<PAGE>

                       Securities and Exchange Commission
                             Washington, D.C. 20549

                                  FORM 10-K/A

(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.
-----------------------------------------------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------------------------------------------
Claritin      Schering-Plough       FDA accepted ANDA for       Patent infringement suit   No.                       $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   No.                       $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


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<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.




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<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 Amendment No. 1 to
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:  April 9, 2002





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