continue to market its product
without further legal risk.

         Prilosec Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Prilosec.

         In May 1998, AstraZeneca filed suit against Andrx in the U.S. District
Court for the Southern District of Florida claiming patent infringement because
of the ANDA filed by Andrx for Prilosec. Andrx responded to this claim by
denying infringement and, among other things, raising various other defenses.
AstraZeneca seeks an injunction enjoining Andrx from further infringing the
subject patents and an order directing that the effective date of any FDA
approval of Andrx's proposed bioequivalent version of Prilosec be no earlier
than the expiration date of its patents.

         A second Paragraph IV certification was later made by Andrx with regard
to a different strength of Prilosec. This resulted in AstraZeneca filing another
suit in the Florida District Court. For purposes of pre-trial discovery
proceedings, the Judicial Panel on Multidistrict Litigation consolidated both of
these suits in the U.S. District Court for the Southern District of New York,
together with three other patent infringement suits initiated by AstraZeneca
involving ANDAs submitted by other companies for bioequivalent versions of
Prilosec. In May 2001, upon completion of discovery, the New York District Court
remanded the two Andrx cases to the Florida District Court. Andrx filed motions
to transfer the two cases back to the New York District Court for a consolidated
trial, and


                                       24
<PAGE>
in November 2001, the New York District Court issued an order consolidating for
trial the two Andrx cases with three other patent infringement cases involving
bioequivalent versions of Prilosec.

         The consolidated trial commenced December 6, 2001. Five patents are at
issue against Andrx: two formulation patents, one process patent (asserted only
against Andrx), and two method-of-treatment patents. The New York District Court
is trying the case in four stages: (1) infringement and validity of the two
formulation patents, (2) infringement and validity of the process patent, (3)
infringement and validity of the two method-of-use patents, and (4) all
remaining issues relative to the five patents, including allegations of
inequitable conduct, misuse, or deficient notices. On March 14, 2002, the court
recessed the trial. As of March 25, 2002, the first two stages of the trial,
with respect to oral and documentary evidence, have been substantially completed
and the trial is scheduled to resume in April 2002.

         Andrx entered into a memorandum of understanding, or MOU, with
Genpharm, Inc. relating to the filing dates of their respective ANDAs for a
bioequivalent version of Prilosec. While the FDA assigned to Andrx the earliest
filing date for this product, Genpharm had contended that the FDA improperly
refused to accept the filing of its earlier ANDA submission. Rather than
litigating the issue as to which of their ANDA's was the first filed, including
the possibility of affecting Andrx's 180-days of market exclusivity, the parties
agreed to set aside their dispute in order to maximize the likelihood that there
will be a bioequivalent product made available to U.S. consumers as soon as
prudently possible.

         The MOU currently provides that Andrx will market whichever of these
products may first be lawfully and prudently marketed, and that through cross
licenses, the parties will receive royalties based on the profits derived from
the sale of either or both products according to a sliding scale. Based on the
anticipated profits, Andrx will share, based on a sliding scale, approximately
15% of those profits with Genpharm.

         On November 16, 2001, prior to obtaining FTC approval of the MOU, Andrx
received FDA final marketing approval of its ANDAs for bioequivalent versions of
Prilosec, and was advised by FDA that Andrx and Genpharm would share the 180-day
market exclusivity for the 10mg and 20mg strengths of this product, and that
Andrx alone would have 180-day market exclusivity for its 40mg strength. This
shared exclusivity concept will likely preclude FTC approval of the MOU in its
current form. It remains unclear whether any of the terms of the MOU will
survive, and the resolution of this issue may depend upon the results obtained
in the pending patent litigation involving Andrx, Genpharm and AstraZeneca.


         In March 2001, AstraZeneca listed four new patents in FDA's Orange
Book. Under protest and with full reservation of its right to challenge the
validity of this new listing, Andrx made a Paragraph IV certification that its
bioequivalent version of Prilosec does not infringe any valid claims of the new
patents. Andrx also filed suit against AstraZeneca, Merck & Co., Inc. and FDA in
the U.S. District Court for the Southern District of New York, seeking
declaratory and injunctive relief and compensatory, punitive and treble damages,
alleging that (1) AstraZeneca and Merck were engaged in illegal anti-competitive
conduct by, among other things, listing the four new patents for the improper
purpose of obtaining another 30-month stay of FDA approval of Andrx's
bioequivalent version of Prilosec, and (2) FDA, by taking no steps to stop
AstraZeneca's and Merck's unlawful conduct, was taking, and would continue to
take, positions inconsistent with specific applicable provisions of the
Waxman-Hatch Amendments. In May 2001, Andrx filed a motion for partial summary
judgment declaring that an additional 30-month stay is inapplicable or
unavailable to AstraZeneca. In June 2001, AstraZeneca and Merck filed a motion
to dismiss the action (1) for lack of subject matter jurisdiction because
Andrx's claims are allegedly moot or are not sufficiently ripe for resolution,
(2) because the Waxman-Hatch Amendments prohibit Andrx's allegedly premature
claims for declaratory relief with respect to the four patents in suit, and (3)
on various other grounds including failure to state a claim for which relief can
be granted. Andrx's and AstraZeneca's motions are still pending.



                                       25
<PAGE>
         On May 4, 2001, AstraZeneca filed suit against Andrx and Cipla LTD in
the U.S. District Court for the Southern District of Florida claiming that Cipla
(the supplier of bulk omeprazole to Andrx) and Andrx, which uses the bulk
omeprazole in its bioequivalent product, infringe a patent that was issued upon
assignment to AstraZeneca. The patent at issue will expire in April 2002. The
basis for the infringement claim is that, after Andrx filed its ANDA for its
bioequivalent version of omeprazole, Cipla allegedly changed its method of
manufacture of the bulk omeprazole, resulting in a compound that infringes the
patent at issue. In August 2001, Andrx and Cipla filed a motion to dismiss the
complaint for lack of subject matter jurisdiction relative to Cipla and for
legal insufficiency relative to Andrx. On October 19, 2001, the Judicial Panel
on Multidistrict Litigation transferred this case to the U.S. District Court for
the Southern District of New York for consolidated pre-trial proceedings before
the same judge who is presiding over the Prilosec trial discussed above.

         On August 3, 2001, Andrx filed an action against aaiPharma, Inc. in the
U.S. District Court for the Southern District of New York seeking a declaratory
judgment of non-infringement and invalidity relative to three patents owned by
aaiPharma that pertain to omeprazole, the active ingredient in the proton pump
inhibitor marketed by AstraZeneca under the brand name Prilosec. The complaint
also alleges that aaiPharma, together with AstraZeneca, have and continue to
conspire to keep bioequivalent omeprazole products off the market in violation
of the federal and state antitrust laws. aaiPharma has filed an answer to the
complaint and the parties have commenced the discovery process.

         On or about January 30, 2002, Dr. Reddy's Laboratories filed suit
against FDA and Andrx in the U.S. District Court for the District of New Jersey
claiming that FDA should have granted Dr. Reddy's Laboratories final marketing
approval for its 40mg strength of bioequivalent omeprazole. Dr. Reddy's claims
it is entitled to co-exclusivity with Andrx on that version of the product.

         Cardizem CD Litigation and the Stipulations

         In September 1997, Andrx entered into a stipulation with Aventis in
connection with the patent infringement litigation brought against Andrx by
Aventis relating to the sale of Andrx's bioequivalent version of Cardizem CD. In
June 1999, FDA approved Andrx's sale of a reformulated version of its
bioequivalent version of Cardizem CD, and Andrx entered into a new stipulation
with Aventis, pursuant to which the lawsuit was dismissed with prejudice and
Andrx received the outstanding fees owed to it under the 1997 stipulation.

         In January 2001, Biovail acquired from Aventis its rights to Cardizem
CD, including Aventis' rights under the 1999 stipulation. On January 19, 2001,
Andrx received a letter from Biovail's counsel advising Andrx that Andrx's sale
of certain lots of Cartia XT did not meet the safe-harbor dissolution values
specified in the 1999 stipulation which, according to Biovail, constitutes a
breach of the 1999 stipulation and demanding that the nonconforming product be
removed from the market. Among other things, Andrx responded to this letter by
filing suit against Biovail in the U.S. District Court for the Southern District
of Florida, alleging breach of contract, violations of the Lanham Act and
Florida's Deceptive and Unfair Practices Act, tortious interference with
business relationships, common law unfair competition, abuse of process and a
declaratory judgment that Andrx did not breach the 1999 stipulation and that its
ANDA does not infringe any of Biovail's patent rights. On March 30, 2001,
Biovail moved to dismiss Andrx's claims for breach of contract, declaratory
relief and abuse of process. Biovail's motion is still pending. On November 7,
2001, Andrx filed a second amended and supplementary complaint that, among other
things, added another count for declaratory relief, relating to Biovail's
assertion that a particular lot of Cartia XT is not bioequivalent to Cardizem
CD. On February 21, 2002, Andrx and Biovail entered a binding letter agreement,
subject to FTC approval, settling with prejudice all


                                       26
<PAGE>

pending litigation and disputes between the companies relating to Biovail's
Cardizem CD and Tiazac and Andrx's bioequivalent version of such products,
Cartia XT and Taztia XT, respectively. The letter agreement provides that
Biovail will license on a non-exclusive basis any patents it may have or
hereafter acquire relating to Tiazac in exchange for a royalty that Andrx will
pay to Biovail, based on Andrx's net sales of Taztia XT.

         Biovail Antitrust Litigation

         In May 1998, Biovail filed a claim against Andrx in the Federal
District Court in the District of Columbia alleging that the 1997 stipulation
violated Sections 1 and 2 of the Sherman-Antitrust Act and seeking a declaratory
judgment as to federal law as well as for alleged violations of state common law
of unfair competition, tortious interference with prospective advantage and
tortious interference with a contract. Andrx filed a motion to dismiss
Biovail's claims. That motion was granted with prejudice with respect to the
federal antitrust claims on January 6, 2000. Biovail appealed that dismissal and
in July 2001, the Court of Appeals reversed portions of the order dismissing
Biovail's counterclaim and held that the dismissal of Biovail's counterclaim
should have been without prejudice. Andrx filed a petition seeking review of
this decision by the United States Supreme Court, which was denied.

         On or about September 24, 2001, Biovail filed a new, essentially
duplicative action against Andrx in the Federal District Court in the District
of Columbia, seeking declaratory and equitable relief and compensatory and
punitive damages in an unspecified amount. On January 7, 2002, Andrx filed its
answer to the complaint, denying the material allegations of the complaint and
asserting affirmative defenses and counterclaims. On January 30, 2002, Biovail
filed a motion to dismiss Andrx's counterclaims. See also "Item 3 - Legal
Proceedings" with respect to other litigation relating to the stipulations. As
noted above, on February 21, 2002, Biovail and Andrx entered into a binding
letter agreement, subject to regulatory approval, to settle this and all other
pending claims between the companies. Regulatory approval of this agreement has
not been received.

         Tiazac Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Tiazac. In October 1998, Biovail
and its related entities, filed suit against Andrx in the U.S. District Court
for the Southern District of Florida claiming patent infringement because of the
ANDA filed by Andrx with FDA for a bioequivalent version of Tiazac. Andrx
responded to this claim by denying infringement and, among other things, raising
various other defenses. On March 6, 2000, the District Court entered an order
that Andrx's product does not infringe the Biovail patent. Biovail appealed and
on February 13, 2001, the U.S. Court of Appeals for the Federal Circuit
unanimously affirmed the District Court order that Andrx's product does not
infringe the Biovail patent.

         Prior to the expiration of the statutory 30-month period and the U.S.
Court of Appeals order that Andrx's product does not infringe the original
patent listed in FDA's Orange Book, Biovail listed another recently issued
patent that it had licensed from DOV Pharmaceuticals, Inc. in FDA's Orange Book.
Believing the listing to be improper, Andrx filed suit against Biovail (and
nominally FDA) in the U.S. District Court for the Southern District of Florida
seeking, among other things, a preliminary and permanent injunction ordering
Biovail to delist the patent from FDA's Orange Book and enjoining FDA


                                       27
<PAGE>

from delaying approval of the Andrx bioequivalent version of Tiazac for any
reason relating to the new patent. On March 6, 2001, the District Court denied
Andrx's motion for a preliminary injunction on the ground that the court does
not have subject matter jurisdiction over the claim brought by Andrx against
Biovail under the provisions of the Waxman-Hatch Amendments. Meanwhile, under
protest and with full reservation of its right to continue to challenge the
validity of Biovail's listing, Andrx made a Paragraph IV certification that its
bioequivalent version of Tiazac does not infringe any valid claims of the DOV
patent. On April 19, 2001, Biovail filed a counterclaim against Andrx under the
Lanham Act for allegedly falsely asserting that its product is bioequivalent to
Tiazac.

         On April 5, 2001, as anticipated by Andrx, Biovail filed suit against
Andrx in the U.S. District Court for the Southern District of Florida for
alleged infringement of the DOV patent.

         On September 19, 2001, the District Court issued an omnibus order that,
among other things, directed that the statutory stay in the DOV patent
infringement case be terminated on September 27, 2001, and set the consolidated
action down for trial on June 3, 2002. Subsequently, on application of Biovail,
the District Court entered an order extending the statutory stay to October 1,
2001, and allowed Biovail to apply to the U.S. Court of Appeals for a further
stay pending appeal, which the U.S. Court of Appeals upheld.

         On January 17, 2002, the Court of Appeals vacated the order of the
District Court that shortened the thirty-month statutory stay to October 1, 2001
and remanded the case for further proceedings. The Court of Appeals did so on
the ground that the District Court exceeded its authority under the Waxman-Hatch
Amendments. No action has been taken concerning Andrx's cross-appeal from the
dismissal of its claims. Meanwhile, in the consolidated action pending before
the District Court, discovery by the parties continues.

         As noted above, in February 21, 2002, Biovail and Andrx entered into a
binding letter agreement, subject to regulatory approval, to settle this and all
other pending claims between the companies. Regulatory approval of this
agreement has not been received.

         Naprelan Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Naprelan. In October 1998, Elan
filed suit against Andrx in the U.S. District Court for the Southern District of
Florida claiming patent infringement because of the ANDA filed by Andrx with FDA
for a bioequivalent version of Naprelan. Andrx responded to this claim by
denying infringement, and, among other things, raising various other defenses.
On March 14, 2002, the Court issued an order of final judgment in favor of Andrx
invalidating the patent in controversy that covers Elan's Naprelan product. On
March 28, 2002, Elan filed a motion requesting the Court to reconsider and
reverse its invalidity ruling. Final FDA marketing approval of Andrx's ANDA is
still subject to the resolution of certain legal issues pertaining to the
exclusivity rights, if any, of a Paragraph IV certification made in connection
with an ANDA for Naprelan that was filed by another pharmaceutical company prior
to the filing of Andrx's ANDA.

         Wellbutrin SR and Zyban Litigation

                                       28
<PAGE>

         Andrx made Paragraph IV certifications in connection with the ANDAs
Andrx filed for Andrx's bioequivalent versions of Wellbutrin SR and Zyban. In
September 1999, Glaxo filed suit against Andrx in the U.S. District Court for
the Southern District of Florida claiming patent infringement because of the
ANDAs filed by Andrx with FDA for bioequivalent versions of Wellbutrin SR and
Zyban and seeking an order directing that the effective date for FDA's approval
of those ANDA's be no earlier than the expiration date of the subject patent.
Andrx responded to this claim by denying infringement and, among other things,
raising various other defenses. In February 2002, the U.S. District Court for
the Southern District of Florida granted Andrx's motion of summary judgment of
non-infringement for Wellbutrin SR and Zyban and denied Glaxo's cross-motion
for summary judgment. Glaxo has filed a notice of appeal from this decision.

         Depakote Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for Andrx's bioequivalent version of Depakote. In March 2000, Abbott
filed suit against Andrx in the U.S. District Court for the Northern District of
Illinois, claiming infringement of two of its patents because of the ANDA Andrx
filed with FDA for its bioequivalent version of Depakote and seeking an order
directing that the effective date for FDA's approval of that ANDA be no earlier
than the expiration date of the subject patents. Following Andrx's filing of a
motion to dismiss for lack of jurisdiction, Abbott filed a second action against
Andrx for the same claims in the U.S. District Court for the Southern District
of Florida as well as a third action against Andrx for the same claims in the
U.S. District Court for the Eastern District of Virginia. All the infringement
claims filed by Abbott against Andrx were transferred to and consolidated for
trial in the U.S. District Court for the Southern District of Florida. Andrx
responded to these claims by denying infringement and, among other things,
raising various other defenses. On January 8, 2002, the U.S. District Court for
the Southern District of Florida granted a joint motion by Andrx and Abbott for
a stay of the action until Andrx and FDA resolve an issue regarding the
definition of "active ingredient" as applied to Andrx's ANDA. The District Court
ordered that (1) the suit be stayed until January 7, 2003, (2) the statutory
stay of FDA approval of the ANDA be extended to a date contemporaneous with the
stay of the suit, (3) the case be removed from the trial calendar and (4) the
parties submit by October 7, 2002 a joint status report detailing the posture of
the case.

         Claritin D-24 Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Claritin D-24. In March 2000,
Schering-Plough filed suit in the U.S. District Court for New Jersey claiming
that Andrx's ANDA product infringes two of its patents, one being a metabolite
patent and the other a formulation patent, and seeking an order directing that
the effective date for FDA's approval of that ANDA be no earlier than the
expiration date of the subject patents. Andrx responded to these claims by
denying infringement and, among other things, raising various other defenses.
Discovery has been completed relative to the metabolite patent and the parties
have filed motions for summary judgment based thereon. The District Court has
set the motions down for oral argument on April 18-19, 2002. With regard to the
formulation patent, the District Court has directed that all fact discovery
relative thereto be completed by May 17, 2002 after which the District Court
will determine how much time will be allowed to complete expert discovery.

         Claritin Reditabs Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Claritin Reditabs. In January 2001,
Schering-Plough filed suit in the U.S. District Court for New Jersey claiming
that Andrx's ANDA product infringes the metabolite patent that is


                                       29
<PAGE>

at issue in the Claritin D-24 Litigation described above and seeking an order
directing that the effective date for FDA's approval of that ANDA be no earlier
than the expiration date of the subject patent. Andrx responded to these claims
by denying infringement and, among other things, raising various other defenses.
The District Court has approved a stipulation of the parties that any final
judgment entered by the District Court in the Claritin D-24 litigation regarding
the disputed claims of the metabolite patent shall be final and binding on the
parties as to the disputed metabolite patent claims in this action.

         Claritin D-12 Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Claritin D-12. In September 2001,
Schering-Plough filed suit in the U.S. District Court for the District of New
Jersey claiming that Andrx's ANDA product infringed the metabolite patent that
is at issue in the Claritin D-24 litigation described above and seeking an order
directing that the effective date for FDA's approval of the Andrx ANDA be no
earlier than the expiration date of the subject patent. Andrx responded to these
claims by denying infringement and, among other things, raising various other
defenses. The District Court has approved a stipulation of the parties that any
final judgment entered by the U.S. District Court for New Jersey in the Claritin
D-24 litigation described above regarding the disputed claims of the metabolite
patent shall be final and binding on the parties as to the disputed metabolite
patent claims in this action.

         Paxil Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Paxil (paroxetine). On June 15,
2001, SmithKline Beecham Corporation and Beecham Group plc, filed suit against
Andrx and BASF in the U.S. District Court for the Eastern District of
Pennsylvania for alleged infringement of four patents relating to paroxetine and
seeking an order directing that the effective date for FDA's approval of that
ANDA be no earlier than the expiration date of the subject patents. Andrx
responded to this claim by denying infringement, and, among other things,
raising various other defenses, including counterclaims seeking a declaration
that the patents are invalid. There are presently 12 related suits pending
before the District Court that concern patents covering paroxetine
hydrochloride. On September 28, 2001, the District Court consolidated all of the
paroxetine cases for pre-trial discovery purposes only.

         Glucotrol XL Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Glucotrol. On July 7, 2001, Pfizer
and Alza Corporation filed suits against Andrx in the federal courts in New
Jersey and Florida for alleged infringement of six patents relative to
Glucotrol. Subsequently, Pfizer and Alza amended the complaints to eliminate two
patents, leaving four patents to be tried, two of which will expire in September
2003. The parties, with the approval of the courts involved, agreed to dismiss
without prejudice the New Jersey action and to continue to prosecute the Florida
action in the Florida District Court. On November 1, 2001, Andrx filed an
answer, various affirmative defenses and counterclaims for a declaratory
judgment of non-infringement, invalidity and unenforceability. On December 17,
2001, the Florida District Court issued a scheduling order directing that
discovery be completed by December 3, 2002 and setting the case for trial on the
March 2003 calendar.

         Pepcid Litigation

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<PAGE>

         As part of a joint venture between Andrx and Carlsbad Technology, Inc.,
Carlsbad developed and is manufacturing for distribution by Andrx a
bioequivalent version of Pepcid. The bulk famotidine used by Carlsbad to make
the product is obtained from a foreign supplier. On July 13, 2001, Richter
Gedeon Vegyeszeti Gyar RT filed an action against Andrx, Carlsbad and seven
other defendants, including the foreign famotidine supplier, in the U.S.
District Court for the Eastern District of New York for alleged infringement of
five patents relating to Pepcid. On September 17, 2001, Andrx filed an answer,
affirmative defenses and a counterclaim for non-infringement and invalidity.
Carlsbad has agreed to indemnify and hold harmless Andrx from any liability
arising out of this action.

         Procardia XL Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Procardia XL. On November 9, 2000,
Pfizer filed suit against Andrx for alleged infringement of US Patent No.
5,264,446 relative to Procardia XL. However, Andrx and Pfizer entered into a
settlement which provided an agreed upon protocol for testing the Andrx product
for infringement. If the product is ultimately determined to infringe the patent
at issue, Pfizer has agreed to license the patent to Andrx in exchange for a
royalty based on net sales.

PRODUCT LIABILITY INSURANCE

         The design, development and manufacture of Andrx's products or the
products Andrx distributes involves a risk of product liability claims. Andrx
has obtained product liability insurance that covers substantially all products
marketed by Andrx's drug distribution operations, in bioequivalence and other
studies for the products Andrx intends to commercialize. Andrx believe that its
product liability insurance is adequate for its current operations, but may seek
to increase Andrx's coverage prior to the commercial introduction of Andrx's
product candidates. Product liability insurance is expensive and difficult to
obtain and may not be available in the future on acceptable terms or in
sufficient amounts, if it is available at all.

ANDRX CORPORATION PERSONNEL

         As of December 31, 2001, Andrx Corporation had approximately 1,837
employees, of whom 47 were involved in corporate administration, 520 were
involved in Andrx's distribution operations and 88 were involved in Cybear's
Internet business. The remaining 1,182 employees were involved in research,
pharmaceutical development and manufacturing, including over 240 scientists,
over 90 of whom hold Ph.D., masters or medical degrees.

                                       31
<PAGE>

                               BUSINESS OF CYBEAR

OVERVIEW

         Cybear is an information technology company that seeks to use the
Internet to (i) aggregate information for physicians; (ii) improve the
efficiency of administrative and communications tasks for physicians; and (iii)
address the healthcare industry's critical need for secure and reliable
transmission of information. Cybear is involved in four primary business lines:

         -        a physician-only portal (www.pol.net);

         -        e-prescribing and process patents;

         -        Laboratory Services Product Line; and

         -        e-Commerce portals.

         Cybear believes that access to physicians and their office staff is
critical to achieving acceptance of the Internet as a technology, administrative
and communications tool by the healthcare industry. Accordingly, Cybear has been
devoting significant resources to building its physician user base. Following
the April 2001 acquisition of Mediconsult.com, Inc. which included the
Physicians' Online (POL) portal, Cybear obtained access to a registered
physician-user base of over 223,000 physicians or approximately one-third of the
practicing physicians in the U.S. POL is believed to be one of the most active
physician websites in the country, with over seven-hundred thousand visits and
over eight million page views per month.

         During the year ended December 31, 2001, revenues were primarily
derived from product sales including revenues generated by Cybearclub LC,
Cybear's joint venture with Andrx, application services and portal services. By
exploiting its physician user base and proprietary technology, Cybear believes
that it has the potential to generate revenue from multiple sources, including
the licensing of ePrescribing software and process patents. However, Cybear's
ability to generate revenues from all or any of these sources is still uncertain
and there can be no assurance that Cybear can commercialize its products to
generate any meaningful revenues and profits. Moreover, Cybear's business
strategy may need to be significantly changed due to the evolving nature of the
industry and limited access to financial resources.

CYBEAR PRODUCTS AND SERVICES

Physicians' Online Portal

         POL is an authenticated physicians-only online portal. POL offers
physicians a wide range of activities, including medical content, discussion
groups, e-mail accounts, surveys and eDetailing. It allows physicians to have
easy access to the information needed to assist patients and manage their
practices. POL products also allow members to collaborate with peers on evolving
medical issues, advise and receive counsel on unique cases, express opinions on
important professional issues and stay informed about non-medical issues
directed to their outside needs and interests.

         Of its approximate 223,000 physician-only subscribers to POL, more than
20,000 use the POL website at least once a month. POL has been serving the
online healthcare community since 1993.

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<PAGE>

         Cybear's primary marketing objective is to create a loyal and active
physician community operating through POL and its "authenticated" physician user
base. Cybear's marketing activities for POL focus on growing the number of
active members, reactivating lapsed members and acquiring new members. Cybear
intends to achieve this by marketing to its lapsed and marginal users, by
utilizing partnerships to co-promote POL services and by promoting content and
service enhancements to its users. POL's marketing is and will continue to be
conducted primarily through the use of a direct sales team, telemarketing, face
to face meetings and the use of e-mails to advise potential advertisers of POL
and its attributes. Supplementing this direct sales approach will be the use of
advertising in marketing publications.

         Cybear is continuing to develop the brand name "Physicians' Online" by
enhancing the POL website to make it faster and easier to use. These
enhancements will continue to focus on the community elements of POL and will
improve applications. Cybear continues to improve the responsiveness of POL to
its members, develop a sense of member "ownership", streamline the user
interface and deploy additional relevant content and applications. All of this
effort is directed to expanding the membership and increasing member usage.

         Cybear is also enhancing the interface and navigation for the POL site
in order to deliver a fast and easy user experience so that physicians can save
time. The POL portal will be further enhanced to make information retrieval,
either through active searching or passive browsing, more convenient. For
example, a new specialty center product has been developed that bundles
information on a given topic in order to encourage members to rely on POL for
complete information on their practice specialty.

         Physicians' Online Site Architecture

         Cybear intends to upgrade the core applications and its underlying
technology in order to make the system architecture more flexible and easier to
incorporate partners or update functionality.

         POL Revenues

         POL generated revenue during the year ended December 31, 2001 from the
sale of banner advertisements, sponsored discussion groups, online market
research to pharmaceutical and non-medical clients and through MD-Direct.

         Banner and tile advertisement services have been provided to My Doc
Online, Inc., a subsidiary of Aventis, Johnson & Johnson, Allscripts Healthcare
Solutions, Inc., AstraZeneca and Glaxo, among others. Advertisements are priced
based upon industry standards utilizing "clicks-per-thousand."

         Cybear has done online market research for Aventis and Taylor Nelson
Sofres Interactive, among others. The price that Cybear charges for this
research is based on the level of detail and the scope of inquiry requested.

         MD-Direct is an online recruitment service for physicians. There is a
monthly fee for access to the physician employee database.

e-PRESCRIBING AND PROCESS PATENTS

         @Rx is offered as a "no cost" subscription service for POL members. It
is an Internet-based, application service provider (ASP) model application for
prescriptions accessed through www.pol.net or www.polpractice.net portals by
physicians and their staff. It features patient medication history (if
available), drug utilization review (DUR), formulary checking, and electronic
routing of prescriptions to


                                       33
<PAGE>

retail and mail service pharmacies. Currently, Cybear has a pilot program to
connect this application to certain retail chain pharmacies.

         Cybear is the owner of two process patents (U.S. Patents Nos. 5,737,539
and 5,845,255) issued in 1998 related to electronic and Internet prescription
writing. The patents, taken together, apply to the process of electronic
prescribing when a diagnosis or patient condition-objective is recorded and/or a
script is "Bridged". Bridging occurs when one script is issued for mail order
fulfillment and a second script is automatically created for immediate use
through local fulfillment. These patents potentially impact most electronic
medical records (EMR), practice management system (PMS) vendors, point of care,
and other companies offering electronic prescription tools for physicians.
Pharmacy benefit managers (PBMs) and managed care organizations (MCOs) are also
potential licensees or strategic partners for the @Rx application or patent use
agreements.

         Cybear has also entered into patent agreements with a number of
companies, including Merck-Medco, PacifiCare Health Systems, Inc. through its
subsidiary, RxConnect Acquisition Corporation, ePhysician, Inc., Readyscript(R),
Inc., RTRX, Inc., Logon Health Corporation and iScribe, Inc. These agreements
generate revenues through upfront and deferred payments and ongoing royalty
obligations.

         @Rx Product Description

         @Rx is an Internet-based, application server provider prescription
management tool for physicians and their staff. Each @Rx user has a unique
password and user identification that allows the prescriber to write, refill
and/or renew secure prescriptions online and to electronically route the
prescription to mail order pharmacies. This electronic routing has certain
connectivity sources for pharmacy submission: Merck-Medco Managed Care LLC mail
service facilities, ProxyMed, Inc. for retail chain pharmacy connectivity (pilot
stage) and NDC-Health Corporation for retail chain and independent pharmacy
connectivity (development stage), and Cybear's Internet portal, Rx.Cybear.com,
designed for independent pharmacies.

         The current @Rx Version 2.6, features patient medication history, drug
utilization review, formulary checks and electronic routing of prescriptions. It
is designed for physicians and is built for a physician's entire patient
population for prescribing on an Internet connected desktop PC.

         The @Rx PDA Application compliments the desktop PC version. The PDA
version uses Pocket PC(R), which is a Windows CE(R) operating system for
handheld computers.

         Market Description and Strategy

         As reported in the Forrester Report, "Doctors Connect with Handhelds"
in June 2001, automated prescription writing today has a very low adoption rate
by physicians. This report indicates that 16% of their respondents have
automated their prescription writing process today. However, the same article
reported that by 2003, 82% of physicians will have automated prescription
writing.

         A marketing and enrollment campaign has been launched targeting matches
between POL users and Merck-Medco "High Prescribers" in a select few states. If
successful, this program will result in a customer base, which may enable Cybear
to generate future transactional revenues utilizing @Rx.

         An application licensing agreement has been signed with Merck-Medco.
This agreement provides the licensee with the right to utilize the @Rx software.
Revenues from this type of agreement include up front and annual maintenance
transaction fees.

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<PAGE>
LABORATORY SERVICES PRODUCT LINE

The Cybear Lab Service Line consists of:

         -        Lab outreach software; and

         -        A proprietary systems integration tool that allows data to
                  flow from one program to another.

         Dr. Chart(TM)

         Dr. Chart provides secure transmission of laboratory orders and results
data from clinical information systems to and from hospitals, reference
laboratories, physician offices and other provider sites over the Internet.

         More specifically, Dr. Chart software is a clinical software
application that allows physicians, nurses, and other clinicians to effectively
manage all patient information necessary to efficiently process test
order-entry, results reporting with cumulative summaries, and Medicare Medical
Necessity Compliance editing with Advanced Beneficiary Notification (ABN).

         Cybear utilizes a proprietary systems integration tool called Clinical
Data Exchange(TM) (CDX(TM)) to link Dr. Chart to disparate laboratory and other
hospital-based information systems. CDX resides on a Windows NT platform, and
has been interfaced with virtually every major systems vendor in the healthcare
industry, including, McKesson/HBOC, Siemens/SMS, Cerner, Sunquest, Antrium,
Citation and Meditech.

         The primary marketplace for Dr. Chart is mid-sized to larger
laboratories located in the United States. Although physicians and other health
care providers use Dr. Chart, they are not the purchasers of Dr. Chart systems.
Revenues, which have been limited to date, have been generated through licensing
and maintenance fees.

         According to the Clinical Laboratory Management Association, there are
approximately 14,300 laboratories in the United States. The majority of these
laboratories are relatively small and do not actively engage in outreach efforts
that would benefit from automating the communications process with referring
health care professionals. The remainder, approximately 4,000 laboratories,
comprise the target market. Of these laboratories, only a small percentage
already have an Internet-based orders solution in place. Cybear intends to
target these laboratories as potential licensees. This type of licensing
agreement includes upfront and annual maintenance fees.

e-COMMERCE PORTALS

         Cybear's e-Commerce portals consist of:

         -        Marketplace at Dr. Cybear;

         -        Marketplace at POL; and

         -        Shop@POL.


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<PAGE>


         Marketplace is the e-commerce environment that is positioned on the
dr.cybear.com and the pol.net websites. The sites provide a wide range of
medical products, including vaccines and injectables, for physicians, office
managers and support persons in the medical office.

         The Marketplace at Dr. Cybear is the subject of the Cybearclub LC joint
venture between Cybear and Andrx, intended to distribute healthcare products to
physicians' offices through the Internet. Capital contributions to,
distributions from and net income or loss generated by Cybearclub are allocated
in proportion to Cybear's and Andrx's interests in the joint venture. Such
interests are 55% to Cybear and 45% to Andrx. Cybearclub's management committee
is comprised of five members. Three members were appointed by Cybear and two
members were appointed by Andrx.

         Cybearclub utilizes Andrx telemarketers to market the Marketplace and
transition Andrx physician customers to ordering through Cybearclub on the
Internet. Andrx telemarketers are also utilized to introduce Cybearclub
Marketplace to new physician customers. Cybear personnel provide technical
support to the customer.

         As part of its operations, Andrx purchases products from outside
vendors and distributes them to pharmacies and physicians who it generally
contacts through telemarketers. In connection with Cybearclub, Andrx sells some
of those products to Cybearclub at cost; Andrx also charges Cybearclub for
certain fulfillment and back office operations such as purchasing, warehousing
and distribution, as well as customer service and telemarketing activities. Such
services were originally charged at 10% and subsequently changed to 6% of gross
sales. The current rate of 6% could increase if Cybearclub achieves certain
quarterly gross sales levels.

         Shop@POL is a newly launched retail-based mall featuring top online
brands and merchants, such as Disney, LL Bean, Dell Computers and
Cars-Direct.com and many others. The site provides a shopping environment that
is contained within the secure www.pol.net portal.

COMPETITION

         Physicians' Online

         Due to Web-MD's recent acquisition of Medscape, Web-MD is the closest
competitor to the POL portal.

         Laboratory Services

         Competitors to Cybear's Dr. Chart application include Cerner, Sunquest,
Medplus, Specialty Labs, Atlas, Formatica, LabDat, Axolotl and WebMD.

         e-Commerce Portals

         Competitors to Cybear's Marketplace for medical products, including
vaccines and injectables include Amerisource Bergen Corporation, McKesson
Medical-Surgical and Cardinal Health, Inc. All retail portals on the Internet
compete with Cybear's retail portal, shop@pol.

         Many of these competitors have substantial installed customer bases in
the healthcare industry and the ability to fund significant product development
and acquisition efforts. Cybear believes that the principal competitive factors
in the market include knowledge of user needs and client service, system quality
and product features, price and the effectiveness of marketing and sales
efforts.


                                       36
<PAGE>

         To be competitive, Cybear must incorporate leading technologies,
enhance its existing services and content, develop new technologies that address
the increasingly sophisticated and various needs of healthcare professionals and
respond to technological advances and emerging industry standards and practices
on a timely and cost-effective basis.

GOVERNMENT REGULATION AND HEALTHCARE REFORM

         The healthcare industry is subject to changing political, economic and
regulatory influences that may affect the procurement practices and operations
of healthcare organizations. During the past several years, the healthcare
industry has been subject to an increase in governmental regulation of, among
other things, reimbursement rates.

         Proposals to reform the current healthcare system have been and will
continue to be considered by Congress. These proposals could increase
governmental involvement in healthcare and otherwise change the operating
environment for Cybear's potential customers. Healthcare organizations may react
to these proposals and the uncertainty surrounding those proposals by curtailing
or deferring investments. On the other hand, changes in the regulatory
environment have in the past increased and may continue to increase the needs of
healthcare organizations for cost-effective information management and thereby
enhance the marketability of Cybear's products and services. Cybear cannot
predict with any certainty what impact, if any, such proposals or healthcare
reforms might have on Cybear's results of operations, financial condition and
business.

         Cybear's products and services are not directly subject to governmental
regulations. However, with regard to healthcare issues on the Internet, the
Health Insurance Portability and Accountability Act of 1996 (HIPAA) mandates the
use of standard transactions, standard identifiers, security and other
provisions by the year 2002. It will be necessary for Cybear's platform and for
the applications that it provides to be in compliance with the proposed
regulations. Congress is also likely to consider legislation that would
establish uniform, comprehensive federal rules about an individual's right to
access his own or someone else's medical information. This legislation would
likely define what is to be considered "protected health information" and
outline steps to ensure the confidentiality of this information.

         There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. However, laws and regulations may be
adopted in the future that address issues such as online content, user privacy,
pricing and characteristics and quality of products and services. For example,
although it was held unconstitutional, the Communications Decency Act of 1996
prohibited the transmission over the Internet of certain types of information
and content. In addition, several telecommunications carriers are seeking to
have telecommunications over the Internet regulated by the FCC in the same
manner as other telecommunications services.

         Internet user privacy has become an issue in the United States. Current
privacy law consists of a few disparate statutes directed at specific industries
that collect personal data, none of which specifically covers the collection of
personal information online. The United States could adopt legislation
purporting to protect such privacy. Any such legislation could affect the way in
which Cybear is allowed to conduct its business, especially those aspects that
involve the collection or use of personal information, and could have a material
adverse effect on Cybear's business, financial condition and operating results.
Moreover, it may take years to determine the extent to which existing laws
governing issues such as property ownership, libel, negligence and personal
privacy are applicable to the Internet.

         The tax treatment of the Internet and e-commerce is currently
unsettled. A number of proposals have been made at the federal, state and local
level and by certain foreign governments that could impose taxes on the sale of
goods and services and certain other Internet activities. Congress recently
extended


                                       37
<PAGE>

the moratorium on certain types of taxation on Internet commerce through
December 31, 2005. Cybear cannot predict the effect of current attempts at
taxing or regulating commerce over the Internet. Any legislation that
substantially impairs the growth of e-commerce could have a material adverse
effect on Cybear's business, financial condition and operating results.

INTELLECTUAL PROPERTY

         Cybear seeks to protect its proprietary information through
nondisclosure agreements with its employees. These nondisclosure agreements
contain provisions prohibiting the disclosure of confidential information to
anyone outside Cybear, requiring disclosure to Cybear of any new ideas,
developments, discoveries or inventions conceived during employment, and require
assignment to Cybear of proprietary rights in matters related to Cybear's
business.

         Cybear also relies on a combination of trade secrets, copyright and
trademark laws and technical measures to protect its rights in various
methodologies, systems and products. Cybear believes that because of the rapid
pace of technological change in the Electronic Data Interface industry, trade
secret and copyright protection are less significant than factors such as the
knowledge, ability, experience and integrity of Cybear's employees, frequent
product enhancements and the timeliness and quality of support services.

         Cybear has a federal service mark and trademark registration for
"Cybear", a federal service mark registration for "Physicians' Online" and a
federal trademark registration for "Dr. Chart", among other trademarks and
service marks. Cybear has also registered the domain names "Cybear.com",
"POL.net", "Cybeardoc.com", "Medimail.org", and "e-scrips.com", among others.
Cybear has asserted its rights in these electronic prescription processing
patents against certain third party infringers and intends to continue to
enforce its rights with respect to these patents. Cybear has also licensed these
patents to Merck-Medco, PacificCare Health Systems, Inc., through its
subsidiary, RxConnect Acquisition Corporation, among others.

         Although Cybear believes that its products do not infringe on the
intellectual property rights of others, no assurance can be given that a claim
will not be asserted against Cybear in the future. If asserted, such a claim
could cause Cybear to lose revenues or incur substantial litigation expense.

CYBEAR EMPLOYEES

         As of December 31, 2001, Cybear had approximately 88 full time
employees, 14 in administration and finance, 41 in technical and research and
development, 14 in sales and marketing and 19 in operations. Cybear believes
that relations with its employees is good.




                                       38
<PAGE>

ITEM     2. PROPERTIES


ANDRX

         Andrx owns a 15-acre tract of land in Davie, Florida on which it built
approximately 245,000 square feet of space. Andrx leases approximately 95,000
square feet, consisting of two buildings, in a complex adjacent to this
building. Together, this space is used for offices, warehousing, research and
development, pilot and commercial product manufacturing, quality control
laboratories, shipping and portions of executive offices. The leased buildings
are occupied pursuant to leases expiring May 31, 2003, at a current total annual
rent of approximately $800,000. Each of the leases affords Andrx five five-year
renewal options, and requires Andrx to pay certain common area costs.

         Andrx leases an approximately 152,000 square foot facility in Weston,
Florida, for its sales, marketing, telemarketing, distribution operations and a
portion of Andrx's executive offices. This lease expires in June 2009, has two
five-year renewal options, at a current annual rental of approximately $1.3
million.

         Andrx has two five-year leases beginning May 1, 2001, for an additional
34,600 square feet of space, at a current annual rent of approximately $360,000.
Located nearby its manufacturing facilities, in Davie, Florida, Andrx uses this
space for warehousing.

         Andrx leases an approximately 129,000 square foot facility in Weston,
Florida, which Andrx is using or intends to use for offices, warehousing and
manufacturing, distribution, and the research and product development of generic
versions of specialty, niche and immediate release pharmaceutical products. This
lease expires in June 2017, has two five-year renewal options, and an initial
annual rental of approximately $540,000.

         Andrx leases an approximately 4,600 square foot facility in Hackensack,
New Jersey, for its clinical development operations. This lease expires July
2006. Current annual rental for this facility is approximately $115,000.

         Andrx has an approximately 9,000 square foot facility in Weston,
Florida, for Andrx Laboratories' commercial operations and administrative
personnel. This lease expires in 2003, at a current annual rental of
approximately $173,000.

         Andrx leases an approximately 4,700 square foot facility in Ft.
Lauderdale, Florida, for additional administrative personnel related to its
Andrx brand research and development activities. This lease expires in 2005, has
two five-year renewal options, and current annual rental of approximately
$80,000.

         Andrx acquired an 11,000 square foot facility in Grand Island, New
York, which is utilized for VIP's distribution operations.

         In connection with the acquisition of CTEX in January 2001, Andrx
leases a 30,000 square foot facility in Madison, Mississippi, which houses
CTEX's administrative offices and warehousing facilities. This lease expires in
2005, and has a current annual rental of approximately $180,000.

         In July 2001, Andrx entered into a three-year lease for a 4,500 square
foot facility in Jackson, Mississippi, to house CTEX's sales, administration and
support personnel. The lease expires in September 2004 with a current annual
rental of approximately $78,000.

         In connection with the acquisition of Armstrong, Andrx assumed a lease
for a 24,000 square foot storage facility in Westwood, Massachusetts, with a
current annual rental of approximately $208,000 which expires in December 2002,
and a lease for a 46,000 square foot manufacturing facility in West Roxbury,
Massachusetts, with a current annual rental of approximately $276,000 which
expires in March 2002. In July 2001, Andrx exercised an option to renew the
lease for a three year term expiring in March 2005 and was granted five options
to extend the term of the lease for five successive one year terms through March
2010.


                                       39

<PAGE>

         In August 2001, Andrx entered into a lease for an approximately 110,000
square foot facility in Canton, Massachusetts, to house administrative offices,
laboratories, warehousing and packaging. The lease expires in November 2011 with
a current annual rental of approximately $1.1 million. Andrx also has two
options to extend the term of the lease for five years each.

         In September 2001, Andrx entered into a ten year lease for an
approximately 356,000 square foot facility located in Columbus, Ohio, to be
utilized as a warehousing and distribution facility. The lease expires in March
2012 with current annual rentals of approximately $641,000. Andrx expects the
facility to be occupied by the second half of 2002.

         In March 2001, Andrx entered into two leases for approximately 6,300
and 9,800 square foot facilities in Hollywood, Florida, to be utilized as
research and development labs. The leases expire in May 2004 with current annual
rentals of approximately $90,000 for the 6,300 square foot facility and $176,000
for the 9,800 square foot facility.

CYBEAR

         Cybear leases approximately 38,100 square feet in Boca Raton, Florida,
for its corporate headquarters and network operating systems. The lease provides
for a current annual rental of approximately $505,000, excluding taxes,
insurance, utilities and common area maintenance charges. The lease expires in
March 2007.

         Cybear leases approximately 8,000 square feet in a facility in Ft.
Washington, Pennsylvania, which houses software license and development
operations. This lease expires in December 2002, at a current annual rental of
approximately $136,000, excluding taxes, insurance, utilities and common area
maintenance charges.

         In connection with Cybear's acquisition of Mediconsult.com, Inc. in
April 2001, Cybear leases approximately 6,500 square feet of office space in
Tarrytown, New York, for its sales and Internet portal operations. This lease
expires in October 2006, at a current annual rental of approximately $164,000,
excluding taxes, insurance, utilities and common area maintenance charges.



                                       40

<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

ANDRX LITIGATION

         See "Item 1 - Patent Litigation and Proprietary Rights" for a
description of the patent litigation involving Andrx.

ANDRX LITIGATION

         In January 2001, Biovail acquired from Aventis its rights to Cardizem
CD, including Aventis' rights under the 1999 stipulation which resulted in the
dismissal of the patent infringement litigation between Aventis and Andrx
relating to Andrx's bioequivalent version of Cardizem CD. On January 19, 2001,
Andrx received a letter from Biovail's counsel advising Andrx that Andrx's sale
of certain lots of Cartia XT, Andrx's bioequivalent version of Cardizem CD, did
not meet the safe-harbor dissolution values specified in the 1999 stipulation
which, according to Biovail, constitutes a breach of the 1999 stipulation and
demanding that the nonconforming product be removed from the market. Among other
things, Andrx responded to this letter by filing suit against Biovail in the
U.S. District Court for the Southern District of Florida, alleging breach of
contract, violations of the Lanham Act and Florida's Deceptive and Unfair
Practices Act, tortious interference with business relationships, common law
unfair competition, abuse of process and a declaratory judgment that Andrx did
not breach the 1999 stipulation and that its ANDA does not infringe any of
Biovail's patent rights. On March 30, 2001, Biovail moved to dismiss Andrx's
claims for breach of contract, declaratory relief and abuse of process.
Biovail's motion is still pending. On November 7, 2001, Andrx filed a second
amended and supplementary complaint that, among other things, added another
count for declaratory relief, relating to Biovail's assertion that a particular
lot of Cartia XT is not bioequivalent to Cardizem CD. On February 21, 2002,
Andrx and Biovail entered a binding letter agreement, subject to FTC approval,
settling with prejudice all pending litigation and disputes between the
companies relating to Biovail's Cardizem CD and Tiazac and Andrx's bioequivalent
version of such products, Cartia XT and Taztia XT, respectively. The letter
agreement provides that Biovail will license on a non-exclusive basis any
patents it may have or hereafter acquire relating to Tiazac in exchange for a
royalty that Andrx will pay to Biovail, based on Andrx's net sales of Taztia XT.
The agreement with Biovail has not received regulatory approval. Andrx is unable
to determine the ultimate outcome of this matter.

          Since August 1998, putative class and individual actions have been
filed against Andrx in Alabama, California, Florida, Illinois, Kansas, Michigan,
Minnesota, New York, Tennessee, Wisconsin, North Carolina and the District of
Columbia. Similar class actions were commenced in Federal Court. The actions
pending in federal court have been consolidated for multi-district litigation
purposes in the U.S. District Court for the Eastern District of Michigan. In all
of these suits, Aventis has been named as a co-defendant. The complaint in each
action alleges that Andrx and Aventis, by way of the 1997 stipulation, have
engaged in alleged state antitrust and other statutory and common law violations
that allegedly have given Aventis and Andrx a near monopoly in the U.S. market
for Cardizem CD and a bioequivalent version of that pharmaceutical product.
According to the complaints, the monopoly possessed by the defendants enables
Aventis to perpetuate its ability to fix the price of Cardizem CD at an
artificially high price, free from generic competition, with the result that
direct purchasers such as pharmacies, as well as indirect purchasers such as
medical patients who have been issued prescriptions for Cardizem CD are forced
to overpay for the drug. Each complaint seeks compensatory damages on behalf of
each class member in an unspecified amount and, in some cases, treble damages,
as well as costs and counsel fees, disgorgement, injunctive relief and other
remedies. In June 1999, most of those class actions were consolidated for
pre-trial purposes in the U.S. District Court for the Eastern District of
Michigan.

         On June 6, 2000, the District Court granted plaintiffs' motion for
partial summary judgment against Andrx and Aventis in the pending putative class
actions. The District Court determined that the 1997 stipulation Andrx had
entered into with Aventis relating to their Cardizem CD patent litigation
constitutes a restraint of trade that is illegal per se under section 1 of the
Sherman-Antitrust Act. On August 15, 2000, the District Court granted Andrx's
and Aventis' motions to certify two questions relating to this determination to
the United States Court of Appeals for the Sixth Circuit. On December 12, 2000,
the Court of Appeals accepted the appeal, as certified by the District Court.
The appeal has been fully briefed and the Court of Appeals has set April 30,
2002 as the date for oral argument. On March 14, 2001, the District Court
granted the plaintiffs' motion to certify the case as a class action on behalf
of all persons or entities who directly purchased Cardizem CD from Aventis
during a specified period. On April 4, 2001, the District Court also certified
as a class the indirect purchasers of Cardizem CD.

         On May 14, 2001, the State Attorney Generals for the States of New York
and Michigan, joined by 13 additional states and the District of Columbia, filed
suit against Andrx and Aventis in the same federal court in which the above
described consolidated Cardizem CD antitrust class action litigation is being
conducted. The attorney generals' suit is brought on behalf of their government
entities and consumers resident in their jurisdictions who allegedly were
damaged as a result of the 1997 stipulation. Subsequently, an amended
complaint was filed adding 12 additional States and Puerto Rico to the action.
The lawsuit essentially reiterates the claims asserted against Andrx in the
Cardizem CD antitrust class action litigation and seeks the same relief sought
in that litigation.

         On July 26, 2001, Blue Cross Blue Shield of Michigan, joined by three
other Blue Cross Blue Shield plans (one in Minnesota and two in New York), filed
suit against Andrx and Aventis in the U.S. District Court for the Eastern
District of Michigan on behalf of themselves and as claim adjustors for their
self-funded customers to recover damages allegedly caused by the 1997
stipulation. The


                                       41
<PAGE>

complaint essentially repeats the claims asserted against Andrx that are being
litigated in the above described consolidated Cardizem CD antitrust class action
litigation and seeks substantially the same relief sought in that litigation.

         The U.S. District Court for the Eastern District of Michigan has
divided the above described class actions, individual actions and actions by the
State Attorney Generals and the Blue Cross Blue Shield Health Plans directed at
the 1997 stipulation entered into by Andrx and Aventis into the following
categories: (1) Sherman Act Class Actions; (2) Sherman Act Individual Actions;
(3) State Law Class Actions; (4) State Law Individual Actions; and (5) State
Attorney Generals and Health Plan Actions. Motions by Andrx and Aventis to
dismiss the Sherman Act Class Actions, the Sherman Act Individual Actions and
State Law Class Actions were denied by the District Court. Andrx has answered
the complaints in the Sherman Act Class Actions and the Sherman Act Individual
Actions denying the allegations of the plaintiffs. Andrx has filed motions to
dismiss the amended complaints in the State Law Class Actions, the State Law
Individual Actions, the State Attorney Generals Action, and the Blue Cross Blue
Shield Action. Discovery is currently scheduled to close April 1, 2002.

         In addition to the consolidated proceedings in the U.S. District Court
for the Eastern District of Michigan, there are two actions pending in state
courts in Florida, Lowery v. Hoechst AG et al., Civil Action No. 98-27437CA11
(Cir. Ct., Eleventh Judicial Circuit, Dade County) and Aetna U.S. Healthcare,
Inc. et al., v. Hoechst AG et al., Civil Action No. 98-116699AN (Cir. Ct.,
Fifteenth Judicial Circuit, Palm Beach Co,) and two actions pending in state
courts in Kansas, Aetna U.S. Healthcare, Inc. et al., Case No. 99 C 00200 (Dist.
Ct., Johnson Co.) and Neal v. Hoechst AG et al., Case No. 99 C 2350 (Dist. Ct.,
Johnson Co.). These actions are currently stayed.

         On March 16, 2000, Andrx was named as a respondent by the FTC in an
administrative action seeking a cease and desist order against future agreements
similar to the stipulation and other remedies. Contrary to the FTC's position,
Andrx believes that the stipulation was pro-competitive and benefited consumers.
On April 2, 2001 the FTC Commissioners voted to approve the proposed consent
decree and, after a 30-day period of public comment, in which no comments were
submitted, the consent decree was approved by the FTC. In substance, the consent
decree prohibits Andrx, when it is either (1) a holder of a NDA or the owner of
a patent listed in the Orange Book or (2) a party determined by FDA to be
entitled to, or eligible for, a 180-day marketing exclusivity period for an ANDA
product which has not yet commenced running or expired, from entering into any
agreement that (1) prevents a party to the agreement from relinquishing its
right to the 180-day marketing exclusivity period, or (2) requires a party to
the agreement to refrain from researching, developing, manufacturing, marketing,
or selling any drug product that could be approved for sale pursuant to an ANDA
as to which such party is the ANDA first filer and that is not the subject of
any written patent infringement. The consent decree did not impose any monetary
penalties or fines against Andrx.


                                       42
<PAGE>

         In January 1999, Andrx and Andrx's bioequivalent pharmaceutical
distribution subsidiary, Anda, Inc., were served with third party complaints
filed against them by certain doctors and distributors who are defendants in
various legal actions relating to the sale of phentermine by Anda and its usage
as a diet drug when taken in combination with fenfluramine, commonly known as
"phen-fen." The substance of the third party complaints is that the defendants
are without fault with respect to the claims in those actions but, if they are
found liable on any of those claims, then allegedly having obtained one or more
of the drugs from Anda, they are entitled to indemnification in an amount to pay
and discharge any judgment entered against them in the putative class action
together with costs, expenses and attorney fees. Andrx and Anda have never sold
fenfluramine and believe that these claims are without merit. Andrx is being
represented and defended in this action by counsel designated by its insurer.

         In November 1999, another phen-fen diet lawsuit was filed against Anda
in the Superior Court of New Jersey by a husband, who claimed to have obtained
or purchased, either directly or indirectly, from Anda and others, and
thereafter ingested, phentermine, dexfenfluramine and fenfluramine, causing
serious medical consequences, all to his financial detriment, and his wife, who,
on behalf of herself and her two children, claimed monetary damages arising from
emotional distress to herself and her children, loss of spousal/paternal
companionship and expenditure of money, time and care for her husband required
by her husband's alleged injuries which are permanent and continuous in nature.
Anda has never sold dexfenflurarmine or fenfluramine. In June 2001, this case
was voluntarily dismissed.

         On November 23, 2001, Lemelson Medical, Education & Research
Foundation, Limited Partnership filed suit against Andrx and numerous other
companies in the U.S. District Court for the District of Arizona for alleged
infringement of patents relating to (1) reading bar codes and (2) computerized
camera imaging and analysis. These processes are used by many companies in
connection with the price labeling of their products. Andrx is investigating the
facts and evaluating the claims and has not yet responded to the complaint.

         On November 14, 2001, Gerald Lannes on behalf of himself and others,
filed a putative class action against Andrx in Superior Court, State of Arizona,
relating to the average wholesale pricing (AWP) of pharmaceutical products and
alleging that Andrx and other unnamed pharmaceutical companies have been and,
continue to be, conspiring to report fictitious AWP. Plaintiff claims violations
of the Arizona Consumer Fraud Act and illegal restraint of trade attendant
thereto, and seeks compensatory, punitive and treble damages in an unspecified
amount, pre and post judgment interest and attorneys fees and costs.

         A series of putative class actions have been filed against Andrx and
numerous other pharmaceutical companies in the federal courts in the states of
Kentucky and Washington and in the Judicial District Court of the State of
Louisiana relating to the use of phenylpropanolamine (PPA) in drug products and
damage allegedly incurred by the consumers of such products. The federal actions
have been consolidated by the Judicial Panel on Multidistrict Litigation and
transferred to the U.S. District Court for the Western District of Washington
for consolidated discovery and other pre-trial proceedings. The Louisiana state
court action is being removed to the federal district court and thereafter is
expected to be consolidated for pre-trial purposes with the other federal court
actions in the Western Court of Washington. Andrx has been joined in this action
because it acquired Entex, a product, which at one time, contained PPA, from a
subsidiary of Elan. Upon acquiring the Entex product, Andrx reformulated the
Entex product eliminating PPA as an active ingredient. Andrx has never caused
the Entex product to be manufactured with PPA as an active ingredient and Elan
has indemnified Andrx in connection with any litigation arising from Entex and
PPA therein.


                                       43
<PAGE>

         On March 7, 2002, Alpharma USPD, Inc., for whom Armstrong had done
contract manufacturing, notified Armstrong that the Epinephrine Mist product
manufactured by Armstrong was subject to a recall. Alpharma claims that
Armstrong has breached its manufacturing agreement and requests indemnification
for the full amount of its loss arising from the recall. Alpharma estimates that
its loss could be in excess of $10 million. Andrx is currently investigating
this matter and has disputed both the basis for liability and the amount of
damages, if any, which may be owing. Nonetheless, Andrx is also seeking
indemnification from Medeva, from whom Andrx acquired Armstrong, for the losses
claimed by Alpharma.

         On March 22, 2002, Ronald Kassover filed a putative securities fraud
class action against Andrx and certain of its officers and directors in the U.S.
District Court for the Southern District of Florida, for alleged violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. The plaintiff purports to bring the suit on behalf of
all persons or institutions who acquired Andrx common stock from April 30, 2001
through February 21, 2002. The complaint alleges that, during the time period in
question, Andrx publicly issued a series of material misrepresentations to the
market regarding the regulatory status of its bioequivalent version of the drug
Tiazac. These statements allegedly misled the investing public into believing
that, but for the pending patent litigation with Biovail, Andrx's bioequivalent
version of Tiazac was ready to be marketed when, in fact, FDA had raised
"certain issues" concerning bioequivalent Tiazac, as Andrx disclosed on February
21, 2002, in connection with its announcement that it had reached a tentative
settlement with Biovail relating to that patent dispute. According to the
plaintiff, Andrx's February 21, 2002 announcement precipitated a decline in
Andrx's stock price. Andrx believes the complaint has no merit, notes that the
stock price of the Andrx common stock actually increased following the February
21, 2002 announcement, and believes that the decline, on February 22, 2002, in
the price of the Andrx common stock, was substantially unrelated to the status
of Tiazac within FDA.

CYBEAR LITIGATION

         On October 19, 1993, Terrill Hill Burnett filed an action in the U.S.
District Court for the Southern District of New York against Physicians' Online
and some of the original shareholders of the company alleging (1) securities and
common law fraud in the sale of shares of common stock; (2) breach of fiduciary
duty and negligent misrepresentation; (3) breach of an employment agreement; (4)
compensation for services rendered; and (5) gender discrimination. Ms. Burnett
seeks damages in an amount in excess of $1 million and punitive damages. All of
Ms. Burnett's claims have been dismissed except her claims for breach of
employment agreement and quantum meruit. Physicians' Online has vigorously
defended the case and has asserted several affirmative defenses to plaintiff's
claims. Discovery has commenced and no trial date is set.

         On May 8, 2001, Cybear filed an action against Healthcare.com Corp.
alleging claims for breach and wrongful termination of contract and seeking
damages for past due amounts owed under the parties' contract, lost profits,
interest and attorneys' fees in the Circuit Court of Palm Beach County, Florida.
On August 29, 2001, Cybear amended its complaint to add counts for enforcement
of statutory lien and wrongful replevin. The wrongful replevin claim was
dismissed without prejudice for lack of ripeness. On October 17, 2001,
Healthcare.com filed an answer, affirmative defenses and a multiple-count
counterclaim for (1) replevin, (2) breach of the AHA and Product Schedule, (3)
breach of the Software Maintenance Agreement, (4) declaratory judgment
terminating the software licenses, (5) conversion for withholding
Healthcare.com's property and (6) conversion for altering Healthcare.com's
property. The relief sought by Healthcare.com is for damages in an unspecified
amount, plus pre-judgment interest, attorneys' fees and costs. Cybear believes
that Healthcare.com's claims are


                                       44
<PAGE>

without merit.

         On October 9, 2001, Nicebid.Com, LLC served a demand for arbitration of
its claims against Cybear and Telegraph Consulting Corporation. The claims arise
out of an agreement between the parties relating to web design and web hosting
services and are for alleged breach of contract, breach of warranty, negligence,
fraudulent inducement, fraud and violation of the New Jersey Consumer Fraud Act.
Nicebid seeks compensatory damages in the amount of $7 million, punitive damages
in an unspecified amount, plus attorneys' fees and costs of the proceeding.
Cybear has asserted numerous defenses.

         In February 2001, the Southeast Regional Office of the Securities and
Exchange Commission commenced a formal private investigation of Cybear, which
focused on Cybear's revenue reporting, disclosure and internal controls in 1999
and 2000 with respect to Cybearclub LC, a joint venture between Andrx and Cybear
intended to promote the distribution of certain healthcare products through the
Internet. This investigation followed an informal inquiry conducted by the SEC
staff beginning late in the third quarter of 2000. Andrx Corporation and the SEC
staff have held discussions concerning the SEC's investigation and a possible
resolution. However, no assurances can be given that a settlement can be
reached. Further, if settlement negotiations fail, Andrx Corporation cannot
predict with any certainty the nature of any enforcement action or what charges
the SEC might pursue.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to a vote of stockholders during the fourth
quarter of the fiscal year covered by this report.



                                       45
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
         STOCKHOLDER MATTERS.


(A)      MARKET INFORMATION

         Andrx Corporation has two classes of common stock: Andrx common stock
and Cybear common stock, both of which are quoted on the Nasdaq National Market.
For the calendar quarters indicated, the table below sets forth the high and low
sales prices per share of Andrx common stock and Cybear common stock, as
reported on the Nasdaq National Market, based on published financial resources.

<TABLE>
<CAPTION>
                                               ANDRX COMMON STOCK             CYBEAR COMMON STOCK
                                                MARKET PRICE (1)                MARKET PRICE (2)
                                           ------------------------         ----------------------
                                            HIGH              LOW            HIGH            LOW
                                           -------         --------         -------        -------
<S>                                        <C>             <C>              <C>            <C>
2000
First Quarter.......................       $ 65.50         $ 20.13          $ 49.00        $ 17.52
Second Quarter......................         68.31           43.63            23.52          10.00
Third Quarter.......................         95.88           63.94            19.52           2.00
Fourth Quarter......................         94.88           58.81             5.76           0.76

2001
First Quarter.......................       $ 72.25         $ 38.50           $ 4.00         $ 0.76
Second Quarter......................         77.00           44.94             4.12           1.00
Third Quarter.......................         77.39           58.07             6.36           0.50
Fourth Quarter......................         76.52           61.30             0.92           0.26
</TABLE>


--------------------
(1) Andrx common stock market prices reflect the April 2000 two-for-one stock
split.
(2) Cybear common stock market prices reflect the July 2001 one-for-four
reverse stock split.

         Nasdaq has notified Andrx Corporation that the Cybear common stock is
subject to delisting because Cybear common stock is not in compliance with the
continued listing requirements of the Nasdaq National Market since the Cybear
common stock failed to (a) maintain minimum market value of publicly held shares
of $5 million and a minimum bid price of $1.00 for 30 consecutive trading days.
Cybear common stock has been given 90 calendar days, or until May 23, 2002, to
regain a minimum market value of $5 million as well as a bid price of at least
$1.00 per share for a minimum of 10 consecutive trading days. If the Cybear
common stock does not meet these criteria by May 23, 2002, Nasdaq will provide
written notification that the Cybear common stock is subject to delisting.
Delisting may be irrelevant due to the conversion described below.

         On March 28, 2002, Andrx Corporation announced its plans to convert all
of the outstanding shares of Cybear common stock into shares of Andrx common
stock effective May 17, 2002. Each outstanding share of Cybear common stock will
be converted into 0.00964 of a share of Andrx common stock. Following the
conversion, the businesses that comprise Cybear will operate within Andrx and
the Andrx common stock will constitute the only outstanding common stock of
Andrx Corporation. A special committee of Andrx Corporation's board of
directors, which was appointed to represent the interests of the holders of the
Cybear common stock, received an opinion from Raymond James & Associates, Inc.
that the consideration to be received, as provided in Andrx Corporation's
certificate of incorporation, is fair, from a financial point of view, to the
holders of the Cybear common stock.

         The conversion ratio is based upon the relative market values of the
Andrx common stock and Cybear common stock averaged over the period from
February 22, 2002 through March 21, 2002. The conversion ratio includes a 25%
premium on the value of the Cybear common stock, as required by the terms of
Andrx Corporation's certificate of incorporation, which was approved by the
Andrx and Cybear stockholders in the reorganization. The conversion is expected
to result in the issuance of approximately 65,013 shares of Andrx common stock.



                                       46
<PAGE>

(B)      HOLDERS

         As of March 9, 2002, there were approximately 200 holders of record of
Andrx common stock and approximately 200 holders of record of Cybear common
stock. Andrx believes the number of beneficial owners of its Andrx common stock
is in excess of 14,000 and the number of beneficial owners of its Cybear common
stock is in excess of 21,000.

(C)      DIVIDENDS

         Andrx Corporation has never paid any cash dividends on its common stock
and does not intend to pay cash dividends for the foreseeable future. Andrx
Corporation intends to retain earnings, if any, to finance the development and
expansion of its business. Payment of cash dividends in the future will depend,
among other things, upon Andrx Corporation's ability to generate earnings, its
need for capital and its overall financial condition.

ITEM 6.  SELECTED FINANCIAL DATA

Selected Financial Data is incorporated by reference from Item 7 included
herein.





                                       47
<PAGE>


ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

REORGANIZATION

         On September 7, 2000, Andrx Corporation completed a Plan of Merger and
Reorganization (the "Reorganization") whereby it acquired the outstanding equity
of its Cybear Inc. subsidiary that it did not own, reincorporated in Delaware
and created two new classes of common stock:

         -        Andrx Group Common Stock ("Andrx common stock"), to track the
                  performance of Andrx Group ("Andrx Group" or "Andrx") which
                  includes Andrx Corporation and its subsidiaries, other than
                  its ownership of Cybear Group ("Cybear Group" or "Cybear");
                  and

         -        Cybear Group Common Stock ("Cybear common stock"), to track
                  the performance of Cybear Group.

         Cybear Group currently includes (i) Cybear Inc. and its subsidiaries,
(ii) certain potential future Internet businesses of Andrx Corporation, (iii)
effective November 22, 2000, certain operating assets of AHT Corporation, and
(iv) effective April 2, 2001, Mediconsult.com, Inc. and its subsidiaries
("Mediconsult").

         Holders of Andrx common stock and Cybear common stock are stockholders
of Andrx Corporation, have no specific rights to assets designated to Andrx or
Cybear and are subject to all the risks and uncertainties of Andrx Corporation
detailed herein or from time to time in Andrx Corporation's filings with the
Securities and Exchange Commission.

         On March 28, 2002, Andrx Corporation announced its plans to convert all
of the outstanding shares of Cybear common stock into shares of Andrx common
stock effective May 17, 2002. Each outstanding share of Cybear common stock will
be converted into 0.00964 of a share of Andrx common stock. Following the
conversion, the businesses that comprise Cybear will operate within Andrx and
the Andrx common stock will constitute the only outstanding common stock of
Andrx Corporation. A special committee of Andrx Corporation's board of
directors, which was appointed to represent the interests of the holders of the
Cybear common stock, received an opinion from Raymond James & Associates, Inc.
that the consideration to be received, as provided in Andrx Corporation's
certificate of incorporation, is fair, from a financial point of view, to the
holders of the Cybear common stock.

         The conversion ratio is based upon the relative market values of the
Andrx common stock and Cybear common stock averaged over the period from
February 22, 2002 through March 21, 2002. The conversion ratio includes a 25%
premium on the value of the Cybear common stock, as required by the terms of
Andrx Corporation's certificate of incorporation, which was approved by the
Andrx and Cybear stockholders in the reorganization. The conversion is expected
to result in the issuance of approximately 65,013 shares of Andrx common stock.

         Through the date of the conversion on May 17, 2002, Andrx Corporation
will continue to allocate net income (loss) to each class of common stock.
Subsequent to the conversion, Andrx Corporation will only report earnings per
share for Andrx common stock which will include all of Cybear Group's operating
results from the effective date of the conversion, and will no longer report
separate future earnings per share for the former Cybear common stock.
Additionally, Andrx will not provide supplemental group financial statements for
Andrx Group and Cybear Group as was previously presented during the two-class
structure. Disclosures required under accounting principles generally accepted
in the United States will continue to be provided, as appropriate.

         While the premium to be paid to Cybear Group stockholders will not be
included in the Andrx Group or Cybear Group pre-conversion operating results,
the premium will be deducted from the net income available to holders of Andrx
common stock in computing Andrx Group's earnings per share and will be deducted
from the net loss available to holders of Cybear common stock in computing
Cybear Group's loss per share. This premium is anticipated to amount to
approximately $500,000 and is estimated to have the effect of reducing Andrx
Group's second quarter 2002 earnings per common share by approximately $0.01 on
a basic and diluted basis. Conversely, the premium is estimated to have the
effect of reducing Cybear Group's second quarter 2002 net loss per share by
approximately $0.07 on a basic and diluted basis. Net income for Andrx
Corporation will not be impacted by this conversion.

         Included herein is as follows:

<TABLE>
<CAPTION>
                                                                                     PAGE
                                                                                ----------------
                  <S>                                                           <C>
                  ANDRX CORPORATION AND SUBSIDIARIES
                  Consolidated selected financial data                               55-56
                  Management's discussion and analysis
                    of financial condition and results of operations                 57-71

                  ANDRX GROUP
                  Consolidated selected financial data                               72
                  Management's discussion and analysis
                    of financial condition and results of operations                 73-81

                  CYBEAR GROUP
                  Consolidated selected financial data                               82
                  Management's discussion and analysis
                    of financial condition and results of operations                 83-91
</TABLE>

         Included herein in Item 8 "Financial Statements and Supplementary Data"
are Andrx Corporation and subsidiaries consolidated financial statements and
notes to consolidated financial statements. Such notes include separate
supplemental group financial statements relating to the business of Andrx and
the business of Cybear (see Note 20).


                                       48
<PAGE>

         FORWARD LOOKING STATEMENTS

         Andrx Corporation cautions readers that certain important factors may
affect the Company's actual results and could cause such results to differ
materially from any forward-looking statements which may be deemed to have been
made in this report or which are otherwise made by or on behalf of the Company.
For this purpose, any statements contained in this report that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the generality of the foregoing, words such as "may", "will",
"to", "expect", "believe", "anticipate", "intend", "plan", "could", "would",
"estimate", or "continue" or the negative or other variations thereof or
comparable terminology are intended to identify forward-looking statements.
Investors are cautioned that all forward-looking statements involve risks and
uncertainties. Andrx Corporation is also subject to other risks detailed herein
or detailed from time to time in Andrx Corporation's Securities and Exchange
Commission ("SEC") filings.

         INTRODUCTION

         Andrx Corporation was organized in August 1992, and commenced
distributing bioequivalent pharmaceuticals manufactured by third parties
primarily to independent pharmacies. In February 1993, Andrx began to engage in
the research and development of bioequivalent versions of controlled-release
pharmaceutical products and proprietary drug delivery technologies. During 1996,
Andrx commenced its research efforts to develop brand name controlled-released
products and an Internet-based application for healthcare providers. In 1999,
the Company commenced its research and development efforts on bioequivalent
versions of specialty, niche and immediate release pharmaceutical products.
Through October 9, 1997, Andrx's distribution operations had generated
substantially all of its revenues. On October 10, 1997, the FDA granted final
approval of Andrx's Abbreviated New Drug Application ("ANDA") for its
bioequivalent version of Dilacor XR, Andrx's first manufactured product, which
it immediately launched as Diltia XT.

         In July 1994, the Company and Circa Pharmaceuticals, Inc., now a
wholly-owned subsidiary of Watson Pharmaceuticals, Inc. ("Watson") (the Company
and Watson are hereafter collectively referred to as the "Partners"), formed
ANCIRC Pharmaceuticals ("ANCIRC"), a 50/50 joint venture to develop, manufacture
and market up to eight bioequivalent controlled-release pharmaceutical products.
The agreement between the Partners contemplated that Andrx would perform the
research and development formulations for ANCIRC's products, and would market
and distribute ANCIRC's products following FDA approval, and that Watson would
provide the regulatory support and would manufacture the ANCIRC products. As
most recently amended in November 2000, the ANCIRC joint venture agreement
provides that Andrx is solely responsible for all of the costs to develop,
manufacture and sell the remaining six products, and Watson may receive a
royalty on net sales, if any, from the commercialization of those products.
Andrx may elect to discontinue its efforts to develop any of these six products
at any time. The 50/50 joint venture relationship for the two marketed products
(bioequivalent versions of Trental and Oruvail) is continuing, except effective
as of November 1, 2000, profits generated by ANCIRC are allocated 75% to Andrx
and 25% to Watson until such time as Andrx has been allocated $610,700 of profit
greater than Watson, to equalize the Partners' respective capital account
activity.

         In September 1997, Andrx entered into a Stipulation and Agreement (the
"Stipulation") with Aventis S.A. ("Aventis") in connection with the patent
infringement litigation involving Cardizem CD in order to reduce the risks that
both parties faced as the case was litigated to its conclusion. Andrx agreed to
maintain the status quo in connection with the marketing of its product and to
dismiss certain claims against Aventis. Aventis agreed to compensate the Company
for the Company's lost profits, which were stipulated to be $100.0 million per
year, if Andrx ultimately prevailed in the litigation and to grant Andrx a
license for Aventis' patents under certain conditions, including if Andrx
ultimately lost the litigation. Aventis also agreed to make non-refundable
interim quarterly payments of $10.0 million to Andrx, beginning upon Andrx's
receipt of final FDA approval for its bioequivalent version of Cardizem CD and
continuing until the litigation was resolved or certain other events occurred.
In July 1998, the FDA granted final marketing approval for Andrx's ANDA for a
bioequivalent version of Cardizem CD. In June 1999, the litigation concerning
Cardizem CD was resolved, and on June 23, 1999, the Company launched its
reformulated bioequivalent version of Cardizem CD, Cartia XT, which enjoyed a
180-day period of marketing exclusivity through December 19, 1999. Accordingly,
for the years ended December 31, 1999 and 1998, Andrx received a total of $70.7
million and $19.1 million, respectively, in Stipulation fees.


                                       49

<PAGE>

         In June 1999, Andrx entered into an agreement with Geneva
Pharmaceuticals, Inc. ("Geneva") a member of the Novartis Pharmaceutical Group,
for the development, sale and marketing of specified products. Geneva agreed to
make license payments of $1.0 million a month for 40 months to fund the
development costs of certain controlled-release dosage forms of existing
products that the Company was developing for submissions as New Drug
Applications (NDAs), in exchange for exclusive marketing rights in specified
territories. Under this arrangement, one of Andrx's NDA products had been
out-licensed for the United States. Upon receiving approval by the FDA or other
regulatory agencies, Andrx was entitled to receive royalties from the sale of
such products in the specified territories with certain minimum guaranteed
levels of royalties in the first five years. In June 2000, the Company amended
its agreement with Geneva to include, among other things, additional license
payments to Andrx of up to $6.0 million for certain controlled-release dosage
forms of existing products that Andrx is developing for submission as NDAs.
Andrx, under this agreement, committed to continue selling Geneva's
bioequivalent products through the Company's distribution operations. On October
24, 2001, the Company terminated its agreement with Geneva and reacquired all of
Geneva's marketing rights for two brand products under development by Andrx,
consisting of U.S. and selected international marketing rights for Metformin XT,
and selected international marketing rights for Altocor. In return for
relinquishing Geneva's marketing rights to these products back to Andrx, Geneva
will not make the twelve remaining monthly payments to Andrx of $1.0 million per
month and Andrx will pay Geneva certain milestone payments and a royalty on net
sales in the U.S. for Metformin XT for a period of five years. In the fourth
quarter of 2001, Andrx paid Geneva its first milestone payment for $2.0 million
which is included in research and development expenses. Andrx's distribution
business will continue to distribute Geneva's products in the normal course of
business.

         In 1997, Andrx formed Cybear, an Internet-based information technology
subsidiary. In June 1999, Cybear completed a public equity offering of Cybear's
common shares (pre-Reorganization) at $64.00 per share, raising $50.8 million
for Cybear, thereby reducing Andrx's ownership in Cybear below 80%. In August
1999, Andrx and Cybear formed Cybearclub LC ("Cybearclub"), a joint venture
intended to distribute healthcare products to physicians' offices through the
Internet.

         On March 15, 2000, Andrx acquired certain assets of Valmed
Pharmaceuticals, Inc. ("Valmed"), a privately owned distributor of bioequivalent
pharmaceuticals headquartered in Grand Island, New York for approximately $15.2
million in cash. The acquisition was accounted for using the purchase method of
accounting.

         In August 2000, Andrx Corporation entered into CARAN, a 50/50 joint
venture with Carlsbad Technology, Inc. ("Carlsbad") to develop, manufacture and
sell three bioequivalent pharmaceutical products, for which ANDAs have been
filed with the FDA for the bioequivalent version of Pepcid which was launched
in 2001, and a bioequivalent version of Prozac. Carlsbad developed and will
manufacture the products and Andrx will distribute such products.

         On September 7, 2000, Andrx completed the Reorganization whereby Andrx
acquired the outstanding equity of Cybear that it did not previously own,
reincorporated in Delaware, and created the two new classes of common stock. In
connection with the Reorganization, Andrx shareholders exchanged each share of
common stock held for one share of Andrx common stock and .0372 shares of Cybear
common stock and Cybear stockholders, other than Andrx, exchanged each share of
Cybear common stock (pre-Reorganization) held for one share of Cybear common
stock.

         On January 23, 2001, Andrx completed its acquisition of CTEX
Pharmaceuticals, Inc. ("CTEX"), a privately owned pharmaceutical company based
in Madison, Mississippi for approximately $29.4 million, $11.2 million in cash
and $18.2 million in Andrx common stock. The acquisition was accounted for using
the purchase method of accounting.


                                       50

<PAGE>

         The Company entered into a memorandum of understanding ("MOU") with
Genpharm, Inc. ("Genpharm") relating to the filing dates of their respective
ANDAs for a bioequivalent version of Prilosec. While the FDA assigned to Andrx
the earliest filing date for this product, Genpharm had contended that the FDA
improperly refused to accept the filing of its earlier ANDA submission. Rather
than litigating the issue as to which of their ANDA's was the first filed,
including the possibility of affecting Andrx's 180-days of market exclusivity,
the parties agreed to set aside their dispute in order to maximize the
likelihood that there will be a bioequivalent product made available to U.S.
consumers as soon as prudently possible.

         The MOU currently provides that Andrx will market whichever of these
products may first be lawfully and prudently marketed, and that through cross
licenses, the parties will receive royalties based on the profits derived from
the sale of either or both products according to a sliding scale. Based on the
anticipated profits, Andrx will share, based on a sliding scale, approximately
15% of those profits with Genpharm.

         On November 16, 2001, prior to obtaining FTC approval of the MOU, Andrx
received FDA final marketing approval of its ANDAs for bioequivalent versions of
Prilosec, and was advised by FDA that Andrx and Genpharm would share the 180-day
market exclusivity for the 10mg and 20mg strengths of this product, and that
Andrx alone would have 180-day market exclusivity for its 40mg strength. This
shared exclusivity concept will likely preclude FTC approval of the MOU in its
current form. It remains unclear whether any of the terms of the MOU will
survive, and the resolution of this issue may depend upon the results obtained
in the pending patent litigation involving Andrx, Genpharm and AstraZeneca.

         On March 30, 2001, Andrx completed its acquisition of substantially all
of the assets of Armstrong Pharmaceuticals ("Armstrong"), a division of Celltech
Manufacturing, Inc., formerly known as Medeva Pharmaceuticals, Inc., based in
West Roxbury, Massachusetts for approximately $18.2 million in cash. Armstrong
manufactures pharmaceutical aerosols, principally metered dose inhalers
("MDIs"), and holds an ANDA for Albuterol MDI. The acquisition was accounted for
using the purchase method of accounting.

         On April 2, 2001, Cybear acquired Mediconsult in a stock-for-stock
merger whereby each share of Mediconsult common stock was exchanged for .0358
shares of Cybear common stock (reflects the effect of the July 31, 2001
one-for-four reverse stock split). Accordingly, 2,355,000 shares of Cybear
common stock were issued in April 2001 in connection with this transaction, and
upon satisfaction of certain merger conditions in July 2001, an additional
587,000 shares of Cybear common stock were issued to the Mediconsult
stockholders. The market value of the total shares at the time of issuance was
approximately $4.8 million. The acquisition was accounted for using the purchase
method of accounting.

         On June 30, 2001, Andrx purchased the Entex line of cough and cold
products including related inventories from an affiliate of Elan Corporation,
plc for approximately $14.8 million in cash, transaction costs and royalties on
net sales.

         On July 1, 2001, Andrx entered into an eight-year agreement with the
pharmaceutical division of Mallinckrodt, a Tyco healthcare company
("Mallinckrodt"), for the marketing rights and supply of three hydrocodone pain
products, which will be marketed under the trade name Anexsia.

         In July 2001, the Company implemented a one-for-four reverse stock
split of its Cybear common stock. Each four shares of existing Cybear common
stock were exchanged for one share of new Cybear common stock. All share and per
share amounts of Cybear common stock included herein give effect to the July 31,
2001 one-for-four reverse stock split.

         On February 21, 2002, Andrx and Biovail entered into a binding letter
agreement settling with prejudice all pending litigation and disputes between
the two companies relating to Biovail's Cardizem CD and Tiazac and Andrx's
versions of these products, Cartia XT and Taztia XT, respectively. The companies
have also agreed to a dispute settlement mechanism to resolve any future issues
which may arise between the parties. The letter agreement, which is subject to
regulatory approval by the FTC, that has not been received, provides that
Biovail will license on a non-exclusive basis any patents it may now have, or
hereafter acquire, relating to Tiazac in exchange for a royalty which Andrx will
pay Biovail based upon Andrx's net sales of Taztia XT.



                                       51
<PAGE>

         Holders of Andrx common stock and Cybear common stock have no specific
rights to assets, operating results or cash flows of Andrx or Cybear, as Andrx
Corporation holds title to all its assets and is responsible for all of its
liabilities, operating results and cash flows regardless of how it allocates
assets and liabilities among the classes of common stock. Therefore stockholders
are subject to the risks of investing in the business, assets and liabilities of
Andrx Corporation as a whole. For instance, the assets allocated to each class
of common stock may be subject to Company-wide claims of creditors and
stockholder litigation. Andrx or Cybear are subject to all the risks and
uncertainties of Andrx Corporation detailed herein or detailed from time to time
in Andrx Corporation's filings with the SEC.

         Andrx Corporation and subsidiaries' consolidated financial statements
include consolidated operating results, along with net income (loss) and basic
and diluted earnings (loss) per share, basic and diluted weighted average shares
outstanding for each series of common stock. Accordingly, after the
Reorganization, the consolidated financial statements do not reflect
consolidated basic and diluted earnings (loss) per share since there is no
underlying equity security related to consolidated financial results.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

         The Company's significant accounting policies are described in Note 2
to the consolidated financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States. The
preparation of these financial statements requires the Company to make estimates
and judgments that effect the reported amounts of assets, liabilities, revenues
and expenses, and related disclosure of contingent assets and liabilities. On an
on-going basis, the Company evaluates its estimates including those related to
the allowance for doubtful accounts receivable, allowance for inventories, sales
allowances, useful life or impairment of goodwill and other intangibles and
deferred tax asset valuation allowances. The Company bases its estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis of
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

         The Company believes the following critical accounting policies affect
its more significant judgments and estimates used in the preparation of its
consolidated financial statements.

         Allowance for Doubtful Accounts Receivable

         The Company maintains an allowance for doubtful accounts receivable for
estimated losses resulting from the inability of its customers to make required
payments. As of December 31, 2001, the Company had $137.6 million in accounts
receivables offset by an allowance for doubtful accounts of $7.7 million.
Accounts receivable generated from the Company's distribution operations, are
principally due from independent pharmacies, pharmacy chains, pharmacy buying
groups and physicians' offices. Accounts receivable generated from the Company's
bioequivalent and brand product sales are principally due from a limited number
of large warehousing pharmacy chains, wholesalers and large managed care
customers. Credit is extended based on an evaluation of the customer's financial
condition and collateral is generally not required. Management specifically
analyzes accounts receivable, historical bad debts, customer concentrations,
customer credit-worthiness, percentage of accounts receivable by aging category
and changes in customer payment terms when evaluating the adequacy of the
allowance for doubtful accounts. The Company also performs ongoing credit
evaluations of its customers. If the financial condition of the Company's
customers were to deteriorate, resulting in an impairment of their ability to
make payments, additional allowances may be required.


                                       52

<PAGE>

         Allowance for Inventories

         As of December 31, 2001, the Company had $161.7 million in inventories.
Inventories of pharmaceutical products consist primarily of finished goods held
for distribution, and raw materials, work in process and finished goods of Andrx
bioequivalent and brand products. As of December 31, 2001, the
Company has approximately $33.9 million in raw materials, work in process and
finished goods inventories relating to products that have either not been
approved by the FDA or have not yet been launched. Included in the December 31,
2001 inventory of products not approved by the FDA or launched, was $7.8 million
relating to the Company's bioequivalent version of Glucophage which the Company
launched in January 2002. Inventories are stated at the lower of cost (first-in,
first-out) or market. Cost of inventories held for distribution is based on
purchase price, net of vendor discounts, rebates and other allowances, but
excludes shipping, warehousing and distribution costs which are expensed as
incurred as selling, general and administrative expenses in the statements of
income. In evaluating whether inventory is stated at the lower of cost or
market, management considers such factors as the amount of inventory on hand and
in the distribution channel, estimated time required to sell such inventory,
remaining shelf life and current and expected market conditions, including
levels of competition. As appropriate, provisions are made to reduce inventories
to their net realizable value.

         Sales Allowances

         Sales allowances for estimated returns, chargebacks and other sales
allowances are established by the Company concurrently with the recognition of
revenue. The provisions are established based upon consideration of a variety of
factors, including but not limited to, actual return and historical experience
by product type, the number and timing of competitive products approved for
sale, both historical and projected, the market for the product, estimated
customer inventory levels by product and current and projected economic
conditions, levels of competition and price declines. Actual product returns,
chargebacks and other sales allowances incurred are, however, dependent upon
future events. The Company continually monitors the factors that influence sales
allowances and makes adjustments to these provisions when management believes
that actual product returns, chargebacks and other sales allowances may differ
from established allowances.

         In the pharmaceutical industry, the practice is generally to grant
customers the right to return or exchange purchased goods. In the generic
pharmaceutical industry, this practice has resulted in generic manufacturers
issuing inventory credits (also known as shelf-stock adjustments) to customers
based on the customers' existing inventory following decreases in the market
price of the related generic pharmaceutical product. Due to the competitive
nature of the generic pharmaceutical industry, prices to customers are subject
to frequent and significant price declines from existing and new competitors.
The determination to grant a credit to a customer following a price decrease is
generally at the discretion of the Company, and generally not pursuant to
contractual arrangements with customers. Accordingly, the Company makes
significant accounting estimates, which include estimates of price declines and
quantities shipped but still on customers shelves, before the products pull
through the distribution channel. The Company accrues an estimate for the sales
allowances in the same period the sale is recognized and continually reviews
such estimates.

         In connection with brand products, the Company's significant accounting
estimates for sales allowances are dependent on the Company's ability to promote
to physicians, create demand for products, pull products through the
distribution channel and estimate returns, future levels of prescriptions for
its products and the inventory levels in the distribution channel. It is a
common practice in the pharmaceutical industry for brand manufacturers to offer
customers buy-in allowances on initial purchases prior to promotion activities
by the manufacturer. All purchases by customers are generally subject to the
right of return or exchange. Accordingly, the Company is required to make
significant accounting estimates related to such sales allowances, concurrently
with the recognition of revenues and continually reviews such estimates.


                                       53

<PAGE>

         Useful Life or Impairment of Goodwill and Other Intangibles

         Under the purchase method of accounting for acquisitions, goodwill
represents the excess of purchase price over the fair value of the net assets
acquired. The Company measures impairment of goodwill using the undiscounted
cash flow method whenever events and circumstances warrant revised estimates of
useful lives or recognition of an impairment of goodwill. The undiscounted cash
flow method compares the net book value being tested to the estimated aggregate
undiscounted cash flows. If the net book value exceeds the estimated aggregate
undiscounted cash flows, the excess carrying amount of goodwill is written off.
As of December 31, 2001, the Company has $32.7 million of goodwill, net in the
Consolidated Balance Sheet. With the adoption of SFAS No. 142 in 2002, goodwill
will be subject to at least an annual assessment for impairment in value by
applying a fair-value based test. Any applicable impairment loss is the amount,
if any, by which the implied fair value of goodwill is less than the carrying
value.

         Other intangible assets consist of brand product rights purchased from
other pharmaceutical companies or acquired through the allocation of purchase
price upon the acquisition of another entity, which are being amortized over
periods ranging from three to ten years. Other intangible assets also consist of
Cybear's physicians' network and trademarks, and patents relating to Cybear's
electronic prescription process, which are being amortized over periods ranging
from five to fourteen years. Management established the amortization period
based on an estimate of the period the assets would generate revenue. As of
December 31, 2001, the Company has $28.3 million of other intangible assets, net
in the Consolidated Balance Sheet. Amortization is provided using the
straight-line method over the estimated useful life. Intangible assets are
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.

         Deferred Income Tax Asset Valuation Allowance

         The Company records a valuation allowance to reduce its deferred tax
assets to the amount that is more likely than not to be realized. As of December
31, 2001, the Company has a $38.0 million deferred income tax asset, offset by a
$7.2 million valuation allowance against the deferred tax assets generated by
Cybear prior to the Reorganization. While the Company has considered future
taxable income and ongoing prudent and feasible tax planning strategies in
assessing the need for the valuation allowance, in the event the Company were to
determine that it would be able to realize this deferred tax asset in the
future, in excess of its net recorded amount, an adjustment to the valuation
allowance would increase income in the period such determination was made.
Alternatively, should the Company determine it would not be able to realize all
or part of its net deferred tax asset in the future, an adjustment to the
deferred tax asset would be charged to income in the period such determination
was made.


                                       54

<PAGE>

ANDRX CORPORATION AND SUBSIDIARIES

CONSOLIDATED SELECTED FINANCIAL DATA

         The following selected financial data is qualified by reference to, and
should be read in conjunction with, the Andrx Corporation and subsidiaries'
Consolidated Financial Statements and related notes thereto included herein.

<TABLE>
<CAPTION>
                                                                          YEARS ENDED DECEMBER 31,
                                                          (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
                                              -----------------------------------------------------------------------------
                                                 2001             2000            1999             1998             1997
                                              ----------      ----------       ----------       ----------       ----------
<S>                                           <C>             <C>              <C>              <C>              <C>
STATEMENTS OF INCOME DATA (1)

Revenues
   Distributed products                       $  495,241      $  329,110       $  262,402       $  215,903       $  146,237
   Andrx products                                229,003         175,428          134,796           11,472            3,324
   Stipulation fees                                   --              --           70,733           19,130               --
   Other                                          24,797          15,422            8,059              552              137
                                              ----------      ----------       ----------       ----------       ----------
Total revenues                                   749,041         519,960          475,990          247,057          149,698
                                              ----------      ----------       ----------       ----------       ----------

Operating expenses
   Cost of goods sold                            479,595         301,475          235,346          188,226          126,802
   Selling, general and administrative           119,221          61,901           55,266           30,646           18,934
   Research and development                       52,846          45,467           25,327           15,906            9,569
   Cybear Internet operating expenses             26,100          20,609           14,744            4,090            1,473
   Cybear other charges                           14,759           5,224               --               --               --
   Reorganization costs                               --           2,098               --               --               --
                                              ----------      ----------       ----------       ----------       ----------
Total operating expenses                         692,521         436,774          330,683          238,868          156,778
                                              ----------      ----------       ----------       ----------       ----------

Income (loss) from operations                     56,520          83,186          145,307            8,189           (7,080)

Other income (expense)
   Equity in earnings (losses) of joint
     ventures                                      1,025          (1,202)            (370)            (931)          (1,682)
   Interest income                                11,386          13,039            3,603            1,064            1,585
   Interest expense                                   --            (767)          (1,661)            (380)            (490)
   Minority interest in Cybear                        --           4,146            1,937               85               31
   Gain on sales of Cybear shares                     --              --              643              700               --
                                              ----------      ----------       ----------       ----------       ----------
Income (loss) before income taxes                 68,931          98,402          149,459            8,727           (7,636)
Income taxes                                      31,385          39,870           55,405              333               --
                                              ----------      ----------       ----------       ----------       ----------
Net income (loss)                             $   37,546      $   58,532       $   94,054       $    8,394       $   (7,636)
                                              ==========      ==========       ==========       ==========       ==========
</TABLE>


                                   (Continued)


                                       55

<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES

CONSOLIDATED SELECTED FINANCIAL DATA (CONTINUED)

<TABLE>
<CAPTION>
                                                                          YEARS ENDED DECEMBER 31,
                                                          (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)
                                              -----------------------------------------------------------------------------
                                                 2001             2000            1999             1998             1997
                                              ----------      ----------       ----------       ----------       ----------
<S>                                           <C>             <C>              <C>              <C>              <C>
EARNINGS (LOSS) PER SHARE

ANDRX GROUP COMMON STOCK (2)

Net income (loss) allocated to
    Andrx Group (including Cybear
    through September 6, 2000)                $   72,862      $   66,873       $   94,054       $    8,394       $   (7,636)
                                              ==========      ==========       ==========       ==========       ==========

Net income (loss) per share of
   Andrx Group common stock
   Basic                                      $     1.04      $     0.99       $     1.52       $     0.14       $    (0.13)
                                              ==========      ==========       ==========       ==========       ==========
   Diluted                                    $     1.01      $     0.95       $     1.45       $     0.13       $    (0.13)
                                              ==========      ==========       ==========       ==========       ==========

Weighted average shares of Andrx Group
   common stock outstanding
   Basic                                      69,998,000      67,756,000       61,980,000       60,091,000       56,852,000
                                              ==========      ==========       ==========       ==========       ==========
   Diluted                                    72,243,000      70,456,000       64,953,000       63,707,000       56,852,000
                                              ==========      ==========       ==========       ==========       ==========

CYBEAR GROUP COMMON STOCK (3)

Net loss allocated to Cybear Group
   (subsequent to September 6, 2000)          $  (35,316)     $   (8,341)
                                              ==========      ==========

Basic and diluted net loss per share
   of Cybear Group common stock               $    (6.09)     $    (2.19)
                                              ==========      ==========

Basic and diluted weighted average
   shares of Cybear Group common stock
   outstanding                                 5,802,000       3,801,000
                                              ==========      ==========
</TABLE>

(1)      Certain prior years' amounts have been reclassified to conform with the
         current year presentation.

(2)      Andrx Group share and per share amounts reflect the Company's May 1999
         and March 2000 two-for-one stock splits of Andrx common stock effected
         in the form of 100% stock dividends.

(3)      Cybear Group share and per share amounts reflect the July 2001
         one-for-four reverse stock split of Cybear common stock.

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,
                                                                                  (IN THOUSANDS)
                                                        -----------------------------------------------------------------------
                                                          2001            2000          1999            1998            1997
                                                        ---------      ---------      ---------      ----------       ---------
<S>                                                     <C>            <C>            <C>            <C>              <C>
BALANCE SHEET DATA

      Cash, cash equivalents and
         investments available-for-sale                 $ 245,424      $ 336,809      $ 123,418      $   23,092       $  25,543
      Working capital                                     446,835        453,860        179,829          51,256          44,728
      Property, plant and equipment, net                  139,898         77,773         39,874          20,429          15,403
      Total assets                                        789,214        669,416        357,954         121,198          90,845
      Short-term borrowings                                    --             --         20,226           4,107             546
      Retained earnings (accumulated deficit)             176,381        138,835         80,303         (13,751)        (22,145)
      Total stockholders' equity                          647,894        559,797        220,972          72,583          60,861
</TABLE>


                                       56

<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                       ANDRX CORPORATION AND SUBSIDIARIES

RESULTS OF OPERATIONS

Year Ended December 31, 2001, As Compared To Year Ended December 31, 2000

         For 2001, the Company generated net income of $37.5 million, as
compared to net income of $58.5 million for 2000. As a result of the
Reorganization, for 2001, $72.9 million of net income was allocated to Andrx
Group and $35.3 million of net loss was allocated to Cybear Group. For 2000,
$66.9 million of net income was allocated to Andrx Group and $8.3 million of net
loss was allocated to Cybear Group.

REVENUES

         Total revenues increased by 44.1% to $749.0 million for 2001, as
compared to $520.0 million for 2000.

         Net sales from distributed products increased by 50.5% to $495.2
million for 2001, as compared to $329.1 million for 2000. Commencing March 2000,
sales from distributed products include sales from Valmed, which the Company
acquired certain assets of in March 2000. For 2001, sales of distributed
products includes $5.3 million of sales of the Company's distribution of the
bioequivalent version of Ventolin (albuterol metered dose inhalers) manufactured
by Armstrong. The Company completed its acquisition of certain of Armstrong's
assets on March 30, 2001. Sales of Armstrong's albuterol metered dose inhalers
after the acquisition date were included in Andrx product sales. The increase in
sales from distributed products reflects the participation in the distribution
of generic products launched by other pharmaceutical companies and an increase
in sales to existing and new customers, generally offset by overall price
declines. Commencing August 2001, sales from distributed products includes
approximately $41.3 million of Andrx's participation in the distribution of
generic Prozac, which enjoyed marketing exclusivity from August 2001 through
January 2002. In January 2002, after the expiration of marketing exclusivity,
numerous competitors entered the market resulting in a price decline in excess
of 90%.

         Net sales of Andrx products increased by 30.5% to $229.0 million for
2001, as compared to $175.4 million in 2000. In 2001, net sales of Andrx
products consisted of $197.9 million of Andrx bioequivalent products and $31.1
million of Andrx brand products. For 2001 and 2000, net sales of Andrx
bioequivalent products of $197.9 million and $175.4 million, respectively,
include sales of the Company's bioequivalent versions of Dilacor XR and Cardizem
CD and, commencing on April 1, 2001, the Company's bioequivalent version of
Ventolin, which the Company acquired with the acquisition of certain assets of
Armstrong. During 2001, sales of the Company's bioequivalent version of Ventolin
were $50.9 million. In 2001, net sales of Andrx brand products of $31.1 million
included the sales of the CTEX products which the Company acquired on January
23, 2001, the Entex cough and cold product line, which the Company acquired on
June 30, 2001, and sales of the Anexsia product line used for the treatment of
pain, which the Company acquired marketing rights to on July 1, 2001 from
Mallinckrodt. In 2000, the Company did not generate any brand product sales as
it commenced its brand sales operations in January 2001 with the acquisition of
CTEX. When recognizing net sales, the Company takes into consideration, amongst
other things, the levels of inventory in the distribution channel. The Company
periodically evaluates the inventory position in the distribution channel to
determine whether high inventory levels of product exist. In 2001, the Company
determined that the levels of inventory in the distribution channel for certain
brand products increased to high levels. These high levels in 2001, were
primarily due to a significantly lighter than expected cough and cold season and
competition from generic introductions, which in combination contributed to a
lower than anticipated sell-through of brand products in the distribution
channel during 2001. As a result, as of December 31, 2001, the Company recorded
a sales allowance of $14.3 million against this high level of brand product in
the distribution channel resulting in recognized net sales of Andrx brand
products of $31.1 million for 2001.


                                       57

<PAGE>
         Net sales of the Company's bioequivalent and brand products may be
affected by the level of provisions for estimated sales allowances. Sales
allowances for estimated returns, chargebacks and other sales allowances are
established by the Company concurrently with the recognition of revenue. The
provisions are established based upon consideration of a variety of factors,
including but not limited to, actual return and historical experience by product
type, the number and timing of competitive products approved for sale, both
historical and projected, the market for the product, estimated customer
inventory levels by product and current and projected economic conditions and
levels of competition. Actual product returns, chargebacks and other sales
allowances incurred are, however, dependent upon future events. The Company
continually monitors the factors that influence sales allowances and makes
adjustments to these provisions when management believes that actual product
returns, chargebacks and other sales allowances may differ from established
allowances.

         In the pharmaceutical industry, the practice is generally to grant
customers the right to return or exchange purchased goods. In the generic
pharmaceutical industry, this practice has resulted in generic manufacturers
issuing inventory credits (also known as shelf-stock adjustments) to customers
based on the customers' existing inventory following decreases in the market
price of the related generic pharmaceutical product. Due to the competitive
nature of the generic pharmaceutical industry, prices to customers are subject
to frequent and significant price declines from existing and new competitors.
The determination to grant a credit to a customer following a price decrease is
generally at the discretion of the Company, and generally not pursuant to
contractual arrangements with customers. Accordingly, the Company makes
significant accounting estimates, which include estimates of price declines and
quantities shipped but still on customers shelves, before the products pull
through the distribution channel. The Company accrues an estimate for the sales
allowances in the same period the sale is recognized and continually reviews
such estimates.

         In connection with brand products, the Company's significant accounting
estimates for sales allowances are dependent on the Company's ability to promote
to physicians, create demand for products, pull products through the
distribution channel and estimate returns, future levels of prescriptions for
its products and the inventory levels in the distribution channel. It is a
common practice in the pharmaceutical industry for brand manufacturers to offer
customers buy-in allowances on initial purchases prior to promotion activities
by the manufacturer. All purchases by customers are generally subject to the
right of return or exchange. Accordingly, the Company is required to make
significant accounting estimates related to such sales allowances, concurrently
with the recognition of revenues and continually reviews such estimates.

         The Company generated $24.8 million of other revenues in 2001, as
compared to $15.4 million in 2000. Other revenues for 2001 primarily represented
$ 13.0 million of fees from an agreement with Geneva through the October 2001
termination of such agreement, $6.4 million of revenues from Armstrong's
contract manufacturing business and $4.8 million of other revenues generated by
Cybear. As a result of the termination of the Geneva agreement, the Company will
no longer earn $1.0 million per month in recurring fees under this agreement. In
connection with the termination of the agreement, the Company reacquired all of
Geneva's marketing rights for two brand products under development by the
Company. For 2000, other revenues of $15.4 million included primarily $14.0
million in fees from Geneva.

GROSS PROFIT/GROSS MARGIN

         In 2001, total revenues generated total gross profit of $269.4 million
with a gross margin of 36.0%, as compared to a total gross profit of $218.5
million with a gross margin of 42.0% in 2000.

         In 2001, net sales of distributed products generated $84.9 million of
gross profit with a gross margin of 17.2%, as compared to $56.2 million of gross
profit with a gross margin of 17.1% for 2000.


                                       58

<PAGE>

         In 2001, net sales of Andrx products generated $164.6 million of gross
profit with a gross margin of 71.9% compared to $146.9 million of gross profit
with a gross margin of 83.7% for 2000. In 2001, within Andrx products, Andrx's
bioequivalent products generated $145.7 million of gross profit with a gross
margin of 73.6%, as compared to $146.9 million of gross profit with a gross
margin of 83.7% in 2000. As a result of the expansion of manufacturing
facilities in anticipation of new product launches and delays in the launches of
Andrx's bioequivalent versions of Prilosec, Tiazac, Glucophage, and Naprelan, in
2001, the Company incurred costs of approximately $3.6 million, included in cost
of goods sold, relating to unabsorbed manufacturing costs at its Florida
manufacturing facilities. Such manufacturing costs will be absorbed in the
future as the Company increases production levels related to launches of Andrx
products into the marketplace. Similarly, in connection with the increase in
competition for Andrx's bioequivalent version of Ventolin through 2001, the
Company experienced a decrease in net sales and lower gross margins, as well as
a related decrease in production levels. The Company incurred costs of
approximately $1.4 million, included in cost of goods sold, relating to
unabsorbed manufacturing costs at its Armstrong manufacturing facility in
Massachusetts. The Company is taking measures to reduce certain levels of these
unabsorbed manufacturing costs. If there is an increase in market demand for
Ventolin and the Company increases production levels to manufacture additional
quantities of its bioequivalent product to match that increase in market demand,
some current excess capacity may be utilized. Additionally, in the future, the
Company may be able to increase efficiency at its Massachusetts facility by
manufacturing other inhalation products, which are currently under development.
In 2001, within Andrx products, Andrx's brand products generated $18.9 million
of gross profit with a gross margin of 60.8%. Due to the high levels of
inventory in the brand distribution channel, the Company evaluated its levels of
brand product inventories based on the latest estimated levels of demand for
these brand products, primarily cough and cold products, but also including the
Anexsia pain product line. Based on such evaluation and the obsolescence of
certain products due to reformulations caused by generic introductions, the
Company provided an inventory allowance of approximately $4.1 million through
cost of goods sold in 2001.

SELLING, GENERAL AND ADMINISTRATIVE ("SG&A") EXPENSES

         SG&A expenses were $119.2 million, or 15.9% of total revenues for 2001,
as compared to $61.9 million, or 11.9% of total revenues for 2000. SG&A expenses
include expenses related to the administration, marketing, selling and
warehousing of distributed and Andrx products, the establishment of brand sales
and marketing efforts, royalties to the Company's Co-Chairman and former Chief
Scientific Officer related to sales of the Company's bioequivalent version of
Cardizem CD, as well as corporate overhead, and legal costs with respect to
patent infringement matters related to the Company's ANDA filings and anti-trust
matters. The increase in SG&A expenses in 2001, as compared to 2000, was
primarily the result of an increase in sales of distributed and Andrx products,
the building of the brand sales and marketing infrastructure, including the CTEX
sales force, and an increase in legal costs. The Company's sales force will
market the current Andrx brand products, including the CTEX products, the Entex
cough and cold product line and the Anexsia pain product line, as the Company
continues to prepare its sales force for the anticipated launch of its first
internally developed NDA product, Altocor, a high-potency, extended-release
lovastatin, for which the Company received an approvable letter from the FDA on
January 25, 2002. The Company is considering increasing the number of sales
representatives from 320 as of December 31, 2001 up to 500 within 12 to 18
months after the Altocor launch. The Company is also exploring entering into
co-promotional arrangements.

RESEARCH AND DEVELOPMENT ("R&D") EXPENSES

         R&D expenses were $52.8 million, or 23.1% of Andrx product sales in
2001, as compared to $45.5 million, or 25.9% of Andrx product sales in 2000. The
increase in R&D expenses of $7.4 million or 16.2% reflects the Company's
continued commercialization efforts in its bioequivalent (ANDA) and brand name
(NDA) development programs. During 2001, ANDAs were accepted as filed by the FDA
for 16 products, including ANDAs for Paxil(R), paroxetine hydrochloride tablets
marketed by Glaxo SmithKline (" Glaxo"); Glucophage XR(R), metformin
extended-release tablets marketed by Bristol-Myers Squibb Company ("Bristol
Myers"); Glucotrol XL, glipizide extended-release tablets marketed by Pfizer,
Inc. ("Pfizer"); Claritin D-12, a loratadine and pseudoephedrine
extended-release tablet marketed by Schering Plough Corporation ("Schering").
The Company believes it was the first company to file ANDAs with the FDA for
Glucophage XR and Glucotrol XL. Additionally, during 2001, the Company submitted
its first NDA to the FDA for Altocor, a high-potency extended-release
lovastatin, and completed Phase III NDA clinical studies for Metformin XT. In
2001, R&D expenses include a $2.0 million milestone payment to Geneva in
connection with the agreement whereby the Company reacquired from Geneva the
marketing rights for certain Andrx brand products under development.


                                       59

<PAGE>

CYBEAR INTERNET OPERATING EXPENSES

         Through Cybear, the Company incurred $26.1 million of Internet
operating expenses in 2001, as compared to $20.6 million in 2000. Cybear
Internet operating expenses represent Cybear's operating expenses which include
network operations and operations support, product development, SG&A and
depreciation and amortization and exclude cost of goods sold and intergroup
eliminations. The increase in Cybear Internet operating expenses was primarily
due to the acquisitions of the AHT operating assets and Mediconsult operations.
See the discussion of Cybear's operating results.

CYBEAR OTHER CHARGES

         Cybear other charges were $14.8 million in 2001, as compared to $5.2
million in 2000. In 2001, Cybear other charges include $9.3 million associated
with the write-off of the remaining net goodwill created in the Reorganization
and $2.0 million associated with the write-off of the remaining net goodwill
created with the acquisition of Telegraph Consulting Corporation ("Telegraph")
by Cybear in 1999. Such write-offs were the result of an evaluation of the
goodwill arising from these transactions giving consideration to among other
things, changes in Cybear's business subsequent to the Reorganization and
acquisition of Telegraph. As a result, management believes the future benefits
previously associated with the Reorganization and Telegraph goodwill no longer
exist. In 2001, Cybear other charges also includes a write-off of $1.7 million
for certain computer software licenses that Cybear no longer intends to market
or otherwise attempt to commercialize and an allowance of $1.7 million
associated with an estimated loss that Cybear expects to incur in subleasing all
or a portion of its Fort Washington, PA, Tarrytown, NY and Boca Raton, FL
locations. For 2000, Cybear other charges of $5.2 million include $1.2 million
in merger costs incurred in connection with the Reorganization and $2.0 million
of severance costs and impairment charges to certain assets and costs incurred
to terminate an agreement, a $4.0 million allowance against a note receivable
from AHT, offset by a $2.0 million credit in connection with the acquisition of
substantially all of the operating assets of AHT with an estimated value of $2.0
million, pursuant to an agreement approved by the United States Bankruptcy
Court.

REORGANIZATION COSTS

         In 2000, the Company incurred $2.1 million of one-time costs in
connection with the Reorganization.

EQUITY IN EARNINGS (LOSSES) OF JOINT VENTURES

         The Company generated $1.0 million of equity in earnings of its joint
ventures in 2001, compared to $1.2 million of equity in losses of its joint
ventures in 2000. For 2001, equity in earnings of its joint ventures reflects
the sales of the ANCIRC bioequivalent versions of Oruvail and Trental and the
CARAN bioequivalent version of Pepcid, reduced by operating expenses. For 2000,
equity in losses of its joint ventures consisted of operating expenses, offset
by net sales of the ANCIRC bioequivalent version of Trental.

INTEREST INCOME

         The Company generated interest income of $11.4 million in 2001, as
compared to $13.0 million in 2000. The decrease in interest income is primarily
the result of the lower average level of cash, cash equivalents and investments
available-for-sale maintained during 2001, as compared to 2000. The Company
invests in taxable and tax-free investment-grade interest bearing securities.

INTEREST EXPENSE

         Interest expense was $767,000 in 2000 resulting from borrowings under
the Company's bank loan, which was terminated in December 2000.

MINORITY INTEREST

         Minority interest in Cybear was $4.1 million in 2000. There was no
minority interest in Cybear after the Reorganization, as Andrx Corporation now
owns 100% of Cybear Group.


                                       60

<PAGE>

INCOME TAXES

         For 2001, the Company provided income taxes of $31.4 million, or 45.5%
of income before income taxes. The Company provided for income taxes in excess
of the expected annual effective federal statutory rate of 35%, primarily due to
the effect of state income taxes, amortization and write-offs of non-deductible
goodwill of Cybear. For 2000, the Company provided $39.9 million for income
taxes, or 40.5% of income before income taxes. The Company provided for income
taxes in excess of the expected annual effective federal statutory rate of 35%,
primarily due to the effect of state income taxes and Andrx Corporation's
inability to utilize its share of Cybear's losses when Andrx Corporation's
ownership of Cybear was reduced below 80% during the period from June 23, 1999
to September 6, 2000. For 2000, net income includes the reversal of a valuation
allowance in deferred income tax assets of $3.6 million. In connection with the
Reorganization, Andrx Corporation changed its method of accounting for
allocating income taxes within the consolidated group from the pro rata method
to the separate return method. Applying the pro rata method for 2001 and 2000
would have resulted in an income tax benefit allocation from Andrx to Cybear of
approximately $7.6 million and $4.8 million, respectively.

         In connection with the Reorganization, Cybear and other members of the
Andrx Corporation consolidated group entered into, among other things, a federal
and state tax sharing agreement. Andrx Corporation utilized the separate return
method of accounting for purposes of allocating federal and state consolidated
income tax liabilities among the consolidated group members. Under the terms of
the tax sharing agreement, a member of the group will be allocated its income
tax benefits and expenses in the year generated. Except as set forth in the
supplement referred to below, to the extent a member cannot utilize its income
tax benefits in the year generated, that member will not be compensated in that
year by other members of the Andrx Corporation consolidated group for
utilization of those benefits. Instead, if and when a member leaves the group,
Andrx Corporation may elect to reimburse that member for any unreimbursed income
tax benefits utilized. That reimbursement will take the form of a capital
investment by Andrx Corporation, for which it will receive stock. In the case of
a "tracking stock" member, such as Cybear, the stock received by Andrx
Corporation shall be in the form of Cybear common stock. In addition, if any
member of the group causes another member to become subject to state income tax
in a state where it would otherwise not be taxed on a separate company basis,
the member causing the income tax liability shall be fully responsible for the
state income tax of the other member. Subsequent to the Reorganization, any
income tax benefits that Cybear is unable to utilize on a separate company basis
will be allocated to Andrx.

         Under the provisions of the tax sharing agreement related to the
Reorganization, for financial statement purposes, at such time as Cybear
achieves profitability, or is otherwise able to recognize its tax benefits under
accounting principles generally accepted in the United States, if ever, Cybear
will recognize the benefit of its accumulated income tax benefits (which had
previously been utilized by Andrx) in its statement of operations with a
corresponding decrease to Cybear's equity (i.e., effectively accounted for as a
non-cash dividend). To the extent Andrx is profitable and is able to utilize
such tax benefit and Cybear is generating losses, it is expected that Andrx's
effective tax rate will be less than the statutory federal and state rate. If
Cybear attains profitability or is otherwise able to recognize its tax benefits,
Andrx's effective tax rate may be greater than the statutory federal and state
income tax rate to the extent of Cybear's then unreimbursed accumulated tax
benefits that can be realized by Cybear (Andrx will then reverse the tax
benefits previously recorded, i.e., effectively transferring such tax benefits
to Cybear in the form of a non-cash equity transaction).

         In October 2000, Andrx Corporation and Cybear signed a supplement to
the tax sharing agreement, whereby Cybear will be reimbursed by Andrx
Corporation for specific tax benefits utilized by Andrx Corporation in
connection with an election Cybear made on its 2000 and 1999 separate federal
corporate tax returns to amortize certain product development expenses over a
period of ten years. Such reimbursements from the Company are accounted for by
Cybear as a capital contribution. As a result of the supplement to the tax
sharing agreement, Cybear may be reimbursed for the after-tax effect of
amortizing approximately $6 million of such expenses over ten years.


                                       61

<PAGE>

WEIGHTED AVERAGE SHARES OUTSTANDING

         The basic and diluted weighted average shares of Andrx common stock
outstanding were 70.0 million and 72.2 million, respectively, in 2001, as
compared to 67.8 million and 70.5 million, respectively, in 2000. Such increases
resulted primarily from stock option exercises and the issuance of approximately
291,400 shares in January 2001 in connection with the acquisition of CTEX. All
share and per share amounts of Andrx common stock give effect to the May 1999
and March 2000 two-for-one stock splits of Andrx common stock effected in the
form of 100% stock dividends.

         The basic and diluted weighted average shares of Cybear common stock
outstanding were 5.8 million for 2001, and 3.8 million for 2000. For 2001,
Cybear common stock includes the 2.9 million shares issued in conjunction with
the acquisition of Mediconsult. For 2000, Cybear common stock reflects the
Cybear common stock outstanding relating to the period from September 7, 2000 to
December 31, 2000. The basic and diluted weighted average shares of Cybear
common stock included herein give effect to the July 2001 one-for-four reverse
stock split of Cybear common stock.

Year Ended December 31, 2000, As Compared To Year Ended December 31, 1999

         For 2000, Andrx Corporation reported net income of $58.5 million, as
compared to net income of $94.1 million for 1999. As a result of the
Reorganization, for 2000, $66.9 million of net income was allocated to Andrx
Group and $8.3 million of net loss was allocated to Cybear Group. The year ended
December 31, 1999 includes Stipulation fees of $70.7 million earned in
connection with the patent infringement litigation involving Cartia XT, Andrx's
bioequivalent version of Cardizem CD, offset by related royalties and
corresponding income taxes.

REVENUES

         Total revenues increased by 9.2%, to $520.0 million for 2000, as
compared to $476.0 million for 1999.

         Net sales from distributed products increased by 25.4% to $329.1
million for 2000, as compared to $262.4 million for 1999. The increase in sales
from distributed products reflects the participation in the distribution of
additional generic products launched by other pharmaceutical companies, an
increase in sales to existing customers and an increase in the number of
customers, generally offset by overall price declines. Sales for 2000 also
include sales generated by Valmed, which the Company acquired certain assets of
in March 2000.

         Net sales of Andrx products increased by 30.1% to $175.4 million for
2000, as compared to $134.8 million for 1999. Sales of Andrx products include
sales of Diltia XT, the Company's bioequivalent version of Dilacor XR, and
commencing June 23, 1999, Cartia XT, which enjoyed marketing exclusivity through
December 19, 1999.

         Pursuant to the Stipulation with Aventis in connection with the patent
infringement litigation involving Cartia XT, the Company earned a total of $70.7
million in interim and final fees in 1999.

         Other revenues were $15.4 million in 2000, as compared to $8.1 million
in 1999, primarily from the Company's domestic and international licensing
arrangements. The revenues in 2000 were primarily generated from the Company's
June 1999 agreement with Geneva, as amended.

GROSS PROFIT/GROSS MARGIN

         In 2000, total revenues generated total gross profit of $218.5 million
with a gross margin of 42.0%, compared to total gross profit of $240.6 million
with a gross margin of 50.6% in 1999. Gross profit for 1999 includes $70.7
million of Stipulation fees.


                                       62

<PAGE>

         Gross profit from sales of distributed products was $56.2 million with
a gross margin of 17.1% in 2000, as compared to $50.2 million with a gross
margin of 19.1% in 1999.

         In 2000, net sales of Andrx products generated $146.9 million of gross
profit with a gross margin of 83.7%, compared to $112.0 million of gross profit
with a gross margin of 83.1% for 1999. The increase in gross profit in 2000 as
compared to 1999 was primarily the result of an increase in sales of Andrx
products as a result of having twelve months of sales of Cartia XT in 2000, as
compared to approximately six months of sales of Cartia XT in 1999.

SG&A EXPENSES

         SG&A expenses were $61.9 million, or 11.9% of total revenues for 2000,
as compared to $55.3 million, or 11.6% of total revenues for 1999. SG&A expenses
include administration, marketing, selling and warehousing of both distributed
products and Andrx products, royalties to the Company's Co-Chairman and former
Chief Scientific Officer related to sales of Cartia XT and Stipulation fees, as
well as corporate overhead including legal costs related to patent infringement
matters related to the Company's ANDA filings and anti-trust matters. The
increase in SG&A expenses in 2000, as compared to 1999, was primarily due to an
increase in the activities necessary to support the increase in sales of both
distributed and Andrx products and legal costs.

R&D EXPENSES

         R&D expenses were $45.5 million in 2000, or 25.9% of Andrx product
sales, as compared to $25.3 million in 1999, or 18.8% of Andrx product sales.
The increase in R&D expenses of $20.1 million, or 79.5% reflects the progress
and expansion of the Company's development activities in ANDA bioequivalent and
NDA brand name programs. During 2000, four ANDAs were filed with the FDA, which
include ANDAs for Claritin D-24, a loratadine and pseudoephedrine
extended-release tablet marketed by Schering; Procardia XL, a nifedipine
extended-release tablet marketed by Pfizer; Claritin Reditabs, a loratadine
rapidly-disintegrating tablet marketed by Schering; and Accupril, a quinapril
hydrochloride immediate-release tablet marketed by Pfizer. The Company believes
it was the first Company to file an ANDA with the FDA for Claritin D-24.

CYBEAR INTERNET OPERATING EXPENSES

         In 2000, the Company incurred $20.6 million of Cybear Internet
operating expenses, as compared to $14.7 million in 1999. Cybear Internet
operating expenses represent Cybear's operating expenses except cost of goods
sold and Cybear's other charges. Such Cybear operating expenses include network
operations and operations support, SG&A, product development, depreciation and
amortization, and exclude cost of goods sold and intergroup eliminations. The
increase in Cybear Internet operating expenses primarily relates to the progress
in the development of Cybear's Internet based applications for healthcare
providers and the establishment of the related administrative infrastructure.
See the discussion of Cybear's operating results.

CYBEAR OTHER CHARGES

         For 2000, Cybear other charges of $5.2 million include $1.2 million in
merger costs incurred in connection with the Reorganization and $2.0 million of
severance costs and impairment charges to certain assets and costs incurred to
terminate an agreement, a $4.0 million allowance against a note receivable from
AHT, offset by a $2.0 million credit in connection with the acquisition of
substantially all of the operating assets of AHT with an estimated value of $2.0
million, pursuant to an agreement approved by the United States Bankruptcy
Court.


                                       63

<PAGE>

REORGANIZATION COSTS

         In 2000, the Company incurred $2.1 million of one-time costs in
connection with the Reorganization.

EQUITY IN EARNINGS (LOSSES) OF JOINT VENTURES

         In 2000 the Company generated $1.2 million of equity in losses of its
joint ventures, compared to equity in losses of joint venture of $370,000 in
1999. For 2000 and 1999 equity in losses of its joint ventures consisted of
operating expenses, offset by net sales of the ANCIRC bioequivalent version of
Trental in 2000 and net sales of the ANCIRC bioequivalent versions of Trental
and Oruvail in 1999.

INTEREST INCOME

         Interest income was $13.0 million in 2000, as compared to $3.6 million
in 1999. The increase in interest income is the result of the higher average
level of cash, cash equivalents and investments available-for-sale maintained
during 2000, as compared to 1999. The increase was primarily the result of net
proceeds of $235.8 million received from Andrx's May 2000 public equity
offering. The Company invests in taxable and tax-free investment grade interest
bearing securities.

INTEREST EXPENSE

         Interest expense decreased to $767,000 in 2000, as compared to $1.7
million in 1999. The decrease in interest expense was primarily the result of a
lower average level of borrowings under Andrx Corporation's bank loan during
2000, as compared to 1999. The borrowings were primarily utilized to fund the
Company's distribution operations. In December 2000, the bank loan was
terminated.

MINORITY INTEREST

         Minority interest in Cybear was $4.1 million in 2000, as compared to
$1.9 million in 1999. The increase in minority interest was a result of the
increase in Cybear's net loss to $15.0 million for the period from January 1,
2000 to September 6, 2000, the effective date of the Reorganization, as compared
to $10.8 million in 1999. Additionally, minority ownership of Cybear increased
primarily from Cybear's June 1999 public offering and the issuance of Cybear
common shares in the acquisition of Telegraph. No minority interest was recorded
after the Reorganization, as Andrx Corporation owns 100% of Cybear Group.

GAIN ON SALE OF CYBEAR SHARES

         In 1999, the Company recognized a gain on the sales of Cybear's common
stock of $643,000. Such sales were pursuant to existing subscription and warrant
agreements with Cybear's then Chairman and its then Chief Executive Officer,
which were issued at the then current price of $12.00 per share.


                                       64

<PAGE>

INCOME TAXES

         For 2000, the Company provided income taxes of $39.9 million, or 40.5%
of income before income taxes. The Company provided for income taxes in excess
of the expected annual effective federal statutory rate of 35%, primarily due to
the effect of state income taxes and the Company's inability to utilize its
share of the losses of Cybear after the Company's ownership of Cybear was
reduced below 80% on June 23, 1999 through September 6, 2000, prior to the
effective date of the Reorganization. For 2000, net income includes the reversal
of a valuation allowance on deferred tax assets of $3.6 million. For 1999, the
Company provided $55.4 million for income taxes, or 37.1% of income before
income taxes. The Company provided for income taxes in excess of the expected
annual effective federal statutory rate of 35% due to the effect of state income
taxes and the Company's inability to utilize its share of the losses of Cybear
incurred from June 23, 1999 through September 6, 2000, offset by the utilization
of Andrx net operating loss carryforwards. Accordingly, Cybear was excluded from
the Company's consolidated tax return and filed as a separate tax entity for all
periods from June 23, 1999 through September 6, 2000. As a result, beginning on
the effective date of the Reorganization, Cybear's results of operations are
included in the consolidated tax returns of the Company, as the Company owns
100% of Cybear and income tax benefits relating to Cybear which are unable to be
utilized by Cybear on a separate company basis, will be allocated to Andrx. In
1999, net income includes the reversal of a valuation allowance on deferred tax
assets of $8.0 million. In connection with the Reorganization, effective
September 7, 2000, the Company changed its method of accounting for its
allocation of income taxes within the consolidated group from the pro rata
method to the separate return method. Had the separate return method of
allocating income taxes been utilized prior to the Reorganization, Cybear would
not have been able to record any income tax benefits, as compared to $2.8
million, as recognized under the pro rata method for the year ended December 31,
1999 (exclusive of the effect of minority interest of approximately 5%).
Conversely, applying the pro rata method to the period subsequent to the
Reorganization would have resulted in an income tax benefit allocation from
Andrx to Cybear of approximately $4.8 million in 2000.

WEIGHTED AVERAGE SHARES OUTSTANDING

         The basic and diluted weighted average shares of Andrx common stock
outstanding were 67.8 million and 70.5 million, respectively, in 2000, as
compared to 62.0 million and 65.0 million, respectively, in 1999. Such increases
resulted primarily from the Andrx May 2000 public equity offering of 5.2 million
shares. All Andrx common stock share and per share amounts reflect the May 1999
and March 2000 two-for-one stock splits effected in the form of 100% stock
dividends.

         The basic and diluted weighted average shares of Cybear common stock
outstanding was 3.8 million for 2000, relating to the period from September 7,
2000 through December 31, 2000. The basic and diluted weighted average shares of
Cybear common stock included herein give effect to the July 2001 one-for-four
reverse stock split of Cybear common stock.

LIQUIDITY AND CAPITAL RESOURCES

         As of December 31, 2001, the Company had $245.4 million in cash, cash
equivalents and investments available-for-sale, and $446.8 million of
consolidated working capital.

OPERATING ACTIVITIES

         Net cash provided by operating activities was $27.6 million in 2001,
$57.0 million in 2000 and $49.2 million in 1999.

         In 2001, net cash provided by operating activities of $27.6 million
includes net income of $37.5 million; income tax benefits related to exercises
of stock options of $18.4 million; an increase in accounts payable and accrued
and other liabilities of $14.7 million and decreases in prepaids and other
assets of $3.9 million; offset by increases in accounts receivable of $35.0
million and inventories of $41.0 million. In addition, 2001 also includes
depreciation and amortization of $22.0 million, and provision for doubtful
accounts of $1.4 million, $14.8 million of Cybear other non cash charges, offset
by undistributed equity in earnings of joint ventures of $1.0 million and a
deferred income tax benefit of $8.0 million.


                                       65

<PAGE>

         In 2000, net cash provided by operating activities of $57.0 million
includes net income of $58.5 million; income tax benefits related to exercises
of stock options of $19.9 million; increases in accounts payable and accrued and
other liabilities of $4.1 million; and a decrease in prepaids and other assets
of $3.2 million, offset by an increase in accounts receivable of $15.9 million
and inventories of $18.3 million. In addition, 2000 also includes depreciation
and amortization of $9.6 million, provision for doubtful accounts of $651,000,
non-recurring charge on AHT Corporation note receivable of $2.0 million,
undistributed equity in losses of joint venture of $1.2 million offset by
minority interest in Cybear of $4.1 million and deferred income tax benefit of
$3.8 million.

         In 1999, net cash provided by operating activities of $49.2 million
includes net income of $94.1 million; income tax benefits related to exercises
of stock options of $9.4 million; and increases in accounts payable and accrued
and other liabilities of $58.5 million; offset by increases in accounts
receivable of $42.1 million, inventories of $36.4 million and prepaid and other
assets of $22.0 million. In addition, the 1999 period also includes depreciation
and amortization of $4.5 million, provision for doubtful accounts of $3.9
million, offset by minority interest in Cybear of $1.9 million and deferred
income tax benefit of $18.4 million.

INVESTING ACTIVITIES

         Net cash used in investing activities was $90.0 million in 2001, $196.5
million in 2000 and $108.7 million in 1999.

         In 2001, net cash used in investing activities of $90.0 million
consisted of $75.1 million in purchases of property and equipment; $11.1 million
in the acquisition of CTEX, net of cash acquired; $3.7 million in loans to
former CTEX shareholders, $18.2 million in the acquisition of certain assets of
Armstrong; $14.8 million in the acquisition of the Entex brand product line;
$2.1 million for the marketing rights of the Anexsia brand product line and $3.2
million in advances to and transaction costs associated with the Mediconsult
acquisition;, offset by $38.3 million in maturities of investments available for
sale.

         In 2000, net cash used in investing activities of $196.5 million
consisted of $44.5 million in purchases of property and equipment, $130.0
million in purchases of investments available for sale, $15.2 million in the
acquisition of certain assets of Valmed, $3.9 million in funding of convertible
note receivable and $2.8 million in costs incurred pertaining to the
Reorganization.

         In 1999, net cash used in investing activities of $108.7 million
consisted of $22.2 million in purchases of property and equipment, $85.3 million
in purchases of investments available for sale and $1.2 million in the
acquisition of Telegraph.

FINANCING ACTIVITIES

         Net cash provided by financing activities was $9.1 million in 2001,
$222.6 million in 2000 and $74.6 million in 1999.

         In 2001, net cash provided by financing activities consisted of $9.1
million in proceeds from the issuance of Andrx common stock upon the exercises
of stock options.

         In 2000, net cash provided by financing activities of $222.6 million
consisted of $235.8 million in net proceeds from the Company's May 2000 public
offering of Andrx common stock, $7.0 million in proceeds from the issuance of
Andrx common stock upon the exercises of stock options, offset by $20.2 million
of net repayments on borrowings under the Company's bank loan.

         In 1999, net cash provided by financing activities of $74.6 million
primarily consisted of $50.8 million in proceeds from Cybear's June 1999 public
equity offering, $16.1 million on net borrowings under the Company's bank loan
and $6.7 million in proceeds from the issuance of Andrx common stock upon the
exercises of stock options.


                                       66

<PAGE>

         In July 2000, the Emerging Issues Task Force ("EITF") issued EITF
00-15, "Classification in the Statement of Cash Flows of the Income Tax Benefit
Realized by a Company upon Employee Exercise of a Non-qualified Stock Option"
("EITF 00-15"). This issue addresses the presentation in the statement of cash
flows of the income tax benefit related to exercises of non-qualified stock
options. Companies receive an income tax deduction for the difference between
the exercise price and the market price of a non-qualified stock option upon
exercise by the employee. EITF 00-15 concludes that the income tax benefit
realized by a company upon employee exercise should be classified in the
operating section of the statement of cash flows. The pronouncement is effective
for all quarters ending after July 20, 2000. The Company adopted EITF 00-15 in
2000 and, accordingly, has classified its 2001 and 2000 income tax benefits
related to exercises of stock options of $18,363 and $19,870 as an operating
activity in the Consolidated Statements of Cash Flows and in 2000 reclassified
$9,368 relating to 1999 from financing activities to operating activities to
conform with this presentation.

         The Company anticipates that its cash requirements will continue to
increase, due to the completion of construction of its research and development,
manufacturing and corporate facilities, including the related equipment. As of
December 31, 2001, the Company had purchase commitments for the building,
construction, supplies and equipment associated with the expansion of the
Company's distribution and manufacturing operations for facilities located in
Ohio and Florida for an estimated cost of $ 52 million. The Company also, from
time to time, considers purchasing additional facilities for expansion. In the
second half of 2002, the Company intends to occupy an additional distribution
facility in Ohio, which will require the purchase of additional distribution
inventories to initially stock this facility. The approximate cost of such
inventory purchases is estimated to be $10 million. Additionally, in the first
quarter of 2002, Andrx commenced the implementation of the JD Edwards software
package and related hardware. JD Edwards is a fully integrated software package
that will allow information to be shared and utilized by the Company's various
businesses. The total cost of this project is estimated to be $15 million. Andrx
Corporation anticipates that its existing capital resources will be sufficient
to enable it to maintain its operations for the foreseeable future.

OUTLOOK

         DISTRIBUTED PRODUCTS

         During 2001, the Company generated $495.2 million in net sales of
distributed products. The Company's pharmaceutical distribution operation has a
history of consistent quarterly sequential growth as a result of, among other
things, the Company's continued penetration of the market servicing independent
pharmacies, pharmacy chains which do not maintain their own central warehousing
facilities, pharmacy buying groups and, to a lesser extent, physician offices.
The Company believes that it will be able to continue to expand in this market,
both in terms of per store volume and customer locations, particularly following
the opening of its Ohio distribution center in the second half of 2002. The
Company anticipates that the Ohio distribution center will enable the Company to
expand its product line and improve its ability to service various geographic
regions.





                                       67

<PAGE>

         Nevertheless, the ability of the Company to provide consistent
sequential quarterly growth is affected, in large part, by the Company's
participation in the launch of new products by other generic manufacturers. As
new and existing products encounter competition, sales prices of such products
typically decline. As an example, the Company's net sales of distributed
products in 2001 included approximately $41.3 million from Andrx's distribution
of generic Prozac, which had a 180-day marketing exclusivity from August 2001
through January 2002. Upon the expiration of that exclusivity, numerous generic
manufacturers entered the market resulting in a price decline in excess of 90%.
As a result, first quarter of 2002 net sales and gross profits of the Company's
distributed products are expected to be lower than the fourth quarter of 2001,
which included approximately $21 million in net sales of generic Prozac.

         Andrx's pharmaceutical distribution operation competes with a number of
large wholesalers and other distributors of pharmaceuticals who have greater
financial and other resources than Andrx. Andrx believes that consolidation
among wholesalers, the growing role of managed care organizations, the formation
of buying groups and competition between distributors have resulted in pricing
pressures.

         The Company's distribution operation will participate and play a vital
role in the launch of Andrx's bioequivalent products. For external reporting
purposes, this segments' financial results do not include its participation in
the distribution of Andrx bioequivalent products. Such sales are classified as
Andrx product sales in the Company's Consolidated Statements of Income.

         ANDRX BIOEQUIVALENT PRODUCTS

         During 2001, the Company generated net sales of $197.9 million from its
bioequivalent products (including sales by the Company's distribution
operations), which included $147.0 million in sales of the Company's
bioequivalent versions of Cardizem CD and Dilacor XR and $50.9 million in sales
from the Company's bioequivalent version of Ventolin. The Company's
bioequivalent products generated gross profits of $145.7 million and a gross
margin of 73.6%.

          The bioequivalent pharmaceutical industry is highly competitive and
selling prices are often subject to significant and rapid declines from
competition among existing or new bioequivalent manufacturers entering the
market. Since the launch of Andrx's bioequivalent version of Cardizem CD in 1999
with 180-days of marketing exclusivity, there have only been two additional
bioequivalent manufacturers of this product. As a result, Andrx's bioequivalent
version of Cardizem CD continues to generate significant net sales and
materially contributes to Andrx's overall current level of profitability.


         The Company believes its bioequivalent controlled-release products
could face more modest competition than other bioequivalent products due to the
limited number of competitors having the scientific and legal expertise, and
financial resources, required to develop these products and bring them to
market. The Company also believes that, for various reasons, its specialty or
niche bioequivalent products may also face less competition than most
bioequivalent products. These competitive barriers, combined with the
synergistic value derived from the Company's pharmaceutical distribution
operation, better enable the Company to compete in the highly competitive
bioequivalent product marketplace.

         Currently, Andrx's overall level of profitability remains dependant on
a relatively small number of products. If these Andrx products and particularly
Andrx's bioequivalent version of Cardizem CD were to experience increased
competition from existing and/or new competitors with accompanying price
reductions and/or reduced market shares, Andrx's operating results would be
materially adversely affected. In the fourth quarter of 2001, increased
competition resulted in reduced market share for the Company's bioequivalent
version of Ventolin, adversely affecting the Company's financial results.


<PAGE>

         The Company launched its bioequivalent version of Glucophage in January
2002, simultaneous with numerous other generic manufacturers in a highly
competitive environment. Additionally, the Company anticipates launching a
number of new bioequivalent products during 2002, including K-Dur in the second
quarter of 2002 and Tiazac, Wellbutrin SR and Zyban in the second half of the
year. Other potential product launches in 2002 include bioequivalent versions of
Prilosec, Naprelan, Procardia XL and other undisclosed specialty or niche
products. The timing of these product launches is dependent upon a number of
factors including factors outside of the Company's control. These factors
include the receipt of FDA final marketing approval, new Orange Book patent
listings and related patent infringement litigation, the expiration of other's
exclusivity rights, and the favorable resolution of patent litigation. The net
sales and gross profits to be generated by these new products will also be
affected by the amount of bioequivalent competition it encounters, particularly
after the expiration of any 180-day exclusivity period that the Company
anticipates having, either alone or shared, for its bioequivalent versions of
Prilosec and the principle strengths of Wellbutrin SR and Zyban.

         ANDRX BRAND PRODUCTS

         In 2002, the Company anticipates launching Altocor, its first
internally developed brand product. Altocor will compete in the statin market,
which had approximately $12 billion in U.S. sales in 2001. The Company expects
receipt of final FDA approval during the second quarter of 2002, shipping its
product to pharmacies throughout the United States within 60 days of receiving
that approval, and to begin promoting Altocor within 90 days of final approval.
The timing and launch of Altocor is subject to various factors including the
receipt of final FDA marketing approval.

         With Altocor's launch, the Company will enter a highly competitive
market against brand pharmaceutical manufacturers having significantly larger
and more experienced sales forces and greater financial resources dedicated to
advertising and promotion. Net sales for Altocor will be subject to significant
accounting estimates for, among other things, the ability of the Company's sales
force and its Physicians' Online (POL) Internet portal to promote to physicians,
generate product demand and pull product through the distribution channel, and
the Company's ability to estimate returns. The Company's estimate of returns
will be based on, among other things, terms offered to customers and an estimate
of expected prescription levels. Consistent with industry practice, the Company
may offer allowances on initial purchases and generally provide for a right of
return or exchange. As low prescription levels of Altocor are anticipated during
the early stages of the launch, sales, marketing, advertising and promotional
costs will exceed gross profits from net sales of Altocor until a profitable
sales level is achieved.


         In connection with existing brand products, net sales in 2002 will be
recognized to the extent that they are reasonably pulled through the
distribution channel. Additionally, as most net sales from current Andrx brand
products primarily relate to cough cold products, such net sales are subject to
seasonality. Moreover, since the Company expects to dedicate its sales force's
efforts to Altocor, net sales of other Andrx brand products could be adversely
affected.

         OTHER REVENUES

         In 2001, the Company generated $24.8 million of Other revenues. Of this
amount, $13.0 million was earned pursuant to an agreement with Geneva. The
Company terminated that agreement in October 2001. While the termination
resulted in, among other things, the cessation of monthly $1.0 million payments
from Geneva, and an obligation for Andrx to make certain milestone payments
(including a $2.0 million milestone payment during the fourth quarter of 2001)
and royalties to Geneva, Andrx reacquired, among other things, all of Geneva's
marketing rights for Metformin XT. Notwithstanding the resulting loss of Other
revenues in 2002, the Company expects that the reacquisition of these marketing
rights, net of royalties and milestone payments to Geneva, will be accretive to
the Company over the term of the royalty arrangement.

         COST OF GOODS SOLD

         In anticipation of projected 2001 bioequivalent product launches, the
Company expanded its manufacturing facilities. As certain launches were delayed,
the Company incurred unabsorbed manufacturing costs at its Florida manufacturing
facilities which are included in cost of goods sold. It is anticipated that
these manufacturing costs will be absorbed in the future as additional products
are manufactured and launched. In addition, as a result of the increased
competition which the Company's bioequivalent version of Ventolin encountered
during the fourth quarter of 2001, the Company experienced a decline in sales
and gross margins and a decrease in production levels for this product. As a
result, the Company incurred unabsorbed manufacturing costs at its Massachusetts
manufacturing facility, which are similarly included in cost of goods sold. The
Company is taking measures to reduce certain levels of these manufacturing costs
and to improve efficiency of this facility and in the future may manufacture
other inhalation products that are currently under development.


<PAGE>

         SG&A EXPENSES

         The Company's SG&A expenses are related to the level of sales and the
sales product mix which includes distributed products, Andrx bioequivalent
products and Andrx brand products. The Company anticipates that its SG&A
expenses will be significantly greater in 2002 than in 2001. That increase is
primarily the result of anticipated bioequivalent product launches in 2002,
additional operating expenses related to the Ohio distribution facility in the
second half of 2002, the existence of a brand sales force throughout 2002, and
the promotion of Altocor. The Company's brand sales effort commenced in January
2001 with the acquisition of CTEX and approximately 90 sales representatives.
During 2001, the Company increased the number of sales representatives to
approximately 300. The Company is also considering increasing the number of
sales representatives up to 500 within 18 months of the Altocor launch. Altocor
promotional expenses, which are expensed as incurred, will be periodically
evaluated throughout 2002 following consideration of, among other things, the
launch of the Company's bioequivalent versions of Wellbutrin SR, Zyban and
Prilosec and any co-promotional arrangements for Altocor. However, due to the
differences between the financial resources of the Company and of its
competitors in the statin market, the Company's sales force and planned
promotional budget for 2002 are likely to be significantly less than its
competitors.

         R&D EXPENSES

         Andrx anticipates that R&D expenses for 2002 will increase to
approximately $55 million from approximately $52.8 million for 2001, as a result
of continued spending in bioequivalent drug development (ANDA) and brand product
development (NDA). Andrx currently expects that its 2002 R&D expenses will be
allocated approximately 55% to bioequivalent products and 45% to brand products.
R&D expenses will be periodically evaluated throughout 2002 following
consideration of, among other things, the launch of the Company's bioequivalent
versions of Wellbutrin SR, Zyban and Prilosec.

         CYBEAR GROUP

         During the year ended December 31, 2001, Cybear revenues were primarily
derived from revenues generated from Cybear's consolidation of the Cybearclub LC
joint venture with Andrx (included in Distributed products sales in the
Consolidated Statements of Income) and application and portal services (included
in Other revenues in the Consolidated Statements of Income). By exploiting its
physicians' user base and proprietary technology, Cybear believes that it may
have the potential to generate revenue from multiple sources, including the
licensing of ePrescribing software and electronic prescription process patents.
However, Cybear's ability to generate revenues from all or any of these sources
is still uncertain and there can be no assurance that Cybear can commercialize
its products to generate any meaningful revenues and profits. Cybear has
incurred net operating losses and negative cash flows from operating activities
since its inception. Cybear expects to continue to incur significant expenses in
product development, network operations and customer support and SG&A. As a
result, Cybear expects to continue to incur operating losses for the foreseeable
future, and may never achieve or sustain profitability. Moreover, Cybear's
business strategy may need to be significantly changed due to the evolving
nature of the industry and limited access to financial resources.

RECENT ACCOUNTING PRONOUNCEMENTS

         Derivatives

         As of January 1, 2001, the Company adopted the provisions of Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments embedded in other contracts and for hedging
activities. Adoption of the provisions of this pronouncement had no effect on
the Company's consolidated financial statements since the Company does not have
any derivative financial instruments or hedging activities.


                                       70







<PAGE>

         Business Combinations

         In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations". This pronouncement addresses financial
accounting and reporting for business combinations and supercedes Accounting
Principles Board Opinion ("APB") No. 16, "Business Combinations" and SFAS No.
38, "Accounting for Preacquisition Contingencies of Purchased Enterprises". All
business combinations within the scope of SFAS No. 141 are to be accounted for
under the purchase method. SFAS No. 141 is effective for business combinations
occurring after June 30, 2001. The Company adopted the provisions of SFAS No.141
as of the effective date. Adoption of the provisions of this pronouncement had
no impact on the consolidated financial statements of the Company.

         Goodwill and Other Intangible Assets

         In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets". This pronouncement addresses financial accounting and
reporting for intangible assets acquired individually or with a group of other
assets (but not those acquired in a business combination) in an acquisition.
SFAS No. 142 also addresses financial accounting and reporting for goodwill and
other intangible assets subsequent to their acquisition. With the adoption of
SFAS No. 142, goodwill and certain other intangible assets are no longer subject
to amortization. Instead, goodwill will be subject to at least an annual
assessment for impairment in value by applying a fair-value based test. Any
applicable impairment loss is the amount, if any, by which the implied fair
value of goodwill is less than the carrying or book value. SFAS No. 142 is
effective for fiscal years beginning after December 15, 2001. An impairment loss
for goodwill arising from the initial application of SFAS No. 142 is to be
reported as a cumulative effect of a change in accounting principle. The Company
will adopt the provisions of SFAS No. 142, as appropriate. The Company estimates
that it will no longer be recording approximately $3.2 million in annual
goodwill amortization in future periods. The Company is in the process of
evaluating if there is any impairment in value of its goodwill, and will not be
able to determine the ultimate impact of this pronouncement until such time the
Company fully applies its provisions.

         Asset Retirement Obligations

         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations". This pronouncement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 is effective for
financial statements issued for fiscal years beginning after June 15, 2002. The
Company believes the adoption of SFAS No. 143 will not have a material impact on
the consolidated financial statements of the Company.

         Long-Lived Assets

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". This pronouncement addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. This pronouncement supersedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
and the accounting and reporting provisions of APB Opinion No. 30, "Reporting
the Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", for the disposal of a segment of a business (as previously
defined in that Opinion). SFAS No. 144 is effective for financial statements
issued for fiscal years beginning after December 15, 2001, and interim periods
within those fiscal years, with early application encouraged. The Company
believes that the adoption of SFAS No. 144 will not have a material impact on
the consolidated financial statements of the Company.

         Stock Splits

         In May 1999 and March 2000, the Company implemented two-for-one stock
splits of Andrx common stock in the form of 100% stock dividends. All Andrx
share and per share amounts included herein give effect to these stock splits.

         On July 31, 2001, the Company implemented a one-for-four reverse stock
split of Cybear common stock whereby each four shares of existing Cybear common
stock were exchanged for one share of new Cybear common stock. All share and per
share amounts of Cybear common stock included herein give effect to the
one-for-four reverse stock split.


                                       71
<PAGE>

         ANDRX GROUP

         CONSOLIDATED SELECTED FINANCIAL DATA

         The following selected financial data is qualified by reference to, and
should be read in conjunction with, the Andrx Corporation and subsidiaries'
Consolidated Financial Statements and related notes thereto included herein.

<TABLE>
<CAPTION>
                                                                         YEARS ENDED DECEMBER 31,
                                                                              (IN THOUSANDS)
                                              -------------------------------------------------------------------------------
STATEMENTS OF INCOME DATA (1)                   2001             2000             1999              1998              1997
                                              --------        ---------         ---------         ---------         ---------
<S>                                           <C>             <C>               <C>               <C>               <C>
Revenues
   Distributed products                       $491,132        $ 324,591         $ 262,321         $ 215,903         $ 146,237
   Andrx products                              229,003          175,428           134,796            11,472             3,324
   Stipulation fees                                 --               --            70,733            19,130                --
   Other                                        19,949           14,966             7,870               552               137
                                              --------        ---------         ---------         ---------         ---------

Total revenues                                 740,084          514,985           475,720           247,057           149,698
                                              --------        ---------         ---------         ---------         ---------

Operating expenses
   Cost of goods sold                          475,760          297,218           235,269           188,226           126,802
   Selling, general and administrative         119,221           61,901            55,266            30,646            18,934
   Research and development                     52,846           45,467            25,327            15,906             9,569
   Reorganization costs                             --            2,098                --                --                --
                                              --------        ---------         ---------         ---------         ---------

Total operating expenses                       647,827          406,684           315,862           234,778           155,305
                                              --------        ---------         ---------         ---------         ---------

Income (loss) from operations                   92,257          108,301           159,858            12,279            (5,607)

Other income (expense)
  Equity in earnings (losses) of joint
     ventures                                    1,025           (1,202)             (370)             (931)           (1,682)
  Interest income                               10,965           11,210             2,321             1,064             1,585
  Interest expense                                  --             (767)           (1,661)             (380)             (490)
                                              --------        ---------         ---------         ---------         ---------

Income (loss) before income taxes              104,247          117,542           160,148            12,032            (6,194)
Income taxes                                    31,385           39,870            58,229             2,233                --
                                              --------        ---------         ---------         ---------         ---------

Net income (loss)                             $ 72,862        $  77,672         $ 101,919         $   9,799         $  (6,194)
                                              ========        =========         =========         =========         =========
</TABLE>

<TABLE>
<CAPTION>
                                                                             DECEMBER 31,
                                                                            (IN THOUSANDS)
                                              -------------------------------------------------------------------------------
BALANCE SHEET DATA                              2001              2000             1999             1998              1997
                                              --------        ---------         ---------         ---------         ---------
<S>                                           <C>             <C>               <C>               <C>               <C>
Cash, cash equivalents and
   investments available for sale             $244,190        $ 320,108         $  82,586         $  20,254         $  22,705
Working capital                                449,684          437,070           137,628            41,363            31,054
Property, plant and equipment, net             137,604           71,433            34,748            18,022            15,214
Total assets                                   774,307          630,513           302,107           118,468            91,718
Short-term borrowings                               --               --            20,226             4,107               546
Andrx Group equity                             640,644          522,246           181,707            63,720            50,623
</TABLE>

(1)      Certain prior year amounts have been reclassified to conform with the
         current year presentation


                                       72
<PAGE>

ANDRX GROUP

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Year Ended December 31, 2001, As Compared To Year Ended December 31, 2000

         For 2001, Andrx generated net income of $72.9 million, as compared to
net income of $77.7 million for 2000.

REVENUES

         Total revenues increased by 43.7% to $740.1 million for 2001, as
compared to $515.0 million for 2000.

         Net sales from distributed products increased by 51.3%, to $491.1
million for 2001, as compared to $324.6 million for 2000. Commencing March 2000,
sales from distributed products also include sales from Valmed, which Andrx
acquired certain assets of in March 2000. For 2001, sales from distributed
products include $5.3 million of sales from Andrx's distribution of the
bioequivalent versions of Ventolin (albuterol metered dose inhaler) manufactured
by Armstrong. Andrx completed its acquisition of certain assets of Armstrong on
March 30, 2001. Sales of Armstrong's albuterol metered dose inhaler after the
acquisition date were included in Andrx product sales. The increase in sales
from distributed products reflects the participation in the distribution of
generic products launched by other pharmaceutical companies, and an increase in
sales to existing and new customers, generally offset by overall price declines.
Commencing August 2001, sales from distributed products includes approximately
$41.3 million of Andrx's participation in the distribution of generic Prozac
which enjoyed marketing exclusivity from August 2001 through January 2002. In
January 2002, after the expiration of marketing exclusivity, numerous
competitors entered the market resulting in a price decline in excess of 90%.

         Net sales of Andrx products increased by 30.5%, to $229.0 million for
2001, as compared to $175.4 million in 2000. In 2001, net sales of Andrx
products consisted of $197.9 million of Andrx bioequivalent products and $31.1
million of Andrx brand products. For 2001 and 2000, net sales of Andrx
bioequivalent products of $197.9 million and $175.4 million, respectively,
include sales of Andrx's bioequivalent versions of Dilacor XR and Cardizem CD,
and commencing on April 1, 2001, Andrx's bioequivalent version of Ventolin,
which Andrx acquired with the acquisition of certain assets of Armstrong. During
2001, sales of albuterol metered dose inhalers were $50.9 million. In 2001,
sales of Andrx brand products of $31.1 million included the sales of the CTEX
products which Andrx acquired on January 23, 2001, the Entex cough and cold
product line which Andrx acquired on June 30, 2001 and sales of the Anexsia
product line used for the treatment of pain which Andrx acquired marketing
rights on July 1, 2001 from Mallinckrodt. In 2000, Andrx did not generate any
brand product sales as it commenced its brand sales operations in January 2001
with the acquisition of CTEX. When recognizing net sales, Andrx takes into
consideration the levels of inventory in the distribution channel. Andrx
periodically evaluates the inventory position in the distribution channel to
determine whether high inventory levels of products exist. In 2001, Andrx Group
determined that the levels of inventory in the distribution channel for certain
brand products increased to high levels. These high levels in 2001 were
primarily due to a significantly lighter than expected cough and cold season and
competition from generic introductions, which, in combination, contributed to a
lower than anticipated sell-through of brand products in the distribution
channel during 2001. As a result, as of December 31, 2001, Andrx Group recorded
a sales allowance of $14.3 million against this high level of brand product in
the distribution channel resulting in recognized net sales of Andrx brand
products of $31.1 million for 2001.


                                       73
<PAGE>

         Andrx's product sales may be affected by the level of provisions for
estimated sales allowances. Sales allowances for estimated returns, chargebacks
and other sales allowances are established by the Company concurrently with the
recognition of revenue. The provisions are established based upon consideration
of a variety of factors, including but not limited to, actual return and
historical experience by product type, the number and timing of competitive
products approved for sale, both historical and projected, the market for the
product, estimated customer inventory levels by product and current and
projected economic conditions and levels of competition. Actual product returns,
chargebacks and other sales allowances incurred are, however, dependent upon
future events. The Company continually monitors the factors that influence sales
allowances and makes adjustments to these provisions when management believes
that actual product returns, chargebacks and sales other allowances may differ
from established allowances.

         In the pharmaceutical industry, the practice is generally to grant
customers the right to return or exchange on purchased goods. In the generic
pharmaceutical industry, this practice has resulted in generic manufacturers
issuing inventory credits (also known as shelf-stock adjustments) to customers
based on the customers' existing inventory following decreases in the market
price of the related generic pharmaceutical product. Due to the competitive
nature of the generic pharmaceutical industry, prices to customers are subject
to frequent and significant price declines from existing and new competitors.
The determination to grant a credit to a customer following a price decrease is
generally at the discretion of the Company, and generally not pursuant to
contractual arrangements with customers. Accordingly, the Company makes
significant accounting estimates, which include estimates of price declines and
quantities shipped but still on customers shelves before the products pull
through the distribution channel. The Company accrues an estimate for the sales
allowances in the same period the sale is recognized and continually reviews
such estimates.

         In connection with brand products, the Company's significant accounting
estimates for sales allowances are dependent on the Company's ability to promote
to physicians, create demand for products, pull products through the
distribution channel and estimate returns, future levels of prescriptions for
its products and the inventory levels in the distribution channel. It is a
common practice in the pharmaceutical industry for brand manufacturers to offer
customers buy-in allowances on initial purchases prior to promotion activities
by the manufacturer. All purchases by customers are generally subject to the
right of return or exchange. Accordingly, the Company is required to make
significant accounting estimates related to such sales allowances, concurrently
with the recognition of revenues and continually reviews such estimates.

         Andrx generated $19.9 million of other revenues in 2001, as compared to
$15.0 million in 2000. Other revenues for 2001 primarily represented $ 13.0
million of fees from Geneva through the October 2001 termination of the
agreement and $6.4 million of revenues from Armstrong's contract manufacturing
business. As a result of the termination of the Geneva agreement, Andrx will no
longer earn $1.0 million per month in recurring fees under this agreement. For
2000, other revenues of $15.0 million include primarily $14.0 million in fees
from Geneva.

GROSS PROFIT/GROSS MARGIN

         In 2001, total revenues generated total gross profit of $264.3 million,
with a gross margin of 35.7%, as compared to total gross profit of $217.8
million, with a gross margin of 42.3% in 2000.

         In 2001, net sales of distributed products generated $84.7 million of
gross profit with a gross margin of 17.2%, as compared to $55.9 million of gross
profit, with a gross margin of 17.2% for 2000.


                                       74
<PAGE>

         In 2001, net sales of Andrx products generated $164.6 million of gross
profit, with a gross margin of 71.9% compared to $146.9 million of gross profit,
with a gross margin of 83.7% for 2000. In 2001, within Andrx products, Andrx's
bioequivalent products generated $145.7 million of gross profit with a gross
margin of 73.6%, as compared to $146.9 million of gross profit, with a gross
margin of 83.7% in 2000. As a result of the expansion of manufacturing
facilities in anticipation of new product launches and delays in the launches,
of Andrx's bioequivalent versions of Prilosec, Tiazac, Glucophage, and Naprelan,
in 2001, Andrx Group incurred costs of approximately $3.6 million, included in
cost of goods sold, relating to unabsorbed manufacturing costs at its Florida
manufacturing facilities. Such manufacturing costs will be absorbed in the
future as Andrx increases production levels related to launches of Andrx
products into the marketplace. Similarly, in connection with the increase in
competition for Andrx's bioequivalent version of Ventolin through 2001, Andrx
Group experienced a decrease in net sales and lower gross margins as well as a
related decrease in production levels. Andrx Group incurred costs of
approximately $1.4 million, included in cost of goods sold, relating to
unabsorbed manufacturing costs at its Armstrong manufacturing facility in
Massachusetts. Andrx is taking measures to reduce certain levels of these
unabsorbed manufacturing costs. If there is an increase in market demand for
Ventolin and Andrx increases production levels to manufacture additional
quantities of its bioequivalent product to match that increase in market demand,
some current excess capacity may be utilized. Additionally, in the future, Andrx
Group may be able to increase efficiency at its Massachusetts facility by
manufacturing other inhalation products, which are currently under development.
In 2001, within Andrx products, Andrx's brand products generated $18.9 million
of gross profit with a gross margin of 60.8%. Due to the high levels of
inventory in the brand distribution channel, Andrx Group evaluated its levels of
its brand product inventories based on the latest estimated levels of demand for
these brand products, primarily cough and cold products, but also including the
Anexsia pain product line. Based on such evaluation and the obsolescence of
certain products due to reformulations caused by generic introductions, Andrx
Group provided an inventory allowance of approximately $4.1 million through cost
of goods sold in 2001.

SG&A EXPENSES

         SG&A expenses were $119.2 million, or 16.1% of total revenues for 2001,
as compared to $61.9 million, or 12.0% of total revenues for 2000. SG&A expenses
include expenses related to the administration, marketing, selling and
warehousing of distributed and Andrx products, the establishment of brand sales
and marketing efforts, royalties to the Company's Co-Chairman and former Chief
Scientific Officer related to sales of Andrx's bioequivalent version of Cardizem
CD, as well as corporate overhead and legal costs with respect to patent
infringement matters related to Andrx's ANDA filings and anti-trust matters. The
increase in SG&A expenses in 2001, as compared to 2000, was primarily the result
of an increase in sales of distributed and Andrx products, the building of the
brand sales and marketing infrastructure, including the CTEX sales force, and an
increase in legal costs. The Andrx sales force will market the current Andrx
Group brand products, including the CTEX products, Entex cough and cold product
line and Anexsia pain products, as Andrx continues to prepare its sales force
for the anticipated launch of its first internally-developed NDA product,
Altocor, a high-potency, extended-release lovastatin, for which Andrx Group
received an approvable letter from the FDA on January 25, 2002. In connection
with that launch Andrx is considering increasing the number of sales
representatives from 320 as of December 31, 2001 up to 500 with 12 to 18 months
after the Altocor launch. Andrx is also exploring entering into co-promotional
arrangements.

R&D EXPENSES

         R&D expenses were $52.8 million, or 23.1% of Andrx product sales in
2001, as compared to $45.5 million, or 25.9% of Andrx product sales in 2000. The
increase in R&D expenses of $7.4 million or 16.2% reflect Andrx's continued
commercialization efforts in its bioequivalent (ANDA) and brand name (NDA) drug
development programs. During 2001, ANDAs were accepted as filed by the FDA for
16 products, including ANDAs for Paxil, paroxetine hydrochloride tablets
marketed by Glaxo; Glucophage XR, metformin extended-release tablets marketed by
Bristol-Myers; Glucotrol XL, glipizide extended-release tablets marketed by
Pfizer; Claritin D-12, a loratadine and pseudoephedrine extended-release tablet
marketed by Schering. Andrx believes it was the first company to file ANDAs with
the FDA for Glucophage XR and Glucotrol XL. Additionally, during 2001, Andrx
submitted its first NDA to the FDA for Altocor, a high-potency, extended-release
lovastatin, and completed Phase III NDA clinical studies for Metformin XT. In
2001, R&D expenses include a $2.0 million milestone payment to Geneva in
connection with the agreement whereby Andrx reacquired from Geneva the marketing
rights for certain Andrx brand products under development.


                                       75
<PAGE>

REORGANIZATION COSTS

         In 2000, Andrx incurred $2.1 million of one-time costs in connection
with the Reorganization.

EQUITY IN EARNINGS (LOSSES) OF JOINT VENTURES

         Andrx Group generated $1.0 million of equity in earnings of its joint
ventures in 2001, compared to $1.2 million of equity in losses of its joint
ventures in 2000. For 2001 equity in earnings of its joint ventures reflect
sales of the ANCIRC bioequivalent versions of Oruvail and Trental and the CARAN
bioequivalent version of Pepcid, reduced by operating expenses. For 2000 equity
in losses of its joint ventures consisted of operating expenses, offset by net
sales of the ANCIRC bioequivalent version of Trental.

INTEREST INCOME

         Andrx generated interest income of $11.0 million in 2001, as compared
to $11.2 million in 2000. The decrease in interest income is primarily the
result of the lower average level of cash, cash equivalents and investments
available-for-sale maintained during 2001, as compared to 2000. Andrx invests in
taxable and tax free investment grade interest bearing securities.

INTEREST EXPENSE

         Interest expense was $767,000 in 2000 resulting from borrowings from
Andrx's bank loan, which was terminated in December 2000.

INCOME TAXES

         For 2001, Andrx provided income taxes of $31.4 million, or 30.1% of
income before income taxes. Andrx provided for income taxes at less than the
expected annual effective federal statutory rate of 35%, primarily due to
Andrx's ability to utilize Cybear's losses after the Reorganization, offset by
the effect of state income taxes. For 2000, Andrx provided income taxes of $39.9
million, or 33.9% of income before income taxes. Andrx provided for income taxes
at less than the expected annual effective federal statutory rate of 35%
primarily due to Andrx's ability to utilize Cybear's losses after the
Reorganization, offset by the effect of the state income taxes. For 2000, net
income includes the reversal of a valuation allowance on deferred tax assets of
$3.6 million. In connection with the Reorganization, effective September 7,
2000, Andrx Corporation changed its method of accounting for allocating income
taxes within the consolidated group from the pro rata method to the separate
return method. Applying the pro rata method to 2001 and 2000 would have resulted
in an income tax benefit allocation from Andrx to Cybear of approximately $7.6
million and $4.8 million, respectively.

         In connection with the Reorganization, Cybear and other members of the
Andrx Corporation consolidated group entered into, among other things, a federal
and state tax sharing agreement. Andrx Corporation will utilize the separate
return method of accounting for purposes of allocating federal and state
consolidated income tax liabilities among group members. Under the terms of the
tax sharing agreement, a member of the group will be allocated its income tax
benefits and expenses in the year generated. Except as set forth in the
supplement referred to below, to the extent a member cannot utilize its income
tax benefits in the year generated, that member will not be compensated in that
year by other members of the Andrx Corporation consolidated group for
utilization of those benefits. Instead, if and when a member leaves the group,
Andrx Corporation may elect to reimburse that member for any unreimbursed income
tax benefits utilized. That reimbursement will take the form of a capital
investment by Andrx Corporation, for which it will receive stock. In the case
that any "tracking stock" members, such as Cybear, the stock received by Andrx
Corporation shall be in the form of Cybear common stock. In addition, if any
member of the group causes another member to become subject to state income tax
in a state where it would otherwise not be taxed on a separate company basis,
the member causing the income tax liability shall be fully responsible for the
state income tax of the other member. Subsequent to the Reorganization, any
income tax benefits that Cybear is unable to utilize on a separate company basis
will be allocated to Andrx.


                                       76
<PAGE>

         Under the provisions of the tax sharing agreement related to the
Reorganization, for financial statement purposes, at such time as Cybear
achieves profitability or is otherwise able to recognize its tax benefits under
accounting principles generally accepted in the United States, if ever, Cybear
will recognize the benefit of its accumulated income tax benefits (which had
previously been utilized by Andrx) in its statement of operations with a
corresponding decrease to Cybear's equity (i.e., effectively accounted for as a
non-cash dividend). To the extent Andrx is profitable and is able to utilize
such tax benefit and Cybear is generating losses, it is expected that Andrx's
effective tax rate will be less than the statutory federal and state rate. If
Cybear attains profitability or is otherwise able to recognize its tax benefits,
Andrx's effective tax rate may be greater than the statutory federal and state
income tax rate to the extent of Cybear's then unreimbursed accumulated tax
benefits that can be realized (Andrx will then reverse the tax benefits
previously recorded, i.e., effectively transferring such tax benefits to Cybear
in the form of a non-cash equity transaction).

         In October 2000, Andrx Corporation and Cybear signed a supplement to
the tax sharing agreement, whereby Cybear will be reimbursed by Andrx
Corporation for specific tax benefits utilized by Andrx Corporation in
connection with an election Cybear made on its 2000 and 1999 separate federal
corporate tax returns to amortize certain product development expenses over a
period of ten years. Such reimbursements from the Company are accounted for by
Cybear as a capital contribution. As a result of the supplement to the tax
sharing agreement, Cybear may be reimbursed for the after-tax effect of
amortizing approximately $6 million of such expenses over ten years.

Year Ended December 31, 2000, As Compared To Year Ended December 31, 1999

         For 2000, Andrx reported net income of $77.7 million, as compared to
net income of $101.9 million for 1999. The year ended December 31, 1999 includes
stipulation fees of $70.7 million earned in connection with the patent
infringement litigation involving Cartia XT, offset by related royalties and
corresponding income taxes.

REVENUES

         Total revenues increased by 8.3%, to $515.0 million for 2000, as
compared to $475.7 million for 1999.

         Net sales from distributed products increased by 23.7% to $324.6
million for 2000, as compared to $262.3 million for 1999. The increase in sales
from distributed products reflects the participation in the distribution of
additional generic products launched by other pharmaceutical companies, an
increase in sales to existing customers and an increase in the number of
customers, generally offset by overall price declines. Sales for 2000 also
include sales generated by Valmed, which Andrx acquired in March 2000.

         Net sales from Andrx products increased by 30.1% to $175.4 million for
2000, as compared to $134.8 million in 1999. Sales from Andrx products include
sales of Diltia XT, and commencing June 23, 1999, Cartia XT, which enjoyed
180-days of marketing exclusivity through December 19, 1999.

         Pursuant to the Stipulation with Aventis in connection with the patent
infringement litigation involving Cartia XT, Andrx earned $70.7 million in
interim and final fees in 1999.

         Other revenues were $15.0 million in 2000, as compared to $7.9 million
in 1999, primarily from Andrx's domestic and international licensing
arrangements. The revenues in 2000 were primarily generated from the June 1999
agreement with Geneva, as amended.

GROSS PROFIT/GROSS MARGIN

         In 2000, total revenues generated total gross profit of $217.8 million
with a gross margin of 42.3%, compared to total gross profit of $240.5 million,
with a gross margin of 50.5% in 1999. Gross profit for 1999 includes $70.7
million of Stipulation fees.

         Gross profit from sales of distributed products was $55.9 million with
a gross margin of 17.2% in 2000, as compared to $50.0 million, with a gross
margin of 19.1% in 1999.


                                       77
<PAGE>

         In 2000, net sales of Andrx products generated $146.9 million of gross
profit, with a gross margin of 83.7%, compared to $112.0 million of gross
profit, with a gross margin of 83.1% for 1999. The increase in gross profit in
2000 as compared to 1999 was primarily the result of an increase in sales of
Andrx products as a result of having twelve months of sales of Cartia XT in
2000, as compared to approximately six months of sales of Cartia XT in 1999.

SG&A EXPENSES

         SG&A expenses were $61.9 million, or 12.0%, of total revenues for 2000,
as compared to $55.3, million, or 11.6%, of total revenues for 1999. SG&A
expenses include administration, marketing, selling and warehousing of both
distributed and manufactured products, royalties to the Company's Co-Chairman
and former Chief Scientific Officer related to sales of Cartia XT and
Stipulation fees, as well as, corporate overhead including legal costs related
to patent infringement matters related to Andrx's ANDA filings and anti-trust
matters. The increase in SG&A expenses in 2000, as compared to 1999, was
primarily due to an increase in the activities necessary to support the increase
in sales of both distributed and manufactured products and legal costs.

R&D EXPENSES

         R&D expenses were $45.5 million, or 25.9% of Andrx product sales, in
2000, as compared to $25.3 million, or 18.8% of Andrx product sales, in 1999.
The increase in research and development expenses of $20.1 million or 79.5%
reflects the progress and expansion of Andrx's development activities in the
ANDA bioequivalent and NDA brand name drug development programs. During 2000,
four ANDAs were filed with the FDA, which include ANDAs for Claritin D-24, a
loratadine and pseudoephedrine extended-release tablet marketed by Schering;
Procardia XL, a nifedipine extended-release tablet marketed by Pfizer; Claritin
Reditabs, a loratadine rapidly-disintegrating tablet, marketed by Schering; and
Accupril, a quinapril hydrochloride immediate-release tablet marketed by Pfizer.
Andrx believes it was the first company to file an ANDA with the FDA for
Claritin D-24.

REORGANIZATION COSTS

         In 2000, Andrx incurred $2.1 million of one-time costs in connection
with the Reorganization.

EQUITY IN EARNINGS (LOSSES) OF JOINT VENTURES

         In 2000, Andrx Group generated $1.2 million of equity in losses of its
joint ventures, compared to $370,000 in 1999. For 2000 and 1999 equity in losses
of its joint ventures consisted of operating expenses, offset by net sales of
the ANCIRC bioequivalent version of Trental in 2000 and net sales of the ANCIRC
bioequivalent versions of Trental and Oruvail.

INTEREST INCOME

         Interest income was $11.2 million in 2000, as compared to $2.3 million
in 1999. The increase in interest income is primarily the result of the higher
average level of cash, cash equivalents and investments available-for-sale
maintained during 2000, as compared to 1999. The increase was primarily the
result of the net proceeds of $235.8 million received from Andrx's May 2000
public equity offering. Andrx invests in taxable and tax-free, investment grade
interest bearing securities.

INTEREST EXPENSE

         Interest expense decreased to $767,000 in 2000, as compared to $1.7
million in 1999. The decrease in interest expense was primarily the result of a
lower average level of borrowings under Andrx's bank loan during 2000, as
compared to 1999. The borrowings were primarily utilized to fund Andrx's
distribution operations. In December 2000, the bank loan was terminated.


                                       78
<PAGE>

INCOME TAXES

         For 2000, Andrx provided income taxes of $39.9 million or 33.9% of
income before income taxes. Andrx provided for income taxes at less than the
expected annual effective federal statutory rate of 35%, primarily due to
Andrx's ability to utilize losses of Cybear after the Reorganization offset by
the effect of the state income taxes. For 2000, net income includes the reversal
of valuation allowance on deferred tax assets of $3.6 million. For 1999, Andrx
provided $58.2 million of income taxes or 36.4% of income before income taxes.
Andrx provided for income taxes in excess of the expected annual effective
federal statutory rate of 35% primarily due to the effect of state income taxes,
offset by the utilization of Andrx's net operating loss carryforwards. Prior to
the Reorganization, Cybear was excluded from Andrx's consolidated tax returns
and filed as a separate tax entity for all periods from June 23, 1999 through
September 6, 2000. Beginning on the effective date of Reorganization. Cybear's
results of operations will be included in the consolidated tax returns of the
Company, as the Company owns 100% of Cybear, and income tax benefits relating to
Cybear which are unable to be utilized by Cybear on a separate company basis,
will be allocated to Andrx. In 1999, net income includes the reversal of a
valuation allowance on deferred tax assets of $8.0 million. In connection with
the Reorganization, effective September 7, 2000, the Company changed its method
of accounting for its allocation of income taxes within the consolidated group
from the pro rata method to the separate return method. Had the separate return
method of allocating income been utilized prior to the Reorganization, Cybear
would not have been able to record any income tax benefits, as compared to $2.8
million, as recognized under the pro rata method for the year ended December 31,
1999, (exclusive of the effect of minority interest of approximately 5%).
Conversely, applying the pro rata method to the period subsequent to the
Reorganization would have resulted in an income tax benefit allocation from
Andrx to Cybear of approximately $4.8 million in 2000.

LIQUIDITY AND CAPITAL RESOURCES

         As of December 31, 2001, Andrx had $244.2 million in cash, cash
equivalents and investments available-for-sale and $449.7 million of
consolidated working capital.

OPERATING ACTIVITIES

         Net cash provided by operating activities was $41.6 million in 2001,
$70.8 million in 2000 and $58.0 million in 1999.

         In 2001, net cash provided by operating activities of $41.6 million
includes net income of $72.9 million, income tax benefits related to exercises
of stock options of $18.4 million, an increase in accounts payable and accrued
and other liabilities of $17.3 million and a decrease in prepaids and other
assets of $2.7 million, offset by increases in accounts receivable of $34.5
million and inventories of $41.0 million. In addition, 2001 also includes
depreciation and amortization of $14.4 million and provision for doubtful
accounts of $518,000, offset by deferred income tax benefit of $8.0 million and
undistributed equity in earnings of joint venture of $1.0 million.

         In 2000, net cash provided by operating activities of $70.8 million
included net income of $77.7 million, income tax benefits related to exercises
of stock options of $19.9 million, increases in accounts payable and accrued and
other liabilities of $5.0 million, offset by increases in accounts receivable of
$15.1 million, inventories of $18.3 million and prepaid and other assets of $1.9
million. In addition, 2000 also included depreciation and amortization of $5.5
million, provision for doubtful accounts of $548,000, undistributed equity in
losses of joint venture of $1.2 million, offset by deferred income tax benefit
of $3.8 million.

         In 1999, net cash provided by operating activities of $58.0 million
included net income of $101.9 million, income tax benefit related to exercise of
stock options of $9.4 million, increases in accounts payable and accrued and
other liabilities of $50.6 million, offset by increases in accounts receivable
of $42.4 million, inventories of $36.4 million and prepaid and other assets of
$13.9 million. In addition, 1999 also included depreciation and amortization of
$3.0 million, and provision for doubtful accounts of $3.9 million, offset by
deferred income tax benefit of $18.4 million.


                                       79
<PAGE>

INVESTING ACTIVITIES

         Net cash used in investing activities was $98.7 million in 2001, $200.0
million in 2000 and $77.6 million in 1999.

         In 2001, net cash used in investing activities of $98.7 million
consisted of $74.8 million in purchases of property and equipment, $11.1 million
in the acquisition of CTEX, net of cash acquired, $3.7 million in loans to
former CTEX shareholders, $18.2 million in the acquisition of certain assets of
Armstrong, $14.8 million in the acquisition of the Entex brand product line, and
$2.1 million for the marketing rights of the Anexsia brand product line offset
by $26.1 million in maturities of investments available for sale.

         In 2000, net cash used in investing activities of $200.0 million
consisted of $40.8 million in purchases of property and equipment, $144.0
million in purchases of investments available for sale and $15.2 million in the
acquisition of certain assets of Valmed.

         In 1999, net cash used in investing activities of $77.6 million
consisted of $18.5 million in purchases of property and equipment, and $59.2
million in purchases of investments available for sale.

FINANCING ACTIVITIES

         Net cash provided by financing activities was $7.1 million in 2001,
$222.6 million in 2000 and $22.8 million in 1999.

          In 2001, net cash provided by financing activities of $7.1 million
consisted of $9.1 million in proceeds from the issuance of Andrx common stock
upon the exercises of stock options, offset by $2.0 million in advances to
Cybear under a line of credit.

         In 2000, net cash provided by financing activities of $222.6 million
consisted of $235.8 million in net proceeds from Andrx's May 2000 public
offering of Andrx common stock, $7.0 million in proceeds from the issuance of
Andrx common stock upon the exercises of stock options, offset by $20.2 million
of net repayments on borrowings under the Company's bank loan.

         In 1999, net cash provided by financing activities of $22.8 million
consisted of $16.1 million on net borrowings under the Company's bank loan and
$6.7 million in proceeds from the issuance of Andrx common stock upon the
exercises of stock options.

         In July 2000, the Emerging Issues Task Force ("EITF") issued EITF
00-15, "Classification in the Statement of Cash Flows of the Income Tax Benefit
Realized by a Company upon Employee Exercise of a Non-qualified Stock Option"
("EITF 00-15"). This issue addresses the presentation in the statement of cash
flows of the income tax benefit related to exercises of non-qualified stock
options. Companies receive an income tax deduction for the difference between
the exercise price and the market price of a non-qualified stock option upon
exercise by the employee. EITF 00-15 concludes that the income tax benefit
realized by a company upon employee exercise should be classified in the
operating section of the statement of cash flows. The pronouncement is effective
for all quarters ending after July 20, 2000. The Company adopted EITF 00-15 in
2000 and, accordingly, has classified its 2001 and 2000 income tax benefits
related to exercises of stock options of $18,363 and $19,870 as an operating
activity in the Consolidated Statements of Cash Flows and in 2000 reclassified
$9,368 relating to 1999 from financing activities to operating activities to
conform with this presentation.

         In March 2001, Andrx agreed to furnish Cybear with a $12.0 million line
of credit. Drawings will be subject to certain covenants, will bear interest at
a rate equal to prime plus 1% or Andrx's cost of borrowing, depending on whether
Andrx is borrowing from a third party, and shall be payable upon the expiration
of the line of credit on March 31, 2004. As of December 31, 2001, Cybear drew
$2.0 million against this line of credit.


                                       80
<PAGE>

          Andrx anticipates that its cash requirements will continue to
increase, due to the completion of construction of its research and development,
manufacturing and corporate facilities, including the related equipment. As of
December 31, 2001, the Company had purchase commitments for the building,
construction, supplies and equipment associated with the expansion of the
Company's distribution and manufacturing operations for facilities located in
Ohio and Florida for an estimated cost of $52 million. Andrx also from time to
time considers purchasing additional facilities for expansion. In the second
half of 2002, Andrx intends to occupy an additional distribution facility in
Ohio, which will require the purchase of additional distribution inventories to
initially stock this facility. The approximate cost is estimated to be $10
million. Additionally, in the first quarter of 2002, Andrx started the
implementation of the JD Edwards software package and related hardware. JD
Edwards is a fully integrated software package that will allow information to be
shared and utilized by the Company's various businesses. The total cost of this
project is estimated to be $15 million. Andrx Corporation anticipates that its
existing capital resources will be sufficient to enable it to maintain its
operations for the foreseeable future.


                                       81
<PAGE>

         CYBEAR GROUP

         CONSOLIDATED SELECTED FINANCIAL DATA

         The following selected financial data is qualified by reference to, and
should be read in conjunction with, the Andrx Corporation and subsidiaries'
Consolidated Financial Statements and related notes thereto included herein.

<TABLE>
<CAPTION>
                                                                                                                     FOR THE PERIOD
                                                                                                                          FROM
                                                                                                                      FEBRUARY 5,
                                                                             YEARS ENDED DECEMBER 31,                     1997
                                                                                  (in thousands)                    (INCEPTION) TO
                                                        ----------------------------------------------------------    DECEMBER 31,
STATEMENTS OF OPERATIONS DATA(1)                          2001             2000             1999            1998          1997
                                                        --------         --------         --------         -------   -------------
<S>                                                     <C>              <C>              <C>              <C>       <C>
Revenues
   Cybearclub LC Internet product sales (2)             $  4,109         $  1,483         $     81         $    --         $    --
   Cybearclub LC telemarketing product sales (2)              --            2,715               --              --              --
   Other product sales                                        --              321               --              --              --
   Application services                                    1,387               30               --              --              --
   Portal services                                         1,448               --               --              --              --
   Website development, hosting and other
    services                                                 479              336              102              --              96
   Online meeting development services                     1,070               --               --              --              --
   Subscription services                                     464              161               87              --              --
                                                        --------         --------         --------         -------         -------

Total revenues                                             8,957            5,046              270              --              96
                                                        --------         --------         --------         -------         -------

Operating expenses
   Cost of goods sold                                      3,835            4,257               77              --              --
   Network operations and operations support               5,603            4,501            2,972             643              --
   Product development                                     5,416            3,774            3,058           1,717             894
   Selling, general and administrative                     7,427            8,399            7,271           1,672             667
   Depreciation and amortization                           7,654            4,035            1,556             139              65
   Merger costs and other charges                         14,759            5,224               --              --              --
                                                        --------         --------         --------         -------         -------

 Total operating expenses                                 44,694           30,190           14,934           4,171           1,626
                                                        --------         --------         --------         -------         -------

 Loss from operations                                    (35,737)         (25,144)         (14,664)         (4,171)         (1,530)
 Other income (expense)
   Interest income                                           422            1,829            1,282              --              --
   Interest expense on advances from Andrx                    (1)              --             (216)           (210)            (28)
                                                        --------         --------         --------         -------         -------

Loss before income taxes                                 (35,316)         (23,315)         (13,598)         (4,381)         (1,558)
Income tax benefit allocated from Andrx                       --               --            2,824           1,900              --
                                                        --------         --------         --------         -------         -------

Net loss                                                $(35,316)        $(23,315)        $(10,774)        $(2,481)        $(1,558)
                                                        ========         ========         ========         =======         =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                        DECEMBER 31,
                                                                                       (in thousands)
                                                        --------------------------------------------------------------------------
BALANCE SHEET DATA                                        2001             2000             1999             1998            1997
                                                        --------         --------         --------         -------         -------
<S>                                                     <C>              <C>              <C>              <C>             <C>
Cash, cash equivalents and investments
  available-for-sale                                    $  1,234         $ 16,701         $ 37,994         $     4         $     1
Working capital (deficit)                                 (3,028)          16,188           39,390          (3,235)         (1,378)
Total assets                                              17,087           39,505           53,068           3,332             395
Equipment, net                                             2,294            6,340            5,126           2,407             189
Cybear Group equity (deficit)                              7,250           37,551           49,978            (467)         (1,014)
</TABLE>

(1)      Certain prior year amounts have been reclassified to conform with the
         current year presentation.

(2)      For the year ended December 31, 1999 and through the first quarter of
         2000, as reported by Cybear, Cybearclub product sales were reported as
         E-commerce sales. In the second quarter of 2000, Cybear changed its
         presentation from E-commerce sales to Cybearclub LC sales and in the
         third quarter of 2000, Cybear changed the classification to Cybearclub
         LC Internet product sales (i.e., physician Internet orders) and
         Cybearclub LC telemarketing product sales (i.e., telemarketing orders
         entered over the Internet on behalf of customers by Cybear employees).
         Cybear is presenting 1999 E-commerce product sales as Cybearclub LC
         Internet product sales, although Cybear's systems at that time did not
         permit such classification to be fully verified.


                                       82
<PAGE>

CYBEAR GROUP

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Year Ended December 31, 2001, As Compared to Year Ended December 31, 2000.

         For 2001, Cybear generated a net loss of $35.3 million, as compared to
a net loss of $23.3 million in 2000.

REVENUES

         Cybear total revenues increased by 77.5% to $9.0 million for 2001, as
compared to $5.0 million for 2000.

         In August 1999, Cybear commenced Cybearclub with Andrx which is
intended to distribute healthcare products to physicians' offices through the
Internet. Capital contributions to, distributions from and net income or loss
generated by Cybearclub are allocated in proportion to Cybear's and Andrx's
interests in the joint venture. Such interests are 55% to Cybear and 45% to
Andrx. Cybearclub's management committee is comprised of five members. Three
members are appointed by Cybear and two members are appointed by Andrx. Based on
its majority ownership and majority representation on the management committee
of Cybearclub, Cybear controls Cybearclub. Accordingly, Cybear consolidates the
accounts of Cybearclub and Andrx utilizes the equity method of accounting for
its investment in Cybearclub.

         To help achieve Cybearclub's objective of having physicians' offices
purchase products through the Internet, Cybearclub initiated a dual strategy of
using Andrx telemarketers to induce physicians' offices, including Andrx
physician's customers, to begin placing orders with Cybearclub, and to then
transition those physicians' offices from being purchasers who place their
orders with a telemarketers into customers who place orders directly through the
Internet.

         Accordingly, through October 8, 2000, revenues reported by Cybearclub
consisted of transition revenues procured by Andrx telemarketers and entered
over the Internet by Cybear employees as well as revenues derived from orders
placed by physician offices over the Internet. As a result of an amendment to
the joint venture agreement, beginning October 9, 2000, Cybearclub revenues
consisted solely of Internet product sales from orders entered by physician
offices over the Internet. Accordingly, effective October 9, 2000, any orders
not entered by physician offices over the Internet were recognized as revenues
by Andrx and not by Cybearclub.

         Through Cybearclub, Cybear generated $4.1 million in revenues for 2001,
compared to $4.2 million in 2000. Cybearclub 2001 revenues of $4.1 million,
consist solely of Cybearclub LC Internet product sales. Cybearclub 2000 revenues
of $4.2 million consist of (i) $1.5 million of physician Internet sales reported
as Cybearclub LC Internet product sales, and (ii) $2.7 million of sales procured
by Andrx telemarketers and entered by Cybear employees over the Internet and
reported as Cybearclub LC telemarketing product sales.

         For the first quarter of 2000, as originally reported by Cybear, all
Cybearclub product sales were presented as E-commerce sales. In the second
quarter of 2000, Cybear changed its presentation from E-commerce sales to
Cybearclub LC sales and in the third quarter of 2000, Cybear further changed its
presentation to "Cybearclub LC Internet product sales" (i.e., physician office
Internet orders) and "Cybearclub LC telemarketing product sales" (i.e.,
telemarketing orders entered over the Internet on behalf of physician customers
by Cybear employees).


                                       83
<PAGE>

         As part of its operations, Andrx purchases products from outside
vendors and distributes them to pharmacies and physicians with whom it generally
contacts through telemarketers. In connection with Cybearclub, Andrx sells some
of those products to Cybearclub at cost and charges Cybearclub for certain
fulfillment and back office operations such as purchasing, warehousing and
distribution, as well as customer service and telemarketing activities. As
negotiated by the parties, such services were charged at a rate of 6% of gross
sales for the year ended December 31, 2001 and 10% (subsequently retroactively
reduced to 6% of gross sales with the effect recorded in the second quarter of
2000) of net sales for the year ended December 31, 2000. The current rate of 6%
could increase if Cybearclub achieves certain quarterly gross sales levels. For
the years ended December 31, 2001 and 2000, Andrx charged Cybearclub $250,000
and $279,000, respectively, for the services it provided.

         Cybearclub operating results were net income of $26,000 in 2001 and net
loss of $43,000 in 2000 for which Cybear recorded Andrx minority interest
expense of $12,000 in 2001 and minority interest income of $19,000 in 2000.

         Revenues from other product sales were $321,000 in 2000.

         Revenues from application services were $1.4 million for 2001 compared
to $30,000 for 2000. Application services represent services provided primarily
from Cybear's Dr. Chart(R) laboratory product and @Rx(TM) electronic
prescription management product and license and royalty fees related to Cybear's
electronic prescription process patents. Application services revenue was
attributable to the acquisition of the AHT assets in November 2000.

         Revenues from portal services were $1.4 million for 2001, which
represent banner and tile advertising, surveys and newsletter advertising
primarily on Physicians' Online(TM), Cybear's physician web portal. Portal
services revenue was attributable to the acquisition of Mediconsult in April
2001.

         Revenues from Website development, hosting and other services were
$479,000 for 2001, an increase of $143,000 or 42.6% compared to $336,000 for
2000. The increase in Website development, hosting and other services for 2001
was primarily associated with the acquisition of the Mediconsult operations
which expanded the available product offerings, offset by a reduction in
Cybear's customer base due to the decision not to renew or seek additional
hosting customers.

         Revenues from online meeting development services were $1.1 million for
2001. Online meeting development services is attributable to the early
termination of a contract by a customer during 2001. As such, Cybear does not
anticipate that significant revenues will be generated from such development
services in future periods.

         Revenues from subscription services were $464,000 for 2001, an increase
of $303,000, compared to $161,000 in 2000. Subscription services represent
subscriptions to the Dr. Cybear website that included Internet service provider
("ISP") services. The increase in subscription services was primarily due to an
increase in the number of subscribers utilizing the Dr. Cybear product during
2001. Management has decided to discontinue these offerings and is transitioning
the remaining customers to Physicians' Online(TM).

GROSS PROFIT/GROSS MARGIN

         Gross profit from Cybearclub LC Internet product sales was $274,000
with a gross margin of 6.7% for 2001, as compared to gross profit from total
Cybearclub sales and other product sales of $262,000 with a gross margin of 5.8%
for 2000.

NETWORK OPERATIONS AND OPERATIONS SUPPORT EXPENSES

         Network operations and operations support costs were $5.6 million in
2001, as compared to $4.5 million in 2000. Network operations and operations
support costs consisted of personnel and related costs associated with operating
the network operations center and providing customer support, telecommunications
and maintenance services on computer hardware and software. The increase in
network operations and support costs for 2001 was primarily associated with the
Mediconsult operations, offset by reductions in personnel costs.


                                       84
<PAGE>

PRODUCT DEVELOPMENT EXPENSES

         Product development costs were $5.4 million for 2001, as compared to
$3.8 million for 2000. Product development costs consisted of personnel related
costs associated with the expansion of the various products under development.
The increase in the product development costs for 2001 reflected the growth of
the business and expansion of Cybear's development activities relating to
electronic prescription and laboratory products.

SG&A EXPENSES

         SG&A expenses were $7.4 million for 2001, as compared to $8.4 million
for 2000. SG&A expenses consisted primarily of salaries and personnel related
expenses for the sales, executive and administrative functions, consulting and
advertising fees, office lease expenses and professional fees. The decrease in
such expenses was primarily the result of reductions in personnel costs, offset
by expenses associated with the Mediconsult operations, which were acquired in
April 2001.

DEPRECIATION AND AMORTIZATION EXPENSES

         Depreciation and amortization expense was $7.7 million for 2001, as
compared to $4.0 million for 2000. The increase in depreciation and amortization
for 2001 resulted primarily from amortization on $12.0 million of goodwill and
other intangible assets established as a result of the acquisition of
Mediconsult in April 2001 and amortization on $10.4 million of goodwill
established from the September 2000 Reorganization.

MERGER COSTS AND OTHER CHARGES

         Merger costs and other charges were $14.8 million in 2001, as compared
to $5.2 million in 2000. For 2001, Cybear's other charges of $14.8 million were
associated with (i) the write-off of the remaining net goodwill of $9.3 million
created in the Reorganization in September 2000 and $2.0 million in the
acquisition of Telegraph in 1999, (ii) the write-off of $1.7 million for certain
computer software licenses that Cybear no longer intends to market or otherwise
attempt to commercialize, and (iii) an allowance of $1.7 million associated with
an estimated loss that Cybear expects to incur in subleasing, all or a portion
of its Fort Washington, PA, Tarrytown, NY, and Boca Raton, FL locations. For
2000, Cybear other charges of $5.2 million include $1.2 million in merger costs
incurred in connection with the Reorganization and $2.0 million of severance
costs and impairment charges to certain assets and costs incurred to terminate
an agreement, a $4.0 million allowance against a note receivable from AHT,
offset by a $2.0 million credit in connection with the acquisition of
substantially all of the operating assets of AHT with an estimated value of $2.0
million, pursuant to an agreement approved by the United States Bankruptcy
Court.

INTEREST INCOME

         Cybear earned interest income of $422,000 in 2001, as compared to $1.8
million in 2000. Such interest income was generated primarily from the
investments of the net proceeds of $50.8 million generated from the Cybear Inc.
June 1999 public offering and from Cybear's convertible notes receivable. Cybear
invests in investment grade interest bearing securities. The decrease in
interest income is primarily due to lower average invested cash balances
maintained by Cybear.


                                       85
<PAGE>

INCOME TAXES

         For 2001 and for the period from September 7, 2000 (after
Reorganization) to December 31, 2000, Cybear did not record an income tax
benefit as it could not realize such benefits in the then current year, as
required by the tax sharing agreement related to the Reorganization. For 2000,
for the period prior to the Reorganization, Cybear did not record an income tax
benefit for the losses it generated due to its history of operating losses.
Accordingly, Cybear provided a full valuation allowance against its deferred tax
assets as a result of its inability to recognize those benefits. As of December
31, 2001, Cybear had net operating loss carryforwards of approximately $19.7
million due to expire in 2019 and 2020 which can only be used by Cybear to
offset its separate company future taxable income. Had the separate return
method of allocating income taxes been utilized prior to the Reorganization,
Cybear would not have been able to record any income tax benefits, as compared
to $2.8 million, as recognized under the pro rata method for the year ended
December 31, 1999 (exclusive of the effect of minority interest of approximately
5% in 1999). Conversely, applying the pro rata method to the period subsequent
to the Reorganization would have resulted in an income tax benefit allocation
from Andrx to Cybear of approximately $7.6 million in 2001 and $4.8 million in
2000. For the period from June 23, 1999 (date of completion of the public
offering) to December 31, 1999, Cybear generated net operating loss
carryforwards of approximately $6.8 million which are available to offset future
earnings of Cybear as a separate company. As of December 31, 1999, Cybear had
net deferred tax assets of approximately $2.7 million attributable to the net
operating loss carryforward of approximately $6.8 million generated from June
23, 1999 to December 31, 1999. Under the provisions of SFAS No. 109, "Accounting
for Income Taxes", Cybear has provided a valuation allowance to reserve against
100% of its net operating loss due to its history of net losses. For the period
from January 1, 1999 to June 22, 1999, Cybear recorded $2.8 million in income
tax benefits. The income tax benefits reflect the reimbursement from Andrx for
the utilization of Cybear's income tax attributes pursuant to the tax allocation
agreement.

         Under the provisions of the tax sharing agreement related to the
Reorganization, for financial statement purposes, at such time as Cybear
achieves profitability, or is otherwise able to recognize its tax benefits under
accounting principles generally accepted in the United States, if ever, Cybear
will recognize the benefit of its accumulated income tax benefits (which had
previously been utilized by Andrx) in its statement of operations with a
corresponding decrease to Cybear's total group equity (i.e., effectively
accounted for as a non-cash dividend). To the extent Andrx is profitable and is
able to utilize such tax benefit and Cybear is generating losses, it is expected
that Andrx's effective tax rate will be less than the statutory federal and
state rate. If Cybear is ever able to attain profitability or is otherwise able
to recognize its tax benefits, Andrx's effective tax rate may be greater than
the statutory federal and state income tax rate to the extent of Cybear's then
unreimbursed accumulated tax benefits that can be realized (Andrx will then
reverse the tax benefits previously recorded, i.e., effectively transferring
such tax benefits to Cybear in the form of a non-cash equity transaction).

         In October 2000, Andrx Corporation and Cybear signed a supplement to
the tax sharing agreement, whereby Cybear will be reimbursed by Andrx
Corporation for specific tax benefits utilized by Andrx Corporation in
connection with an election Cybear made on its 2000 and 1999 separate federal
corporate tax returns to amortize certain product development expenses over a
period of ten years. Such reimbursements from the Company are accounted for by
Cybear as a capital contribution from Andrx Group. As a result of this
supplement to the tax sharing agreement, Cybear may be reimbursed by Andrx for
the after-tax effect of amortizing approximately $6 million of such expenses
over ten years.

         Through the completion of its public offering in June 1999, Cybear's
results of operations for tax purposes were included in the consolidated income
tax return of Andrx, since Andrx owned at least 80% of the common stock of
Cybear. Cybear and Andrx had a tax allocation agreement pursuant to which
federal income tax liabilities or benefits were allocated to Cybear on a pro
rata basis as if Cybear had filed a separate income tax return when Cybear's
taxable results are included in the consolidated income tax return of Andrx.
Upon completion of the public offering on June 23, 1999, Andrx's ownership in
Cybear was reduced below 80%. Consequently, thereafter Cybear filed its income
tax returns separately, until September 7, 2000 (the effective date of the
Reorganization). Upon the effective date of Reorganization, Cybear's results of
operations, for tax purposes, will be included in the consolidated income tax
return of Andrx Corporation, as Andrx Corporation owns 100% of Cybear. In
connection with the Reorganization, Andrx Corporation changed its method of
accounting for allocating income taxes to Andrx and Cybear from the pro rata to
the separate return method.


                                      86
<PAGE>

Year Ended December 31, 2000, As Compared to Year Ended December 31, 1999.

REVENUES

         Cybear total revenues were $5.0 million for 2000, as compared to
$270,000 for 1999.

         In August 1999, Cybear commenced the Cybearclub LC joint venture with
Andrx, which is intended to distribute healthcare products to physician offices
through the Internet. Through Cybearclub, Cybear generated $4.2 million in
revenues for 2000 as compared to $81,000 in 1999. Cybearclub 2000 revenues of
$4.2 million, consisted of (i) physician Internet sales reported as Cybearclub
LC Internet product sales of $1.5 million and (ii) orders procured by Andrx
telemarketers and entered by Cybear employees over the Internet (i.e.,
transition revenues) through October 8, 2000, reported as Cybearclub LC
telemarketing product sales of $2.7 million.

         For the year ended December 31, 1999 and through the first quarter of
2000, as originally reported by Cybear, all Cybearclub product sales were
reported as E-commerce sales. In the second quarter of 2000, Cybear changed its
presentation from E-commerce sales to Cybearclub LC sales and in the third
quarter of 2000, Cybear further changed its presentation to Cybearclub LC
Internet product sales (i.e., physicians office Internet orders) and Cybearclub
LC telemarketing product sales (i.e., telemarketing orders entered over the
Internet on behalf of physician customers by Cybear employees). Cybear is
presenting 1999 E-commerce products sales as Cybearclub LC Internet product
sales of $81,000 although Cybear's systems at that time did not permit such
classification to be fully verified.

         As part of its operations, Andrx purchases products from outside
vendors and distributes them to pharmacies and physicians with whom it generally
contacts through telemarketers. In connection with Cybearclub, Andrx sells some
of those products to Cybearclub at cost and charges Cybearclub for certain
fulfillment and back office operations such as purchasing, warehousing and
distribution, as well as customer service and telemarketing activities. As
negotiated by the parties, such services were charged at a rate of 6% of gross
sales for the year ended December 31, 2000 and 10% of gross sales for the year
ended December 31, 1999. The current rate of 6% could increase if Cybearclub
achieves certain quarterly gross sales levels. For the years ended December 31,
2000 and 1999, Andrx charged Cybearclub $279,000 and $8,000, respectively, for
the services it provided.

         Cybearclub operating results were net losses of $43,000 and $17,000 in
2000 and 1999, respectively, for which Cybear recorded Andrx minority interest
of $19,000 and $8,000, respectively.

         Cybear generated $321,000 of other product sales in 2000.

         Cybear generated $30,000 from application services for 2000 relating to
the acquisition of the AHT operating assets in November 2000.

         Cybear generated $336,000 from Website development, hosting and other
services for 2000, as compared to $102,000 for 1999.

         Revenues from subscription services were $161,000 for 2000, compared to
$87,000 in 1999.

GROSS PROFIT/GROSS MARGIN

         Gross profit from Cybearclub Internet product sales, Cybearclub
telemarketing product sales and other product sales was $262,000 with a gross
margin of 5.8% for 2000, as compared to gross profit of $4,000 with a gross
margin of 4.9% for 1999.


                                      87
<PAGE>

NETWORK OPERATIONS AND OPERATIONS SUPPORT EXPENSES

         Network operations and operations support costs were $4.5 million in
2000, as compared to $3.0 million in 1999. Network operations and operations
support consisted of personnel and related costs associated with operating the
network operations center and providing customer support, telecommunications
costs and maintenance expense on computer hardware and software. The increase in
network operations and operations support costs for 2000 related primarily to
the expansion of the network operations and operations support infrastructure.

PRODUCT DEVELOPMENT EXPENSES

         Product development costs were $3.8 million for 2000, as compared to
$3.1 million for 1999. The increase in the product development costs for 2000
reflected the progress and expansion of Cybear's development activities.

SG&A

         SG&A expenses were $8.4 million for 2000, as compared to $7.3 million
for 1999. SG&A expenses consisted primarily of salaries and personnel related
expenses for the sales, executive and administrative functions, consulting and
advertising fees, housing fees and professional fees. During 2000, management
primarily maintained the selling, marketing and administrative infrastructure
established in 1999.

DEPRECIATION AND AMORTIZATION EXPENSES

         Depreciation and amortization expense was $4.0 million for 2000, as
compared to $1.6 million for 1999. The increase in depreciation and amortization
for 2000 resulted primarily from the increase in amortization on the $3.9
million of goodwill established from the acquisition of Telegraph and from the
amortization of the $10.4 million of goodwill established from the
Reorganization. In the third quarter of 2000, Cybear re-evaluated the expected
benefits to be received from the 1999 acquisition of TCC and, as such, as of
July 1, 2000, prospectively revised the life of the goodwill related to the
acquisition from ten years to three years.

MERGER COSTS AND OTHER CHARGES

         For 2000, Cybear other charges of $5.2 million include $1.2 million in
merger costs incurred in connection with the Reorganization and $2.0 million of
severance costs and impairment charges to certain assets and costs incurred to
terminate an agreement, $4.0 allowance against a note receivable from AHT,
offset by a $2.0 million credit in connection with the acquisition of
substantially all of the operating assets of AHT with an estimated value of $2.0
million, pursuant to an agreement approved by the United States Bankruptcy
Court.

INTEREST INCOME

         Cybear had interest income of $1.8 million in 2000 and $1.3 million in
1999. The interest income was generated primarily from the investments of the
net proceeds of $50.8 million generated from the June 1999 public offering and
from Cybear's convertible notes receivable. Cybear invests in investment-grade,
interest-bearing securities.

INTEREST EXPENSE

         Interest expense of $216,000 in 1999 represented interest on the amount
due to Andrx under the credit agreement between the two companies to fund
Cybear's operations.


                                      88
<PAGE>

INCOME TAXES

         For the period from September 7, 2000 (after Reorganization) to
December 31, 2000, Cybear did not record an income tax benefit as it could not
realize such benefits in the then current year, as required by the tax sharing
agreement related to the Reorganization. For 2000, for the period prior to the
Reorganization, Cybear did not record an income tax benefit for the losses it
generated due to its history of operating losses. Accordingly, Cybear provided a
full valuation allowance against its deferred tax assets as a result of its
inability to recognize those benefits. As of December 31, 2000, Cybear had net
operating loss carryforwards of approximately $19 million due to expire in 2019
and 2020 which can only be used by Cybear to offset its separate Company future
taxable income. Had the separate return method of allocating income taxes been
utilized prior to the Reorganization, Cybear would not have been able to record
any income tax benefits, as compared to $2.8 million, as recognized under the
pro rata method for the year ended December 31, 1999, (exclusive of the effect
of minority interest of approximately 5%). Conversely, applying the pro rata
method to the period subsequent to the Reorganization would have resulted in an
income tax benefit allocation from Andrx to Cybear of approximately $4.8 million
in 2000. For the period from June 23, 1999 (date of completion of the public
offering) to December 31, 1999, Cybear generated net operating loss
carryforwards of approximately $6.8 million which are available to offset future
earnings of Cybear as a separate company. As of December 31, 1999, Cybear had
net deferred tax assets of approximately $2.7 million attributable primarily to
the net operating loss carryforward of approximately $6.8 million generated from
June 23, 1999 to December 31, 1999. Under the provisions of SFAS No. 109,
"Accounting for Income Taxes", Cybear has provided a valuation allowance to
reserve against 100% of its net deferred tax assets due to its history of net
losses. For the period from January 1, 1999 to June 22, 1999, Cybear recorded
$2.8 million, in income tax benefits. The income tax benefits reflect the
reimbursement from Andrx for the utilization of Cybear's income tax attributes
pursuant to the tax allocation agreement.

         Under the provisions of the tax sharing agreement related to the
Reorganization, for financial statement purposes, at such time as Cybear
achieves profitability, or is otherwise able to recognize its tax benefits under
accounting principles generally accepted in the United States, if ever, Cybear
will recognize the benefit of its accumulated income tax benefits (which had
previously been utilized by Andrx) in its statement of operations with a
corresponding decrease to Cybear's total group equity (i.e., effectively
accounted for as a non-cash dividend). To the extent Andrx is profitable and is
able to utilize such tax benefit and Cybear is generating losses, it is expected
that Andrx's effective tax rate will be less than the statutory federal and
state rate. If Cybear is ever able to attain profitability or is otherwise able
to recognize its tax benefits, Andrx's effective tax rate may be greater than
the statutory federal and state income tax rate to the extent of Cybear's then
unreimbursed accumulated tax benefits that can be realized (Andrx will then
reverse the tax benefits previously recorded, i.e., effectively transferring
such tax benefits to Cybear in the form of a non-cash equity transaction).

         In October 2000, Andrx Corporation and Cybear signed a supplement to
the tax sharing agreement, whereby Cybear will be reimbursed by Andrx
Corporation for specific tax benefits utilized by Andrx Corporation in
connection with an election Cybear made on its 1999 and 2000 separate federal
corporate tax returns to amortize certain product development expenses over a
period of ten years. Such reimbursements from the Company are accounted for by
Cybear as a capital contribution from Andrx. As a result of this supplement to
the tax sharing agreement, Cybear may be reimbursed by Andrx for the after-tax
effect of amortizing approximately $6 million of such expenses over ten years.

         Through the completion of its public offering in June 1999, Cybear's
results of operations for tax purposes were included in the consolidated income
tax return of Andrx, since Andrx owned at least 80% of the common stock of
Cybear. Cybear and Andrx had a tax allocation agreement pursuant to which
federal income tax liabilities or benefits were allocated to Cybear on a pro
rata basis as if Cybear had filed a separate income tax return when Cybear's
taxable results are included in the consolidated income tax return of Andrx.
Upon completion of the public offering on June 23, 1999, Andrx's ownership in
Cybear was reduced below 80%. Consequently, thereafter Cybear filed its income
tax returns separately, until September 7, 2000 (the effective date of the
Reorganization). Upon the effective date of Reorganization, Cybear's results of
operations, for tax purposes, will be included in the consolidated income tax
return of Andrx Corporation, as Andrx Corporation owns 100% of Cybear. In
connection with the Reorganization, Andrx Corporation changed its method of
accounting for allocating income taxes to Andrx and Cybear from the pro rata to
the separate return method.


                                      89
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

         As of December 31, 2001, Cybear had $1.2 million in cash and cash
equivalents, a $3.0 million deficiency in working capital and owed Andrx $2.0
million on a $12.0 million line of credit.

OPERATING ACTIVITIES

         Net cash used in operating activities was $14.2 million for 2001, $13.8
million for 2000 and $13.3 million in 1999.

         Net cash used in operating activities in 2001 of $14.2 million was due
to Cybear generating a net loss of $35.3 million, a decrease in accounts payable
and accrued liabilities of $3.0 million and an increase in accounts receivable
of $434,000; offset by decreases in prepaid and other assets of $1.4 million. In
addition 2001, also includes depreciation and amortization of $7.7 million, and
non-cash charges of $14.8 million.

         Net cash used in operating activities of $13.8 million in 2000 is due
to a net loss of $23.3 million, an increase in accounts receivable of $846,000
and a decrease in accounts payable of $637,000 offset by a $4.9 million decrease
in prepaid and other assets. In addition 2000, also includes depreciation and
amortization of $4.0 million, a non-cash net charge related to the AHT
Corporation note receivable of $2.0 million.

         Net cash used in operating activities in 1999 of $13.3 million is due
to a net loss of $10.8 million and a $5.9 million increase in prepaid and other
assets, offset by a $1.5 million increase in accounts payable and accrued
liabilities. In addition, 1999 also includes depreciation and amortization of
$1.6 million.

INVESTING ACTIVITIES

         Net cash provided by investing activities was $8.7 million in 2001 and
$6.3 million in 2000; net cash used in investing activities was $31.1 million in
1999.

         Net cash provided by investing activities for 2001, was due to the
maturities of investments available-for-sale of $12.2 million, offset by the
purchase of Mediconsult for $3.2 million and purchases of equipment of $307,000.

         In 2000, Cybear received $14.0 million from maturities of investments
available-for-sale, net. Additionally, during 2000, Cybear used $3.9 million
related to a note receivable and investment in AHT Corporation and purchased
$3.8 million in equipment.

         In 1999, Cybear purchased $26.2 million of investments
available-for-sale, net, used $1.2 million for the acquisition of Telegraph
Consulting Corporation ("TCC "), and purchased $3.8 million of property and
equipment.

FINANCING ACTIVITIES

         Net cash provided by financing activities was $2.3 million for 2001,
$26,000 for 2000 and $56.3 million in 1999.

         Net cash provided by financing activities in 2001 was due to Cybear
exercising the right to draw down the Andrx line of credit by $2.0 million.

         In 2000, net cash provided by financing activities of $26,000 consisted
of capital transactions of Cybear.

         In 1999, net cash provided by financing activities consisted primarily
of $50.8 million in net proceeds generated from the public offering of 3,450,000
shares of common stock of Cybear and $5.2 million of advances from Andrx to fund
Cybear's operations, net of the reimbursement from Andrx for the utilization of
Cybear's income tax attributes pursuant to the tax allocation agreement prior to
the Reorganization.


                                      90
<PAGE>

         Cybear has incurred net operating losses and negative cash flows from
operating activities since its inception. Cybear expects to continue to incur
significant expenses in product development, network operations and customer
support. As a result, Cybear expects to continue to incur substantial operating
losses for the foreseeable future, and may never achieve or sustain
profitability.

         In 2001, Andrx furnished Cybear with a $12.0 million line of credit.
Drawings are subject to covenants, bear interest at a rate equal to prime plus
1% or Andrx's cost of borrowing, depending on whether Andrx is borrowing from a
third party, and shall be payable upon the expiration of the line of credit on
March 31, 2004. As of December 31, 2001, $2.0 million has been drawn against
this line of credit.

         Cybear believes that its existing capital resources will be sufficient
to enable it to meet its anticipated working capital and capital expenditure
requirements for at least the next 12 months. Cybear expects negative cash flows
and net losses to continue for the foreseeable future. Whether or not the
business plan is modified, Cybear may need to raise additional capital through
public or private debt or equity financing or through funding from Andrx.
Additionally, funding, whether obtained through public or private debt may not
be available on terms favorable to Cybear, if at all.



                                      91
<PAGE>
ITEM 7A.          QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

                  Not applicable

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ANDRX CORPORATION AND SUBSIDIARIES

Report of Independent Certified Public Accountants                 93

Consolidated Balance Sheets as of December 31, 2001 and 2000       94

Consolidated Statements of Income for the years
   ended December 31, 2001, 2000 and 1999                          95

Consolidated Statements of Stockholders' Equity for the years
   ended December 31, 2001, 2000 and 1999                          96

Consolidated Statements of Cash Flows for the years
   ended December 31, 2001, 2000 and 1999                          97-98

Notes to Consolidated Financial Statements                         99-154




                                       92
<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To Andrx Corporation:

         We have audited the accompanying consolidated balance sheets of Andrx
Corporation (a Delaware corporation) and subsidiaries as of December 31, 2001
and 2000, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 2001. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Andrx Corporation
and subsidiaries as of December 31, 2001 and 2000, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2001, in conformity with accounting principles generally accepted
in the United States.

         As discussed in Note 11 to the consolidated financial statements,
effective September 7, 2000, in connection with the Reorganization, Andrx
Corporation changed its method of allocating income taxes within the
consolidated group from the pro rata method to the separate return method.

ARTHUR ANDERSEN LLP

Fort Lauderdale, Florida,
  February 20, 2002 (except with respect to
  the matters discussed in Notes 17 and 21
  as to which the date is March 28, 2002).


                                      93


<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
             (in thousands, except for share and per share amounts)


<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,
                                                                                       ----------------------------
                                                                                         2001                2000
                                                                                       ----------        ----------
<S>                                                                                    <C>               <C>
ASSETS
Current assets
   Cash and cash equivalents                                                           $   62,311        $  115,609
   Investments available-for-sale, at market value                                        183,113           221,200
   Accounts receivable, net of allowances of $7,663 in 2001 and $7,077 in 2000            129,900            92,960
   Inventories                                                                            161,691           101,219
   Deferred income tax assets, net                                                         30,745            20,428
   Prepaid and other current assets                                                        15,313            10,603
                                                                                       ----------        ----------
          Total current assets                                                            583,073           562,019
Property, plant and equipment, net                                                        139,898            77,773
Goodwill, net                                                                              32,669            22,290
Other intangible assets, net                                                               28,305               875
Other assets                                                                                5,269             6,459
                                                                                       ----------        ----------
          Total assets                                                                 $  789,214        $  669,416
                                                                                       ==========        ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
   Accounts payable                                                                    $   68,861        $   70,501
   Accrued and other liabilities                                                           67,377            37,658
                                                                                       ----------        ----------
          Total current liabilities                                                       136,238           108,159
Other liabilities                                                                           5,082             1,460
                                                                                       ----------        ----------
          Total liabilities                                                               141,320           109,619
                                                                                       ----------        ----------

Commitments and contingencies (Notes 3, 12, 17 and 21)

Stockholders' equity
   Convertible preferred stock; $0.001 par value, 1,000,000 shares
         authorized; none issued and outstanding                                               --                --
   Common stocks:
         Andrx Group common stock; $0.001 par value, 100,000,000 shares
         authorized; issued and outstanding 70,483,600 shares in 2001 and
         69,311,200 shares in 2000                                                             70                69
         Cybear Group common stock; $0.001 par value, 12,500,000
         shares authorized; issued and outstanding 6,743,000 shares in 2001 and
         3,801,000 shares in 2000                                                               7                 4
   Additional paid-in-capital                                                             471,035           420,685
   Retained earnings                                                                      176,381           138,835
   Accumulated other comprehensive income, net of income taxes                                401               204
                                                                                       ----------        ----------
          Total stockholders' equity                                                      647,894           559,797
                                                                                       ----------        ----------

          Total liabilities and stockholders' equity                                   $  789,214        $  669,416
                                                                                       ==========        ==========
</TABLE>



           The accompanying notes to consolidated financial statements
           are an integral part of these consolidated balance sheets.


                                      94


<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
             (in thousands, except for share and per share amounts)


<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER 31,
                                                      --------------------------------------------------
                                                          2001               2000               1999
                                                      ------------       ------------       ------------
<S>                                                   <C>                <C>                <C>
Revenues
     Distributed products                             $    495,241       $    329,110       $    262,402
     Andrx products                                        229,003            175,428            134,796
     Stipulation fees                                           --                 --             70,733
     Other                                                  24,797             15,422              8,059
                                                      ------------       ------------       ------------
Total revenues                                             749,041            519,960            475,990
                                                      ------------       ------------       ------------

Operating expenses
     Cost of goods sold                                    479,595            301,475            235,346
     Selling, general and administrative                   119,221             61,901             55,266
     Research and development                               52,846             45,467             25,327
     Cybear Internet operating expenses                     26,100             20,609             14,744
     Cybear other charges                                   14,759              5,224                 --
     Reorganization costs                                       --              2,098                 --
                                                      ------------       ------------       ------------
Total operating expenses                                   692,521            436,774            330,683
                                                      ------------       ------------       ------------

Income from operations                                      56,520             83,186            145,307

Other income (expense)
     Equity in earnings (losses) of joint ventures           1,025             (1,202)              (370)
     Interest income                                        11,386             13,039              3,603
     Interest expense                                           --               (767)            (1,661)
     Minority interest in Cybear                                --              4,146              1,937
     Gain on sale of Cybear shares                              --                 --                643
                                                      ------------       ------------       ------------
Income before income taxes                                  68,931             98,402            149,459
Income taxes                                                31,385             39,870             55,405
                                                      ------------       ------------       ------------

Net income                                            $     37,546       $     58,532       $     94,054
                                                      ============       ============       ============

EARNINGS (LOSS) PER SHARE (Note 2)

ANDRX GROUP COMMON STOCK:

Net income allocated to Andrx Group
  (including Cybear through September 6, 2000)        $     72,862       $     66,873       $     94,054
                                                      ============       ============       ============

Net income per share of Andrx Group common stock
     Basic                                            $       1.04       $       0.99       $       1.52
                                                      ============       ============       ============
     Diluted                                          $       1.01       $       0.95       $       1.45
                                                      ============       ============       ============

Weighted average shares of Andrx Group common
  stock  outstanding
     Basic                                              69,998,000         67,756,000         61,980,000
                                                      ============       ============       ============
     Diluted                                            72,243,000         70,456,000         64,953,000
                                                      ============       ============       ============

CYBEAR GROUP COMMON STOCK:

Net loss allocated to Cybear Group
  (subsequent to September 6, 2000)                   $    (35,316)      $     (8,341)
                                                      ============       ============

Basic and diluted net loss per share of Cybear
  Group common stock                                  $      (6.09)      $      (2.19)
                                                      ============       ============

Basic and diluted weighted average shares of
  Cybear Group common stock outstanding                  5,802,000          3,801,000
                                                      ============       ============
</TABLE>



                The accompanying notes to consolidated financial
       statements are an integral part of these consolidated statements.


                                      95


<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                    (in thousands, except for share amounts)



<TABLE>
<CAPTION>
                                                          Common Stocks
                                           -----------------------------------------
                                                Andrx Group          Cybear Group      Additional
                                           --------------------   ------------------    Paid-In
                                              Shares     Amount    Shares     Amount    Capital
                                           -----------   ------   ---------   ------   ----------
<S>                                        <C>          <C>      <C>         <C>      <C>
Balance, December 31, 1998                  60,693,600   $   61          --   $   --   $   86,274

Shares of Andrx common stock issued
  in connection with exercises of
  warrants and stock options                 2,279,400        2          --       --        6,681

Income tax benefits related to exercises
  of Andrx stock options                            --       --          --       --        9,368

Andrx options granted to consultants                --       --          --       --           10

Capital transactions of Cybear                      --       --          --       --       38,367

Unrealized loss on investments
  available-for-sale, net of income
  taxes of $13                                      --       --          --       --           --

Net income                                          --       --          --       --           --

Comprehensive income
                                           -----------   ------   ---------   ------   ----------
Balance, December 31, 1999                  62,973,000       63          --       --      140,700

Shares of Andrx common stock issued
  in connection with equity offering         5,185,100        5          --       --      235,814

Shares of Andrx common stock issued
  in connection with exercises
  of stock options                           1,153,100        1          --       --        6,958

Shares of Cybear Stock issued in
  connection with the Reorganization                --       --   3,801,000        4       17,359

Income tax benefits related to exercises
  of Andrx stock options                            --       --          --       --       19,870

Capital transactions of Cybear                      --       --          --       --          (16)

Unrealized gain on investments
  available-for-sale, net of income
  taxes of $115                                     --       --          --       --           --

Net income                                          --       --          --       --           --

Comprehensive income
                                           -----------   ------   ---------   ------   ----------
Balance, December 31, 2000                  69,311,200       69   3,801,000        4      420,685

Shares of Andrx common stock issued in
  connection with CTEX Pharmaceuticals,
  Inc. acquisition                             291,400       --          --       --       18,166

Shares of Andrx common stock issued
  in connection with exercises
  of stock options                             881,000        1          --       --        9,059

Shares of Cybear common stock issued in
  connection with Mediconsult.com, Inc.
  acquisition                                       --       --   2,942,000        3        4,762

Income tax benefits related to exercises
  of Andrx stock options                            --       --          --       --       18,363

Unrealized gain on investments
  available-for-sale, net of income
  taxes of $ 225                                    --       --          --       --           --

Net income                                          --       --          --       --           --

Comprehensive income
                                           -----------   ------   ---------   ------   ----------
Balance, December 31, 2001                  70,483,600   $   70   6,743,000   $    7   $  471,035
                                           ===========   ======   =========   ======   ==========

<CAPTION>

                                             Retained       Accumulated
                                             Earnings          Other
                                           (Accumulated    Comprehensive    Comprehensive
                                              Deficit)     Income (Loss)        Income
                                           ------------    -------------    -------------
<S>                                        <C>             <C>              <C>
Balance, December 31, 1998                 $     (13,751)  $          (1)

Shares of Andrx common stock issued
  in connection with exercises of
  warrants and stock options                         --               --

Income tax benefits related to exercises
  of Andrx stock options                             --               --

Andrx options granted to consultants                 --               --

Capital transactions of Cybear                       --               --

Unrealized loss on investments
  available-for-sale, net of income
  taxes of $13                                       --              (93)   $         (93)

Net income                                       94,054               --           94,054
                                                                            -------------
Comprehensive income                                                        $      93,961
                                           ------------    -------------    =============

Balance, December 31, 1999                       80,303              (94)







Shares of Andrx common stock issued
  in connection with equity offering                 --               --

Shares of Andrx common stock issued
  in connection with exercises
  of stock options                                   --               --

Shares of Cybear Stock issued in
  connection with the Reorganization                 --               --

Income tax benefits related to exercises
  of Andrx stock options                             --               --

Capital transactions of Cybear                       --               --

Unrealized gain on investments
  available-for-sale, net of income
  taxes of $115                                      --              298    $         298

Net income                                       58,532               --           58,532
                                                                            -------------
Comprehensive income                                                        $      58,830
                                           ------------    -------------    =============
Balance, December 31, 2000                      138,835              204

Shares of Andrx common stock issued in
  connection with CTEX Pharmaceuticals,
  Inc. acquisition                                   --               --

Shares of Andrx common stock issued
  in connection with exercises
  of stock options                                   --               --

Shares of Cybear common stock issued in
  connection with Mediconsult.com, Inc.
  acquisition                                        --               --

Income tax benefits related to exercises
  of Andrx stock options                             --               --

Unrealized gain on investments
  available-for-sale, net of income
  taxes of $ 225                                     --              197    $         197

Net income                                       37,546               --           37,546
                                                                            -------------
Comprehensive income                                                        $      37,743
                                           ------------    -------------    =============
Balance, December 31, 2001                 $    176,381    $         401
                                           ============    =============
</TABLE>


                The accompanying notes to consolidated financial
       statements are an integral part of these consolidated statements.


                                      96


<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                                            YEARS ENDED DECEMBER 31,
                                                                              --------------------------------------------------
                                                                                  2001               2000               1999
                                                                              ------------       ------------       ------------
<S>                                                                           <C>                <C>                <C>
Cash flows from operating activities
    Net income                                                                $     37,546       $     58,532       $     94,054
    Adjustments to reconcile net income to net cash
       provided by operating activities:
          Depreciation and amortization                                             22,039              9,570              4,516
          Provision for doubtful accounts                                            1,357                651              3,897
          Cybear other non-cash charges                                             14,759                 --                 --
          Minority interest in Cybear                                                   --             (4,146)            (1,937)
          Gain on sale of Cybear shares                                                 --                 --               (643)
          Undistributed equity in (earnings) losses of joint ventures               (1,025)             1,202                370
          Non-cash net charge related to AHT Corporation
              note receivable                                                           --              2,000                 --
          Deferred income tax benefit                                               (7,996)            (3,818)           (18,442)
          Income tax benefits on exercises of stock options (Note 2)                18,363             19,870              9,368
          Changes in operating assets and liabilities:
              Accounts receivable                                                  (34,973)           (15,944)           (42,062)
              Inventories                                                          (41,045)           (18,286)           (36,434)
              Prepaid and other assets                                               3,861              3,231            (22,032)
              Accounts payable and accrued and other liabilities                    14,749              4,100             58,544
                                                                              ------------       ------------       ------------
         Net cash provided by operating activities                                  27,635             56,962             49,199
                                                                              ------------       ------------       ------------

Cash flows from investing activities
    Purchases of property, plant and equipment                                     (75,089)           (44,540)           (22,233)
    Maturities (purchases) of investments available-for-sale, net                   38,283           (130,038)           (85,323)
    Acquisition of CTEX Pharmaceuticals, Inc., net of cash acquired                (11,135)                --                 --
    Loans to former CTEX Pharmaceuticals, Inc. shareholders                         (3,697)                --                 --
    Acquisition of certain assets of Armstrong Pharmaceuticals                     (18,218)                --                 --
    Acquisition of Entex brand product line                                        (14,795)                --                 --
    Acquisition of marketing rights of the Anexsia brand product line               (2,100)                --                 --
    Acquisition of and advances to Mediconsult.com, Inc.                            (3,242)                --                 --
    Acquisition of certain assets of Valmed Pharmaceuticals, Inc.,
       net of cash acquired                                                             --            (15,195)                --
    Cash flows relating to AHT Corporation note receivable and
       investment                                                                       --             (3,875)                --
    Costs associated with the purchase of Cybear minority interest
       in connection with the Reorganization                                            --             (2,838)                --
    Acquisition of Telegraph Consulting Corporation                                     --                 --             (1,181)
                                                                              ------------       ------------       ------------
         Net cash used in investing activities                                     (89,993)          (196,486)          (108,737)
                                                                              ------------       ------------       ------------

Cash flows from financing activities
    Net proceeds from Andrx public share offering                                       --            235,819                 --
    Proceeds from issuance of shares of Andrx common stock and
      exercises of warrants and stock options                                        9,060              6,959              6,683
    Net borrowings (repayments) under bank loan                                         --            (20,226)            16,119
    Net proceeds from Cybear's public share offering                                    --                 --             50,778
    Other capital transactions of Cybear                                                --                 26                379
    Proceeds from sale of Cybear shares                                                 --                 --                675
                                                                              ------------       ------------       ------------
         Net cash provided by financing activities                                   9,060            222,578             74,634
                                                                              ------------       ------------       ------------

Net increase (decrease) in cash and cash equivalents                               (53,298)            83,054             15,096
Cash and cash equivalents, beginning of year                                       115,609             32,555             17,459
                                                                              ------------       ------------       ------------
Cash and cash equivalents, end of year                                        $     62,311       $    115,609       $     32,555
                                                                              ============       ============       ============
</TABLE>


                                   (Continued)


                                      97


<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                                   YEARS ENDED DECEMBER 31,
                                                                              -----------------------------------
                                                                                2001          2000         1999
                                                                              ---------     --------     --------
<S>                                                                           <C>           <C>          <C>
Supplemental disclosure of cash paid during the year for:

    Interest                                                                  $       -     $    767     $  1,661
                                                                              =========     ========     ========
    Income taxes                                                              $   9,499     $ 32,440     $ 48,790
                                                                              =========     ========     ========

Supplemental disclosure of non-cash investing activities:

Acquisition of CTEX Pharmaceuticals, Inc.
    Market value of Andrx common stock issued                                 $  18,166
                                                                              =========
    Fair value of net liabilities assumed                                     $     537
                                                                              =========
Acquisition of Mediconsult.com, Inc.
    Market value of Cybear common stock issued                                $   4,765
                                                                              =========
    Fair value of net liabilities assumed                                     $   5,295
                                                                              =========

Market value of Cybear Group common stock issued in connection with the
    Reorganization                                                                          $ 17,363
Less book value of Cybear minority interest at acquisition date                               (9,757)
                                                                                            --------
Goodwill resulting from purchase of Cybear minority interest                                $  7,606
                                                                                            ========


Acquisition of certain assets of Valmed Pharmaceuticals, Inc.
      Fair value of net assets acquired                                                     $  6,487
                                                                                            ========
</TABLE>


                The accompanying notes to consolidated financial
       statements are an integral part of these consolidated statements.


                                      98


<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


(1)      GENERAL

         On September 7, 2000, Andrx Corporation completed a Plan of Merger and
Reorganization (the "Reorganization") whereby it acquired the outstanding equity
of its Cybear Inc. subsidiary that it did not own, reincorporated in Delaware
and created two new classes of common stock:

         -        Andrx Group Common Stock ("Andrx common stock"), to track the
                  performance of Andrx Group ("Andrx Group" or "Andrx"), which
                  includes Andrx Corporation and its subsidiaries, other than
                  its ownership of Cybear Group ("Cybear Group").

         -        Cybear Group Common Stock ("Cybear common stock" or "Cybear"),
                  to track the performance of Cybear Group.

         Cybear Group currently includes (i) Cybear Inc. and its subsidiaries,
(ii) certain potential future Internet businesses of Andrx Corporation, (iii)
effective November 22, 2000, certain operating assets of AHT Corporation
("AHT"), and (iv) effective April 2, 2001, Mediconsult.com, Inc. and its
subsidiaries ("Mediconsult").

         Cybear stockholders other than Andrx, exchanged each share of Cybear
Inc. common stock (pre-Reorganization) held for one share of Cybear common
stock (see Note 21).

         Throughout the notes to consolidated financial statements, the words
"Andrx Corporation" or the "Company" refer to Andrx Corporation and all of its
subsidiaries. "Management" and "board of directors" refer to the management and
board of directors of Andrx Corporation. "Andrx" refers to Andrx Corporation and
all of its subsidiaries other than Cybear prior to the Reorganization, and to
Andrx Group following the Reorganization. "Cybear" refers to Cybear Inc. and its
subsidiaries prior to the Reorganization and to Cybear Group following the
Reorganization.

         Andrx Corporation was organized in August 1992 and commenced
distributing generic pharmaceutical products manufactured by third parties. In
February 1993, the Company began to engage in the research and development of
bioequivalent controlled-release pharmaceutical products and proprietary drug
delivery technologies. During 1996, the Company commenced its research efforts
to develop brand name controlled-release products, and an Internet-based
application for healthcare providers. During 1999, the Company expanded its
research and development efforts to include bioequivalent versions of specialty,
niche or immediate release pharmaceutical products. Through October 9, 1997, the
Company's distribution operations had generated substantially all of its
revenues. On October 10, 1997, the United States Food and Drug Administration
("FDA") granted final approval of the Company's abbreviated new drug application
("ANDA"), for a bioequivalent version of Dilacor XR, the Company's first
manufactured product, which it immediately launched as Diltia XT.

         In September 1997, Andrx entered into a Stipulation and Agreement (the
"Stipulation") with Hoechst Marion Roussel, Inc. (now known as Aventis S.A.) and
Carderm Capital, L.P. (collectively, "Aventis") in partial settlement of a
patent infringement claim brought against Andrx by Aventis (the "Aventis
Litigation") in order to reduce the risks that both parties faced as the case
was litigated to its conclusion. Andrx agreed to maintain the status quo in
connection with the marketing of its product and to dismiss certain claims
against Aventis. Aventis agreed to compensate Andrx for its lost profits,
stipulated to be $100,000 per year, if Andrx ultimately prevailed in the Aventis
Litigation and to grant Andrx a license for its patents under certain
conditions, including if Andrx ultimately lost the litigation. Aventis also
agreed to make non-refundable interim quarterly payments of $10,000 to Andrx,
beginning upon Andrx's receipt of final FDA approval for its bioequivalent
version of Cardizem CD and continuing until the Aventis Litigation was resolved
or certain other events occurred. In July 1998, the FDA granted final marketing
approval for the Company's ANDA for a bioequivalent version of Cardizem CD. In
June 1999, the Aventis Litigation was resolved and on June 23, 1999, Andrx
launched its reformulated bioequivalent version of Cardizem CD, Cartia XT, which
enjoyed a 180-day period of marketing exclusivity through December 19, 1999. For
the year ended December 31, 1999, Andrx earned $70,733 in interim and final
Stipulation fees.


                                      99

<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         On November 20, 1998, Cybear, the Company's subsidiary engaged in the
development of Internet applications, merged with a wholly-owned subsidiary of
1997 Corp., a Delaware corporation, pursuant to a Merger Agreement and Plan of
Reorganization dated July 15, 1998. 1997 Corp. was a "blank check" company that
had a registration statement on file with the Securities and Exchange Commission
("SEC") to seek a business combination with an operating entity. In June 1999,
Cybear completed a public offering of its common shares generating net proceeds
of approximately $50,778. As a result of the public offering, exercises of
Cybear stock options, other Cybear stock issuances, and sales of shares of
Cybear common stock by Andrx, Andrx's ownership in Cybear decreased to
approximately 73% as of December 31, 1999.

         Reorganization Plan

         Pursuant to the Reorganization, Andrx acquired the outstanding equity
of its Cybear subsidiary that it did not own, reincorporated in Delaware and
created two new classes of common stock: Andrx common stock to track the
performance of Andrx Group and Cybear common stock to track the performance of
Cybear Group. Cybear's public stockholders received one share of Cybear common
stock for every Cybear share they owned. In the Reorganization, the number of
Cybear shares held by Andrx was reduced from 3.1 million shares to 2.6 million
shares so as to provide the equivalent of a 20% increase in shares held by the
non-Andrx shareholders of Cybear. As a result, the non-Andrx shareholders of
Cybear owned approximately 34.5% of the Cybear common stock following the close
of the transaction. Pursuant to the Reorganization, each Andrx common share was
converted into (i) one share of Andrx common stock and (ii) .0372 shares of
Cybear common stock. Upon completion of the Reorganization, (i) Cybear became a
wholly-owned subsidiary of Andrx Corporation with 100% of its value publicly
traded in the form of Cybear common stock; (ii) Cybear public stockholders owned
approximately 34.5% of the Cybear common stock; and (iii) Andrx shareholders
owned 100% of the Andrx common stock and approximately 65.5% of the Cybear
common stock.

         In addition, in connection with the Reorganization, Andrx Corporation
changed its method of accounting for allocating income taxes within the
consolidated group from the pro rata method to the separate return method (see
Note 11).

         The Reorganization was intended to (i) reestablish certain tax
consolidation advantages for the Company; (ii) separate the operating losses of
Cybear from the operating results of Andrx for financial reporting purposes;
(iii) improve liquidity for the publicly traded equity of Cybear; (iv) provide
Cybear with a more viable currency for potential future strategic acquisitions;
and (v) preserve financial flexibility for the Company's management to maximize
the long-term growth of stockholder value.

         Holders of Andrx common stock and Cybear common stock have no specific
rights to assets, operating results or cash flows of Andrx or Cybear, as Andrx
Corporation holds title to all its assets and is responsible for all of its
liabilities, operating results and cash flows regardless of how it allocates
assets and liabilities among the classes of common stock and are therefore
subject to the risks of investing in the business, assets and liabilities of
Andrx Corporation as a whole. For instance, the assets allocated to each class
of common stock may be subject to Company-wide claims of creditors and
stockholder litigation. Andrx or Cybear are subject to all the risks and
uncertainties of Andrx Corporation detailed herein or detailed from time to time
in Andrx Corporation's filings with the SEC.

         In connection with the Reorganization, Andrx Corporation purchased the
minority interest of Cybear by issuing Cybear common stock valued at $17,363 and
incurred costs of $2,838 related to the acquisition.



                                       100

<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         Risks and Uncertainties

         Factors which may affect the Company's results include, but are not
limited to, the risks and uncertainties associated with a drug delivery company
which has only commercialized a few products, has new technology and limited
manufacturing experience, current and potential competitors with significant
technical and marketing resources, and dependence on key personnel. The Company
is subject to risks associated with its ability to develop proprietary
technologies necessary for product development activities, adequately protect
its technology and enforce its intellectual property rights. The Company is also
subject to the risks and uncertainties associated with all drug delivery,
bioequivalent and brand pharmaceutical companies, including changes in
regulatory schemes, difficulty in receiving regulatory approval to market new
products, compliance with extensive, costly, complex and evolving government
regulations and restrictions, timeliness of any governmental court or other
regulatory action, including without limitation, the scope, outcome or
timeliness of any inspection or any action of the FDA, and patent infringement,
product liability and other litigation and contingencies.

         Andrx is developing and evaluating various strategies for the sales and
marketing of its brand name pharmaceuticals. These strategies include
establishing its own sales organization and related infrastructure to support
and manage the Company's sales efforts. If the Company's sales efforts are
unsuccessful there would be an adverse effect on Andrx Group's business and
results of operations.

         The bioequivalent pharmaceutical industry is highly competitive and
selling prices are often subject to price declines from existing competitors
entering the market. The Company conducts a significant amount of its
bioequivalent and brand product sales with a limited number of large
pharmaceutical wholesalers and pharmacy warehousing chains. Significant price
declines or the loss of any of these customers would have an adverse effect on
Andrx Group's business and results of operations.

         Additionally, the Company is subject to risks and uncertainties
associated with drug distribution companies, included but not limited to, fierce
competition and decreasing gross profits.

         In addition, Cybear, Andrx's Internet based healthcare information
technology subsidiary, is subject to the risks and uncertainties of an early
stage Internet company, including but not limited to, limited operating history,
substantial operating losses, availability of capital resources, ability to
effectively compete, unanticipated difficulties in product development, ability
to gain market acceptance and market share, ability to manage growth, reliance
on short-term non-exclusive contracts, ability to obtain content, Internet
security risks and uncertainty relating to the evolution of the Internet as a
medium of commerce, dependence on third party content providers, dependence on
key personnel, ability to protect intellectual property and the impact of future
government regulation.

         The Company is also subject to other risks detailed herein or detailed
from time to time in Andrx Corporation's filings with the SEC.

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis of Presentation

         The accompanying consolidated financial statements include the accounts
of Andrx Corporation and its majority owned subsidiaries. All significant
intercompany transactions and balances have been eliminated in consolidation.


                                      101

<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         Andrx Corporation is presenting consolidated financial statements and
related footnotes. Such footnotes include separate supplemental financial
statements relating to the business of Andrx Group and the business of Cybear
Group (see Note 20). Holders of Andrx common stock and Cybear common stock have
no specific rights to assets, operating results or cash flows of Andrx or Cybear
as Andrx Corporation holds title to all its assets and is responsible for all of
its liabilities, operating results and cash flows regardless of how it allocates
assets and liabilities among the classes of common stock and are therefore
subject to the risks of investing in the business, assets and liabilities of
Andrx Corporation as a whole. For instance, the assets allocated to each class
of common stock may be subject to Company-wide claims of creditors and
stockholder litigation.

         After the Reorganization, Andrx Corporation's consolidated financial
statements include consolidated operating results, as well as net income (loss),
basic and diluted earnings (loss) per share, basic and diluted weighted average
shares outstanding for each class of common stock. Accordingly, after the
Reorganization the consolidated financial statements do not reflect consolidated
basic and diluted earnings (loss) per share since there is no underlying equity
security related to consolidated financial results.

         Use of Estimates

         The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

         The most significant estimates made by management include the allowance
for doubtful accounts receivable, allowance for inventories, sales allowances,
useful life or impairment of goodwill and other intangibles assets and deferred
tax asset valuation allowances. Management periodically evaluates estimates used
in the preparation of the consolidated financial statements for continued
reasonableness. Appropriate adjustments, if any, to the estimates used are made
prospectively based on such periodic evaluations.

         Cash and Cash Equivalents

         All highly liquid investments with an original maturity of three months
or less are considered cash equivalents and are carried at cost.

         Investments Available-for-Sale

         The Company utilizes the provisions of Financial Accounting Standards
Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities". SFAS No. 115
requires that marketable equity securities and all debt securities be classified
into three categories: (i) held to maturity securities, (ii) trading securities,
and (iii) available-for-sale securities. The Company classifies its investments
as available-for-sale and, accordingly, such investments are carried at market
value and any unrealized gain or loss, net of income taxes, is reported in
accumulated other comprehensive income (loss) in stockholders' equity. The cost
related to investments available-for-sale is determined utilizing the specific
identification method.


                                      102
<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         Accounts Receivable, Net

         For the years ended December 31, 2001, 2000 and 1999, the Company
recorded a provision for doubtful accounts receivable of $1,357, $651 and
$3,897, respectively. During 2001, $771 of accounts receivable was written off.
The allowance for doubtful accounts receivable was $7,663, $7,077 and $6,426 as
of December 31, 2001, 2000, and 1999, respectively.

         Inventories

         Inventories of pharmaceutical products consist primarily of finished
goods held for distribution, and raw materials, work in process and finished
goods of Andrx bioequivalent and brand products. As of December 31, 2001 the
Company had approximately $33,883 in raw materials, work in process and finished
goods inventories relating to products that have either not been approved by the
FDA or which have not yet been launched. Included in the December 31, 2001
inventory of products not approved by the FDA or launched, was $7,790 relating
to the Company's bioequivalent version of Glucophage which the Company launched
in 2002. Inventories are stated at the lower of cost (first-in, first-out) or
market. Cost of inventories held for distribution is based on purchase price,
net of vendor discounts, rebates and other allowances, but excludes shipping,
warehousing and distribution costs which are expensed when incurred as selling,
general and administrative ("SG&A") expenses in the Consolidated Statements of
Income. In evaluating whether inventory is stated at the lower of cost or
market, management considers such factors as the amount of inventory on hand and
in the distribution channel, estimated time required to sell such inventory,
remaining shelf life and current and expected market conditions, including
levels of competition. As appropriate, provisions are made to reduce inventories
to their net realizable value.

         Property, Plant and Equipment, Net

         Property, plant and equipment are recorded at cost, less accumulated
depreciation or amortization. Depreciation or amortization is provided using the
straight-line method over the following estimated useful lives:

         Buildings                                        20-40 years
         Manufacturing equipment                          10 years
         Laboratory equipment                             5 years
         Leasehold improvements                           Term of lease
         Computer hardware and software                   3 years
         Furniture and fixtures                           5 years

         Major renewals and betterments are capitalized, while maintenance,
repairs and minor renewals are expensed as incurred.

         Goodwill, Net

         Under the purchase method of accounting for acquisitions, goodwill
represents the excess of purchase price over the fair value of the net assets
acquired. Goodwill is capitalized and through December 31, 2001 amortized on a
straight-line basis over the estimated useful life of the business acquired,
ranging from five to fifteen years. As of December 31, 2001 and 2000, the
Company has $36,344 and $24,255, respectively, of goodwill, and accumulated
amortization of $3,675 and $1,965, respectively. Goodwill amortization expense
was $4,967, $1,850 and $115 for the years ended December 31, 2001, 2000 and
1999, respectively. Effective with the adoption of SFAS No. 142, "Goodwill and
Other Intangible Assets", on January 1, 2002, goodwill and certain other
intangible assets will no longer be subject to amortization. Instead, goodwill
will be subject to an annual assessment for impairment in value by applying a
fair-value based test.


                                      103


<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         The Company measures impairment of goodwill using the undiscounted cash
flow method whenever events and circumstances warrant revised estimates of
useful lives or recognition of an impairment of goodwill. The undiscounted cash
flow method compares the net book value being tested to the estimated aggregate
undiscounted cash flows. If the net book value exceeds the estimated aggregate
undiscounted cash flows, the excess carrying amount of goodwill is written off.
Beginning in 2002, in connection with the adoption of SFAS No. 142, goodwill
will be subject to at least an annual assessment for impairment in value by
applying a fair-value based test.

         Other Intangible Assets, Net

         Other intangible assets consist of brand product rights purchased from
other pharmaceutical companies or acquired through the allocation of purchase
price upon the acquisition of another entity, which are being amortized over
periods ranging from three to ten years. Other intangible assets also consist of
Cybear's physician network and trademarks, and patents relating to Cybear's
electronic prescription process, which are being amortized over periods ranging
from five to fourteen years. As of December 31, 2001 and 2000, the Company had
$31,596 and $1,135 of intangible assets, and accumulated amortization of $3,291
and $260, respectively, included in Other intangible assets, net in the
Consolidated Balance Sheets. Amortization expense was $3,543, $162 and $98, for
the years ended December 31, 2001, 2000 and 1999, respectively. Amortization is
provided using the straight-line method over the estimated useful life.

         Other Liabilities

         Other liabilities include $3,428 and $1,460 as of December 31, 2001 and
2000, respectively, related to a deferred income tax liability resulting from
tax depreciation in excess of book depreciation. Additionally, as of December
31, 2001, other liabilities include $1,654 in deferred revenue pertaining
primarily to the deferred recognition of revenues by Cybear from the licensing
of electronic prescription processing patents.

         Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of

         The Company utilizes the provision of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of,"
which requires that long-lived assets be reviewed for impairment whenever events
or changes in circumstance indicate that the carrying amount of an asset may not
be recoverable. The Company periodically evaluates whether events and
circumstances have occurred that may warrant revision of the estimated useful
life of its long-lived assets or whether the remaining balance of long-lived
assets should be evaluated for possible impairment. The Company uses an estimate
of the related undiscounted cash flows over the remaining life of the long-lived
assets to determine whether an impairment has occurred. Fair value is compared
to cost in calculating the amount of the impairment.

         Revenue Recognition

         Sales of distributed and Andrx bioequivalent and brand products and the
related cost of goods sold are recognized at the time a product is received by
the customer. Based on currently available information, sales allowances for
chargebacks, discounts, rebates, returns, pricing adjustments, shelf stock
adjustments and other allowances or adjustments related to sales to customers
are provided in the same period the related sales are recorded.

         Distributed product sales include Cybearclub LC Internet and
telemarketing product sales related to Cybearclub, a joint venture between
Cybear Group and Andrx Group to distribute healthcare products to physicians'
offices through the Internet (see Note 20).


                                      104

<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         In the pharmaceutical industry, the practice is generally to grant
customers the right to return or exchange purchased goods. In the generic
pharmaceutical industry, this practice has resulted in generic manufacturers
issuing inventory credits (also known as shelf-stock adjustments) to customers
based on the customers' existing inventory following decreases in the market
price of the related generic pharmaceutical product. Due to the competitive
nature of the generic pharmaceutical industry, prices to customers are subject
to frequent and significant price declines from existing and new competitors.
The determination to grant a credit to a customer following a price decrease is
generally at the discretion of the Company, and generally not pursuant to
contractual arrangements with customers.

         Provisions for estimated returns, chargebacks and other sales
allowances are established by the Company concurrently with the recognition of
revenue. The provisions are established based upon consideration of a variety of
factors, including but not limited to, actual return and historical experience
by product type, the number and timing of competitive products approved for
sale, both historical and projected, the market for the product, estimated
customer inventory levels by product and current and projected economic
conditions and levels of competition. Actual product returns, chargebacks and
other sales allowances incurred are, however, dependent upon future events. The
Company continually monitors the factors that influence sales allowances and
makes adjustments to these provisions when management believes that actual
product returns, chargebacks and other sales allowances may differ from
established allowances.

         The Company has entered into long-term supply arrangements with certain
customers related to Andrx bioequivalent products. Prepayments by the Company to
customers related to such arrangements are capitalized in the Consolidated
Balance Sheets as prepaid and other current assets and other assets, as
appropriate, and are amortized in the Consolidated Statements of Income against
Andrx product revenues over the life of the arrangements or when the
relationship ends, as appropriate, utilizing the straight-line basis, which
approximates the pattern according to which the economic benefits are realized.
Such assets are periodically assessed for realizability and any adjustments for
impairment are made as they become known.

         Stipulation fees are recognized when earned in accordance with the
terms of the underlying agreement (see Note 17).

         Other revenues include contract manufacturing revenues generated from
Armstrong, subsequent to the March 30, 2001 acquisition, license fees from
Geneva Pharmaceuticals, Inc., a member of the Novartis Group ("Geneva") and
Cybear's application services and portal services, website development, hosting
and other services, online meeting development services and subscription
services.

         Armstrong's contract manufacturing revenues are recognized on a
completed contract method.

         Licensing fees from Geneva are recognized in accordance with the terms
of the underlying agreements (see Note 4).

         Application services revenue represents the licensing of software
products and maintenance, implementation and training as well as the license and
royalty fees associated with the electronic prescription process patents.
Software licenses are generally sold to customers pursuant to contracts that
range in duration up to five years. For software licenses that are bundled with
services and maintenance that require significant implementation efforts and
provide for payments upon the achievement of implementation milestones, the
Company has generally recognized revenues using the percentage of completion
method. Revenues from other software licenses which are bundled with long-term
maintenance agreements are recognized on a straight-line basis over the
contracted maintenance period. Revenues relating to the licensing of patents are
recognized over the life of the patent.



                                      105

<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         Portal services revenue represents primarily banner and tile
advertising as well as surveys and newsletter advertising. These services are
derived principally from advertising contracts in which Cybear Group typically
guarantees a minimum number of impressions to be delivered to users over a
specified period of time for a fixed fee. Revenue is recognized in the period in
which the advertisement is displayed based on the ratio of impressions delivered
over the total guaranteed impressions or on a straight-line basis over the term
of the contract, provided no significant obligations remain. To the extent the
minimum number of impressions is not achieved, recognition of the corresponding
revenue is deferred until the guaranteed impressions are delivered. Survey and
newsletter advertising revenue is recognized upon completion of the related
service.

         Website development, hosting, other services and online development
services are generally recognized when the services are performed.

         Subscription services revenue is recognized ratably over the
subscription period.

         In December 1999, the SEC issued Staff Accounting Bulletin No. 101,
("SAB 101") "Revenue Recognition", which summarizes certain of the staff's views
in applying accounting principles generally accepted in the United States to
revenue recognition in financial statements. The effective date of SAB 101 for
the Company was the quarter ended December 31, 2000. The Company adopted the
provisions of SAB 101, as required, and such adoption had no effect upon the
consolidated financial statements.

         Research and Development Expenses

         Research and development expenses are expensed as incurred, and consist
of costs related to products being developed internally as well as costs related
to products subject to licensing agreements in both the Company's bioequivalent
(ANDA) and brand name (NDA) programs. In 2001, research and development includes
a $2,000 milestone payment Geneva, in connection with an agreement whereby the
Company reacquired from Geneva the marketing rights for certain Andrx brand
products under development (see Note 4).

         Equity in Earnings (Losses) of Joint Ventures

         The Company is a 50% partner in ANCIRC Pharmaceuticals, Inc.
("ANCIRC"). In addition to Andrx's 50% ownership in ANCIRC, the Company provided
ANCIRC research and development services at cost. Accordingly, research and
development expenses in the Consolidated Statements of Income exclude costs of
research and development services rendered to ANCIRC, as such costs are charged
to ANCIRC as incurred. In November 2000, the ANCIRC joint venture agreement was
amended (see Note 10).

         In August 2000, Andrx Corporation entered into CARAN, a 50/50 joint
venture with Carlsbad Technology, Inc. ("Carlsbad") to develop, manufacture and
sell three bioequivalent products (see Note 10).

         Cybear Internet Operating Expenses

         In the Company's Consolidated Statements of Income, Cybear Internet
operating expenses represents Cybear Group's operating expenses except cost of
goods sold and Cybear other charges. Such Cybear Group operating expenses
include network operations and operations support, product development, selling,
general and administrative and depreciation and amortization, and exclude cost
of goods sold and intergroup eliminations.


                                      106

<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         Stock-Based Compensation

         In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation". Under the provisions of SFAS No. 123, companies can
either measure the compensation cost of equity instruments issued under employee
compensation plans using a fair value based method, or can continue to recognize
compensation cost using the intrinsic value method under the provisions of
Accounting Principles Board Opinion ("APB") No. 25. However, if the provisions
of APB No. 25 are applied, pro forma disclosures of net income or loss and
earnings or loss per share must be presented in the financial statements as if
the fair value method had been applied. For the years ended December 31, 2001,
2000 and 1999, the Company measures compensation costs under the provisions of
APB No. 25, and the Company has provided the expanded pro forma disclosures
required by SFAS No. 123 (see Note 15).

         Issuance of Stock by Subsidiary

         The Company accounted for the issuances of shares of common stock by
Cybear as equity transactions within the Consolidated Statements of
Stockholders' Equity and excluded the results of such transactions from the
Consolidated Statements of Income. The Company does not currently intend to
issue shares of common stock of its other subsidiaries.

         Legal Expenses

         Legal expenses are included in selling, general and administrative and
are expensed as incurred. In 2000 and prior periods, legal expenses reflect
legal costs incurred as well as an estimate of legal costs expected to be
incurred in defending against its patent infringement claims to their
conclusion. In 2001, due to the increased complexity of the Company's patent
infringement litigation, legal costs expected to be incurred to the conclusion
of the patent infringement litigation were not reasonably estimatable. The
effect of the change was not material to the consolidated financial statements
of the Company.

         Income Taxes

         The provisions of SFAS No. 109, "Accounting for Income Taxes", require,
among other things, recognition of future tax benefits measured at enacted rates
attributable to the deductible temporary differences between the financial
statement and income tax bases of assets and liabilities and to benefit net
operating loss carryforwards to the extent that the realization of such benefits
is "more likely than not" (see Note 11). Under the provisions of SFAS No. 109,
deferred tax assets and liabilities are determined based on the difference
between the financial statement and tax bases of assets and liabilities, using
enacted tax rates in effect for the year in which the differences are expected
to reverse.

         Earnings (loss) per share

         The Company utilizes the provisions of SFAS No. 128, "Earnings Per
Share".

         As a result of the Reorganization, Andrx Corporation's operating
results for the year ended December 31, 2001 have been allocated to each class
of common stock. Accordingly, for the year ended December 31, 2001, net income
and basic and diluted net income per share of Andrx common stock excludes Andrx
Corporation's 100% ownership of Cybear Group. For the year ended December 31,
2000, the net income used in computing net income per share of Andrx common
stock is based on the consolidated results of Andrx, including the majority
ownership of Cybear through September 6, 2000 and the net income of Andrx,
excluding Andrx's 100% ownership of Cybear Group from September 7, 2000 to
December 31, 2000. For the year ended December 31, 1999, the net income used in
computing net income per share of Andrx common stock is based on the
consolidated results of Andrx, including the majority ownership of Cybear. The
net loss and weighted average shares outstanding in the computation of net loss
per share of Cybear common stock for the year ended December 31, 2000 are based
on the period from September 7, 2000 (the effective date of issuance of Cybear
common stock) to December 31, 2000 and are adjusted to reflect the July 2001
one-for-four reverse stock split.


                                      107

<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


ANDRX

         The shares used in computing net income per share of Andrx common stock
are based on the weighted average shares of Andrx common stock outstanding for
the years ended December 31, 2001, 2000 and 1999. The diluted basis considers
the weighted average shares of common stock outstanding for Andrx common stock
including common stock equivalents. Anti-dilutive weighted average stock options
to purchase shares of Andrx common stock were excluded in computing diluted
earnings per share because their effects were anti-dilutive for the respective
periods.

         A reconciliation of the denominators of basic and diluted earnings per
share of Andrx common stock for the years ended December 31, 2001, 2000 and 1999
is as follows:


<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                     ------------------------------------------
                                                        2001            2000            1999
                                                     ----------      ----------      ----------
<S>                                                  <C>             <C>             <C>
Basic weighted average shares of common stock
     outstanding                                     69,998,000      67,756,000      61,980,000

     Effect of dilutive items:
         Stock options                                2,245,000       2,700,000       2,356,000
         Warrants                                            --              --         617,000
                                                     ----------      ----------      ----------

Diluted weighted average shares of common stock
     outstanding                                     72,243,000      70,456,000      64,953,000
                                                     ==========      ==========      ==========

Anti-dilutive weighted average stock options            290,000          32,000         118,000
                                                     ==========      ==========      ==========
</TABLE>


                                      108


<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         CYBEAR

         Cybear generated a net loss for the year ended December 31, 2001 and
for the period from September 7, 2000, to December 31, 2000. Accordingly, all
Cybear common stock equivalents were excluded from the Cybear calculation of
diluted shares since the effects were anti-dilutive. As of December 31, 2001 and
2000, there were 318,039 and 393,347 anti-dilutive options outstanding,
respectively.

         The following table reconciles the consolidated net income in the Andrx
Corporation and subsidiaries' consolidated financial statements to the separate
supplemental group financial statements of Andrx and Cybear (see Note 20).



<TABLE>
<CAPTION>
                                                                               YEARS ENDED DECEMBER 31,
                                                                    --------------------------------------------
                                                                       2001             2000             1999
                                                                    ----------       ----------       ----------
<S>                                                                 <C>              <C>              <C>
Andrx Corporation and subsidiaries consolidated net income          $   37,546       $   58,532       $   94,054
                                                                    ----------       ----------       ----------

Cybear net loss included above:
     Subsequent to the Reorganization                                   35,316            8,341               --
     Prior to the Reorganization                                            --           14,974           10,774
                                                                    ----------       ----------       ----------

Add back Cybear net loss                                                35,316           23,315           10,774
Less minority ownership in Cybear net loss
     prior to the Reorganization and other                                  --           (4,146)          (1,937)
Less gain on sale of Cybear shares                                          --               --             (643)
Less intercompany eliminations (primarily interest
     and management fees)                                                   --              (29)            (329)
                                                                    ----------       ----------       ----------

Andrx Group net income (excluding Andrx's ownership of Cybear)      $   72,862       $   77,672       $  101,919
                                                                    ==========       ==========       ==========

Cybear Group net loss                                               $  (35,316)      $  (23,315)      $  (10,774)
                                                                    ==========       ==========       ==========
</TABLE>


         The following table reconciles the consolidated net income in the Andrx
Corporation consolidated financial statements to the net income allocated to
Andrx Group:



<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                       ------------------------------------------
                                                          2001            2000            1999
                                                       ----------      ----------      ----------
<S>                                                    <C>             <C>             <C>
Andrx Corporation consolidated net income              $   37,546      $   58,532      $   94,054

Add back Cybear net loss included above:
      Subsequent to Reorganization                         35,316           8,341              --
                                                       ----------      ----------      ----------

Net income allocated to Andrx Group
     (including Cybear through September 6, 2000)      $   72,862      $   66,873      $   94,054
                                                       ==========      ==========      ==========
</TABLE>



                                      109
<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         Stock Splits

         In May 1999 and March 2000, the Company implemented two-for-one stock
splits of Andrx common stock effected in the form of 100% stock dividends. All
Andrx share and per share amounts included herein give effect to these stock
splits.

         On July 31, 2001, the Company implemented a one-for-four reverse stock
split of Cybear common stock whereby each four shares of existing Cybear common
stock were exchanged for one share of new Cybear common stock. All share and per
share amounts of Cybear common stock included herein give effect to the
one-for-four reverse stock split.

         Fair Value of Financial Instruments

         As of December 31, 2001 and 2000, the carrying amount of cash and cash
equivalents, accounts receivable, net, accounts payable and accrued and other
liabilities approximate fair value due to the short maturity of these
instruments. Investments available-for-sale are carried at fair value.

         Concentration of Credit Risk

         The Company invests in U.S. Treasury and government agency securities,
debt instruments of corporations and tax advantaged money market preferreds with
investment grade credit ratings. The Company has established guidelines relative
to diversification and maturities that are designed to help ensure safety and
liquidity.

         Accounts receivables are principally due from independent pharmacies,
warehousing pharmacy chains, pharmacy buying groups, physician offices and
wholesalers and distributors. Credit is extended based on an evaluation of the
customer's financial condition and collateral is generally not required. The
Company performs ongoing credit evaluations of its customers and maintains
allowances for potential uncollectable accounts.

         The Company conducts a significant amount of its bioequivalent and
brand product sales with a limited number of large pharmaceutical wholesalers
and pharmacy warehousing chains. The loss of any of these customers would have
an adverse effect on Andrx Group's business and results of operations.

         The Company has no off-balance sheet concentration of credit risk.

         Comprehensive Income

         SFAS No. 130, "Reporting Comprehensive Income" establishes standards
for reporting and presentation of comprehensive income or loss and its
components in financial statements. The Company has included the required
disclosure of this pronouncement in the accompanying Consolidated Statements of
Stockholders' Equity for the years ended December 31, 2001, 2000 and 1999, as
required.

         Business Segments

         SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", establishes standards for defining the Company's segments and
disclosing information about them. The provisions of SFAS No. 131 require that
the segments be based on the internal structure and reporting of the Company's
operations (see Note 18).


                                      110

<PAGE>



                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


Recent Accounting Pronouncements

         Classification in the Statement of Cash Flows of the Income Tax Benefit
         Realized by a Company upon Employee Exercise of a Non-Qualified Stock
         Option

         In July 2000, the Emerging Issues Task Force ("EITF") issued EITF
00-15, "Classification in the Statement of Cash Flows of the Income Tax Benefit
Realized by a Company upon Employee Exercise of a Non-qualified Stock Option"
("EITF 00-15"). This issue addresses the presentation in the statement of cash
flows of the income tax benefit related to exercises of non-qualified stock
options. Companies receive an income tax deduction for the difference between
the exercise price and the market price of a non-qualified stock option upon
exercise by the employee. EITF 00-15 concludes that the income tax benefit
realized by a company upon employee exercise should be classified in the
operating section of the statement of cash flows. The pronouncement is effective
for all quarters ending after July 20, 2000. The Company adopted EITF 00-15 in
2000 and, accordingly, has classified its 2001 and 2000 income tax benefits
related to exercises of stock options of $18,363 and $19,870 as an operating
activity in the Consolidated Statements of Cash Flows and in 2000 reclassified
$9,368 relating to 1999 from financing activities to operating activities to
conform with this presentation.

         Derivatives

         As of January 1, 2001, the Company adopted the provisions of SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities", as amended.
Adoption of the provisions of this pronouncement had no effect on the Company's
consolidated financial statements since the Company does not have any derivative
financial instruments or hedging activities.

         Business Combinations

         In June 2001, the FASB issued SFAS No. 141, "Business Combinations".
This pronouncement addresses financial accounting and reporting for business
combinations and supercedes Accounting Principles Board Opinion ("APB") No. 16,
"Business Combinations" and SFAS No. 38, "Accounting for Preacquisition
Contingencies of Purchased Enterprises". All business combinations within the
scope of SFAS No. 141 are to be accounted for under the purchase method. SFAS
No. 141 is effective for business combinations occurring after June 30, 2001.
The Company adopted the provisions of SFAS No.141 as of the effective date.
Adoption of the provisions of this pronouncement had no impact on the
consolidated financial statements of the Company.

         Goodwill and Other Intangible Assets

         In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets". This pronouncement addresses financial accounting and
reporting for intangible assets acquired individually or with a group of other
assets (but not those acquired in a business combination). SFAS No. 142 also
addresses financial accounting and reporting for goodwill and other intangible
assets subsequent to their acquisition. With the adoption of SFAS No. 142,
goodwill and certain other intangible assets are no longer subject to
amortization. Instead, goodwill will be subject to at least an annual assessment
for impairment in value by applying a fair value based test. Any applicable
impairment loss is the amount, if any, by which the implied fair value of
goodwill is less than the carrying or book value. SFAS No. 142 is effective for
fiscal years beginning after December 15, 2001. An impairment loss for goodwill
arising from the initial application of SFAS No. 142 is to be reported as a
cumulative effect of a change in accounting principle. The Company will adopt
the provisions of SFAS No. 142, as appropriate. The Company estimates that it
will no longer be recording approximately $3,200 in annual goodwill amortization
in future periods. The Company is in the process of evaluating if there is any
impairment in value of its goodwill and will not be able to determine the
ultimate impact of this pronouncement until such time the Company fully applies
its provisions which the Company does not believe will have a material impact on
its consolidated financial statements.


                                      111

<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         Asset Retirement Obligations

         In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations". This pronouncement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. SFAS No. 143 is effective for
financial statements issued for fiscal years beginning after June 15, 2002. The
Company believes the adoption of SFAS No. 143 will not have a material impact on
the consolidated financial statements of the Company.

         Long-Lived Assets

         In August 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". This pronouncement addresses
financial accounting and reporting for the impairment or disposal of long-lived
assets. This pronouncement supersedes SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
and the accounting and reporting provisions of APB Opinion No. 30, "Reporting
the Results of Operations - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions", for the disposal of a segment of a business (as previously
defined in that Opinion). SFAS No. 144 is effective for financial statements
issued for fiscal years beginning after December 15, 2001, and interim periods
within those fiscal years, with early application encouraged. The Company
believes that the adoption of SFAS No. 144 will not have a material impact on
the consolidated financial statements of the Company.

         Reclassifications

         Certain prior years amounts have been reclassified to conform to the
current year presentation.

(3)      ACQUISITIONS

         On March 15, 2000, Andrx acquired certain assets of Valmed
Pharmaceuticals, Inc. ("Valmed"), a privately owned distributor of bioequivalent
pharmaceuticals headquartered in Grand Island, New York. The acquisition was
accounted for using the purchase method of accounting. Accordingly, the excess
of the total purchase price of approximately $15,195, including transaction
costs, over the fair value of the net assets acquired, primarily accounts
receivable, inventories and property, plant and equipment was approximately
$8,700 which represents goodwill, and is included in Goodwill, net in the
accompanying Consolidated Balance Sheets. Such goodwill was amortized on a
straight-line basis over its estimated life of 15 years through December 31,
2001. Effective with the adoption of SFAS No. 142 goodwill will no longer be
subject to amortization. Instead, goodwill will be subject to an annual
assessment for impairment in value by applying a fair value based test.

         In March 2000, Cybear entered into a software license agreement and a
development service agreement with AHT whereby, among other things, Cybear
obtained non-exclusive licenses to two AHT software applications and whereby
Cybear agreed to develop a software application for AHT. In connection with
these agreements, Cybear loaned $4,000 to AHT in exchange for a secured
promissory note. In the third quarter of 2000, due to the uncertainty of
collection resulting from AHT filing for bankruptcy protection in September
2000, Cybear recorded a 100% allowance against the $4,000 note. On November 22,
2000, Cybear Group acquired certain of the operating assets of AHT under the
terms of an acquisition agreement approved by the United States Bankruptcy
Court. Accordingly, Cybear Group recognized a $2,000 credit in the fourth
quarter of 2000. Such credit represents the receipt of AHT's assets with an
estimated value of $2,000, in exchange for a portion of the $4,000 secured
convertible note. Cybear other charges for the year ended December 31, 2000
include the $4,000 allowance against the note receivable from AHT offset by the
$2,000 credit related to the receipt of AHT assets.


                                      112
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
              (in thousands, except for share and per share amounts


         On January 23, 2001, Andrx completed its acquisition of CTEX
Pharmaceuticals, Inc. ("CTEX"), a privately owned pharmaceutical company based
in Madison, Mississippi. The acquisition was accounted for using the purchase
method of accounting. The total purchase price, including transaction costs, was
approximately $29,356, consisting of approximately $11,190 in cash, including
transaction costs and 291,400 shares of Andrx common stock valued at $18,166.
The purchase price, after allocation of $2,638 to product rights, was in excess
of the preliminary estimate of the fair value of net liabilities acquired and
resulted in goodwill of $27,255. As part of the acquisition of CTEX, Andrx
acquired CTEX's sales force and related infrastructure. Such goodwill was being
amortized on a straight-line basis over its estimated life of ten years through
December 31, 2001. Effective with the adoption of SFAS No. 142 goodwill will no
longer be subject to amortization. Instead, goodwill will be subject to at least
an annual assessment for impairment in value by applying a fair value test. In
addition, in connection with the acquisition, Andrx made loans to the former
CTEX shareholders for $3,697 which are due to Andrx no later than January 23,
2006 but under certain circumstances may be forgiven as additional purchase
price consideration. In the event of default, the loans bear interest at 18% or
the highest rate permitted by applicable state law and are collateralized by
68,250 shares of Andrx common stock. These loans are included in Other assets in
the Consolidated Balance Sheet as of December 31, 2001. The operating results of
CTEX are included in the consolidated financial statements subsequent to the
January 23, 2001 acquisition.

         On March 30, 2001, Andrx completed its acquisition of substantially all
of the assets of Armstrong Pharmaceuticals ("Armstrong"), a division of Celltech
Manufacturing, Inc., formerly known as Medeva Pharmaceuticals, Inc., based in
West Roxbury, Massachusetts. Armstrong manufactures pharmaceutical aerosols,
principally metered dose inhalers ("MDIs") on a contract manufacturing basis for
major pharmaceutical companies and holds an approved ANDA for Albuterol MDI. The
acquisition was accounted for using the purchase method of accounting. The total
purchase price, including transaction costs, of approximately $18,218, was
preliminarily allocated among the acquired net assets, resulting in no goodwill.

         On April 2, 2001, Cybear acquired Mediconsult in a stock-for-stock
merger whereby each share of Mediconsult common stock was exchanged for .0358
shares of Cybear common stock (reflects the effect of the July 31, 2001
one-for-four reverse stock split). Accordingly, 2,355,000 shares of Cybear
common stock were issued in April 2001 in connection with this transaction, and
upon satisfaction of certain merger conditions in July 2001, an additional
587,000 shares of Cybear common stock were issued to the Mediconsult
stockholders. The market value of the total shares issued was approximately
$4,765. The acquisition was accounted for using the purchase method of
accounting. In connection with this transaction, Cybear Group incurred $3,242 in
transaction costs and advances to Mediconsult. The purchase price, including
transaction costs, was in excess of the preliminary estimate of the fair value
of the net liabilities assumed, resulting in an allocation to other intangible
assets for physicians network and trademarks of $11,571 and goodwill of $381.
Such other intangible assets and goodwill were amortized on a straight-line
basis over its estimated life of five years through December 31, 2001. Effective
with the adoption of the SFAS No. 142 goodwill will no longer be subject to
amortization. Instead, goodwill will be subject to an annual assessment for
impairment in value by applying a fair value based test.

         The following unaudited pro forma information combines the consolidated
results of operations of Andrx Corporation and Mediconsult including the
allocation of the pro forma operating results to Andrx Corporation's classes of
common stock as if the acquisition of Mediconsult had occurred as of the
beginning of the period for each of the periods presented after giving effect to
certain adjustments including amortization of the purchase price in excess of
the net liabilities assumed, elimination of Mediconsult's historical goodwill
amortization, elimination of Mediconsult's historical compensation expense
relating to the difference between SFAS No. 123, "Accounting for Stock-Based
Compensation" and APB No. 25, "Accounting for Stock Issued to Employee,"
interest expense and income tax benefit. This unaudited pro forma information is
not necessarily indicative of the results of operations that would have occurred
if Andrx Corporation and Mediconsult had been combined during such periods.
Moreover, the unaudited pro forma information is for informational purposes only
and is not intended to be indicative of the results of operations expected to be
attained in the future.


                                      113
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)



         The following unaudited pro forma information does not give effect to
the Company's March 15, 2000 acquisition of certain assets of Valmed, the
January 23, 2001 acquisition of CTEX or the March 30, 2001 acquisition of
certain assets of Armstrong, as the effect of such acquisitions is not material.


<TABLE>
<CAPTION>
                                                                            YEARS ENDED DECEMBER 31,
                                                                 -----------------------------------------
                                                                      2001                        2000
                                                                 --------------               ------------
<S>                                                               <C>                         <C>
Revenues                                                          $     749,927               $    540,549
                                                                  =============               ============

Income from operations                                            $      51,970               $     52,705
                                                                  =============               ============

Net income                                                        $      34,472               $     39,623
                                                                  =============               ============

ANDRX  GROUP COMMON STOCK:
Net income allocated to Andrx Group
     (including Cybear through September 6, 2000)                 $      74,335               $     78,320
                                                                  =============               ============

Net income per share of Andrx Group common stock:
      Basic                                                       $        1.06               $       1.16
                                                                  =============               ============
      Diluted                                                     $        1.03               $       1.11
                                                                  =============               ============

Weighted average shares of Andrx Group common stock
  outstanding:
      Basic                                                          69,998,000                 67,756,000
                                                                  =============               ============
      Diluted                                                        72,243,000                 70,456,000
                                                                  =============               ============

CYBEAR GROUP COMMON STOCK:
Net loss allocated to Cybear Group
     (subsequent to September 6, 2000)                            $     (39,863)              $    (38,697)
                                                                  =============               ============

Basic and diluted net loss per share of Cybear
      common stock                                                $       (5.91)              $      (5.74)
                                                                  =============               ============
Basic and diluted weighted average shares of Cybear
     common stock outstanding                                         6,743,000                  6,743,000
                                                                  =============               ============
</TABLE>


                                      114


<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


(4)      PRODUCT MARKETING RIGHTS

         On June 30, 2001, Andrx purchased the Entex(R) line of cough and cold
products and related inventories from an affiliate of Elan Corporation, plc
("Elan") for approximately $14,795 in cash, transaction costs and royalties on
net sales. The purchase price for the product rights of $14,356 is being
amortized over its estimated useful life of ten years. The Entex product rights
purchase price, net of accumulated amortization is included in Other intangible
assets, net in the Consolidated Balance Sheet as of December 31, 2001.

         On July 1, 2001, Andrx entered into an eight-year agreement with the
pharmaceutical division of Mallinckrodt ("Mallinckrodt"), a Tyco healthcare
company, for the marketing rights and supply of three hydrocodone pain products.
As part of the agreement, Andrx is to pay Mallinckrodt $1,000 upon approval of
each of the products and royalties on a percentage of the net sales of this
product line. Andrx also agreed to pay an annual licensing fee of $100 to
Mallinckrodt for use of the trade name Anexsia(R). Two dosage strengths were
launched under the newly licensed trade name, Anexsia, in November 2001, and the
third dosage strength also to be marketed under the trade name Anexsia, which is
the highest strength, is expected to be approved by the FDA in 2002.
Accordingly, through December 31, 2001, Andrx paid $2,000 to Mallinckrodt for
product rights and $100 for the use of the trade name Anexsia. The Anexsia
product rights purchase price, net of accumulated amortization is included in
Other intangible assets, net in the Consolidated Balance Sheet as of December
31, 2001.

         On October 24, 2001, Andrx terminated its 1999 agreement with Geneva
and reacquired all of Geneva's marketing rights for two brand products under
development by Andrx; consisting of U.S. and selected international marketing
rights for Metformin XT, a controlled-release formulation of Metformin, and
selected international marketing rights to Altocor, a high-potency,
extended-release lovastatin. In return for relinquishing Geneva's marketing
rights to these products back to Andrx, Geneva will no longer make payments to
Andrx of $1,000 per month and Andrx will pay Geneva certain milestone payments
and a royalty on net sales in the U.S. for Metformin XT for a period of five
years. In 2001, Andrx paid Geneva a $2,000 milestone payment which is included
in research and development expenses. For the years ended December 31, 2001,
2000 and 1999, Andrx recorded as Other revenues included in the accompanying
Consolidated Statements of Income, $12,981, $14,019 and $7,000, respectively, of
fees from Geneva. Andrx's distribution operations will continue to distribute
Geneva products in the normal course of business.

         Andrx has entered into additional development and licensing agreements
covering bioequivalent pharmaceuticals with U.S. and foreign pharmaceutical
companies. Pursuant to these agreements, the licenses typically will fund the
cost of product research and development and will pay Andrx royalties in
exchange for a license to market the products for a specified territory.

         Andrx also works with other pharmaceutical companies to formulate
controlled-release versions of existing commercialized drugs and drugs they are
developing using Andrx's proprietary drug delivery technologies.

 (5)     OTHER INTANGIBLE ASSETS, NET

         Other intangible assets, net consist of the following:

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                 ---------------------------------------
                                                     2001                        2000
                                                 -------------               ------------
<S>                                              <C>                         <C>
Product rights                                   $      18,456               $         --
Physicians network and trademarks                       11,571                         --
Patents                                                  1,569                        650
Software development                                        --                        485
                                                 -------------               ------------
                                                        31,596                      1,135
Less accumulated amortization                           (3,291)                      (260)
                                                 -------------               ------------
                                                 $      28,305               $        875
                                                 =============               ============
</TABLE>



                                      115
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)



 (6)     INVESTMENTS AVAILABLE-FOR-SALE

Investments available-for-sale consist of the following:


<TABLE>
<CAPTION>
                                                                 DECEMBER 31, 2001
                                             ----------------------------------------------------------------

                                                                  GROSS           GROSS
                                             AMORTIZED         UNREALIZED      UNREALIZED            MARKET
                                               COST               GAINS          LOSSES              VALUE
                                             ----------        ----------      ----------          ----------
<S>                                          <C>               <C>             <C>                 <C>
U.S. Treasury and government agency
     securities                              $  119,980        $      492      $      (16)         $  120,456
Corporate bonds                                   7,607               150              --               7,757
Tax advantaged money market
     preferreds                                  54,900                --              --              54,900
                                             ----------        ----------      ----------          ----------
                                             $  182,487        $      642      $      (16)         $  183,113
                                             ==========        ==========      ==========          ==========


<CAPTION>

                                                                 DECEMBER 31, 2000
                                             ----------------------------------------------------------------
                                                                  GROSS          GROSS
                                             AMORTIZED         UNREALIZED      UNREALIZED            MARKET
                                               COST               GAINS          LOSSES              VALUE
                                             ----------        ----------      ----------          ----------
<S>                                          <C>               <C>             <C>                 <C>
U.S. Treasury and government agency
     securities                              $   78,518        $      255      $       (1)         $   78,772
Corporate bonds                                  14,369                59              --              14,428

Tax advantaged money market
     preferreds                                 128,000                --              --             128,000
                                             ----------        ----------      ----------          ----------
                                             $  220,887        $      314      $       (1)         $  221,200
                                             ==========        ==========      ==========          ==========
</TABLE>


(7)      INVENTORIES

Inventories consist of the following:


<TABLE>
<CAPTION>
                                                DECEMBER 31,
                                   ----------------------------------------
                                       2001                        2000
                                   -------------               ------------
<S>                                <C>                         <C>
Raw materials                      $      42,326               $      8,238
Work in process                           16,212                      4,234
Finished goods                           103,153                     88,747
                                   -------------               ------------
                                   $     161,691               $    101,219
                                   =============               ============
</TABLE>


         As of December 31, 2001, the Company has approximately $33,883 in raw
materials, work in process and finished goods inventories relating to products
that have either not been approved by the FDA or which have not yet been
launched. Included in the December 31, 2001 inventory of products not approved
by the FDA or launched was $7,790 relating to the Company's bioequivalent
version of Glucophage which the Company launched in January 2002. As of December
31, 2000, the Company did not have any raw materials, work in process, or
finished goods inventory relating to products that were not approved by the FDA
or had not been launched as of December 31, 2000.


                                      116
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


(8)      PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net are summarized as follows:

<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                                                  ----------------------------------------
                                                                      2001                        2000
                                                                  -------------               ------------
<S>                                                               <C>                         <C>
Land                                                              $       7,232               $      2,903
Buildings                                                                33,388                     11,643
Manufacturing equipment                                                  44,250                     20,684
Laboratory equipment                                                     13,204                      8,801
Leasehold improvements                                                   14,037                     11,392
Computer hardware and software                                           20,675                     17,327
Furniture and fixtures                                                    8,974                      3,840
                                                                  -------------               ------------
                                                                        141,760                     76,590
Less:  accumulated depreciation and amortization                        (30,440)                   (19,265)
                                                                  -------------               ------------
                                                                        111,320                     57,325
Construction in progress                                                 28,578                     20,448
                                                                  -------------               ------------
                                                                  $     139,898               $     77,773
                                                                  =============               ============
</TABLE>

         Depreciation expense was $13,521, $7,720 and $4,401 for the years ended
December 31, 2001, 2000 and 1999, respectively.


(9)      CYBEAR OTHER CHARGES

         The Company measures impairment of goodwill using the undiscounted cash
flow method whenever events and circumstances warrant revised estimates of
useful lives or recognition of an impairment of goodwill. The undiscounted cash
flow method compares the net book value being tested to the estimated aggregate
undiscounted cash flows; if the net book value exceeds the estimated aggregate
undiscounted cash flows, the excess carrying amount of goodwill is written off.
The Company followed this method in determining the goodwill write-off of
Telegraph Consulting Corporation ("Telegraph") and the Reorganization goodwill
described below.

         In June 2001, Cybear wrote off the remaining $1,982 of goodwill
established with the acquisition of Telegraph by Cybear in 1999. Such write-off
was the result of an evaluation of the Telegraph goodwill in consideration of,
among other things, Cybear Group's business strategy and the acquisition of
Mediconsult (see Note 3). As a result, the future benefits previously associated
with the Telegraph goodwill no longer existed.

         In September 2001, Cybear wrote off the remaining $9,313 of goodwill
established in the September 2000 Reorganization. Such write-off was the result
of an evaluation of the Reorganization goodwill in consideration of, among other
things, Cybear Group's business subsequent to the Reorganization. As a result,
the future benefits previously associated with the Reorganization goodwill no
longer existed.


                                      117
<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         In 2001, Cybear recorded an additional charge of $1,722 associated with
an estimated loss that Cybear expects to incur in subleasing all or a portion of
its Fort Washington, PA, Tarrytown, NY and Boca Raton, FL locations. This
write-off was the result of an evaluation of Cybear's business strategy and
decision to consolidate facilities into the Boca Raton headquarters. Also, in
December 2001, Cybear recorded a charge of approximately $1,742 for certain
computer software licenses that Cybear Group no longer intends to market or
otherwise attempt to commercialize. Such write-off was the result of an
evaluation of the revenues and cash flows generated by these software licenses
and in consideration of, among other things, Cybear Group's business strategies.
As a result, the future benefits previously associated with these software
licenses no longer exist.

         In 2000, Cybear recorded $1,202 in merger costs associated with the
Reorganization. Cybear also recorded $6,022 in an allowance against a note
receivable, severance costs, impairment charges to certain assets and costs
incurred to resolve a dispute and to terminate certain agreements, offset by a
$2,000 credit in connection with the acquisition of substantially all of the
operating assets of AHT, in exchange for a portion of a $4,000 secured
convertible note pursuant to an agreement approved by the United States
Bankruptcy Court.

(10)     UNCONSOLIDATED JOINT VENTURES

         In July 1994, and as originally amended on October 30, 1995, the
Company and Circa Pharmaceuticals, Inc., now a wholly-owned subsidiary of Watson
Pharmaceuticals, Inc. ("Watson") (the Company and Watson are hereafter
collectively referred to as the "Partners"), formed ANCIRC, a 50/50 joint
venture to develop, manufacture and market up to eight bioequivalent
controlled-release pharmaceutical products. The agreement between the Partners
contemplated that Andrx, would perform the research and development formulations
for ANCIRC's products, and would market and distribute ANCIRC's products
following FDA approval, and that Watson would provide the regulatory support for
ANCIRC's products and would manufacture the ANCIRC products.

         In September 1998, ANCIRC received approval of its first manufactured
product, a bioequivalent version of Trental and launched this product. On March
24, 1999, the FDA approved the ANDA for the second ANCIRC product, a
bioequivalent version of Oruvail, which was launched in April 1999. Due to
manufacturing problems, ANCIRC halted the production and sale of ANCIRC's
bioequivalent version of Oruvail in June 1999. In April 2001, ANCIRC commenced
producing and selling such product.

         Capital contributions to, distributions from and net income or loss
generated by ANCIRC are allocated in proportion to the respective Partners'
interest in the joint venture.

         ANCIRC is managed by and under the direction of a management committee
which is comprised of six members. Three members are appointed by each Partner.
Based on the equal representation of the management committee and the Company's
inability to unilaterally control the joint venture, the Company utilizes the
equity method to account for this joint venture.

         In November 2000, the Company and Watson further amended the terms of
the ANCIRC joint venture agreement. Under the amendment, Andrx is solely
responsible for all of the costs to develop, manufacture and sell the remaining
six products, and Watson may receive a royalty on net sales, if any, from the
commercialization of those products (see Note 12). The amendment also provides
that Andrx may elect to discontinue its efforts to develop any of these six
products at any time. The 50/50 joint venture relationship for the two-marketed
products is continuing, except effective November 1, 2000, the profits generated
by ANCIRC will be allocated 75% to the Andrx partner and 25% to the Watson
partner until such time as Andrx has been allocated $611 of profit greater than
Watson to equalize the Partners' respective capital accounts activity.

         In August 2000, Andrx Corporation entered into CARAN, a 50/50 joint
venture with Carlsbad to develop, manufacture and sell three bioequivalent
pharmaceutical products, for which ANDAs have been filed with the FDA, including
the bioequivalent version of Pepcid, which was launched in 2001 and a
bioequivalent version or Prozac. Carlsbad developed and will manufacture the
products and Andrx will distribute such products.


                                      118
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         As of December 31, 2001 and 2000, the Company's investment in
unconsolidated joint ventures was $1,907 and $755, respectively, and is included
in Other assets in the Consolidated Balance Sheets.

         Condensed financial information of the unconsolidated joint ventures is
not presented as they are not material to the consolidated financial statements
of the Company.

(11)     INCOME TAXES

         The components of the provision for income taxes are summarized as
follows:

<TABLE>
<CAPTION>
                                          YEARS ENDED DECEMBER 31,
                           ----------------------------------------------------
                              2001                 2000                 1999
                           ----------           ----------           ----------
<S>                        <C>                  <C>                  <C>
Current provision
      Federal              $   36,123           $   41,326           $   69,855
      State                     3,258                2,362                3,992
                           ----------           ----------           ----------
                               39,381               43,688               73,847
                           ----------           ----------           ----------

Deferred benefit
      Federal                  (7,564)              (3,612)             (17,445)
      State                      (432)                (206)                (997)
                           ----------           ----------           ----------
                               (7,996)              (3,818)             (18,442)
                           ----------           ----------           ----------
Total                      $   31,385           $   39,870           $   55,405
                           ==========           ==========           ==========
</TABLE>



         The following table indicates the significant elements contributing to
the difference between the federal statutory rate and the Company's effective
tax rate:


<TABLE>
<CAPTION>

                                                                    YEARS ENDED DECEMBER 31,
                                                          -----------------------------------------
                                                           2001             2000              1999
                                                          ------           ------            ------
<S>                                                       <C>              <C>               <C>
Federal statutory rate                                      35.0%            35.0%             35.0%
State income taxes, net of federal effect                    2.0%             2.0%              2.0%
Change in valuation allowance on net deferred
    income tax assets                                         --              3.3%             (2.7)%

Non-deductible goodwill and Reorganization costs             7.9%             2.9%               --
Other, net                                                   0.6%            (2.7)%             2.8%
                                                          ------           ------            ------
Effective tax rate                                          45.5%            40.5%             37.1%
                                                          ======           ======            ======
</TABLE>


                                      119
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)



         Deferred income taxes represent the tax effect of the difference
between financial reporting and income tax bases of assets and liabilities. The
amount of tax liability relating to tax depreciation in excess of book
depreciation is included in Other liabilities in the Consolidated Balance
Sheets. The major components of deferred tax assets and liabilities are as
follows:

<TABLE>
<CAPTION>

                                                                               DECEMBER 31,
                                                                  ----------------------------------------
                                                                      2001                        2000
                                                                  -------------               ------------
<S>                                                               <C>                         <C>
DEFERRED INCOME TAX ASSET
Net operating loss carryforwards                                  $       7,249               $      7,249
Allowance for doubtful accounts                                           2,823                      2,559
Other operating reserves                                                 25,857                     15,639
Cybear product development                                                2,065                      2,230
                                                                  -------------               ------------
                                                                         37,994                     27,677
Valuation allowance                                                      (7,249)                    (7,249)
                                                                  -------------               ------------
Deferred income tax assets, net                                   $      30,745               $     20,428
                                                                  =============               ============

DEFERRED INCOME TAX LIABILITY
Tax over book depreciation                                        $       3,428               $      1,460
                                                                  =============               ============
</TABLE>

         The following table indicates the activity in the valuation allowance:

<TABLE>
<CAPTION>
                                                                               DECEMBER 31,
                                                                  ----------------------------------------
                                                                      2001                        2000
                                                                  -------------               ------------
<S>                                                               <C>                         <C>
Beginning balance, January 1                                      $      (7,249)              $     (3,957)
Utilized                                                                     --                      3,572
Provided for Cybear, separate company, prior to the
  Reorganization                                                             --                     (6,864)
                                                                  -------------               ------------

Ending balance, December 31                                       $      (7,249)              $     (7,249)
                                                                  =============               ============
</TABLE>

         At December 31, 2001, the Company had available net operating loss
carryforwards generated by Cybear of $19,681. The net operating loss
carryforward, which begins to expire in 2019, can only be utilized by Cybear to
offset its future taxable income, on a separate company basis.

         In assessing the realizability of deferred tax assets, pursuant to SFAS
No. 109, management considers whether it is more likely than not that some
portion or all of the deferred tax assets will not be utilized. The Company has
recorded a valuation allowance of $7,249 for all deferred tax assets resulting
from Cybear's net operating loss carryforwards. The Company adjusts the
valuation allowance in the period management determines it is more likely than
not that the deferred tax assets will be realized.


                                      120
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         In connection with the Reorganization, Cybear and other members of the
Andrx Corporation consolidated group entered into, among other things, a federal
and state tax sharing agreement. Andrx Corporation will utilize the separate
return method of accounting for purposes of allocating federal and state
consolidated income tax liabilities among group members. Under the terms of the
tax sharing agreement, a member of the group will be allocated its income tax
benefits and expenses in the year generated. Except as set forth in the
supplement referred to below, to the extent a member cannot utilize its income
tax benefits in the year generated, that member will not be compensated in that
year by other members of the Andrx Corporation consolidated group for
utilization of those benefits. Instead, if and when a member leaves the group,
Andrx Corporation may elect to reimburse that member for any unreimbursed income
tax benefits utilized. That reimbursement will take the form of a capital
investment by Andrx Corporation, for which it will receive stock. In the case of
any "tracking stock" members, such as Cybear Group, the stock received by Andrx
Corporation shall be in the form of Cybear common stock. In addition, if any
member of the group causes another member to become subject to state income tax
in a state where it would otherwise not be taxed on a separate company basis,
the member causing the income tax liability shall be fully responsible for the
state income tax of the other member. Subsequent to the Reorganization, any
income tax benefits that Cybear is unable to utilize on a separate company basis
will be allocated to Andrx.

         In October 2000, Andrx and Cybear signed a supplement to the tax
sharing agreement, whereby Cybear will be reimbursed by Andrx Corporation for
specific tax benefits utilized by Andrx Corporation in connection with an
election Cybear made on its 2000 and 1999 separate federal corporate tax return
to amortize certain product development expenses over a period of ten years.
Such reimbursements from the Company are accounted for by Cybear Group as a
capital contribution. As a result of the supplement to the tax sharing
agreement, Cybear Group may be reimbursed by Andrx for the after-tax effect of
amortizing approximately $6,000 of such expenses over ten years.

         Under the provisions of the tax sharing agreement related to the
Reorganization, for financial statement purposes, at such time as Cybear Group
achieves profitability, or is otherwise able to recognize its tax benefits under
accounting principles generally accepted in the United States, if ever, Cybear
will recognize the benefit of its accumulated income tax benefits (which had
previously been utilized by Andrx) in its statement of operations with a
corresponding decrease to Cybear's equity (i.e., effectively accounted for as a
non-cash dividend). To the extent Andrx is profitable and is able to utilize
such tax benefit and Cybear is generating losses, it is expected that Andrx's
effective tax rate will be less than the statutory federal and state rate. If
Cybear attains profitability or is otherwise able to recognize its tax benefits,
Andrx's effective tax rate may be greater than the statutory federal and state
income tax rate to the extent of Cybear's then unreimbursed accumulated tax
benefits that can be realized (Andrx will then reverse the tax benefits
previously recorded, i.e., effectively transferring such tax benefits to Cybear
in the form of a non-cash equity transaction).

         In connection with the Reorganization, Andrx Corporation changed its
method of accounting for allocating income taxes within the consolidated group
from the pro rata method to the separate return method. Had the separate return
method of allocating income taxes been utilized prior to the Reorganization,
Cybear would not have been able to record any income tax benefits, as compared
to $2,824, as recognized under the pro rata method for the year ended December
31, 1999 (exclusive of the effect of minority interest of approximately 5%).
Conversely, applying the pro rata method for the year ended December 31, 2001
and for the period from September 7, 2000 through December 31, 2000 would have
resulted in an income tax benefit allocation from Andrx to Cybear of
approximately $7,600 and $4,800, respectively.



                                      121
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)



(12)     COMMITMENTS AND CONTINGENCIES


         Memorandum of Understanding with Genpharm

         The Company entered into a memorandum of understanding ("MOU") with
Genpharm, Inc. ("Genpharm") relating to the filing dates of their respective
ANDAs for a bioequivalent version of Prilosec. While the FDA assigned to Andrx
the earliest filing date for this product, Genpharm had contended that the FDA
improperly refused to accept the filing of its earlier ANDA submission. Rather
than litigating the issue as to which of their ANDA's was the first filed,
including the possibility of affecting Andrx's 180-days of market exclusivity,
the parties agreed to set aside their dispute in order to maximize the
likelihood that there will be a bioequivalent product made available to U.S.
consumers as soon as prudently possible.

         The MOU currently provides that Andrx will market whichever of these
products may first be lawfully and prudently marketed, and that through cross
licenses, the parties will receive royalties based on the profits derived from
the sale of either or both products according to a sliding scale. Based on the
anticipated profits, Andrx will share, based on a sliding scale, approximately
15% of those profits with Genpharm.

         On November 16, 2001, prior to obtaining FTC approval of the MOU, Andrx
received FDA final marketing approval of its ANDAs for bioequivalent versions of
Prilosec, and was advised by FDA that Andrx and Genpharm would share the 180-day
market exclusivity for the 10mg and 20mg strengths of this product, and that
Andrx alone would have 180-day market exclusivity for its 40mg strength. This
shared exclusivity concept will likely preclude FTC approval of the MOU in its
current form. It remains unclear whether any of the terms of the MOU will
survive, and the resolution of this issue may depend upon the results obtained
in the pending patent litigation involving Andrx, Genpharm and AstraZeneca.

         Agreement with a Law Firm

         On January 2, 2002, Andrx entered into an agreement with a law firm
(the "Law Firm") it utilizes on matters relating to its efforts to market
bioequivalent versions of Tiazac and Prilosec (see Note 17). Under the terms of
and as defined in the agreement, Andrx shall pay the Law Firm (i) 2.5% of net
sales of the product directly or indirectly resulting from the ANDA Andrx filed
for a bioequivalent Tiazac, (ii) up to 2.75% of net sales of the product
directly or indirectly resulting from the ANDA Andrx filed for a bioequivalent
version of Prilosec, with this amount declining to not less than 1.75% following
achievement of certain cumulative net sales amounts, and (iii) up to 2.5% of the
value created, by any settlement or agreement with AstraZeneca or any other
party concerning bioequivalent Prilosec, in each case certain conditions stated
in the agreement occur, and the agreement calls for the Law Firm to receive 25%
of the damages adjudged against Biovail in the Tiazac litigation. Upon the
occurrence of any of the events entitling the Law Firm to the aforementioned
payments, Andrx will estimate the present value of the aggregate payments the
Law Firm is entitled to receive under the agreement, and recognize such amount
as an expense and liability. Such estimates will be evaluated periodically and
adjusted as necessary. Andrx is currently not able to estimate the present value
of the potential obligations under this agreement. However, the amount of this
obligation and the adjustments which could result from changes in the Company's
estimate of the remaining present value of those payments could be significant.

         Royalty on ANCIRC Products

         Pursuant to the ANCIRC agreement, as amended, in November 2001, upon
commercialization, Watson may be entitled to receive a royalty on net sales of
the Company bioequivalent versions of Procardia XL and Glucotrol XL (see Note
10).

         Employment Agreements

         In September 2001, the Company entered into employment agreements with
certain corporate executive officers, the terms of which commenced on September
28, 2001, and continue for 60 calendar months. These agreements provide, among
other things, that if the employment of the named corporate executives is
terminated by the Company without cause or if there is a change in control of
the Company, the Company may make a lump sum payment of three times the annual
compensation, as provided, and may vest in full on any installments of shares
under stock option agreements. Additionally, if the executive officers resign
after there is a change in Chief Executive Officer, as provided, the named
executives may vest in full or any installments of shares under their stock
option agreements.


                                      122
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


The following schedule summarizes the future minimum payments under the
employment agreements as of December 31, 2001:


<TABLE>
                   <S>                  <C>
                   2002                 $    770
                   2003                      770
                   2004                      770
                   2005                      770
                   2006                      578
                                       ---------
                                       $   3,658
                                       =========
</TABLE>

         Valmed Profit Sharing Arrangement

         In 2000, upon acquiring Valmed, the Company entered into a profit
sharing agreement with several former shareholders of Valmed and current Andrx
employees. Under the terms of the agreement, the individuals received profit
sharing payments of $1,239 and $447 in 2001 and 2000, respectively, based upon
pretax profits generated by Valmed, as defined by and in accordance with
accounting principles generally accepted in the United States.

         Operating Leases

         The Company leases manufacturing, laboratory, warehouse, office space,
and various equipment under operating leases which expire at various dates
through 2017. The following schedule summarizes future minimum lease payments
required under non-cancelable operating leases with terms greater than one year,
as of December 31, 2001:


<TABLE>
             <S>                       <C>
                   2002                $  10,220
                   2003                   10,148
                   2004                    9,705
                   2005                    8,175
                   2006                    6,745
             Thereafter                   33,713
                                       ---------
                                       $  78,706
                                       =========
</TABLE>

         Rent expense amounted to $5,800, $4,633 and $2,674 for the years ended
December 31, 2001, 2000 and 1999, respectively.

         Purchase Commitments

         On July 1, 2001, Andrx entered into an eight-year supply and marketing
agreement with Mallinckrodt for three hydrocodone pain products. Under the terms
of the agreement, Andrx agreed to aggregate minimum purchase commitments of
approximately $2,750 over the first four contract years beginning on July 1,
2001. There are no minimum purchase requirements for contract years ending
subsequent to June 30, 2005.

         The Company had purchase commitments at December 31, 2001, of
approximately $52,000 for building, construction, supplies and equipment
associated with the expansion of the Company's distribution and manufacturing
operations for facilities in Ohio and Florida.



                                      123
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         Additionally, in the first quarter of 2002 Andrx started the
implementation of the JD Edwards software package and related hardware. JD
Edwards is a fully integrated software solution that will allow information to
be shared and utilized by the Company's various businesses. The total cost of
this project is estimated to be $15,000.

(13)     RELATED PARTY TRANSACTIONS


         In February 1993, the Company entered into a royalty agreement with Dr.
Chen, the Company's Co-Chairman and former Chief Scientific Officer, which
provides for royalties to Dr. Chen upon the sale of Andrx's bioequivalent
version of Cardizem CD, for which the Company received final approval in July
1998 from the FDA. In August 1998, the Company amended that royalty agreement to
account for the various contingencies presented by the Stipulation (see Note
17). Royalties paid to Dr. Chen of $4,238, $5,033 and $6,995 for the years ended
December 31, 2001, 2000 and 1999, respectively, were based on 3.33% of the net
sales of Cartia XT, as defined, and interim and final Stipulation fees. Such
royalties are included in selling, general, and administrative expenses in the
accompanying Consolidated Statements of Income.

         In September 1998, Andrx agreed to sell 83,333 shares of Cybear common
stock for $1,000 or the then current market value of $12.00 per share to
Cybear's then Chairman of the Board. As of December 31, 1998, Andrx had sold
58,333 shares to Cybear's Chairman and in January 1999, Andrx sold the remaining
25,000 shares under this agreement and recognized a gain of $300. In addition,
in October 1999 Cybear's then Chief Executive Officer exercised a warrant for
31,250 shares at the then current market value of $12.00 per share upon which
Andrx recognized a gain of $343. Accordingly, Gain on sale of Cybear shares in
the 1999 Consolidated Statement of Income include $643, from these transactions.

         During 2001, the Company entered into an Asset Purchase Agreement with
Athlon Pharmaceuticals, Inc. ("Athlon") whereby the primary shareholder, who is
a current employee of the Company and former primary shareholder of CTEX. Under
the terms of the agreement the Company sold trademarks, equipment, licenses and
permits, marketing materials and packaging supplies related to certain products
acquired from CTEX to Athlon. In return, the Company received $500 in cash on
December 27, 2001, the closing date of the Asset Purchase Agreement, and will
receive another $1,500 in cash in 2002, $500 of which was received on February
1, 2002, with $1,000 due on June 1, 2002. Additionally, among other things, the
Company may receive quarterly royalty payments on net sales of certain of these
products. This transaction resulted in a net pre-tax gain to the Company of
approximately $117.

         The Company entered into an Executive Suite License Agreement with
Arena Operating Company, LTD for lease of a suite at the National Car Rental
Center where the Florida Panthers of the National Hockey League play their home
games. The principal owner of the Florida Panthers is Andrx's former Chief
Executive Officer and current Co-Chairman of the Board of Directors. Additional
owners of the Florida Panthers include Andrx's, current President and Chief
Executive Officer and an Andrx subsidiary Vice President. The term of the lease
is for one year and automatically renews for successive one year periods until
either party provides written notice of intent to cancel prior to March 1, of
the contract year. The current annual rental is approximately $109.
Additionally, the Company paid approximately $200 to the Florida Panthers Hockey
Club for participation in the Panthers Pals Community Group Program. Under the
program, the Company purchased 600 tickets for 43 home games from the Florida
Panthers Hockey Club for distribution to youth and charities.



                                      124
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         In the normal course of its distribution operations, the Company
purchases finished good inventory from Ranbaxy Pharmaceutical ("Ranbaxy").
During 2001, Ranbaxy purchased the assets of HMS Sales and Marketing, Inc. The
principal shareholder of HMS is a current Director of Andrx and currently serves
as a consultant to Ranbaxy. For the years ended December 31, 2001, 2000 and
1999, the Company purchased finished goods inventory of $7,245, $3,345 and
$3,325, respectively, from Ranbaxy.

(14)     STOCKHOLDERS' EQUITY


         In June 1999, Watson exercised a warrant to acquire 1,348,400 shares of
Andrx common stock at an exercise price of $2.23 which was issued to Watson in
connection with the original investment in the Company in July 1994.

         In May 2000, Andrx completed an underwritten public offering of shares
of common stock whereby Andrx sold 5,185,100 shares of common stock receiving
net proceeds of $235,819 to be used for the expansion of manufacturing, research
and development and administrative facilities, research and development for
branded and bioequivalent products, acquisition of products, product candidates
and/or companies, working capital requirements and other general corporate
purposes.

         On January 23, 2001, Andrx completed its acquisition of CTEX issuing
291,400 shares of Andrx common stock.

         On April 2, 2001, Cybear completed its acquisition of Mediconsult in a
stock-for-stock merger, whereby each share of Mediconsult common stock was
exchanged for .0358 shares of Cybear common stock (reflects the effect of the
July 31, 2001 one-for-four reverse stock split). Accordingly, 2,355,000 shares
of Cybear common stock were issued in April 2001, in connection with this
transaction, and upon satisfaction of certain merger conditions in July 2001, an
additional 587,000 shares of Cybear common stock were issued to the Mediconsult
stockholders. The market value of the total shares issued was approximately
$4,765.


(15)     STOCK PLANS


         In September 2000, shareholders approved the Company's 2000 Stock
Incentive Plan (the "2000 Plan") which allows for the issuance of up to
12,000,000 shares of Andrx common stock. Under the provisions of the 2000 Plan,
the Company's Board of Directors or its Compensation Committee (the " Andrx
Committee") is authorized to grant stock options of Andrx common stock and
Cybear common stock to employees, consultants or advisors of the Company. The
terms for, and exercise price at which any stock option may be awarded is to be
determined by the Andrx Committee. Prior to the approval of the 2000 Plan, the
Company operated under the 1993 Stock Incentive Plan, as amended, which allowed
for the issuance of up to 8,000,000 shares of Andrx common stock.

         In connection with the Reorganization, each Cybear stock option issued
under the 1997 Cybear Stock Incentive Plan was automatically converted into an
option to purchase .2210 shares of Cybear common stock under the 2000 Plan.
Additionally, as provided by the Reorganization, similar to Andrx Corporation
stockholders, Andrx Corporation option holders received .0372 options to acquire
Cybear common stock for each option held in Andrx Corporation. Total Cybear
Group options issued to Andrx Corporation option holders were 194,875 at $12.00
per share.

         As of December 31, 2001, approximately 7,600,000 options remain
available for future grants under the 2000 Plan.

         In July 2001, the Andrx stockholders approved the adoption of an
Employee Stock Purchase Plan. The number of shares available for purchase by
participating employees under the plan is 400,000.



                                      125
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         The Company accounts for options granted to employees under the plans
in accordance with the provisions of APB Opinion No. 25. Each stock option has
an exercise price equal to the market price on the date of grant, and
accordingly, no compensation expense has been recorded for any employees stock
option grants. On rare occasions, the Company may issue an insignificant amount
of equity instruments to non-employees. No such options were granted for the
years ended December 31, 2001, 2000 and 1999. In instances where the fair value
or the goods or services received is not reliably measurable, the measure is
based upon the fair value of the equity instruments issued, and such value is
amortized over the period for which services are provided. The fair value of
equity instruments issued to consultants are valued using the Black-Scholes
option pricing model.

         A summary of the plan activity is as follows:


ANDRX GROUP COMMON STOCK

<TABLE>
<CAPTION>
                                                  OUTSTANDING                                       EXERCISABLE
                             -----------------------------------------------------------       --------------------------
                               NUMBER OF                 EXERCISE PRICE PER SHARE                                WTD. AVG.
                             SHARES UNDER         --------------------------------------                        EXERCISE
                                OPTION               LOW          HIGH         WTD. AVG.         SHARES           PRICE
                             ------------         --------      --------       ---------       ---------         --------
<S>                         <C>                   <C>           <C>            <C>             <C>               <C>

December 31, 1998               5,164,892         $ 0.75        $ 10.13        $   5.17        2,268,500         $   5.17

Granted                         1,538,800           5.73          29.94           19.99
Exercised                        (869,086)          0.75           9.72            4.11
Forfeited                        (198,000)          1.80          29.94           10.41
                             ------------


December 31, 1999               5,636,606           0.75          29.94            9.19        2,518,056             9.19

Granted                         1,760,900          29.25          85.00           55.33
Exercised                      (1,153,121)          0.75          30.06            6.03
Forfeited                        (279,000)          4.98          85.00           29.16
                             ------------


December 31, 2000               5,965,385           1.62          85.00           22.49        2,492,535             6.13

Granted                         1,961,258          49.00          70.85           64.05
Exercised                        (880,736)          1.80          58.50           10.29
Forfeited                        (133,785)          8.22          85.00           40.74
                              -----------


December 31, 2001               6,912,122           1.62          85.00           35.49        2,747,798            13.88
                             ============       ========      =========        ========    =============         ========

<CAPTION>


                                  OPTIONS OUTSTANDING                                        EXERCISABLE OPTIONS
                                  AT DECEMBER 31, 2001                                       AT DECEMBER 31, 2001
-------------------------------------------------------------------------------------    --------------------------------
      RANGE OF               NUMBER OF           WEIGHTED AVG.        WEIGHTED AVG.                         WEIGHTED AVG.
      EXERCISE                 SHARES           REMAINING LIFE          EXERCISE                             EXERCISE
       PRICES               UNDER OPTION            (YEARS)               PRICE             SHARES             PRICE
---------------------     -----------------    ------------------    ----------------    ------------     ----------------
<S>                       <C>                  <C>                   <C>                 <C>              <C>
$1.62 - $5.73                    1,237,095            2.90           $    2.57             1,237,095             $   2.57
$5.85 - $16.62                   1,766,825            4.77               11.51               954,075                 9.43
$20.57 - $57.19                  1,264,724            6.41               38.51               268,864                28.95
$58.09 - $62.38                  1,354,580            8.95               61.61               269,504                62.02
$64.66 - $70.85                  1,181,798            9.85               68.46                    --                   --
$77.73 - $85.00                    107,100            8.72               81.50                18,260                80.97
                          ----------------                                               -----------
                                 6,912,122            6.48               35.49             2,747,798                13.88
                          ================                                               ===========

</TABLE>

         The range of fair values of Andrx shares as of the grant date was
$17.10 to $49.51, $21.93 to $67.90 and $5.36 to $20.41, for stock options
granted during the years ended December 31, 2001, 2000 and 1999, respectively.



                                      126
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         The fair market value of an Andrx option was estimated using the
Black-Scholes option pricing model with the following assumptions:

<TABLE>
<CAPTION>

                                           YEARS ENDED DECEMBER 31,
                                  ----------------------------------------
                                     2001          2000            1999
                                  ---------      ---------       ---------
<S>                               <C>            <C>            <C>
Risk-free interest rate               4.5%           4.9%           6.4%
Average life of options (years)       6.8            5.6            6.0
Average volatility                     59%            85%            70%
Dividend yield                         --             --             --
</TABLE>



         The following table summarizes the pro forma consolidated results of
operations of Andrx as though the provisions of the fair value-based accounting
method of SFAS No. 123 had been used in accounting for stock options:


<TABLE>
<CAPTION>

                                                                        YEARS ENDED DECEMBER 31,
                                                         --------------------------------------------------
         ANDRX COMMON STOCK                                 2001                2000                1999
                                                         ----------          ----------          ----------
<S>                                                      <C>                 <C>                 <C>
Net income allocated to Andrx Group
  (including Cybear through September 6, 2000)
        As reported                                      $   72,862          $   66,873          $   94,054
                                                         ==========          ==========          ==========
        Pro forma                                        $   42,686          $   53,628          $   86,969
                                                         ==========          ==========          ==========

Basic net income per Andrx Group common share
        As reported                                      $     1.04          $     0.99          $     1.52
                                                         ==========          ==========          ==========
        Pro forma                                        $     0.61          $     0.79          $     1.46
                                                         ==========          ==========          ==========

Diluted net income per Andrx Group common share
        As reported                                      $     1.01          $     0.95          $     1.45
                                                         ==========          ==========          ==========
        Pro forma                                        $     0.61          $     0.77          $     1.40
                                                         ==========          ==========          ==========
</TABLE>



                                      127
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)



CYBEAR COMMON STOCK



<TABLE>
<CAPTION>

                                                         OUTSTANDING                                       EXERCISABLE
                                 ------------------------------------------------------------    ---------------------------------
                                  NUMBER OF                EXERCISE PRICE PER SHARE                                    WTD. AVG.
                                    SHARES      ----------------------------------------------                          EXERCISE
                                 UNDER OPTION            LOW           HIGH        WTD. AVG.           SHARES            PRICE
                                 -------------  ----------------------------------------------     --------------     -------------
<S>                              <C>            <C>                  <C>           <C>             <C>                <C>
September 7, 2000                     372,500          $  4.92       $ 74.88         $ 26.76           200,129          $   27.72

Granted                                78,138             3.00          3.00            3.00
Forfeited                             (57,291)            4.92         64.00           24.76
                                 ------------


December 31, 2000                     393,347             3.00         74.88           22.32           164,690              32.72

Granted                                15,158            34.13        176.78          124.53
Forfeited                             (90,466)            3.00         74.88           15.82
                                 ------------


December 31, 2001                     318,039             3.00        176.78           29.02           224,291              36.37
                                 ============         =========     ========       =========        ===========        ==========

</TABLE>

         Options granted during 2001 were to employees of Mediconsult, prior to
its acquisition by Cybear. Such outstanding Mediconsult options and warrants
were converted into Cybear options upon the acquisition of Mediconsult in April
2001.


<TABLE>
<CAPTION>

                                 OPTIONS OUTSTANDING                                         EXERCISABLE OPTIONS AT
                                AT DECEMBER 31, 2001                                           DECEMBER 31, 2001
-------------------------------------------------------------------------------------------------------------------------
         RANGE OF                 NUMBER OF         WEIGHTED AVG.       WEIGHTED AVG.                      WEIGHTED AVG.
         EXERCISE                   SHARES         REMAINING LIFE         EXERCISE                           EXERCISE
          PRICES                 UNDER OPTION         (YEARS)              PRICE            SHARES            PRICE
----------------------------    ---------------    ---------------     ---------------    ------------    ---------------
<S>                             <C>                <C>                 <C>                <C>             <C>
$ 3.00  -   $14.04                     225,746               4.87          $    10.90         135,769         $    11.58
$ 30.42 -   $47.69                      30,203               7.93               40.44          26,817              39.81
     $ 74.88                            50,507               7.46               74.88          50,122              74.88
$ 97.90 -  $176.78                      11,583               8.51              152.43          11,583             152.43
                                --------------                                            ------------
                                       318,039               5.70               29.02         224,291              36.37
                                ==============                                            ============
</TABLE>


         The weighted average fair value per Cybear share as of the grant date
was $1.62 and $3.00 for stock options granted for the year ended December 31,
2001 and for the period from September 7, 2000 through December 31, 2000,
respectively.

         The fair market value of a Cybear option was estimated using the
Black-Scholes option pricing model with the following assumptions:


<TABLE>
<CAPTION>
                                                                              PERIOD FROM
                                               YEAR ENDED                  SEPTEMBER 7, 2000
                                            DECEMBER 31, 2001             TO DECEMBER 31, 2000
                                        ----------------------------------------------------------
<S>                                     <C>                               <C>
Risk-free interest rate                            4.7%                            5.9%
Average life of options (years)                    7.5                             5.0
Average volatility                                 291%                            215%
Dividend yield                                      --                              --
</TABLE>



                                      128
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         The following table summarizes the pro forma consolidated results of
operations of Cybear Group as though the provisions of the fair value-based
accounting method of SFAS No. 123 had been used in accounting for stock options:


<TABLE>
<CAPTION>
                                                                                     FOR THE PERIOD FROM
                                                                    YEAR ENDED      SEPTEMBER 7, 2000 TO
                                                                 DECEMBER 31, 2001     DECEMBER 31, 2000
                                                                 -----------------  ------------------------
<S>                                                              <C>                <C>
Net loss allocated to Cybear Group
   (subsequent to September 6, 2000)            As reported         $   (35,316)         $  (8,341)
                                                                    ===========          =========
                                                Pro forma           $   (38,863)         $  (9,726)
                                                                    ===========          =========

Basic and diluted net loss per Cybear Group
   common share                                 As reported         $     (6.09)         $   (2.19)
                                                                    ===========          =========
                                                Pro forma           $     (6.70)         $   (2.56)
                                                                    ===========          =========
</TABLE>


(16)     401 (K) PLAN

         In February 1995, the Company adopted a 401(k) retirement plan covering
substantially all of its employees. Monthly contributions to the retirement plan
are made by the Company based upon the employees' contributions to the plan.

         On September 24, 1999, as a result of the Company's ownership in Cybear
falling below 80% due to the June 1999 Cybear public offering, Cybear adopted
the Cybear 401(k) retirement plan. The net assets related to Cybear employees in
the Andrx 401(k) retirement plan were transferred to the Cybear 401(k)
retirement plan.

         On November 6, 2000, the Board of Directors approved a change in the
plan's trustee, custodian and recordkeeper. Effective February 1, 2001, the
plan's new trustee is Trustar Retirement Services and the plan's new custodian
and recordkeeper is the Principal Financial Group. During February 2001, the
participants' balances were transferred to the respective investment options at
the Principal Financial Group based on the participants' investment option
elections.

         For the years ended December 31, 2001, 2000 and 1999, the Company
contributed $1,156, $534 and $381, respectively, to the 401(k) retirement plans.

         In February 2001, as a result of the September 2000 Reorganization,
whereby, among other things, Cybear became a wholly-owned subsidiary of Andrx
Corporation, the Cybear 401(k) Plan was merged with the Andrx 401(k) Plan.

         Upon acquiring Armstrong on March 30, 2001, Andrx participates in a
multiemployer employee benefit plan for employees of Armstrong. Total
contributions charged to expense under this agreement from the acquisition date
of Armstrong through December 31, 2001 were $101.



                                      129
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


(17)     LITIGATION

PATENT INFRINGEMENT LITIGATION

         While Andrx believes its ANDA products do not infringe the patents that
Andrx has been sued upon and/or that such patents are invalid and/or
unenforceable, the ultimate resolution of these patent litigation matters is not
known and there is no assurance that Andrx's position will ultimately prevail.
The following summarizes the status of the pending patent infringement
litigation involving Andrx's ANDA filings. As no ANDA product may be launched
until such time as it receives final FDA marketing approval, the successful
resolution of patent infringement litigation will not necessarily result in the
launch of the ANDA product involved in that litigation. Obtaining FDA marketing
approval involves a process whereby, among other things, the FDA raises certain
observations and possibly requests changes and additional information concerning
the product described in the ANDA and, through its responses, in the form of
amendments, the Company attempts to satisfy the FDA's concerns.

         Prilosec Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Prilosec.

         In May 1998, AstraZeneca filed suit against Andrx in the U.S. District
Court for the Southern District of Florida claiming patent infringement because
of the ANDA filed by Andrx for Prilosec. Andrx responded to this claim by
denying infringement and, among other things, raising various other defenses.
AstraZeneca seeks an injunction enjoining Andrx from further infringing the
subject patents and an order directing that the effective date of any FDA
approval of Andrx's proposed bioequivalent version of Prilosec be no earlier
than the expiration date of its patents.

         A second Paragraph IV certification was later made by Andrx with regard
to a different strength of Prilosec. This resulted in AstraZeneca filing another
suit in the Florida District Court. For purposes of pre-trial discovery
proceedings, the Judicial Panel on Multidistrict Litigation consolidated both of
these suits in the U.S. District Court for the Southern District of New York,
together with three other patent infringement suits initiated by AstraZeneca
involving ANDAs submitted by other companies for bioequivalent versions of
Prilosec. In May 2001, upon completion of discovery, the New York District Court
remanded the two Andrx cases to the Florida District Court. Andrx filed motions
to transfer the two cases back to the New York District Court for a consolidated
trial, and in November 2001, the New York District Court issued an order
consolidating for trial the two Andrx cases with three other patent infringement
cases involving bioequivalent versions of Prilosec.

         The consolidated trial commenced December 6, 2001. Five patents are at
issue against Andrx: two formulation patents, one process patent (asserted only
against Andrx), and two method-of-treatment patents. The New York District Court
is trying the case in four stages: (1) infringement and validity of the two
formulation patents, (2) infringement and validity of the process patent, (3)
infringement and validity of the two method-of-use patents, and (4) all
remaining issues relative to the five patents, including allegations of
inequitable conduct, misuse, or deficient notices. On March 14, 2002, the court
recessed the trial. As of March 25, 2002, the first two stages of the trial,
with respect to oral and documentary evidence, have been substantially completed
and the trial is scheduled to resume in April 2002.


                                      130
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         In March 2001, AstraZeneca listed four new patents in FDA's Orange
Book. Under protest and with full reservation of its right to challenge the
validity of this new listing, Andrx made a Paragraph IV certification that its
bioequivalent version of Prilosec does not infringe any valid claims of the new
patents. Andrx also filed suit against AstraZeneca, Merck & Co., Inc. and FDA in
the U.S. District Court for the Southern District of New York, seeking
declaratory and injunctive relief and compensatory, punitive and treble damages,
alleging that (1) AstraZeneca and Merck were engaged in illegal anti-competitive
conduct by, among other things, listing the four new patents for the improper
purpose of obtaining another 30-month stay of FDA approval of Andrx's
bioequivalent version of Prilosec, and (2) FDA, by taking no steps to stop
AstraZeneca's and Merck's unlawful conduct, was taking, and would continue to
take, positions inconsistent with specific applicable provisions of the
Waxman-Hatch Amendments. In May 2001, Andrx filed a motion for partial summary
judgment declaring that an additional 30-month stay is inapplicable or
unavailable to AstraZeneca. In June 2001, AstraZeneca and Merck filed a motion
to dismiss the action (1) for lack of subject matter jurisdiction because
Andrx's claims are allegedly moot or are not sufficiently ripe for resolution,
(2) because the Waxman-Hatch Amendments prohibit Andrx's allegedly premature
claims for declaratory relief with respect to the four patents in suit, and (3)
on various other grounds including failure to state a claim for which relief can
be granted. Andrx's and AstraZeneca's motions are still pending.

         On May 4, 2001, AstraZeneca filed suit against Andrx and Cipla LTD
("Cipla") in the U.S. District Court for the Southern District of Florida
claiming that Cipla (the supplier of bulk omeprazole to Andrx) and Andrx, which
uses the bulk omeprazole in its bioequivalent product, infringe a patent that
was issued upon assignment to AstraZeneca. The patent at issue will expire in
April 2002. The basis for the infringement claim is that, after Andrx filed its
ANDA for its bioequivalent version of omeprazole, Cipla allegedly changed its
method of manufacture of the bulk omeprazole, resulting in a compound that
infringes the patent at issue. In August 2001, Andrx and Cipla filed a motion to
dismiss the complaint for lack of subject matter jurisdiction relative to Cipla
and for legal insufficiency relative to Andrx. On October 19, 2001, the Judicial
Panel on Multidistrict Litigation transferred this case to the U.S. District
Court for the Southern District of New York for consolidated pre-trial
proceedings before the same judge who is presiding over the Prilosec trial
discussed above.

         On August 3, 2001, Andrx filed an action against aaiPharma, Inc. in the
U.S. District Court for the Southern District of New York seeking a declaratory
judgment of non-infringement and invalidity relative to three patents owned by
aaiPharma that pertain to omeprazole, the active ingredient in the proton pump
inhibitor marketed by AstraZeneca under the brand name Prilosec. The complaint
also alleges that aaiPharma, together with AstraZeneca, have and continue to
conspire to keep bioequivalent omeprazole products off the market in violation
of the federal and state antitrust laws. aaiPharma has filed an answer to the
complaint and the parties have commenced the discovery process.

         On or about January 30, 2002, Dr. Reddy's Laboratories filed suit
against FDA and Andrx in the U.S. District Court for the District of New Jersey
claiming that FDA should have granted Dr. Reddy's Laboratories final marketing
approval for its 40mg strength of bioequivalent omeprazole. Dr. Reddy's claims
it is entitled to co-exclusivity with Andrx on that version of the product.
Given the positions taken by FDA, Andrx believes that Dr. Reddy's Laboratories'
co-exclusivity claim has no merit.

                                      131

<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         Tiazac Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Tiazac. In October 1998, Biovail
and its related entities, filed suit against Andrx in the U.S. District Court
for the Southern District of Florida claiming patent infringement because of the
ANDA filed by Andrx with FDA for a bioequivalent version of Tiazac. Andrx
responded to this claim by denying infringement and, among other things, raising
various other defenses. On March 6, 2000, the District Court entered an order
that Andrx's product does not infringe the Biovail patent. Biovail appealed, and
on February 13, 2001, the U.S. Court of Appeals for the Federal Circuit
unanimously affirmed the District Court order that Andrx's product does not
infringe the Biovail patent.

         Prior to the expiration of the statutory 30-month period and the U.S.
Court of Appeals order that Andrx's product does not infringe the original
patent listed in FDA's Orange Book, Biovail listed another recently issued
patent that it had licensed from DOV Pharmaceuticals, Inc. ("DOV") in FDA's
Orange Book. Believing the listing to be improper, Andrx filed suit against
Biovail (and nominally FDA) in the U.S. District Court for the Southern District
of Florida seeking, among other things, a preliminary and permanent injunction
ordering Biovail to delist the patent from FDA's Orange Book and enjoining FDA
from delaying approval of the Andrx bioequivalent version of Tiazac for any
reason relating to the new patent. On March 6, 2001, the District Court denied
Andrx's motion for a preliminary injunction on the ground that the court does
not have subject matter jurisdiction over the claim brought by Andrx against
Biovail under the provisions of the Waxman-Hatch Amendments. Meanwhile, under
protest and with full reservation of its right to continue to challenge the
validity of Biovail's listing, Andrx made a Paragraph IV certification that its
bioequivalent version of Tiazac does not infringe any valid claims of the DOV
patent. On April 19, 2001, Biovail filed a counterclaim against Andrx under the
Lanham Act for allegedly falsely asserting that its product is bioequivalent to
Tiazac.

         On April 5, 2001, as anticipated by Andrx, Biovail filed suit against
Andrx in the U.S. District Court for the Southern District of Florida for
alleged infringement of the DOV patent.

         On September 19, 2001, the District Court issued an omnibus order that,
among other things, directed that the statutory stay in the DOV patent
infringement case be terminated on September 27, 2001, and set the consolidated
action down for trial on June 3, 2002. Subsequently, on application of Biovail,
the District Court entered an order extending the statutory stay to October 1,
2001, and allowed Biovail to apply to the U.S. Court of Appeals for a further
stay pending appeal, which the U.S. Court of Appeals upheld.

         On January 17, 2002, the Court of Appeals vacated the order of the
District Court that shortened the thirty-month statutory stay to October 1, 2001
and remanded the case for further proceedings. The Court of Appeals did so on
the ground that the District Court exceeded its authority under the Waxman-Hatch
Amendments. No action has been taken concerning Andrx's cross-appeal from the
dismissal of its claims. Meanwhile, in the consolidated action pending before
the District Court, discovery by the parties continues.

         As noted above, in February 21, 2002, Biovail and Andrx entered into a
binding letter agreement, subject to regulatory approval, to settle this and all
other pending claims between the companies. Regulatory approval has not been
received.


                                      132
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         Naprelan Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Naprelan. In October 1998, Elan
filed suit against Andrx in the U.S. District Court for the Southern District of
Florida claiming patent infringement because of the ANDA filed by Andrx with FDA
for a bioequivalent version of Naprelan. Andrx responded to this claim by
denying infringement, and, among other things, raising various other defenses.
On March 14, 2002, the Court issued an order of final judgment in favor of Andrx
invalidating the patent in controversy that covers Elan's Naprelan product. On
March 28, 2002, Elan filed a motion requesting the Court to reconsider and
reverse its invalidity ruling. Final FDA marketing approval of Andrx's ANDA is
still subject to the resolution of certain legal issues pertaining to the
exclusivity rights, if any, of a Paragraph IV certification made in connection
with an ANDA for Naprelan that was filed by another pharmaceutical company prior
to the filing of Andrx's ANDA.

         Wellbutrin SR and Zyban Litigation

         Andrx made Paragraph IV certifications in connection with the ANDAs
Andrx filed for Andrx's bioequivalent versions of Wellbutrin SR and Zyban. In
September 1999, Glaxo filed suit against Andrx in the U.S. District Court for
the Southern District of Florida claiming patent infringement because of the
ANDAs filed by Andrx with FDA for bioequivalent versions of Wellbutrin SR and
Zyban and seeking an order directing that the effective date for FDA's approval
of those ANDA's be no earlier than the expiration date of the subject patent.
Andrx responded to this claim by denying infringement and, among other things,
raising various other defenses. In February 2002, the U.S. District Court for
the Southern District of Florida granted Andrx's motion of summary judgment of
non-infringement for Wellbutrin SR and Zyban and denied Glaxo's cross-motion for
summary judgment. Glaxo has filed a notice of appeal from this decision.

         Depakote Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for Andrx's bioequivalent version of Depakote. In March 2000, Abbott
filed suit against Andrx in the U.S. District Court for the Northern District of
Illinois, claiming infringement of two of its patents because of the ANDA Andrx
filed with FDA for its bioequivalent version of Depakote and seeking an order
directing that the effective date for FDA's approval of that ANDA be no earlier
than the expiration date of the subject patents. Following Andrx's filing of a
motion to dismiss for lack of jurisdiction, Abbott filed a second action against
Andrx for the same claims in the U.S. District Court for the Southern District
of Florida as well as a third action against Andrx for the same claims in the
U.S. District Court for the Eastern District of Virginia. All the infringement
claims filed by Abbott against Andrx were transferred to and consolidated for
trial in the U.S. District Court for the Southern District of Florida. Andrx
responded to these claims by denying infringement and, among other things,
raising various other defenses. On January 8, 2002, the U.S. District Court for
the Southern District of Florida granted a joint motion by Andrx and Abbott for
a stay of the action until Andrx and FDA resolve an issue regarding the
definition of "active ingredient" as applied to Andrx's ANDA. The District Court
ordered that (1) the suit be stayed until January 7, 2003, (2) the statutory
stay of FDA approval of the ANDA be extended to a date contemporaneous with the
stay of the suit, (3) the case be removed from the trial calendar and (4) the
parties submit by October 7, 2002 a joint status report detailing the posture of
the case.


                                      133
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         Claritin D-24 Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Claritin D-24. In March 2000,
Schering-Plough filed suit in the U.S. District Court for New Jersey claiming
that Andrx's ANDA product infringes two of its patents, one being a metabolite
patent and the other a formulation patent, and seeking an order directing that
the effective date for FDA's approval of that ANDA be no earlier than the
expiration date of the subject patents. Andrx responded to these claims by
denying infringement and, among other things, raising various other defenses.
Discovery has been completed relative to the metabolite patent and the parties
have filed motions for summary judgment based thereon. The District Court has
set the motions down for oral argument on April 18-19, 2002. With regard to the
formulation patent, the District Court has directed that all fact discovery
relative thereto be completed by May 17, 2002 after which the District Court
will determine how much time will be allowed to complete expert discovery.

         Claritin Reditabs Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Claritin Reditabs. In January 2001,
Schering-Plough filed suit in the U.S. District Court for New Jersey claiming
that Andrx's ANDA product infringes the metabolite patent that is at issue in
the Claritin D-24 Litigation described above and seeking an order directing that
the effective date for FDA's approval of that ANDA be no earlier than the
expiration date of the subject patent. Andrx responded to these claims by
denying infringement and, among other things, raising various other defenses.
The District Court has approved a stipulation of the parties that any final
judgment entered by the District Court in the Claritin D-24 litigation regarding
the disputed claims of the metabolite patent shall be final and binding on the
parties as to the disputed metabolite patent claims in this action.

         Claritin D-12 Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Claritin D-12. In September 2001,
Schering-Plough filed suit in the U.S. District Court for the District of New
Jersey claiming that Andrx's ANDA product infringed the metabolite patent that
is at issue in the Claritin D-24 litigation described above and seeking an order
directing that the effective date for FDA's approval of the Andrx ANDA be no
earlier than the expiration date of the subject patent. Andrx responded to these
claims by denying infringement and, among other things, raising various other
defenses. The District Court has approved a stipulation of the parties that any
final judgment entered by the U.S. District Court for New Jersey in the Claritin
D-24 litigation described above regarding the disputed claims of the metabolite
patent shall be final and binding on the parties as to the disputed metabolite
patent claims in this action.

         Paxil Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Paxil (paroxetine). On June 15,
2001, SmithKline Beecham Corporation and Beecham Group plc, filed suit against
Andrx and BASF in the U.S. District Court for the Eastern District of
Pennsylvania for alleged infringement of four patents relating to paroxetine and
seeking an order directing that the effective date for FDA's approval of that
ANDA be no earlier than the expiration date of the subject patents. Andrx
responded to this claim by denying infringement, and, among other things,
raising various other defenses, including counterclaims seeking a declaration
that the patents are invalid. There are presently 12 related suits pending
before the District Court that concern patents covering paroxetine
hydrochloride. On September 28, 2001, the District Court consolidated all of the
paroxetine cases for pre-trial discovery purposes only.


                                      134
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         Glucotrol XL Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Glucotrol. On July 7, 2001, Pfizer
and Alza Corporation filed suits against Andrx in the federal courts in New
Jersey and Florida for alleged infringement of six patents relative to
Glucotrol. Subsequently, Pfizer and Alza amended the complaints to eliminate two
patents, leaving four patents to be tried, two of which will expire in September
2003. The parties, with the approval of the courts involved, agreed to dismiss
without prejudice the New Jersey action and to continue to prosecute the Florida
action in the Florida District Court. On November 1, 2001, Andrx filed an
answer, various affirmative defenses and counterclaims for a declaratory
judgment of non-infringement, invalidity and unenforceability. On December 17,
2001, the Florida District Court issued a scheduling order directing that
discovery be completed by December 3, 2002 and setting the case for trial on the
March 2003 calendar.

         Pepcid Litigation

         As part of a joint venture between Andrx and Carlsbad Technology, Inc.,
Carlsbad developed and is manufacturing for distribution by Andrx a
bioequivalent version of Pepcid. The bulk famotidine used by Carlsbad to make
the product is obtained from a foreign supplier. On July 13, 2001, Richter
Gedeon Vegyeszeti Gyar RT filed an action against Andrx, Carlsbad and seven
other defendants, including the foreign famotidine supplier, in the U.S.
District Court for the Eastern District of New York for alleged infringement of
five patents relating to Pepcid. On September 17, 2001, Andrx filed an answer,
affirmative defenses and a counterclaim for non-infringement and invalidity.
Carlsbad has agreed to indemnify and hold harmless Andrx from any liability
arising out of this action.

         Procardia XL Litigation

         Andrx made a Paragraph IV certification in connection with the ANDA
Andrx filed for its bioequivalent version of Procardia XL. On November 9, 2000,
Pfizer filed suit against Andrx for alleged infringement of US Patent No.
5,264,446 relative to Procardia XL. However, Andrx and Pfizer entered into a
settlement which provided an agreed upon protocol for testing the Andrx product
for infringement. If the product is ultimately determined to infringe the patent
at issue, Pfizer has agreed to license the patent to Andrx in exchange for a
royalty based on net sales.


ANTITRUST LITIGATION


          In May 1998, Biovail filed a claim against Andrx in the Federal
District Court in the District of Columbia alleging that the 1997 stipulation
violated Sections 1 and 2 of the Sherman-Antitrust Act and seeking a declaratory
judgment as to federal law as well as for alleged violations of state common law
of unfair competition, tortious interference with prospective advantage and
tortious interference with a contract. Andrx filed a motion to dismiss Biovail's
claims. That motion was granted with prejudice with respect to the federal
antitrust claims on January 6, 2000. Biovail appealed that dismissal and in July
2001, the Court of Appeals reversed portions of the order dismissing Biovail's
counterclaim and held that the dismissal of Biovail's counterclaim should have
been without prejudice. Andrx filed a petition seeking review of this decision
by the United States Supreme Court, which was denied.

          On or about September 24, 2001, Biovail filed a new, essentially
duplicative action against Andrx in the Federal District Court in the District
of Columbia, seeking declaratory and equitable relief and compensatory and
punitive damages in an unspecified amount. On January 7, 2002, Andrx filed its
answer to the complaint, denying the material allegations of the complaint and
asserting affirmative defenses and counterclaims. On January 30, 2002, Biovail
filed a motion to dismiss Andrx's counterclaims. See also the description herein
with respect to other litigation relating to the stipulations. As noted above,
on February 21, 2002, Biovail and Andrx entered into a binding letter agreement,
subject to regulatory approval, to settle this and all other pending claims
between the companies. Regulatory approval of this agreement has not been
received. Andrx is unable to determine the ultimate outcome of this matter.

          Since August 1998, putative class and individual actions have been
filed against Andrx in Alabama, California, Florida, Illinois, Kansas, Michigan,
Minnesota, New York, Tennessee, Wisconsin, North Carolina and the District of
Columbia. Similar class actions were commenced in Federal Court. The actions
pending in federal court have been consolidated for multi-district litigation
purposes in the U.S. District Court for the Eastern District of Michigan. In all
of these suits, Aventis has been named as a co-defendant. The complaint in each
action alleges that Andrx and Aventis, by way of the 1997 stipulation, have
engaged in alleged state antitrust and other statutory and common law violations
that allegedly have given Aventis and Andrx a near monopoly in the U.S. market
for Cardizem CD and a bioequivalent version of that pharmaceutical product.
According to the complaints, the monopoly possessed by the defendants enables
Aventis to perpetuate its ability to fix the price of Cardizem CD at an
artificially high price, free from generic competition, with the result that
direct purchasers such as pharmacies, as well as indirect purchasers such as
medical patients who have been issued prescriptions for Cardizem CD are forced
to overpay for the drug. Each complaint seeks compensatory damages on behalf of
each class member in an unspecified amount and, in some cases, treble damages,
as well as costs and counsel fees, disgorgement, injunctive relief and other
remedies. In June 1999, most of those class actions were consolidated for
pre-trial purposes in the U.S. District Court for the Eastern District of
Michigan.


                                      135
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         On June 6, 2000, the District Court granted plaintiffs' motion for
partial summary judgment against Andrx and Aventis in the pending putative class
actions. The District Court determined that the 1997 stipulation Andrx had
entered into with Aventis relating to their Cardizem CD patent litigation
constitutes a restraint of trade that is illegal per se under section 1 of the
Sherman-Antitrust Act. On August 15, 2000, the District Court granted Andrx's
and Aventis' motions to certify two questions relating to this determination to
the United States Court of Appeals for the Sixth Circuit. On December 12, 2000,
the court of appeals accepted the appeal, as certified by the District Court.
The appeal has been fully briefed and the Court of Appeals has set April 30,
2002 as the date for oral argument. On March 14, 2001, the District Court
granted the plaintiffs' motion to certify the case as a class action on behalf
of all persons or entities who directly purchased Cardizem CD from Aventis
during a specified period. On April 4, 2001, the District Court also certified
as a class the indirect purchasers of Cardizem CD.

         On May 14, 2001, the State Attorney Generals for the States of New York
and Michigan, joined by 13 additional states and the District of Columbia, filed
suit against Andrx and Aventis in the same federal court in which the above
described consolidated Cardizem CD antitrust class action litigation is being
conducted. The attorney generals' suit is brought on behalf of their government
entities and consumers resident in their jurisdictions who allegedly were
damaged as a result of the 1997 stipulation. Subsequently, an amended complaint
was filed adding 12 additional States and Puerto Rico to the action. The lawsuit
essentially reiterates the claims asserted against Andrx in the Cardizem CD
antitrust class action litigation and seeks the same relief sought in that
litigation.

         On July 26, 2001, Blue Cross Blue Shield of Michigan, joined by three
other Blue Cross Blue Shield plans (one in Minnesota and two in New York), filed
suit against Andrx and Aventis in the U.S. District Court for the Eastern
District of Michigan on behalf of themselves and as claim adjustors for their
self-funded customers to recover damages allegedly caused by the 1997
stipulation. The complaint essentially repeats the claims asserted against Andrx
that are being litigated in the above described consolidated Cardizem CD
antitrust class action litigation and seeks substantially the same relief sought
in that litigation.

         The U.S. District Court for the Eastern District of Michigan has
divided the above described class actions, individual actions and actions by the
State Attorney Generals and the Blue Cross Blue Shield Health Plans directed at
the 1997 stipulation entered into by Andrx and Aventis into the following
categories: (1) Sherman Act Class Actions; (2) Sherman Act Individual Actions;
(3) State Law Class Actions; (4) State Law Individual Actions; and (5) State
Attorney Generals and Health Plan Actions. Motions by Andrx and Aventis to
dismiss the Sherman Act Class Actions, the Sherman Act Individual Actions and
State Law Class Actions were denied by the District Court. Andrx has answered
the complaints in the Sherman Act Class Actions and the Sherman Act Individual
Actions denying the allegations of the plaintiffs. Andrx has filed motions to
dismiss the amended complaints in the State Law Class Actions, the State Law
Individual Actions, the State Attorney Generals Action, and the Blue Cross Blue
Shield Action. Discovery is currently scheduled to close April 1, 2002.

         In addition to the consolidated proceedings in the U.S. District Court
for the Eastern District of Michigan, there are two actions pending in state
courts in Florida, Lowery v. Hoechst AG et al., Civil Action No. 98-27437CA11
(Cir. Ct., Eleventh Judicial Circuit, Dade County) and Aetna U.S. Healthcare,
Inc. et al., v. Hoechst AG et al., Civil Action No. 98-116699AN (Cir. Ct.,
Fifteenth Judicial Circuit, Palm Beach Co,) and two actions pending in state
courts in Kansas, Aetna U.S. Healthcare, Inc. et al., Case No. 99 C 00200 (Dist.
Ct., Johnson Co.) and Neal v. Hoechst AG et al., Case No. 99 C 2350 (Dist. Ct.,
Johnson Co.). These actions are currently stayed.



                                      136
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         Andrx is unable to determine the ultimate outcome of these matters.

Other Andrx Litigation

         In January 2001, Biovail acquired from Aventis its rights to Cardizem
CD, including Aventis' rights under the 1999 stipulation which resulted in the
dismissal of the patent infringement litigation between Aventis and Andrx
relating to Andrx's bioequivalent version of Cardizem CD. On January 19, 2001,
Andrx received a letter from Biovail's counsel advising Andrx that Andrx's sale
of certain lots of Cartia XT, Andrx's bioequivalent version of Cardizem CD, did
not meet the safe-harbor dissolution values specified in the 1999 stipulation
which, according to Biovail, constitutes a breach of the 1999 stipulation and
demanding that the nonconforming product be removed from the market. Among other
things, Andrx responded to this letter by filing suit against Biovail in the
U.S. District Court for the Southern District of Florida, alleging breach of
contract, violations of the Lanham Act and Florida's Deceptive and Unfair
Practices Act, tortious interference with business relationships, common law
unfair competition, abuse of process and a declaratory judgment that Andrx did
not breach the 1999 stipulation and that its ANDA does not infringe any of
Biovail's patent rights. On March 30, 2001, Biovail moved to dismiss Andrx's
claims for breach of contract, declaratory relief and abuse of process.
Biovail's motion is still pending. On November 7, 2001, Andrx filed a second
amended and supplementary complaint that, among other things, added another
count for declaratory relief, relating to Biovail's assertion that a particular
lot of Cartia XT is not bioequivalent to Cardizem CD. On February 21, 2002,
Andrx and Biovail entered a binding letter agreement, subject to FTC approval,
settling with prejudice all pending litigation and disputes between the
companies relating to Biovail's Cardizem CD and Tiazac and Andrx's bioequivalent
version of such products, Cartia XT and Taztia XT, respectively. The letter
agreement provides that Biovail will license on a non-exclusive basis any
patents it may have or hereafter acquire relating to Tiazac in exchange for a
royalty that Andrx will pay to Biovail, based on Andrx's net sales of Taztia XT.
The agreement with Biovail has not received regulatory approval. Andrx is unable
to determine the ultimate outcome of this matter.

         In January 1999, Andrx and Andrx's bioequivalent pharmaceutical
distribution subsidiary, Anda, Inc., were served with third party complaints
filed against them by certain doctors and distributors who are defendants in
various legal actions relating to the sale of phentermine by Anda and its usage
as a diet drug when taken in combination with fenfluramine, commonly known as
"phen-fen." The substance of the third party complaints is that the defendants
are without fault with respect to the claims in those actions but, if they are
found liable on any of those claims, then allegedly having obtained one or more
of the drugs from Anda, they are entitled to indemnification in an amount to pay
and discharge any judgment entered against them in the putative class action
together with costs, expenses and attorney fees. Andrx and Anda have never sold
fenfluramine and believe that these claims are without merit. Andrx is being
represented and defended in this action by counsel designated by its insurer.

         In November 1999, another phen-fen diet lawsuit was filed against Anda
in the Superior Court of New Jersey by a husband, who claimed to have obtained
or purchased, either directly or indirectly, from Anda and others, and
thereafter ingested, phentermine, dexfenfluramine and fenfluramine, causing
serious medical consequences, all to his financial detriment, and his wife, who,
on behalf of herself and her two children, claimed monetary damages arising from
emotional distress to herself and her children, loss of spousal/paternal
companionship and expenditure of money, time and care for her husband required
by her husband's alleged injuries which are permanent and continuous in nature.
Anda has never sold dexfenflurarmine or fenfluramine and believes that these
claims, including any based solely on the use of phentermine, have no merit. In
June 2001, this case was voluntarily dismissed.

         On November 23, 2001, Lemelson Medical, Education & Research
Foundation, Limited Partnership filed suit against Andrx and numerous other
companies in the U.S. District Court for the District of Arizona for alleged
infringement of patents relating to (1) reading bar codes and (2) computerized
camera imaging and analysis. These processes are used by many companies in
connection with the price labeling of their products. Andrx is investigating the
facts and evaluating the claims and has not yet responded to the complaint.
Andrx is unable to determine the ultimate outcome of this matter.

         On November 14, 2001, Gerald Lannes on behalf of himself and others,
filed a putative class action against Andrx in Superior Court, State of Arizona,
relating to the average wholesale pricing (AWP) of pharmaceutical products and
alleging that Andrx and other unnamed pharmaceutical companies have been and,
continue to be, conspiring to report fictitious AWP. Plaintiff claims violations
of the Arizona Consumer Fraud Act and illegal restraint of trade attendant
thereto, and seeks compensatory, punitive and treble damages in an unspecified
amount, pre and post judgment interest and attorneys fees and costs. Andrx
is unable to determine the ultimate outcome of this matter.


                                      137
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         A series of putative class actions have been filed against Andrx
and numerous other pharmaceutical companies in the federal courts in the states
of Kentucky and Washington and in the Judicial District Court of the State of
Louisiana relating to the use of phenylpropanolamine (PPA) in drug products and
damage allegedly incurred by the consumers of such products. The federal actions
have been consolidated by the Judicial Panel on Multidistrict Litigation and
transferred to the U.S. District Court for the Western District of Washington
for consolidated discovery and other pre-trial proceedings. The Louisiana state
court action is being removed to the federal district court and thereafter is
expected to be consolidated for pre-trial purposes with the other federal court
actions in the Western District of Washington. Andrx has been joined in this
action because it acquired Entex, a product, which at one time, contained PPA,
from a subsidiary of Elan. Upon acquiring the Entex product, Andrx reformulated
the Entex product eliminating PPA as an active ingredient. Andrx has never
caused the Entex product to be manufactured with PPA as an active ingredient and
Elan has indemnified Andrx in connection with any litigation arising from Entex
and PPA therein.

         On March 7, 2002, Alpharma USPD, Inc., for whom Armstrong had done
contract manufacturing, notified Armstrong that the Epinephrine Mist product
manufactured by Armstrong was subject to a recall. Alpharma claims that
Armstrong has breached its manufacturing agreement and requests indemnification
for the full amount of its loss arising from the recall. Alpharma estimates that
its loss could be in excess of $10,000. Andrx is currently investigating
this matter and has disputed both the basis for liability and the amount of
damages, if any, which may be owing. Nonetheless, Andrx is also seeking
indemnification from Medeva, from whom Andrx acquired Armstrong, for the losses
claimed by Alpharma.

         On March 22, 2002, Ronald Kassover filed a putative securities fraud
class action against Andrx and certain of its officers and directors in the U.S.
District Court for the Southern District of Florida, for alleged violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder. The plaintiff purports to bring the suit on behalf of
all persons or institutions who acquired Andrx common stock from April 30, 2001
through February 21, 2002. The complaint alleges that, during the time period in
question, Andrx publicly issued a series of material misrepresentations to the
market regarding the regulatory status of its bioequivalent version of the drug
Tiazac. These statements allegedly misled the investing public into believing
that, but for the pending patent litigation with Biovail, Andrx's bioequivalent
version of Tiazac was ready to be marketed when, in fact, FDA had raised
"certain issues" concerning generic Tiazac, as Andrx disclosed on February 21,
2002, in connection with its announcement that it had reached a tentative
settlement with Biovail relating to that patent dispute. According to the
plaintiff, Andrx's February 21, 2002 announcement precipitated a decline in
Andrx's stock price. Andrx believes the complaint is without merit, notes that
the stock price of the Andrx common stock actually increased following the
February 21, 2002 announcement, and believes that the decline on February 22,
2002, in the price of the Andrx common stock was substantially unrelated to the
status of Tiazac within the FDA.

CYBEAR LITIGATION

         On October 19, 1993, Terrill Hill Burnett filed an action in the U.S.
District Court for the Southern District of New York against Physicians' Online
and some of the original shareholders of the company alleging (1) securities and
common law fraud in the sale of shares of common stock; (2) breach of fiduciary
duty and negligent misrepresentation; (3) breach of an employment agreement; (4)
compensation for services rendered; and (5) gender discrimination. Ms. Burnett
seeks damages in an amount in excess of $1,000 and punitive damages. All of
Ms. Burnett's claims have been dismissed except her claims for breach of
employment agreement and quantum meruit. Physicians' Online has vigorously
defended the case and has asserted several affirmative defenses to plaintiff's
claims. Discovery has commenced and no trial date is set.


                                      138
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


         On May 8, 2001, Cybear filed an action against Healthcare.com Corp.
alleging claims for breach and wrongful termination of contract and seeking
damages for past due amounts owed under the parties' contract, lost profits,
interest and attorneys' fees in the circuit court of Palm Beach County Florida.
On August 29, 2001, Cybear amended its complaint to add counts for enforcement
of statutory lien and wrongful replevin. The wrongful replevin claim was
dismissed without prejudice for lack of ripeness. On October 17, 2001,
Healthcare.com filed an answer, affirmative defenses and a multiple-count
counterclaim for (1) replevin, (2) breach of the AHA and Product Schedule, (3)
breach of the Software Maintenance Agreement, (4) declaratory judgment
terminating the software licenses, (5) conversion for withholding
Healthcare.com's property and (6) conversion for altering Healthcare.com's
property. The relief sought by Healthcare.com is for damages in an unspecified
amount, plus pre-judgment interest, attorneys' fees and costs. Cybear believes
that Healthcare.com's claims are without merit, but is unable to determine the
ultimate outcome of this matter.

         On October 9, 2001, Nicebid.Com, LLC served a demand for arbitration of
its claims against Cybear and Telegraph Consulting Corporation. The claims arise
out of an agreement between the parties relating to web design and web hosting
services and are for alleged breach of contract, breach of warranty, negligence,
fraudulent inducement, fraud and violation of the New Jersey Consumer Fraud Act.
Nicebid seeks compensatory damages in the amount of $7,000, punitive damages in
an unspecified amount, plus attorneys' fees and costs of the proceeding. Cybear
has asserted numerous defenses, but is unable to determine the ultimate outcome
of this matter.

         In February 2001, the Southeast Regional Office of the Securities and
Exchange Commission commenced a formal private investigation of Cybear, which
focused on Cybear's revenue reporting, disclosure and internal controls in 1999
and 2000 with respect to Cybearclub LC, a joint venture between Andrx and Cybear
intended to promote the distribution of certain healthcare products through the
Internet. This investigation followed an informal inquiry conducted by the SEC
staff beginning late in the third quarter of 2000. Andrx Corporation and the SEC
staff have held discussions concerning the SEC's investigation and a possible
resolution. However, no assurances can be given that a settlement can be
reached. Further, if settlement negotiations fail, Andrx Corporation cannot
predict with any certainty the nature of any enforcement action or what charges
the SEC might pursue.

OTHER LITIGATION

         As of December 31, 2001, Andrx and Cybear are involved with other legal
proceedings incidental to its business. Although it is not impossible to predict
the outcome of such proceedings, it is the opinion of management, based on the
legal advice of counsel, that the ultimate outcome of those proceedings will not
have any material adverse effect on the consolidated financial statements of the
Company.


(18)     SEGMENTS


         Operating segments are defined as components of an enterprise about
which separate financial information is available that is evaluated regularly by
the chief operating decision maker, or decision making group, in deciding how to
allocate resources and in assessing performance. The operating segments are
managed separately because of the fundamental difference in their operations or
in the uniqueness of their product(s).


                                      139
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         The Company operates in the following business segments:

         Distributed Products

         The Company distributes generic pharmaceuticals manufactured by third
parties primarily through its in-house telemarketing staff primarily to
independent pharmacies, non-warehousing chains and physician offices. The
distributed products segment includes the activity of Valmed after the Company
acquired certain assets of Valmed on March 15, 2000. The distributed products
segment's operating results exclude participation in the distribution of Andrx
bioequivalent products, which are included in the bioequivalent product segment.
Through March 30, 2001, the distributed products segment includes sales related
to the distribution of the bioequivalent version of Ventolin(R) (albuterol
metered dose inhaler) manufactured by Armstrong. Sales of Armstrong's albuterol
metered dose inhalers after the Company acquired certain assets of Armstrong on
March 30, 2001 are excluded from the distributed products segment and are
included in the bioequivalent products segment.

         Bioequivalent Products

         The Company researches and develops, manufactures and sells
bioequivalent versions of selected controlled-release brand name pharmaceuticals
utilizing its proprietary drug delivery technologies and bioequivalent versions
of specialty, niche or immediate release pharmaceutical products. Additionally,
the bioequivalent products segment includes the operations of Armstrong after
the acquisition of certain of its assets on March 30, 2001. Armstrong
manufactures bioequivalent versions of albuterol metered dose inhalers under an
approved ANDA and also manufactures and sells such products under contract to
one other pharmaceutical company. In addition, Armstrong manufactures products
for other pharmaceutical companies under contract manufacturing arrangements.

         Brand Products

         The Company applies proprietary drug delivery technologies to the
research and development of brand name controlled-release formulations of
existing chemical entities. The brand products segment also includes fees
generated under the Geneva agreement, CTEX, which Andrx acquired on January 23,
2001, the Entex brand product line of cough and cold products and, starting in
November 2001, the hydrocodone pain products licensed under an agreement with
Mallinckrodt under the new trade name Anexsia.

         Internet

          Through Cybear, the Company is an information technology company that
seeks to use the Internet to aggregate information for physicians and improve
administrative and communications tasks for physicians, while addressing the
healthcare industry's critical need for secure and reliable transmission of
information. The Internet segment has also entered into license and royalty
agreements related to its electronic prescription delivery patents. The Internet
segment also includes AHT and the consolidation of the Cybearclub LC joint
venture with Andrx, intended to distribute healthcare products to physicians
through the Internet. Additionally, the Internet segment includes Mediconsult
after the April 2, 2001 acquisition.

          Corporate and Other

         Corporate and other consists of corporate headquarters, including
general and administrative expenses, interest income and income taxes.

         The Company evaluates the performance of the segments after all
intercompany sales are eliminated. The allocation of income taxes is not
evaluated at the segment level.


                                      140
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)



The following table presents financial information by business segment:

<TABLE>
<CAPTION>

                                                              AS OF OR FOR THE YEAR ENDED DECEMBER 31, 2001
                                        ------------------------------------------------------------------------------------------
                                        DISTRIBUTED    BIOEQUIVALENT    BRAND                         CORPORATE
                                          PRODUCTS        PRODUCTS     PRODUCTS        INTERNET        & OTHER        CONSOLIDATED
                                        -----------    -------------  ----------      ----------     ------------     ------------
<S>                                     <C>            <C>            <C>             <C>            <C>              <C>
Revenues                                $  491,132     $  204,969     $   44,045      $    8,957     $       (62)     $  749,041
Income (loss) from operations               34,554        102,504        (20,033)        (35,737)        (24,768)         56,520
Interest income                                 --             --             --             422          10,964          11,386
Interest expense (income)                       --             --             --               1              (1)             --
Equity in earnings of joint ventures            --          1,025             --              --              --           1,025
Depreciation and amortization                2,924          6,954          4,429           7,654              78          22,039
Capital expenditures                         8,336         64,908            842             307             696          75,089
Total assets                               194,784        222,045         56,506          17,087         298,792         789,214

</TABLE>

<TABLE>
<CAPTION>

                                                              AS OF OR FOR THE YEAR ENDED DECEMBER 31, 2000
                                        ------------------------------------------------------------------------------------------
                                        DISTRIBUTED    BIOEQUIVALENT    BRAND                         CORPORATE
                                          PRODUCTS        PRODUCTS     PRODUCTS        INTERNET        & OTHER        CONSOLIDATED
                                        -----------    -------------  ----------      ----------     ------------     ------------
<S>                                     <C>            <C>            <C>             <C>            <C>              <C>
Revenues                                $  324,591     $  176,375     $   14,019      $    5,046     $       (71)     $  519,960
Income (loss) from operations               16,770        108,989         (4,078)        (25,144)        (13,351)         83,186
Interest income                                 --             --             --           1,829          11,210          13,039
Interest expense                               767             --             --              --              --             767
Equity in losses of joint ventures              --          1,202             --              --              --           1,202
Depreciation and amortization                2,610          2,484             65           4,035             376           9,570
Capital expenditures                         1,811         38,752            176           3,753              48          44,540
Total assets                               179,576        118,885            671          39,505         330,779         669,416

</TABLE>

<TABLE>
<CAPTION>

                                                              AS OF OR FOR THE YEAR ENDED DECEMBER 31, 1999
                                        ------------------------------------------------------------------------------------------
                                        DISTRIBUTED    BIOEQUIVALENT    BRAND                         CORPORATE
                                          PRODUCTS        PRODUCTS     PRODUCTS        INTERNET        & OTHER        CONSOLIDATED
                                        -----------    -------------  ----------      ----------     ------------     ------------
<S>                                     <C>            <C>            <C>             <C>            <C>              <C>
Revenues                                $  262,321        206,399     $    7,000      $      270     $        --      $  475,990
Income (loss) from operations               20,010        151,443         (2,566)        (14,664)         (8,916)        145,307
Gain on sale of Cybear shares                  643             --             --              --              --             643
Interest income                                 --             --             --           1,282           2,321           3,603
Interest expense (income)                    1,661             --             --             216            (216)          1,661
Equity in losses of joint venture               --            370             --              --              --             370
Depreciation and amortization                1,209          1,447             46           1,556             258           4,516
Capital expenditures                         6,960         13,009             44           2,149              71          22,233
Total assets                               123,494         45,623            134          53,068         135,635         357,954

</TABLE>


                                      141
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


  (19)   SELECTED QUARTERLY DATA (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                        YEAR ENDED DECEMBER 31, 2001
                                                                     --------------------------------------------------------------
                                                                      MARCH 31          JUNE 30       SEPTEMBER 30      DECEMBER 31
                                                                     ----------       ----------      ------------      -----------
<S>                                                                  <C>              <C>              <C>              <C>
Distributed products revenue                                         $  107,956       $  107,676       $  133,819       $  145,790
Andrx products revenue                                                   44,754           65,476           72,736           46,037
Selling, general and administrative expenses                             22,953           27,872           36,019           32,377
Research and development expenses                                        14,324           14,564           11,294           12,664
Cybear Internet operating expenses                                        5,490            8,044            6,374            6,192
Cybear other charges                                                         --            1,982           10,373            2,404
Income (loss) from operations                                            19,983           23,504           18,985           (5,952)
Income taxes                                                              8,856           11,154           11,120              255
Net income (loss)                                                        14,603           15,721           10,665           (3,443)
Net income allocated to Andrx Group                                      19,169           24,201           25,251            4,241
Basic net income per Andrx Group common share                              0.28             0.35             0.36             0.06
Diluted net income per Andrx Group common share                            0.27             0.34             0.35             0.06
Net loss allocated to Cybear Group                                       (4,566)          (8,480)         (14,586)          (7,684)
Basic and diluted net loss per Cybear Group common share                  (1.20)           (1.39)           (2.23)           (1.14)

</TABLE>

<TABLE>
<CAPTION>

                                                                                         YEAR ENDED DECEMBER 31, 2000
                                                                      -------------------------------------------------------------
                                                                      MARCH 31          JUNE 30       SEPTEMBER 30      DECEMBER 31
                                                                     ----------       ----------      ------------      -----------
<S>                                                                  <C>              <C>              <C>              <C>
Distributed products revenue                                         $   67,826       $   78,805       $   85,019       $   97,460
Andrx products revenue                                                   44,114           45,994           43,101           42,219
Selling, general and administrative expenses                             11,542           14,338           16,088           19,933
Research and development expenses                                         8,218           10,463           13,676           13,110
Cybear Internet operating expenses                                        5,187            4,903            4,879            5,640
Cybear other charges (credits)                                            1,984              923            4,317           (2,000)
Andrx Reorganization costs                                                   --               --            2,098               --
Income from operations                                                   25,343           24,897           13,150           19,796
Income taxes                                                             11,856           12,124            6,782            9,108
Net income                                                               16,371           16,742           10,757           14,662
Net income allocated to Andrx Group (includes
    Cybear through September 6, 2000)                                    16,371           16,742           16,056           17,704
Basic net income per Andrx Group common share                              0.26             0.26             0.23             0.26
Diluted net income per Andrx Group common share                            0.25             0.25             0.22             0.25
Net loss allocated to Cybear Group (subsequent to September 6, 2000)                                       (5,299)          (3,042)
Basic and diluted net loss per Cybear Group common share                                                    (1.39)           (0.80)

</TABLE>


       Certain prior years amounts have been reclassified to conform to the
current year presentation.

       Earnings (loss) per share are computed independently for each quarter
presented. Therefore, the sum of the quarterly earnings (loss) per share for the
years ended December 31, 2001 and 2000, may not equal the total computed for the
year.


                                      142
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)


(20)     SUPPLEMENTAL GROUP FINANCIAL STATEMENTS


       Holders of Andrx common stock and Cybear common stock have no specific
rights to assets, operating results or cash flows of Andrx Group or Cybear Group
as Andrx Corporation holds title to all its assets and is responsible for all of
its liabilities, operating results and cash flows regardless of how it allocates
assets and liabilities among the classes of common stock and are therefore
subject to the risks of investing in the business, assets and liabilities of
Andrx Corporation as a whole. For instance, the assets allocated to each class
of common stock may be subject to Company-wide claims of creditors and
stockholder litigation. Following are the separate supplemental consolidated
financial statements for Andrx Group and Cybear Group.


      ANDRX GROUP
      (representing Andrx Corporation and subsidiaries other than Cybear)
      CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                       DECEMBER 31,
                                                                           -----------------------------------
                                                                              2001                     2000
                                                                           ----------               ----------
<S>                                                                        <C>                      <C>
ASSETS
Current assets
   Cash and cash equivalents                                               $   61,077               $  111,131
   Investments available-for-sale, at market value                            183,113                  208,977
   Accounts receivable, net of allowances of $7,035 in
     2001 and $6,971 in 2000                                                  128,697                   92,069
   Inventories                                                                161,691                  101,219
   Deferred income tax assets, net                                             30,745                   20,428
   Prepaid and other current assets                                            14,596                   10,053
                                                                           ----------               ----------

Total current assets                                                          579,919                  543,877

Property, plant and equipment, net                                            137,604                   71,433
Goodwill, net                                                                  32,345                    8,263
Other intangible assets, net                                                   17,025                       --
Note receivable from Cybear Group                                               2,001                       --
Other assets                                                                    5,413                    6,940
                                                                           ----------               ----------

Total assets                                                               $  774,307               $  630,513
                                                                           ==========               ==========

LIABILITIES AND ANDRX GROUP EQUITY
Current liabilities
   Accounts payable                                                        $   67,426               $   69,551

   Accrued liabilities                                                         62,809                   37,256
                                                                           ----------               ----------

Total current liabilities                                                     130,235                  106,807

Other liabilities                                                               3,428                    1,460
                                                                           ----------               ----------

Total liabilities                                                             133,663                  108,267

Commitments and contingencies

Andrx Group equity                                                            640,644                  522,246
                                                                           ----------               ----------

Total liabilities and Andrx Group equity                                   $  774,307               $  630,513
                                                                           ==========               ==========

</TABLE>


                                      143
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)



      ANDRX GROUP
      (representing Andrx Corporation and subsidiaries other than Cybear)
      CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

                                                                                  YEARS ENDED DECEMBER 31,
                                                             ---------------------------------------------------------------
                                                                2001                     2000                       1999
                                                             ----------               -----------                -----------
<S>                                                          <C>                      <C>                        <C>
Revenues
   Distributed products                                      $  491,132               $   324,591                $   262,321
   Andrx products                                               229,003                   175,428                    134,796
   Stipulation fees                                                  --                        --                     70,733
   Other                                                         19,949                    14,966                      7,870
                                                             ----------               -----------                -----------

Total revenues                                                  740,084                   514,985                    475,720
                                                             ----------               -----------                -----------

Operating expenses
   Cost of goods sold                                           475,760                   297,218                    235,269
   Selling, general and administrative                          119,221                    61,901                     55,266
   Research and development                                      52,846                    45,467                     25,327
   Reorganization costs                                              --                     2,098                         --
                                                             ----------               -----------                -----------

Total operating expenses                                        647,827                   406,684                    315,862
                                                             ----------               -----------                -----------

Income from operations                                           92,257                   108,301                    159,858

Other income (expense)

   Equity in earnings (losses) of joint ventures                  1,025                    (1,202)                      (370)
   Interest income                                               10,965                    11,210                      2,321
   Interest expense                                                  --                      (767)                    (1,661)
                                                             ----------               -----------                -----------

Income before income taxes                                      104,247                   117,542                    160,148

Income taxes                                                     31,385                    39,870                     58,229
                                                             ----------               -----------                -----------

Net income                                                   $   72,862               $    77,672                $   101,919
                                                             ==========               ===========                ===========

</TABLE>


                                      144
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)



      ANDRX GROUP
      (representing Andrx Corporation and subsidiaries other than Cybear)
      CONSOLIDATED STATEMENTS OF GROUP EQUITY

<TABLE>
<CAPTION>

                                                                                                              COMPREHENSIVE
                                                                                  ANDRX GROUP EQUITY             INCOME
                                                                                  ------------------          -------------
<S>                                                                               <C>                         <C>
Balance, December 31, 1998                                                           $   63,720
Allocation of Andrx common stock issued in
  connection with exercises of warrants and options                                       6,683
Allocation of income tax benefits related to
  exercises of Andrx stock options                                                        9,368
Allocation of Andrx options granted to consultants                                           10
Allocation of unrealized  gain on investments
  available-for-sale, net of income taxes of $13                                              7                 $       7
Net income allocated to Andrx Group                                                     101,919                   101,919
                                                                                     ----------                 ---------
Comprehensive income                                                                                            $ 101,926
                                                                                                                =========
Balance, December 31, 1999                                                              181,707

Allocation of Andrx common stock issued in
  connection with equity offering                                                       235,819
Allocation of Andrx common stock issued in
  connection with exercises of warrants and options                                       6,959
Allocation of income tax benefits related to
  exercises of Andrx common stock                                                        19,870
Allocation of unrealized gain on investments
  available-for-sale, net of income taxes of $115                                           219                 $     219
Net income allocated to Andrx Group                                                      77,672                    77,672
                                                                                     ----------                 ---------
Comprehensive income                                                                                            $  77,891
                                                                                                                =========
Balance, December 31, 2000                                                              522,246

Allocation of Andrx common stock issued in
  connection with exercises of options                                                    9,060
Allocation of income tax benefits related to
  exercises of Andrx common stock                                                        18,363
Allocation of stock issued in connection with CTEX
  Pharmaceuticals, Inc. acquisition                                                      18,166
Allocation to Cybear under  tax sharing agreement                                          (250)
Allocation of unrealized gain on investments
  available-for-sale, net of income taxes of $225                                           197                 $     197
Net income allocated to Andrx Group                                                      72,862                    72,862
                                                                                     ----------                 ---------
Comprehensive income                                                                                            $  73,059
                                                                                                                =========
Balance, December 31, 2001                                                           $  640,644
                                                                                     ==========
</TABLE>

                                      145
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

ANDRX GROUP
(representing Andrx Corporation and subsidiaries other than Cybear)
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                               YEARS ENDED DECEMBER 31,
                                                                                     ---------------------------------------------
                                                                                       2001               2000              1999
                                                                                     ---------         ---------         ---------
<S>                                                                                  <C>               <C>               <C>
Cash flows from operating activities
Net income                                                                           $  72,862         $  77,672         $ 101,919
  Adjustments to reconcile net income to net cash provided by
    operating activities
      Depreciation and amortization                                                     14,385             5,535             2,960
      Provision for doubtful accounts                                                      518               548             3,897
      Undistributed equity in (earnings) losses of joint ventures                       (1,025)            1,202               370
      Income tax benefits related to exercises of Andrx stock options                   18,363            19,870             9,368
      Deferred income tax benefit                                                       (7,996)           (3,818)          (18,442)
      Changes in operating assets and liabilities:
        Accounts receivable                                                            (34,539)          (15,098)          (42,382)
        Inventories                                                                    (41,045)          (18,286)          (36,434)
        Prepaid and other assets                                                         2,679            (1,858)          (13,871)
        Accounts payable and accrued and other liabilities                              17,349             4,989            50,623
                                                                                     ---------         ---------         ---------

Net cash provided by operating activities                                               41,551            70,756            58,008
                                                                                     ---------         ---------         ---------

Cash flows from investing activities:
    Purchases of property, plant and equipment                                         (74,782)          (40,787)          (18,481)
    Maturity (purchases) of investments available-for-sale,
       at market value                                                                  26,063          (143,990)          (59,151)
    Acquisition of CTEX Pharmaceuticals, Inc. net of cash acquired                     (11,135)               --                --
    Loans to former CTEX Pharmaceuticals, Inc. shareholders                             (3,697)               --                --
    Acquisition of certain assets of Armstrong Pharmaceuticals                         (18,218)               --                --
    Acquisition of Entex brand product line                                            (14,795)               --                --
    Acquisition of marketing rights of the Anexsia brand product line                   (2,100)               --                --
    Acquisition of certain assets of Valmed Pharmaceuticals, Inc.,
       net of cash acquired                                                                 --           (15,195)               --
                                                                                     ---------         ---------         ---------

Net cash used in investing activities                                                  (98,664)         (199,972)          (77,632)
                                                                                     ---------         ---------         ---------

Cash flows from financing activities
    Net proceeds from Andrx public share offering                                           --           235,819                --
    Proceeds from the issuance of shares of Andrx common stock from
      exercises of stock options and warrants                                            9,060             6,959             6,683
    Advances to Cybear Group on line of credit                                          (2,001)               --                --
    Net borrowings (repayments) under bank loan                                             --           (20,226)           16,119
                                                                                     ---------         ---------         ---------

Net cash provided by financing activities                                                7,059           222,552            22,802
                                                                                     ---------         ---------         ---------

Net increase (decrease) in cash and cash equivalents                                   (50,054)           93,336             3,178

Cash and cash equivalents, beginning of year                                           111,131            17,795            14,617
                                                                                     ---------         ---------         ---------

Cash and cash equivalents, end of year                                               $  61,077         $ 111,131         $  17,795
                                                                                     =========         =========         =========
</TABLE>

                                   (Continued)


                                      146
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

<TABLE>
<CAPTION>
                                                                                               YEARS ENDED DECEMBER 31,
                                                                                     ---------------------------------------------
                                                                                       2001               2000              1999
                                                                                     ---------         ---------         ---------
<S>                                                                                  <C>               <C>               <C>
Supplemental disclosure of cash paid during the year for:

      Interest                                                                       $      --         $     767         $   1,661
                                                                                     =========         =========         =========

      Income taxes                                                                   $   9,499         $  32,440         $  48,790
                                                                                     =========         =========         =========

Supplemental disclosure of non-cash investing activities:
Acquisition of CTEX Pharmaceuticals, Inc.
      Market value of Andrx common stock issued                                      $ 18,166
                                                                                     ========

      Fair value of net liabilities assumed                                          $    537
                                                                                     ========

Acquisition of certain assets of Valmed Pharmaceuticals, Inc.
      Fair value of net assets acquired                                                                $   6,487
                                                                                                       =========
</TABLE>


                                      147
<PAGE>


                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

CYBEAR GROUP
(representing Cybear Inc. and its subsidiaries)
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                               DECEMBER 31,
                                                                                       ----------------------------
                                                                                          2001               2000
                                                                                       ---------          ---------
<S>                                                                                    <C>                <C>
ASSETS
Current assets
   Cash and cash equivalents                                                           $   1,234          $   4,478
   Investments available-for-sale, at market value                                            --             12,223
   Accounts receivable, net of allowances of $628 in 2001
      and $106 in 2000                                                                     1,203                891
   Prepaid and other current assets                                                          717                550
                                                                                       ---------          ---------

         Total current assets                                                              3,154             18,142

Equipment, net                                                                             2,294              6,340
Goodwill, net                                                                                324             14,027
Other intangible assets, net                                                              11,280                875
Other assets                                                                                  35                121
                                                                                       ---------          ---------

         Total assets                                                                  $  17,087          $  39,505
                                                                                       =========          =========

LIABILITIES AND CYBEAR GROUP EQUITY
Current liabilities
   Accounts payable                                                                    $   1,435          $     950
   Accounts payable to Andrx Group                                                           179                602
   Accrued liabilities                                                                     3,508                402
   Other liabilities                                                                       1,060                 --
                                                                                       ---------          ---------
         Total current liabilities                                                         6,182              1,954

Note payable to Andrx Group                                                                2,001                 --
Other liabilities                                                                          1,654                 --
                                                                                       ---------          ---------
         Total liabilities                                                                 9,837              1,954

Commitments and contingencies

Cybear Group equity                                                                        7,250             37,551
                                                                                       ---------          ---------

         Total liabilities and Cybear Group equity                                     $  17,087          $  39,505
                                                                                       =========          =========
</TABLE>


                                      148
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

CYBEAR GROUP
(representing Cybear Inc. and its subsidiaries)
CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                               YEARS ENDED DECEMBER 31,
                                                                                     ---------------------------------------------
                                                                                        2001              2000             1999
                                                                                     ---------         ---------         ---------
<S>                                                                                  <C>               <C>               <C>
Revenues
   Cybearclub LC Internet product sales                                              $   4,109         $   1,483         $      81
   Cybearclub LC telemarketing product sales                                                --             2,715                --
   Other product sales                                                                      --               321                --
   Application services                                                                  1,387                30                --
   Portal services                                                                       1,448                --                --
   Website development, hosting and other services                                         479               336               102
   Online meeting development services                                                   1,070                --                --
   Subscription services                                                                   464               161                87
                                                                                     ---------         ---------         ---------

Total revenues                                                                           8,957             5,046               270
                                                                                     ---------         ---------         ---------

Operating expenses
   Cost of goods sold                                                                    3,835             4,257                77
   Network operations and operations support                                             5,603             4,501             2,972
   Product development                                                                   5,416             3,774             3,058
   Selling, general and administrative                                                   7,427             8,399             7,271
   Depreciation and amortization                                                         7,654             4,035             1,556
   Merger costs and other charges                                                       14,759             5,224                --
                                                                                     ---------         ---------         ---------

Total operating expenses                                                                44,694            30,190            14,934
                                                                                     ---------         ---------         ---------

Loss from operations                                                                   (35,737)          (25,144)          (14,664)

Other income (expense)
   Interest income                                                                         422             1,829             1,282
   Interest expense on advances from Andrx Group                                            (1)               --              (216)
                                                                                     ---------         ---------         ---------

Loss before income taxes                                                               (35,316)          (23,315)          (13,598)


Income tax benefit allocated from Andrx Group                                               --                --             2,824
                                                                                     ---------         ---------         ---------

Net loss                                                                             $ (35,316)        $ (23,315)        $ (10,774)
                                                                                     =========         =========         =========
</TABLE>


                                      149
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

CYBEAR GROUP
(representing Cybear Inc. and its subsidiaries)
CONSOLIDATED STATEMENTS OF GROUP EQUITY

<TABLE>
<CAPTION>
                                                                                               CYBEAR GROUP        COMPREHENSIVE
                                                                                              EQUITY (DEFICIT)          LOSS
                                                                                              ----------------     -------------
<S>                                                                                           <C>                  <C>
Balance, December 31, 1998                                                                       $    (467)

Allocation of Cybear public offering                                                                50,778
Conversion of Due to Andrx upon consummation of Cybear
   public offering                                                                                   7,446
Allocation of acquisition of Telegraph Consulting
   Corporation                                                                                       2,771
Allocation of Cybear common stock issued in connection with
   exercises of warrants                                                                               169
Allocation of Cybear options granted to consultants                                                    155
Allocation of unrealized loss on investments
   available-for-sale                                                                                 (100)          $    (100)
Net loss allocated to Cybear                                                                       (10,774)            (10,774)
                                                                                                 ---------           ---------

Comprehensive loss                                                                                                   $ (10,874)
                                                                                                                     =========

Balance, December 31, 1999                                                                          49,978

Allocation of equity in connection with the Reorganization                                           9,411
Allocation of Cybear employee options as a result of the
  Reorganization                                                                                     1,053
Allocation of Cybear common stock issued in connection with
  exercise of options                                                                                  322
Allocation of unrealized gain on investments
  available-for-sale                                                                                   102           $     102
Net loss allocated to Cybear                                                                       (23,315)            (23,315)
                                                                                                 ---------           ---------

Comprehensive loss                                                                                                   $ (23,213)
                                                                                                                     =========

Balance, December 31, 2000                                                                          37,551

Allocation of Cybear common stock issued in connection with
    the purchase of Mediconsult.com, Inc                                                             4,765

Allocation from Andrx under tax sharing agreement                                                      250

Net loss allocated to Cybear                                                                       (35,316)          $ (35,316)
                                                                                                 ---------           ---------

Comprehensive loss                                                                                                   $ (35,316)
                                                                                                                     =========

Balance, December 31, 2001                                                                       $   7,250
                                                                                                 =========
</TABLE>


                                      150
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

CYBEAR GROUP
(representing Cybear Inc. and its subsidiaries)
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                               YEARS ENDED DECEMBER 31,
                                                                                     ---------------------------------------------
                                                                                       2001              2000               1999
                                                                                     ---------         ---------         ---------
<S>                                                                                  <C>               <C>               <C>
Cash flows from operating activities
   Net loss                                                                          $ (35,316)        $ (23,315)        $ (10,774)
   Adjustments to reconcile net loss to net cash used in operating
      activities
      Depreciation and amortization                                                      7,654             4,035             1,556
      Cybear other non-cash charges                                                     14,759                --                --
      Non-cash net charge related to AHT Corporation note
         receivable                                                                         --             2,000                --
      Provision for doubtful accounts                                                      839               103                --
      Changes in operating assets and liabilities
         Accounts receivable, net                                                         (434)             (846)              320
         Prepaid and other assets                                                        1,355             4,866            (5,945)
         Accounts payable and accrued and other liabilities                             (3,023)             (637)            1,549
                                                                                     ---------         ---------         ---------
Net cash used in operating activities                                                  (14,166)          (13,794)          (13,294)
                                                                                     ---------         ---------         ---------

Cash flows from investing activities
   Maturities (purchases) of investments available-for-sale, net                        12,220            13,952           (26,172)
   Purchases of property and equipment                                                    (307)           (3,753)           (3,752)
   Acquisition of and advances to Mediconsult.com, Inc.                                 (3,242)               --                --
   Acquisition of Telegraph Consulting Corporation                                          --                --            (1,181)
   Cash flow related to AHT Corporation note receivable and investment                      --            (3,875)               --
                                                                                     ---------         ---------         ---------
Net cash provided by (used in) investing activities                                      8,671             6,324           (31,105)
                                                                                     ---------         ---------         ---------

Cash flows from financing activities
   Advances from Andrx on line of credit                                                 2,001                --                --
   Proceeds from issuance of Cybear common stock                                            --                --            50,778
   Capital contributions under tax sharing agreement                                       250                --                --
   Capital transactions of Cybear, net                                                      --                26               379
   Advances from Andrx, net of Andrx's utilization of
      Cybear's income tax attributes                                                        --                --             5,160
                                                                                     ---------         ---------         ---------
Net cash provided by financing activities                                                2,251                26            56,317
                                                                                     ---------         ---------         ---------

Net increase (decrease) in cash and cash equivalents                                    (3,244)           (7,444)           11,918
Cash and cash equivalents, beginning of year                                             4,478            11,922                 4
                                                                                     ---------         ---------         ---------

Cash and cash equivalents, end of year                                               $   1,234         $   4,478         $  11,922
                                                                                     =========         =========         =========

Supplemental disclosure of non-cash investing and financing activities:

   Purchase of Cybear minority interest by Andrx                                                       $  10,444
                                                                                                       =========

   Conversion of due to Andrx into shares of Cybear common stock                                                         $   7,446
                                                                                                                         =========

Acquisition of Mediconsult.com, Inc.

   Market value of Cybear common stock issued                                        $   4,765
                                                                                     =========
   Fair value of net liabilities assumed                                             $   5,295
                                                                                     =========
</TABLE>


                                      151
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         RELATED INTERGROUP TRANSACTIONS

         Certain significant transactions between the groups, which are
eliminated in consolidation, are as follows:

         Subscription Fees

         In September 1999, Cybear provided subscriptions to its Physician
Practice Portal product to certain customers of Andrx at a standard monthly
rate. Andrx paid for such subscription services on behalf of its customers.
Revenues generated from such services were $19 for the year ended December 31,
1999. No such revenues were generated in 2001 or 2000.

         Banner Advertisements

         Beginning in July 2000, Cybear developed banner advertisements for
certain Andrx customers and provided such Andrx customers with advertising on
its dr.Cybear website. Andrx paid Cybear for such services. Cybear recorded $72
as Website development, hosting and other services revenue for the year ended
December 31, 2000 for such services. Management believes that the amounts billed
for these services approximate fair value.

         Cybearclub LC

         In August 1999, Cybear commenced the Cybearclub LC joint venture
("Cybearclub") with Andrx intended to distribute healthcare products to
physician offices through the Internet. Capital contributions to, distributions
from and net income or loss generated by Cybearclub are allocated in proportion
to Cybear Group's and Andrx Group's interests in the joint venture. Such
interests are 55% to Cybear Group and 45% to Andrx Group. Cybearclub is managed
by and under the direction of a management committee comprised of five members.
Three members are appointed by Cybear Group and two members are appointed by
Andrx Group. Based on its majority ownership and majority representation on the
management committee of Cybearclub, Cybear Group controls Cybearclub.
Accordingly, Cybear Group consolidates the accounts of Cybearclub and Andrx
Group utilizes the equity method of accounting for its investment in Cybearclub.

         To help achieve Cybearclub's objective of having physician offices
purchase products through the Internet, Cybearclub initiated a dual strategy of
using Andrx Group telemarketers to induce physician offices, including Andrx
Group physician customers, to begin placing orders with Cybearclub, and to then
transition those physician offices from being purchasers who place their orders
with a telemarketers into customers who place orders directly through the
Internet.

         Accordingly, through October 8, 2000, revenues reported by Cybearclub
consisted of revenues derived from orders procured by Andrx Group telemarketers
and entered on the Internet by Cybear personnel, as well as revenues derived
from orders placed by physician offices over the Internet. As a result of an
amendment to the joint venture agreement, beginning October 9, 2000, Cybearclub
revenues consisted solely of orders entered by physician offices over the
Internet. Accordingly, effective October 9, 2000, any orders not entered by
physician offices over the Internet were recognized as revenues by Andrx Group
and not by Cybearclub.

         Through Cybearclub, Cybear generated $4,109 and $4,198 in revenues for
2001 and 2000 as compared to $81 in 1999. Cybearclub 2001 revenues of $4,109
consist solely of physician Internet sales reported as "Cybearclub LC Internet
product sales". Cybearclub 2000 revenues of $4,198, consist of (i) physician
Internet sales reported as "Cybearclub LC Internet product sales" of $1,483 and
(ii) sales procured by Andrx telemarketers and entered by Cybear employees over
the Internet through October 8, 2000, reported as "Cybearclub LC telemarketing
product sales" of $2,715.


                                      152
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         For the year ended December 31, 1999 and through the first quarter of
2000, as originally reported by Cybear, all Cybearclub product sales were
reported as E-commerce sales. In the second quarter of 2000, Cybear changed its
presentation from E-commerce sales to Cybearclub LC sales and in the third
quarter of 2000, Cybear changed its presentation to Cybearclub LC Internet
product sales (i.e. physician office Internet orders) and Cybearclub LC
telemarketing product sales (i.e. telemarketing orders entered over the Internet
on behalf of physician customers by Cybear employees). Cybear Group is
presenting 1999 E-commerce products sales as Cybearclub LC Internet product
sales of $81 although Cybear Group's systems at that time did not permit such
classification to be fully verified.

         As part of its operations, Andrx purchases products from outside
vendors and distributes them to pharmacies and physicians with whom it generally
contacts through telemarketers. In connection with Cybearclub, Andrx sells some
of those products to Cybearclub at cost and charges Cybearclub for certain
fulfillment and back office operations such as purchasing, warehousing and
distribution, as well as customer service and telemarketing activities. Under
the joint venture agreement negotiated by the parties, such services were
charged at a rate of 6% of gross sales for the years ended December 31, 2001 and
2000 and 10% of gross sales for the year ended December 31, 1999. The current
rate of 6% could increase if Cybearclub achieves certain quarterly gross sales
levels. For the years ended December 31, 2001, 2000 and 1999, Andrx charged
Cybearclub $250, $279 and $8, respectively, for the services it provided.

         Cybearclub's operations resulted in net income of $26 in 2001, and net
losses of $43 and $17 in 2000 and 1999, respectively, for which Cybear recorded
Andrx minority interest expense of $12 in 2001 and minority interest income of
$19 and $8 for 2000 and 1999, respectively.

         Management Services

         Cybear Group and Andrx Group have a corporate services agreement
whereby Andrx Group provides Cybear Group with various management services. For
the years ended December 31, 2001, 2000 and 1999, Cybear Group incurred amounts
for these services based upon mutually agreed upon allocation methods.
Management believes that the amounts incurred for these services approximate
fair value. Costs for such services were $120 for each of the years ended
December 31, 2001, 2000 and 1999.

         Intergroup Payable

         Accounts payable to Andrx Group in Cybear Group's Consolidated Balance
Sheets, represents amounts payable to Andrx for the purchase of the products
sold by Cybear Group and services provided by Andrx Group. As of December 31,
2001 and 2000, the accounts payable to Andrx were $179 and $602, respectively.

         Intergroup Note

         Note payable to Andrx Group in Cybear Group's Consolidated Balance
Sheet and note receivable from Cybear Group in Andrx Group's Consolidated
Balance Sheet, represent amounts payable to Andrx under an unsecured revolving
line of credit between Andrx Group and Cybear Group, entered into in March 2001,
and expiring on March 31, 2004. As of December 31, 2001, the note payable to
Andrx was $2,001 with an interest rate of 5.75% per annum. Cybear Group must
maintain certain covenants, as defined in the agreement. As of December 31,
2001, Cybear Group was in compliance with all of the covenants of this
agreement. As of December 31, 2001, $1 of interest expense was accrued on the
loan.


                                      153
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        DECEMBER 31, 2001, 2000 AND 1999
             (in thousands, except for share and per share amounts)

         Tax Sharing Agreement

         Andrx Group and Cybear Group have entered into a tax sharing agreement,
as supplemented, in connection with the Reorganization in September 2000 (see
Note 11).

(21)     SUBSEQUENT EVENTS

         Nasdaq Notice of Cybear Delisting

         The Nasdaq Stock Market ("Nasdaq") has notified Andrx Corporation that
the Cybear common stock is subject to delisting because Cybear common stock is
not in compliance with the continued listing requirements of the Nasdaq since
the Cybear common stock failed to maintain a minimum market value of publicly
held shares ("MVPHS") of $5,000 and a minimum bid price of $1.00 per share for
30 consecutive trading days as required under Nasdaq's Marketplace Rules
4450(a)(2) and 4450(a)(5), respectively. Cybear Group has been given 90 calendar
days, or until May 23, 2002, to regain a MVPHS of at least $5,000 as well as a
bid price of at least $1.00 per share, at the market close, for a minimum of 10
consecutive trading days. If Cybear Group does not meet these criteria by May
23, 2002, Nasdaq will provide written notification that Cybear Group's
securities are subject to delisting. At that time, Andrx Corporation may appeal
Nasdaq's determination as it relates to the Cybear Group to a listing
qualifications panel or apply for a transfer of its securities to the Nasdaq
Small-Cap Market. If Andrx Corporation applies for an appeal or transfer for
Cybear Group, there is no assurance that either action would be granted. As a
result, an investor may find it more difficult to dispose of or obtain accurate
quotations as to the market value of the Cybear common stock, potentially
leading to further declines in share price and making it more difficult for
Cybear to raise additional capital. Cybear common stock market prices included
herein give effect to the July 2001 one-for-four reverse stock split. The
delisting may be irrelevant due to the conversion described below.

         Conversion of Cybear Common Stock

         On March 28, 2002, Andrx Corporation announced its plans to convert all
of the outstanding shares of Cybear common stock into shares of Andrx common
stock effective May 17, 2002. Each outstanding share of Cybear common stock will
be converted into 0.00964 of a share of Andrx common stock. Following the
conversion, the businesses that comprise Cybear will operate within Andrx and
the Andrx common stock will constitute the only outstanding common stock of
Andrx Corporation. A special committee of Andrx Corporation's board of
directors, which was appointed to represent the interests of the holders of the
Cybear common stock, received an opinion from Raymond James & Associates, Inc.
that the consideration to be received, as provided in Andrx Corporation's
certificate of incorporation, is fair, from a financial point of view, to the
holders of the Cybear common stock.

         The conversion ratio is based upon the relative market values of the
Andrx common stock and Cybear common stock averaged over the period from
February 22, 2002 through March 21, 2002. The conversion ratio includes a 25%
premium on the value of the Cybear common stock, as required by the terms of
Andrx Corporation's certificate of incorporation, which was approved by the
Andrx and Cybear stockholders in the reorganization. The conversion is expected
to result in the issuance of approximately 65,013 shares of Andrx common stock.

         Through the date of the conversion on May 17, 2002, Andrx Corporation
will continue to allocate net income (loss) to each class of common stock.
Subsequent to the conversion, Andrx Corporation will only report earnings per
share for Andrx common stock which will include all of Cybear Group's operating
results from the effective date of the conversion, and will no longer report
separate future earnings per share for the former Cybear common stock.
Additionally, Andrx will not provide supplemental group financial statements for
Andrx Group and Cybear Group as was previously presented during the two-class
structure. Disclosures required under accounting principles generally accepted
in the United States will continue to be provided, as appropriate.

         While the premium to be paid to Cybear Group stockholders will not be
included in the Andrx Group or Cybear Group pre-conversion operating results,
the premium will be deducted from the net income available to holders of Andrx
common stock in computing Andrx Group's earnings per share and will be deducted
from the net loss available to holders of Cybear common stock in computing
Cybear Group's loss per share. This premium is anticipated to amount to
approximately $500 and is estimated to have the effect of reducing Andrx Group's
second quarter 2002 earnings per common share by approximately $0.01 on a basic
and diluted basis. Conversely, the premium is estimated to have the effect of
reducing Cybear Group's second quarter 2002 net loss per share by approximately
$0.07 on a basic and diluted basis. Net income for Andrx Corporation will not be
impacted by this conversion.

                                      154
<PAGE>
ITEM 9.  CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

None.






                                      155
<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Set forth below is certain information concerning the directors and
executive officers:

<TABLE>
<CAPTION>
                                                                                                                 TERM
NAME                                      AGE    POSITION                                                       EXPIRES
----                                      ---    --------                                                       -------
<S>                                       <C>    <C>                                                            <C>
Alan P. Cohen .........................    47    Co-Chairman of the Board and Director                            2002
Chih-Ming J. Chen, Ph.D................    50    Co-Chairman of the Board and Director                            2003
Elliot F. Hahn, Ph.D...................    57    Chief Executive Officer, President and Director                  2004
Scott Lodin............................    46    Executive Vice President, General Counsel and Secretary          N/A
Angelo C. Malahias.....................    40    Vice President and Chief Financial Officer                       N/A
Melvin Sharoky, M.D....................    51    Executive Director and Director                                  2002
Tamara A. Baum (1).....................    49    Director                                                         2002
Lawrence J. DuBow .....................    70    Director                                                         2004
Irwin C. Gerson (1)(2).................    72    Director                                                         2003
Timothy E. Nolan ......................    46    Director                                                         2004
Michael A. Schwartz, Ph.D. (1)(2)......    71    Director                                                         2003
</TABLE>

-------------------
(1)      Member of Audit Committee.
(2)      Member of Compensation Committee.

         Alan P. Cohen is Co-Chairman of the Board of Directors, and a director
of Andrx Corporation, which he founded in August 1992. Mr. Cohen served as
Andrx's Chief Executive Officer from its inception in 1992 through October 2001.
Mr. Cohen was the Chairman and a director of Cybear from February 1997 through
August 1998, when he resigned as Chairman and remained a director until the
Reorganization. In 1984, Mr. Cohen founded Best Generics, Inc., or Best, a
bioequivalent drug distribution firm, which was sold to IVAX Corporation, or
IVAX, in 1988. Mr. Cohen served as President of Best from April 1989 until June
1990. Mr. Cohen is a graduate of the University of Florida and is a registered
pharmacist. In June 2001, Mr. Cohen led a group of investors who purchased the
National Hockey League's Florida Panthers.

         Dr. Chih-Ming J. Chen has been Co-Chairman of the Board of Directors
since November 1998 and a director since November 1992. Dr. Chen served as
Andrx's Chief Scientific Officer from November 1992 until August 2001. In
January 1992, Dr. Chen formed his own company, ASAN Labs, Inc., which was
acquired by Andrx in November 1992. Dr. Chen served as the Director of Product
Development at IVAX from 1988 to 1992, where he was the leader of a research
team which specialized in the development of drug formulations, including
several controlled-release products. After graduating with a Ph.D. degree in
pharmaceutics from Ohio State University in 1981, Dr. Chen worked at
Bristol-Myers and Berlex Labs.

         Dr. Elliot F. Hahn has been Chief Executive Officer since October 2001
and has been President and a director of Andrx Corporation since February 1993.
From June 1990 to February 1993, Dr. Hahn was employed as Vice President,
Scientific Affairs of IVAX, where he was involved in the evaluation and
international licensing of product opportunities and was responsible for
maintaining the intellectual property of IVAX. From 1988 to 1993, Dr. Hahn also
served as the Vice President of Research of Baker Norton Pharmaceuticals, a
subsidiary of IVAX. Prior to that, he was an Associate Professor at The
Rockefeller University from 1977 to 1988. From 1972 until 1977, Dr. Hahn was an
Assistant Professor at Albert Einstein College of Medicine and a member of the
Institute for Steroid Research at Montefiore Hospital in New York City. Since
1988, he has been an adjunct Associate Professor at the University of Miami
School of Medicine. Dr. Hahn holds a B.S. degree from City College of New York
and a Ph.D.


                                       156
<PAGE>

degree in chemistry from Cornell University. Dr. Hahn also serves as a director
of Delta Pharmaceutical, Inc.

         Scott Lodin joined Andrx Corporation in January 1994 and is its
Executive Vice President, General Counsel and Secretary. Mr. Lodin was the
Secretary and a director of Cybear from February 1997 until the reorganization.
Prior to joining Andrx Corporation, Mr. Lodin was Special Counsel to Hughes,
Hubbard & Reed and a predecessor firm in Miami, Florida, where he practiced
primarily in the areas of corporate and commercial law.

         Angelo C. Malahias joined Andrx Corporation as its Vice President and
Chief Financial Officer in January 1996. Mr. Malahias was a director of Cybear
from April 1999 until the reorganization. From January 1995 to January 1996, Mr.
Malahias was Vice President and Chief Financial Officer of Circa
Pharmaceuticals, Inc., where he also served as Corporate Controller from July
1994 to January 1995. From 1983 to July 1994, Mr. Malahias was employed by KPMG
LLP.

         Timothy E. Nolan has been a director of Andrx Corporation since March
2000. Mr. Nolan served as President and Chief Operating Officer of Cybear from
March 2000 through November 2001. Mr. Nolan also was a director of Cybear from
June 1999 until the Reorganization. From 1985 to March 2000, Mr. Nolan was
employed by Aetna U.S. Healthcare, most recently as senior vice president of
Aetna U.S. Healthcare in charge of the field organization. Mr. Nolan is
currently consulting for various healthcare companies.

         Dr. Melvin Sharoky, a director of Andrx Corporation since November
1995, joined Andrx Corporation as Executive Director on March 1, 1999. Dr.
Sharoky was a director of Cybear from April 1999 until the reorganization. Dr.
Sharoky is also president of Somerset Pharmaceuticals Inc., a privately owned
joint venture between Watson Pharmaceuticals, Inc. and Mylan Pharmaceuticals,
Inc. Dr. Sharoky was a director of Watson from July 1995 to May 1998. From July
1995 through January 1998, Dr. Sharoky was President of Watson. From February
1993 through January 1998, Dr. Sharoky served as the President and Chief
Executive Officer of Circa. From November 1995 to May 1998, Dr. Sharoky served
on Andrx's Board of Directors as the designee of Watson.

         Tamara A. Baum was appointed a director of Andrx Corporation in April
2001. Prior to retiring, from 1994 until 1999, Ms. Baum was Managing Director,
Global Head of Health Care Finance for Warburg Dillon Read. From 1989 until
1994, Ms. Baum was Managing Director, Co-Head Health Care Group for Kidder,
Peabody & Co., Incorporated. From 1983 until 1989, Ms. Baum, was the Director of
Corporate Finance - Health Care for Prudential-Bache Capital Funding.

         Lawrence J. DuBow, a director of Andrx Corporation since April 2000, is
a consultant to Ranbaxy Pharmaceuticals, Inc. which purchased the assets of HMS
Sales and Marketing, Inc. HMS, which is engaged in the marketing of
pharmaceutical products, was founded by Mr. Dubow in 1991 and prior to its sale
to Ranbaxy, Mr. DuBow served as its Chairman and Chief Executive Officer. Since
1957, Mr. DuBow was engaged in various capacities within the pharmaceutical
industry. Mr. DuBow was the former President of the Drug Wholesales' Association
and a former Chairman of the National Wholesale Druggists' Association.

         Irwin C. Gerson, a director of Andrx Corporation since November 1993,
was the Chairman of the Lowe McAdams Healthcare division of the Interpublic
Group (formerly William Douglas McAdams, Inc.), a healthcare marketing,
communications and public relations company, from 1987 through December 1998.
Mr. Gerson is a member of the board of trustees of several academic
institutions, including Long Island University, Albany College of Pharmacy and
is Chairman of the Council of


                                       157
<PAGE>

Overseers of the Arnold and Marie Schwartz College of Pharmacy. Mr. Gerson is
also a director of Cytoclonal Pharmaceutics, Inc., a biotechnology company.

         Dr. Michael A. Schwartz, a director of Andrx Corporation since November
1993, is currently Dean Emeritus and a Professor at the College of Pharmacy at
the University of Florida having served as Dean of that college from April 1978
through May 1996.

         Andrx Corporation is currently searching for a permanent Chief
Executive Officer to replace Alan P. Cohen who retired from this position and as
a corporate officer of all other Andrx entities in October 2001. Dr. Elliot F.
Hahn has served as interim Chief Executive Officer since Mr. Cohen's retirement.

DIRECTOR COMPENSATION

         Non-employee directors receive $5,000 for each regularly scheduled
quarterly meeting they attend and a lesser amount for other board matters in
which they participate (including attendance at committee meetings or other
special meetings of the Board of Directors). Non-employee directors are also
eligible to receive grants of stock options at the discretion of the
Compensation Committee. All options granted to non-employee directors are
granted at fair market value on the date of the grant and expire ten years from
the date of the grant. During 2001, Tamara Baum was granted options to purchase
15,000 shares of Andrx common stock at an exercise price of $58.05. No other
non-employee directors received a grant of options in 2001.

INDEMNIFICATION AGREEMENTS

         Andrx Corporation has entered into an indemnification agreement with
each of its directors and executive officers. Each indemnification agreement
provides that Andrx Corporation will indemnify such person against certain
liabilities (including settlements) and expenses actually and reasonably
incurred by him or her in connection with any threatened or pending legal
action, proceeding or investigation (other than actions brought by or in the
right of Andrx Corporation) to which he or she is, or is threatened to be, made
a party by reason of his or her status as a director, officer or agent of Andrx
Corporation, provided that such director or executive officer acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of Andrx Corporation and, with respect to any criminal
proceedings, had no reasonable cause to believe his or her conduct was unlawful.
With respect to any action brought by or in the right of Andrx Corporation, a
director or executive officer will also be indemnified, to the extent not
prohibited by applicable law, against expenses and amounts paid in settlement,
and certain liabilities if so determined by a court of competent jurisdiction,
actually and reasonably incurred by him or her in connection with such action if
he or she acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of Andrx Corporation.

COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934

         Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires Andrx Corporation's executive officers, directors and holders of more
than 10% of the Andrx common stock or Cybear common stock, to file reports of
ownership and changes in ownership with the SEC and the Nasdaq National Market.
Such persons are required to furnish Andrx Corporation with copies of all
Section 16(a) forms they file.

         Based solely on its review of the copies of such forms received by it,
or oral or written representations from certain reporting persons that no Forms
5 were required for those persons, Andrx Corporation believes that, with respect
to 2001, all filing requirements applicable to its executive officers, directors
and greater than 10% beneficial owners were complied with.



                                       158
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

         The following table sets forth information concerning compensation for
the years ended December 31, 2001, 2000 and 1999 received by Alan P. Cohen, who
served as the Chief Executive Officer, or the CEO, during 2001 until October 25,
2001 and Dr. Elliot F. Hahn, who has served as CEO since October 25, 2001, and
the present and other executive officers whose annual salary and bonus exceeded
$100,000 for 2001 (together with the CEO, the "Named Executive Officers.") The
individuals described below were Andrx's only executive officers in 2001.

<TABLE>
<CAPTION>
                                                                                                                LONG TERM
                                                               ANNUAL COMPENSATION                             COMPENSATION
                                         ----------------------------------------------------------------      -------------
                                                                                                                SECURITIES
                                        FISCAL                                           OTHER ANNUAL           UNDERLYING
    NAME AND PRINCIPAL POSITION          YEAR           SALARY($)      BONUS($)         COMPENSATION($)        OPTIONS(#)(1)
-------------------------------------   ------          ---------      --------         ---------------        -------------
<S>                                     <C>             <C>            <C>              <C>                    <C>
Alan P. Cohen                            2001            416,300             --             12,700  (2)           100,000
   Co-Chairman and                       2000            348,400        150,000             16,800  (3)           300,000
   Former Chief Executive Officer (7)    1999            264,500        150,000             18,300  (3)                --

Chih-Ming J. Chen Ph.D.                  2001            372,100             --             11,600  (2)                --
   Co-Chairman and Former Chief          2000            348,400        150,000             14,800  (3)           300,000
   Scientific Officer (7)                1999            264,500        150,000             18,300  (3)                --

Elliot F. Hahn Ph.D.                     2001            398,000        175,000             16,100  (4)           150,000
   Chief Executive Officer               2000            294,400        100,000             15,920  (4)           100,000
   and President                         1999            264,500        100,000             17,000  (4)                --

Scott Lodin                              2001            323,600        150,000             10,900  (5)           110,000
   Executive Vice President,             2000            249,000        100,000             10,400  (5)            24,000
   General Counsel and Secretary         1999            199,600         50,000             12,000  (5)           108,000

Angelo C. Malahias                       2001            273,600        110,000             10,500  (6)           110,000
   Vice President and                    2000            199,400         75,000             10,100  (6)            40,000
   Chief Financial Officer               1999            169,700         50,000              5,700  (6)            48,000
</TABLE>


------------------
(1)      Represents options to purchase shares of Andrx common stock granted to
         the Named Executive Officers.
(2)      Represents an automobile allowance, premiums for a $1.0 million life
         insurance policy (the beneficiary of which is designated by the Named
         Executive Officer) and insurance premium reimbursements.
(3)      Represents an automobile allowance, premiums for a $1.0 million life
         insurance policy (the beneficiary of which is designated by the Named
         Executive Officer), certain medical expense reimbursements other than
         Dr. Chen and health insurance premium reimbursements.
(4)      Represents an automobile allowance, certain medical expense
         reimbursements and health insurance premium reimbursements.
(5)      Represents health insurance premium reimbursements, group term life
         insurance benefits and an automobile allowance in 2001 and 2000.
(6)      Represents health insurance premium reimbursements, group term life
         insurance benefits and an automobile allowance in 2001 and 2000.
(7)      Mr. Cohen and Dr. Chen resigned in their capacity as officers in
         October 2001 and August 2001, respectively. Mr. Cohen and Dr. Chen
         remain Co-Chairmen of the Board of Directors.



                                       159
<PAGE>

                       EMPLOYMENT AND SEVERANCE AGREEMENTS

         Andrx Corporation is a party to employment agreements with each of
Messrs. Lodin and Malahias which expire in September 2006. The employment
agreements currently provide for a base annual salary of $400,000 for Mr. Lodin
and $350,000 for Mr. Malahias, subject to upward adjustment by the compensation
committee, a car allowance and medical and dental insurance for the executive's
immediate family, and other executive benefits. The employment agreements
provide if the executive's employment is terminated by Andrx Corporation without
cause or if there is a change in control of Andrx Corporation, i) Andrx
Corporation shall make a lump sum payment equal to three times the executive's
highest annual salary and annual bonus amounts received during the preceding
three years and pay for an additional twelve months of medical and dental
insurance coverage for the executive officer and his family, and ii) any
unvested stock options shall immediately vest. Additionally, in the event that
the Chief Executive Officer changes to a person other than Alan P. Cohen,
Chih-Ming J. Chen, Ph.D. or Elliot F. Hahn, Ph.D., the executive has the right
to resign within 18 months of the change of Chief Executive Officer. If such an
event occurs, the vesting schedule of any unvested stock options shall
immediately accelerate and a severance package would be negotiated between the
parties.

         In connection with Mr. Cohen and Dr. Chen's retirement as officers of
Andrx Corporation in October 2001 and August 2001, respectively, each entered
into a termination agreement with Andrx Corporation which included certain
non-compete and non-solicitation provisions. Both Mr. Cohen and Dr. Chen
currently serve as Co-Chairman of Andrx Corporation's Board of Directors. The
non-compete and non-solicitation provisions remain effective until the later of
two years from the date of the termination agreement or one year following the
officer's resignation from the Board of Directors.



                                       160
<PAGE>

                        OPTION GRANTS IN LAST FISCAL YEAR

         The following table sets forth information concerning individual grants
of stock options of Andrx made during 2001 to any of the Named Executive
Officers. There were no grants of Cybear common stock options during 2001 to any
of the Named Executive Officers.

<TABLE>
<CAPTION>
                              NUMBER OF      % OF TOTAL                                           POTENTIAL REALIZABLE
                             SECURITIES       OPTIONS                                               VALUE OF ASSUMED
                             UNDERLYING       GRANTED        EXERCISE                                ANNUAL RATES OF
                               OPTIONS      TO EMPLOYEES        OR                              STOCK PRICE APPRECIATION
                             GRANTED (#)         IN         BASE PRICE                            FOR OPTION TERMS(2)
          NAME                   (1)        FISCAL YEAR       ($/SH)      EXPIRATION DATE                 ($)
-------------------------    -----------    ------------    ----------    ---------------       ------------------------
                                                                                                    5%             10%
                                                                                                ----------    ----------
<S>                          <C>            <C>             <C>           <C>                   <C>            <C>
Alan P. Cohen
.....(Andrx common stock)       100,000          5.10           64.66      November 12, 2011      4,066,433    10,305,139

Chih-Ming J. Chen, Ph.D.
.....(Andrx common stock)             0           N/A             N/A           N/A                 N/A            N/A

Elliot F. Hahn, Ph.D.
.....(Andrx common stock)       150,000          7.65%          70.85      December 19, 2011      6,683,578    16,937,498

Scott Lodin
.....(Andrx common stock)       100,000          5.10           70.85      December 19, 2011      4,455,718    11,291,665

.....(Andrx common stock)        10,000          0.51           49.25      April 5, 2011            309,731       784,918

Angelo C. Malahias
.....(Andrx common stock)       100,000          5.10           70.85      December 19,2011       4,455,718    11,291,665

.....(Andrx common stock)        10,000          0.51           49.25      April 5, 2011            307,731       784,918
</TABLE>

------------------
(1)      These awards were made pursuant to the Andrx Corporation's 2000 Stock
         Option plan. One-fourth of the options awarded to Dr. Hahn and Mr.
         Lodin in 2001 vest on the first, second, third and fourth anniversaries
         of the date of grant. One-fifth of the options awarded to Mr. Malahias
         in 2001 vest of the first, second, third, fourth and fifth
         anniversaries of the date of grant. Options granted to Mr. Cohen in
         2001 vest upon the appointment of a new CEO of Andrx Corporation, other
         than on an interim basis.

(2)      Based upon the exercise price, which was equal to the fair market value
         on the date of grant, and annual appreciation at the assumed rates
         stated on such price through the expiration date of the options.
         Amounts shown represent hypothetical gains that could be achieved for
         the options if exercised at the end of the term. These amounts have
         been determined on the basis of assumed rates of appreciation mandated
         by the SEC and do not represent Andrx Corporation's estimate or
         projection of the future stock price. Actual gains, if any, are
         contingent upon the continued employment of the Named Executive Officer
         through the expiration date, as well as being dependent upon the
         general performance of the Andrx common stock. The potential realizable
         values have not taken into account amounts required to be paid for
         federal income taxes. Andrx Corporation did not use an alternative
         formula for a grant date valuation, an approach which would state gains
         at present, and therefore lower, value.



                                       161
<PAGE>

                        STOCK OPTIONS HELD AT END OF 2001

         The following table indicates the number of shares acquired and value
realized from the exercise of options and the total number and value of
exercisable and unexercisable stock options of Andrx common stock and Cybear
common stock, respectively, held by each of the Named Executive Officers as of
December 31, 2001:

<TABLE>
<CAPTION>
                                                                NUMBER OF SECURITIES
                                                               UNDERLYING UNEXERCISED              VALUE OF UNEXERCISED
                                                                     OPTIONS AT                    IN-THE-MONEY OPTIONS
                                                                 FISCAL YEAR-END(#)               AT FISCAL YEAR-END(1)
                                                            ---------------------------    ----------------------------------
                                SHARES
                               ACQUIRED        VALUE
           NAME             ON EXERCISE(#)   REALIZED($)    EXERCISABLE   UNEXERCISABLE    EXERCISABLE($)    UNEXERCISABLE($)
           ----             --------------   ------------   -----------   -------------    --------------    ----------------
<S>                         <C>              <C>            <C>           <C>              <C>               <C>
Alan P. Cohen
.....(Andrx common stock)       100,000         6,877,490        100,000       300,000          803,500          2,182,000
.....(Cybear common stock)            0                 0          9,251             0                0                  0

Chih-Ming J. Chen, Ph.D.
.....(Andrx common stock)             0                 0      1,000,000       200,000       62,196,430          1,607,000
.....(Cybear common stock)            0                 0         33,525             0                0                  0

Elliot F. Hahn, Ph.D.
.....(Andrx common stock)        50,000         2,711,245         56,334       216,666        1,730,521            535,661
.....(Cybear common stock)            0                 0          3,725             0                0                  0

Scott Lodin
.....(Andrx common stock)        69,500(2)      4,603,642(2)      69,000(3)    242,000(3)     4,465,821(3)       6,214,041(3)
.....(Cybear common stock)            0                 0         43,710(3)      4,023(3)             0(3)               0(3)

Angelo C. Malahias
.....(Andrx common stock)        30,000         2,116,752         95,500       198,000        6,259,116          3,115,045
.....(Cybear common stock)            0                 0         10,759         1,788                0                  0

</TABLE>

(1)      Based on Nasdaq National market closing price of $70.40 share for Andrx
         common stock and $0.33 for Cybear common stock on December 31, 2000,
         respectively. Reflects the Cybear common stock one-for-four reverse
         stock split in July 2001.


(2)      Includes 42,250 shares representing a value realized of $2,936,975
         which were sold by Mr. Lodin's former wife, in her absolute discretion,
         in connection with the terms of a divorce settlement.


(3)      Includes 27,000 exercisable and 54,000 unexercisable options to
         purchase Andrx common stock, representing a value of Unexercised
         In-The-Money options of $1,715,469 for exercisable options and
         Unexercised In-The-Money Options of $2,904,800 for unexercisable
         options as of December 31, 2001, and 5,576 exercisable and 2,011
         unexercisable Out-Of-The-Money options to purchase Cybear common stock
         as of December 31, 2001, nominally held by Mr. Lodin, but exercisable
         by Mr. Lodin's former wife in her sole discretion, pursuant to the
         terms of a divorce settlement.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         Melvin Sharoky, M.D. and Lawrence J. DuBow, served as members of Andrx
Corporation's compensation committee from May 21, 2001 through February 18,
2002, when they were replaced by Michael A. Schwartz, Ph.D. and Irwin C. Gerson.
Melvin Sharoky is an employee of Andrx Corporation, currently serving as its
Executive Director, and Lawrence J. DuBow serves as a consultant to Ranbaxy
Pharmaceuticals, Inc., which purchased Mr. Dubow's former company in 2001, and
sold $7.2 million of finished goods to Andrx in 2001.

         There were no other compensation interlocks and insider participation
in executive compensation decisions during 2001.



                                       162
<PAGE>

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

         Under rules established by the Securities and Exchange Commission,
Andrx Corporation is required to provide a report explaining the rationale and
considerations that led to fundamental compensation decisions affecting Andrx
Corporation's executive officers (including the Named Executive Officers) during
the past fiscal year. The report of Andrx Corporation's Compensation Committee
is set forth below.

         Compensation Philosophy

         The three principal components of Andrx Corporation's executive
compensation are salary, bonus and stock options. These components are designed
to facilitate fulfillment of the compensation objectives of the Board of
Directors and the Compensation Committee, which objectives include (i)
attracting and retaining competent management, (ii) recognizing individual
initiative and achievement, (iii) rewarding management for short and long term
accomplishments, and (iv) aligning management compensation with the achievement
of Andrx Corporation's goals and performance.

         The Compensation Committee endorses the position that equity ownership
by management is beneficial in aligning management's and stockholders' interests
in the enhancement of stockholder value. This alignment is amplified by the
extensive holdings by management of Andrx Corporation's Common Stock and stock
options. Base salaries for new management employees are determined initially by
evaluating the responsibilities of the position held and the experience of the
individual, and by reference to the competitive marketplace for managerial
talent, including a comparison of base salaries for comparable positions at
similar companies of comparable sales and capitalization. Annual salary
adjustments are determined by evaluating the competitive marketplace, the
performance of Andrx Corporation, the performance of the executive, and the
responsibilities assumed by the executive.

         The Compensation Committee intends to annually review Andrx
Corporation's existing management compensation programs and plans (i) to meet
with the CEO to attempt to review the results obtained during the year by
members of senior management and/or Andrx Corporation, and (ii) to consider and,
as appropriate, approve modifications to such programs to ensure a proper fit
with the philosophy of the Compensation Committee.

         Executive Officer Compensation

         The 2001 base salary, bonus and stock options for Andrx Corporation's
executive officers were determined by the Compensation Committee. This
determination was made after a review and consideration of a number of factors,
including each executive's level of responsibility and commitment, level of
performance (with respect to specific areas of responsibility and on an overall
basis), past and present contribution to and achievement of Andrx Corporation's
goals and individual performance during 2001, compensation levels at competitive
similarly situated publicly held companies and Andrx Corporation's historical
compensation levels. Although Andrx Corporation performance was one of the
factors considered, the approval of the Compensation Committee was based upon an
overall review of the relevant factors, and there was no specific relationship
or formula by which compensation was tied to Andrx Corporation performance.



                                       163
<PAGE>

         Stock Options

         Andrx Corporation maintains its option plans which are designed to
attract and retain executive officers, directors and other employees of Andrx
Corporation and to reward them for delivering long-term value to Andrx
Corporation.

                                              /s/Irwin C. Gerson and
                                              /s/Michael A. Schwartz, Ph.D.

                                              Joined by its former members:
                                              /s/Laurence J. DuBow
                                              /s/Melvin Sharoky, M.D.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth certain information regarding the
beneficial ownership of the common stock as of March 25, 2002, by (i) each
person or entity known by Andrx Corporation to beneficially own more than 5% of
the outstanding shares of Andrx common stock and Cybear common stock,
respectively; (ii) each director of Andrx Corporation; (iii) each of the Named
Executive Officers; and (iv) all directors and executive officers of Andrx
Corporation as a group.

<TABLE>
<CAPTION>
                                          NUMBER OF SHARES        % OF CLASS      NUMBER OF SHARES        % OF CLASS
                                         BENEFICIALLY OWNED      OUTSTANDING     BENEFICIALLY OWNED      OUTSTANDING
NAME AND ADDRESS                                ANDRX               ANDRX              CYBEAR           CYBEAR COMMON
OF  BENEFICIAL OWNER (1)                    COMMON STOCK         COMMON STOCK     COMMON STOCK (2)        STOCK (2)
------------------------------------     ------------------      ------------    ------------------     -------------
<S>                                      <C>                     <C>             <C>                    <C>
DIRECTORS AND EXECUTIVE OFFICERS:
Alan P. Cohen........................       2,578,388(3)              3.6            197,474(4)                2.9
Chih-Ming J. Chen, Ph.D..............       4,134,120(5)              5.8            227,111(6)                3.4
Elliot F. Hahn, Ph.D.................       1,458,623(7)              2.1             55,049(8)                  *
Scott Lodin..........................          80,000(9)                *             16,737(10)                 *
Angelo C. Malahias...................         124,700(11)               *             12,073(12)                 *
Tamara A. Baum.......................           5,000(13)                                 --                    --
Timothy E. Nolan.....................          60,000(14)               *             55,129(15)                 *
Melvin Sharoky, M.D..................         143,320(16)               *            102,552(17)               1.5
Lawrence J. DuBow ...................          45,000(18)               *              1,675(19)                 *
Irwin C. Gerson......................          50,000(20)               *              3,299(21)                 *
Michael A. Schwartz, Ph.D............          73,390(22)               *              3,484(23)                 *
All directors and executive..........
  officers as a group................
  (11 persons).......................       8,752,541(24)            12.1            674,582(25)               9.7

5% OR GREATER HOLDERS
FMR Corp.
    89 Devonshire St.
    Boston, MA (26).................        5,394,575(26)             7.6                   (26)               (26)
Putnam Investments, LLC
    One Post Office Square
    Boston, MA 02109(27)............        4,452,261(27)             6.3                   (27)               (27)
</TABLE>


--------------------
*        Less than 1%

(1)      Except as indicated, the address of each person named in the table is
         c/o Andrx Corporation, 4955 Orange Drive, Davie, Florida 33314. Except
         as otherwise indicated, the persons named in this table have sole
         voting and investment power with respect to all shares of common stock
         listed, which include shares of common stock that such persons have the
         right to acquire a beneficial interest within 60 days from the date of
         this report.


                                       164
<PAGE>

(2)      Reflects the Cybear common stock one-for-four reverse stock split in
         July 2001.

(3)      Represents 8,000 shares of Andrx common stock held jointly by Mr. Cohen
         and his spouse, 2,470,388 shares of Andrx common stock held in family
         limited partnerships and 100,000 shares of Andrx common stock issuable
         upon the exercise of stock options. Does not include 100,000 shares of
         Andrx common stock issuable upon the appointment of a new CEO of Andrx
         Corporation.

(4)      Represents 875 shares of Cybear common stock owned directly by Mr.
         Cohen, 651 shares of Cybear common stock held jointly by Mr. Cohen and
         his spouse, 186,697 shares of Cybear common stock held in family
         limited partnerships and 9,251 shares of Cybear common stock issuable
         upon the exercise of stock options.

(5)      Represents 43,421 shares of Andrx common stock owned directly by Dr.
         Chen, 1,567,669 shares of Andrx common stock owned directly by Dr.
         Chen's spouse, 559,378 shares of Andrx common stock held by limited
         partnerships for which Dr. Chen is an officer of the corporate general
         partner, 99,555 shares of Andrx common stock held by a charitable
         family foundation, 864,097 shares held in various trusts for Dr. Chen
         and his family and 1,000,000 of Andrx common stock issuable upon the
         exercise of stock options.

(6)      Represents 192,408 shares of Cybear common stock held by limited
         partnerships for which Dr. Chen is an officer of the corporate general
         partner, 1,000 shares of Cybear common stock owned jointly by Dr. Chen
         and his spouse, 178 shares of Cybear common stock held by a charitable
         family foundation and 33,525 shares of Cybear common stock issuable
         upon the exercise of stock options.

(7)      Represents 175,510 shares of Andrx common stock held in a trust for the
         benefit of Dr. Hahn's spouse, 24,000 shares of Andrx common stock held
         in trust for the benefit of one of Dr. Hahn's children, 1,202,780
         shares of Andrx common stock held in a family foundation and 56,333
         shares of Andrx common stock issuable upon the exercise of stock
         options.

(8)      Represents 5,211 shares of Cybear common stock held in a trust for the
         benefit of Dr. Hahn's spouse, 1,340 shares of Cybear common stock held
         in trust for the benefit of one of Dr. Hahn's children, 44,773 shares
         held in a family foundation and 3,725 shares of Cybear common stock
         issuable upon the exercise of stock options.

(9)      Represents 80,000 shares of Andrx common stock issuable upon the
         exercise of the stock options. Mr. Lodin disclaims beneficial ownership
         of 18,000 of these options, in which pursuant to the terms of his
         divorce settlement, Mr. Lodin's former spouse maintains sole
         dispositive power.

(10)     Represents 1,313 shares of Cybear common stock owned directly by Mr.
         Lodin, 250 shares of Cybear common stock held as custodian for his
         minor children and 15,174 shares of Cybear common stock issuable upon
         the exercise of stock options. Mr. Lodin disclaims beneficial ownership
         of 7,587 of these options, of which, pursuant to the terms of his
         divorce settlement, Mr. Lodin's former spouse maintains sole
         dispositive power.

(11)     Represents 3,200 shares of Andrx common stock held as custodian for his
         minor children and 121,500 shares of Andrx common stock issuable upon
         the exercise of stock options.

(12)     Represents 300 shares of Cybear common stock owned directly by Mr.
         Malahias, 119 shares held as custodian for his minor children and
         11,654 shares of common stock issuable upon the exercise of stock
         options.

(13)     Represents 5,000 shares of Andrx common stock issuable upon the
         exercise of stock options.

(14)     Represents 60,000 shares of Andrx common stock issuable upon the
         exercise of stock options.

(15)     Represents 8,750 shares of Cybear common stock owned directly by Mr.
         Nolan and 46,379 shares of Cybear common stock issuable upon the
         exercise of stock options.

(16)     Represents 3,320 shares of Andrx common stock held by Dr. Sharoky as a
         custodian for his minor children, 20,000 shares of Andrx common stock
         held in Dr. Sharoky's IRA and 120,000 shares of Andrx common stock
         issuable upon the exercise of stock options.



                                       165
<PAGE>

(17)     Represents 89,602 shares of Cybear common stock owned directly by Dr.
         Sharoky, 124 shares of Cybear common stock held by Dr. Sharoky as
         custodian for his minor children, 745 shares of Cybear common stock
         held in Dr. Sharoky's IRA and 12,081 shares of Cybear common stock
         issuable upon the exercise of the stock options.

(18)     Represents 40,000 shares of Andrx common stock owned directly by Mr.
         DuBow and 5,000 shares of Andrx common stock issuable upon the exercise
         of stock options.

(19)     Represents 1,489 shares of Cybear common stock owned directly by Mr.
         DuBow and 186 shares of Cybear common stock issuable upon the exercise
         of stock options.

(20)     Represents 50,000 shares of Andrx common stock issuable upon the
         exercise of the stock options.

(21)     Represents 500 shares of Cybear common stock held directly by Mr.
         Gerson, 750 shares of Cybear common stock held jointly by Mr. Gerson
         and his spouse, and 2,049 shares of Cybear common stock issuable upon
         the exercise of stock options.

(22)     Represents 890 shares of Andrx common stock owned directly by Dr.
         Schwartz and 72,500 shares of Andrx common stock issuable upon exercise
         of stock options.

(23)     Represents 784 shares of Cybear common stock owned directly by Dr.
         Schwartz and 2,701 shares of Cybear common stock issuable upon exercise
         of stock options.

(24)     Includes 1,670,333 shares of Andrx common stock issuable upon the
         exercise of stock options.

(25)     Includes 136,725 shares of Cybear common stock issuable upon exercise
         of stock options.

(26)     Based solely on information contained in Schedule 13G and filed
         February 14, 2002 filed with the SEC. The FMR Corporation did not
         disclose the number of shares of Cybear common stock owned by it in its
         Schedule 13G filed February 14, 2002.

(27)     Based solely on information contained in Schedule 13G and filed
         February 13, 2002 filed with the SEC. Putnum Investments, LLC did not
         disclose the number of shares of Cybear common stock owned by it in its
         Schedule 13G filed February 13, 2002.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Andrx Corporation is party to a royalty agreement with Dr. Chen,
Andrx's Co-Chairman of the Board of Directors, which provides for royalties to
Dr. Chen upon the sale of Andrx's bioequivalent version of Cardizem CD, for
which Andrx received final approval in July 1998 from the FDA. In August 1998,
Andrx amended that royalty agreement to account for the various contingencies
presented by the Cardizem CD Stipulation. Royalties paid to Dr. Chen of $4.2
million for the year ended December 31, 2001 were based on 3.33% of the net
sales of Cartia XT. Such royalties are included in selling, general, and
administrative expenses in the Consolidated Statement of Income.

         Andrx Corporation entered into an Executive Suite License Agreement
with Arena Operating Company, LTD for lease of a suite at the National Car
Rental Center where the Florida Panthers of the National Hockey League play
their home games. The principal shareholder of the Florida Panthers is Alan P.
Cohen, Andrx Corporation's former Chief Executive Officer and current
Co-Chairman of the Board of Directors. Additional shareholders of the Florida
Panthers include Elliot F. Hahn, current President, Director and Chief Executive
Officer of Andrx and Steve Cohen, current subsidiary Vice President of Andrx.
The term of the lease is for one year and automatically renews for successive
one year periods until either party provides written notice of intent to cancel
prior to March 1, of the contract year. The current annual rental is
approximately $109,000. Additionally, Andrx Corporation paid approximately
$200,000 to the Florida Panthers Hockey Club for participation in the Panthers
Pals


                                       166
<PAGE>

Community Group Program. Under the program, Andrx Corporation purchased 600
tickets for 43 home games from the Florida Panthers Hockey Club for distribution
to youth and other charities.

         Andrx Corporation purchases finished good inventory from Ranbaxy
Pharmaceutical. During 2001, Ranbaxy purchased the assets of HMS Sales and
Marketing, Inc. The principal shareholder of HMS was Lawrence DuBow, a director
of Andrx Corporation, who currently serves as a consultant to Ranbaxy. For the
year ended December 31, 2001, Andrx Corporation purchased finished goods
inventory of $7.2 million from Ranbaxy.


                                       167

<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(A)      Documents Filed as Part of this Report

         (1)      Reference is made to the Index to Financial Statements
                  included in Part II, Item 8 of this Report.

         (2)      Financial Statement Schedules

                  Not Applicable

         All other schedules for which provision is made in applicable
regulations of the SEC are omitted because they are not applicable or the
required information is in the Consolidated Financial Statements or notes
thereto.

         (3)      Exhibits
<TABLE>
<CAPTION>
Exhibit No.                                        Description
-----------                                        -----------
<S>                <C>
      2.2          Agreement and Plan of Merger and Reorganization dated March 23, 2000 by and among Andrx
                   Corporation, Cybear, Inc., New Andrx Corporation, Andrx Acquisition Corp., and Cybear
                   Acquisition Corp. (10)

      2.3          Agreement and Plan of Merger dated January 9, 2001, by and among Andrx Corporation, Mediconsult
                   Acquisition Corp. and Mediconsult.com, Inc. (19)

      3.1          Form of Registrant's Amended and Restated Certificate of Incorporation (14)

      3.2          Form of Registrant's Amended and Restated Bylaws (12)

      4.1          Specimen Certificate of Andrx Corporation - Andrx Group Common Stock (13)

      4.2          Specimen Certificate of Andrx Corporation - Cybear Group Common Stock (13)

     10.1          Form of Stock Incentive Plan, as amended (1)*

     10.2          Intentionally Deleted

     10.3          Intentionally Deleted

     10.4          Intentionally Deleted

     10.5          Intentionally Deleted

     10.6          Royalty Agreement between the Registrant and Chih-Ming J. Chen (1)*

     10.7          Form of Indemnification Agreement between the Registrant and officers and directors (1)*

     10.8          Development and License Agreement dated as of June 28, 1993 by between Zenith Laboratories,
                   Inc. and the Registrant (1)(3)

     10.9          Technical Transfer Agreement dated as of July 30, 1993 by and between Yung Shin Pharmaceutical
                   Ind. Co. Ltd. and the Registrant (1)(3)

     10.11         Development and License Agreement dated as of November 10, 1993 by and between Mylan
                   Pharmaceuticals, Inc. and the Registrant (1)(3)
</TABLE>



                                      168
<PAGE>

<TABLE>
<CAPTION>
Exhibit No.                                        Description
-----------                                        -----------
<S>                <C>
     10.12         Development and License Agreement dated as of December 7, 1993 by and between Circa
                   Pharmaceuticals, Inc. and the Registrant (1)(3)

     10.13         Development and License Agreement dated as of January 17, 1994 by and between Purzer
                   Pharmaceutical Co., Ltd. and the Registrant (1)(3)

     10.14         Lease Agreement relating to premises located at 4001 SW 47th Avenue, Ft. Lauderdale, Florida (1)

     10.15         Lease Agreement related to premises located at 4011 SW 47th Avenue, Ft. Lauderdale, Florida (1)

     10.16         Lease Agreement relating to premises located at 3436 University Drive, Davie, Florida (1)

     10.17         Loan and Security Agreement by and between Congress Financial Corporation (Florida) and the
                   Registrant, as amended (1)

     10.18         ANCIRC General Partnership Agreement between Circa, Inc. and the Registrant, as amended (1)

     10.19         Research and Development Services Agreement dated as of July 8, 1994 by and between ANCIRC and
                   the Registrant, as amended (1)

     10.20         Manufacturing and Regulatory Approval Agreement dated as of July 8, 1994 by and between Circa
                   Pharmaceuticals, Inc. and ANCIRC, as amended (1)

     10.21         Distribution and Marketing Agreement dated as of July 8, 1994 between ANCIRC and the
                   Registrant, as amended (1)

     10.22         Patent and Know How License Agreement dated as of July 8, 1994 between ANCIRC and the
                   Registrant, as amended (1)

     10.23         Patent and Know How License Agreement dated as of July 8, 1994 between Circa Pharmaceuticals,
                   Inc. and ANCIRC, as amended (1)

     10.24         Securities Purchase Agreement dated as of July 8, 1994 between the Registrant and Circa
                   Pharmaceuticals, Inc. (1)

     10.25         Securities Purchase Agreement dated as of August 17, 1995 the Registrant and Circa
                   Pharmaceuticals, Inc. (1)

     10.26         Securities Purchase Agreement dated as of October 30, 1995 the Registrant and Circa
                   Pharmaceuticals, Inc. (1)

     10.27         Development Agreement between Sepracor, Inc. and the Registrant (1)(3)

     10.28         Sixth Amendment to the Loan and Security Agreement by and between Congress Financial
                   Corporation (Florida) and Registrant (4)

     10.29         Employment Agreement between the Registrant and Angelo C. Malahias (5)*

     10.30         First Amendment to Lease Agreement relating to the premises located at 3436 University Drive,
                   Davie, Florida (5)

     10.31         Third Addendum to Lease between the Registrant and New Town Centre, Ltd., relating to the
                   premises at 4011 S.W. Avenue, Davie, Florida (6)

     10.32         Fourth Addendum to Lease between the Registrant and New Town Commerce Centre, Ltd., relating to
                   the premises at 4011 S.W. 47th Avenue, Davie, Florida (6)
</TABLE>


                                      169
<PAGE>

<TABLE>
<CAPTION>
Exhibit No.                                        Description
-----------                                        -----------
<S>                <C>
     10.33         Fifth Addendum to Lease between the Registrant and New Town Commerce Centre, Ltd., relating to
                   the premises at 4011 S.W. 47th Avenue, Davie, Florida (6)

     10.34         Lease by and between Registrant and New Town Commerce Center, Ltd., relating to the premises
                   located at 4111 S.W. 47th Avenue, Davie, Florida (6)

     10.35         Amendment to Royalty Agreement between the Registrant and Chih-Ming J. Chen, Ph.D. (7)*

     10.36         Lease Agreement relating to premises located at 500 Blue Lake Drive, Boca Raton, Florida (7)

     10.37         Lease Agreement relating to premises located at 2915 Weston Road, Weston, Florida (7)

     10.38         Product Distribution, Development and Licensing Agreement between Geneva Pharmaceuticals, Inc.,
                   the Global Generics Sector of Norvartis AG and the Registrant (3)(8)

     10.39         Lease Agreement relating to premises located at 180 Passaic Avenue, Fairfield, New Jersey (9)

     10.40         Lease Agreement relating to premises located at 5000 Blue Lake Drive, Suite 200, Boca Raton,
                   Florida (9)

     10.41         Second Amendment to Lease Agreement relating to premises located at 5000 Blue Lake Drive, Suite
                   200, Boca Raton, Florida (9)

     10.42         2000 Stock Option Plan (11)*

     10.43         Intentionally omitted

     10.44         Intentionally omitted

     10.45         Tax Sharing Agreement (12)

     10.46         Intentionally omitted

     10.47         Intentionally omitted

     10.48         Intentionally omitted

     10.49         Intentionally omitted

     10.50         Lease Agreement Relating to Premises located at 4491 South State Road 7, Suite #700, Ft.
                   Lauderdale, Florida 33314 (15)

     10.51         Second Amendment to General Partnership Agreement regarding ANCIRC (15)

     10.52         CARAN General Partnership Agreement (15)

     10.53         Lease Agreement Relating to Premises located at 2945 West Corporate Lakes Boulevard, Weston,
                   Florida (15)

     10.54         Amendment to Tax Sharing Agreement (15)

     10.55         Lease Agreement Relating to Premises located at 3040 Universal Boulevard, Suite #150, Weston,
                   Florida (15)

     10.56         Cybearclub LC Joint Venture, as amended (15)

     10.57         Fulfillment and Telemarketing Service Agreement by and between Anda, Inc. and Cybearclub LC (15)
</TABLE>



                                      170
<PAGE>

<TABLE>
<CAPTION>
Exhibit No.                                        Description
-----------                                        -----------
<S>                <C>
     10.58         Line of Credit Agreement by and between Andrx Corporation and Cybear Inc. (16)

     10.59         Termination Agreement with Geneva Pharmaceuticals, Inc. (17)(3)

     10.60         Employment Agreement between the Registrant and Scott Lodin, Executive Vice President and
                   General Counsel (17)*

     10.61         Employment Agreement between the Registrant and Angelo C. Malahias, Vice President and Chief
                   Financial Officer (17)*

     10.62         Separation Agreement between the Registrant and Chih Ming Chen, Ph.D., Chief Scientific Officer (17)*

     10.63         Separation Agreement between the Registrant and Alan P. Cohen, Chief Executive Officer (17)*

     10.64         Employee Stock Purchase Plan, as amended (18)

     21.1          Subsidiaries of the Registrant (2)

     23.2          Consent of Arthur Andersen LLP (2)

     99.1          Letter from the Registrant to the SEC regarding representations made by Arthur Andersen LLP (2)
</TABLE>

--------------------

*        Management Compensation Plan or arrangement.

(1)      Filed as an exhibit of the same number to Andrx Corporation's
         Registration Statement on Form S-1 (File No. 333-03614) and
         incorporated herein by reference.

(2)      Filed herewith.

(3)      A request for confidential treatment pursuant to Rule 406 under the
         Securities Act has been made and granted for certain portions of this
         exhibit.

(4)      Filed as an exhibit of the same number in Andrx Corporation's Quarterly
         Report on Form 10-Q for the period ended September 30, 1996 and
         incorporated herein by reference.

(5)      Filed as an exhibit of the same number in Andrx Corporation's Annual
         Report on Form 10-K for the year ended December 31, 1996 and
         incorporated herein by reference.

(6)      Filed as an exhibit of the same number in Andrx Corporation's Report on
         Form 10-K for the year ended December 31, 1997 and incorporated herein
         by reference.

(7)      Filed as an exhibit of the same number in Andrx Corporation's Quarterly
         Report on Form 10-Q for the period ended September 30, 1998 and
         incorporated herein by reference.

(8)      Filed as an exhibit of the same number in Andrx Corporation's Quarterly
         Report on Form 10-Q for the period ended June 30, 1999 and incorporated
         herein by reference.

(9)      Filed as an exhibit to Cybear Inc.'s Annual Report on Form 10-K for the
         year ended December 31, 1999 and incorporated herein by reference.

(10)     Filed as an exhibit of the same number in Andrx Corporation's Annual
         Report on Form 10-K for the year ended December 31, 1999 and
         incorporated herein by reference.



                                      171
<PAGE>

(11)     Filed as Annex C to Andrx Corporation's Registration Statement on Form
         S-4 (File No. 333-54926).

(12)     Filed as an exhibit of the same number to Andrx Corporation's
         Registration Statement on Form S-4 (File No. 333-38226).

(13)     Filed as an exhibit of the same number to Andrx Corporation's Form
         8-A12G.

(14)     Filed as an exhibit of the same number to Andrx Corporation's
         Registration Statement on Form S-4 (File No. 333-54926).

(15)     Filed as an exhibit of the same number in Andrx Corporation's Annual
         Report on Form 10-K for the year ended December 31, 2000, as amended
         and incorporated herein by reference.

(16)     Filed as an exhibit of the same number in Andrx Corporation's Quarterly
         Report on Form 10-Q for the period ended March 31, 2001 and
         incorporated by reference.

(17)     Filed as an exhibit of the same number in Andrx Corporation's Quarterly
         Report on Form 10-Q for the period ended September 30, 2001 and
         incorporated by reference.

(18)     Filed as an exhibit to Andrx Corporation's Form S-8 (File No.
         333-84672) dated March 21, 2002.

(19)     Filed as an exhibit to Andrx Corporation's Form 8-K filed January 17,
         2001 and incorporated herein by reference.

--------------------

(B)      Reports on Form 8-K

None.

(C)      Item 601 Exhibits

The exhibits required by Item 601 of Regulation S-K are set forth in (A)(3)
above.

(D)      Financial Statement Schedules

The Financial Statement Schedules required by Regulation S-K are set forth in
(A)(2) above.



                                      172
<PAGE>


                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                        ANDRX CORPORATION

                           By:  /s/ Elliot F. Hahn, Ph.D.
                                ---------------------------------------------
                                Elliot F. Hahn, Ph.D.
                                Chief Executive Officer

                           By:  /s/ Angelo C. Malahias
                                ---------------------------------------------
                                Angelo C. Malahias
                                Vice President and Chief Financial Officer

Date:  March 29, 2002

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
          SIGNATURES                                    TITLE                                        DATE
          ----------                                    -----                                        ----
<S>                                   <C>                                                      <C>
/s/ Elliot F. Hahn, Ph.D.             Chief Executive Officer and Director                     March 29, 2002
---------------------------------     (Principal Executive Officer)
Elliot F. Hahn, Ph.D.

/s/ Angelo C. Malahias                Vice President and Chief Financial Officer               March 29, 2002
---------------------------------     (Principal Financial and Accounting Officer)
Angelo C. Malahias

/s/ Alan P. Cohen                     Co-Chairman of the Board of Directors                    March 29, 2002
---------------------------------
Alan P. Cohen

/s/ Chih-Ming J. Chen, Ph.D.          Co-Chairman of the Board of Directors                    March 29, 2002
---------------------------------
Chih-Ming J. Chen, Ph.D.

/s/ Tamara A. Baum                    Director                                                 March 29, 2002
---------------------------------
Tamara A. Baum

/s/ Lawrence J. DuBow                 Director                                                 March 29, 2002
---------------------------------
Lawrence J. DuBow

/s/ Irwin C. Gerson                   Director                                                 March 29, 2002
---------------------------------
Irwin C. Gerson

/s/ Timothy E. Nolan                  Director                                                 March 29, 2002
---------------------------------
Timothy E. Nolan
</TABLE>


                                      173
<PAGE>


<TABLE>
<CAPTION>
          SIGNATURES                                    TITLE                                        DATE
          ----------                                    -----                                        ----
<S>                                   <C>                                                      <C>
/s/ Michael A. Schwartz, Ph.D.        Director                                                 March 29 , 2002
---------------------------------
Michael A. Schwartz

/s/ Melvin Sharoky, M.D.              Executive Director and Director                          March 29 , 2002
---------------------------------
Melvin Sharoky, M.D.
</TABLE>



                                      174
<PAGE>


                                  EXHIBIT INDEX


EXHIBIT NO.       DESCRIPTION
-----------       -----------

21.1              Subsidiaries of Registrant

23.2              Consent of Arthur Andersen LLP

99.1              Letter from the Registrant to the SEC regarding
                  representations made by Arthur Andersen LLP


                                      175