<PAGE>   1
================================================================================


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q/A
                                 Amendment No.1
                                       To

Quarterly Report Pursuant To Section 13 or 15 (d) of the Securities Exchange Act
                                    of 1934

For quarter ended                           Commission file number 1-8593
June 30, 1999

                                  Alpharma Inc.
                                  -------------
             (Exact name of registrant as specified in its charter)

          Delaware                                  22-2095212
          --------                                  ----------
   (State of Incorporation)             (I.R.S. Employer Identification No.)

                One Executive Drive, Fort Lee, New Jersey       07024
                -----------------------------------------       -----
                (Address of principal executive offices)       zip code

                                 (201) 947-7774
                                 --------------
               (Registrant's Telephone Number Including Area Code)

         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
requirements for the past 90 days.


                             YES    X         NO
                                  -----          -----


         Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of July 30, 1999:

    Class A Common Stock, $.20 par value - 18,048,159 shares.
    Class B Common Stock, $.20 par value -- 9,500,000 shares.

================================================================================

                                  Page 1 of 32


<PAGE>   2


                                  ALPHARMA INC.
                                      INDEX

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

                                                                       Page No.
                                                                       --------

PART I.  FINANCIAL INFORMATION

   Item 1.  Financial Statements

         Consolidated Condensed Balance Sheet as of
         June 30, 1999 and December 31, 1998                               3

         Consolidated Statement of Income for the
         Three and Six Months Ended June 30, 1999
         and 1998                                                          4

         Consolidated Condensed Statement of Cash
         Flows for the Six Months Ended June 30,
         1999 and 1998                                                     5

         Notes to Consolidated Condensed Financial
         Statements                                                       6-16

   Item 2.  Management's Discussion and Analysis
            of Financial Condition and Results of
            Operations                                                   17-29

PART II.  OTHER INFORMATION

   Item 4.  Submission of Matters to a Vote
            of Security Holders                                            30

   Item 6.  Exhibits and reports on Form 8-K                               31

         Signatures                                                        32

                                  Page 2 of 32



<PAGE>   3

                         ALPHARMA INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEET
                            (In thousands of dollars)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                     June 30,    December 31,
                                                       1999         1998
                                                    ----------   -----------
<S>                                               <C>           <C>
ASSETS
Current assets:
  Cash and cash equivalents                         $   22,516      $ 14,414
  Accounts receivable, net                             172,470       169,744
  Inventories                                          152,917       138,318
  Prepaid expenses and other                            13,067        13,008
                                                    ----------      --------
         Total current assets                          360,970       335,484

Property, plant and equipment, net                     237,784       244,132
Intangible assets, net                                 473,227       315,709
Other assets and deferred charges                       36,010        13,611
                                                    ----------      --------
                  Total assets                      $1,107,991      $908,936
                                                    ==========      ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current portion of long-term debt                 $    9,258      $ 12,053
  Short-term debt                                       46,917        41,921
  Accounts payable and accrued liabilities             128,508       105,679
  Accrued and deferred income taxes                      7,972        10,784
                                                    ----------      --------
         Total current liabilities                     192,655       170,437

Long-term debt:
    Senior                                             237,923       236,184
    Convertible subordinated notes,
       including $67,850 to related party              363,362       192,850
Deferred income taxes                                   31,424        31,846
Other non-current liabilities                           11,776        10,340

Stockholders' equity:
   Class A Common Stock                                  3,662         3,551
   Class B Common Stock                                  1,900         1,900
   Additional paid-in-capital                          233,626       219,306
   Accumulated other comprehensive
     loss                                              (31,522)       (7,943)
   Retained earnings                                    69,369        56,649
   Treasury stock, at cost                              (6,184)       (6,184)
                                                    ----------      --------
         Total stockholders' equity                    270,851       267,279
                                                    ----------      --------

                  Total liabilities and
                   stockholders' equity             $1,107,991      $908,936
                                                    ==========      ========
</TABLE>



   The accompanying notes are an integral part of the consolidated condensed
                             financial statements.

                                 Page 3 of 32


<PAGE>   4


                        ALPHARMA INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENT OF INCOME
                     (In thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                              Three Months Ended                   Six Months Ended
                                                   June 30,                            June 30,
                                            -----------------------            -------------------------
                                              1999           1998                1999             1998
                                              ----           ----                ----             ----
<S>                                       <C>            <C>                  <C>              <C>
Total revenue                               $163,839       $139,513            $320,598         $266,075

      Cost of sales                           90,028         80,351             178,395          153,496
                                            --------       --------            --------         --------
Gross profit                                  73,811         59,162             142,203          112,579

   Selling, general and
     administrative expenses                  52,743         47,826             102,814           87,833
                                            --------       --------            --------         --------

Operating income                              21,068         11,336              39,389           24,746

   Interest expense                           (8,857)        (6,489)            (16,323)         (10,979)

   Other, net                                    (22)           383                 921              182
                                            --------       --------            --------         --------

Income before provision
 for income taxes                             12,189          5,230              23,987           13,949

   Provision for income
          taxes                                4,417          2,925               8,779            6,242
                                            --------       --------            --------         --------

Net income                                  $  7,772       $  2,305            $ 15,208         $  7,707
                                            ========       ========            ========         ========


Earnings per common share:

  Basic                                     $   0.28       $   0.09            $   0.56         $   0.30
                                            ========       ========            ========         ========
  Diluted                                   $   0.28       $   0.09            $   0.55         $   0.30
                                            ========       ========            ========         ========
Dividends per common share                  $  0.045       $  0.045            $   0.09         $   0.09
                                            ========       ========            ========         ========
</TABLE>


                   The accompanying notes are an integral part
              of the consolidated condensed financial statements.

                                 Page 4 of 32


<PAGE>   5



                        ALPHARMA INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
                           (In thousands of dollars)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                           Six Months Ended
                                                                               June 30,
                                                                        ---------------------
                                                                          1999             1998
                                                                        -------          -------
<S>                                                                   <C>             <C>                <C>
Operating Activities:
  Net income                                                          $  15,208        $   7,707
  Adjustments to reconcile net
   income to net cash provided
   by operating activities:
   Depreciation and amortization                                         21,893           17,327
   Purchased in-process research & development                                             2,081
  Changes in assets and liabilities,
   net of effects from business
   acquisitions:
      Decrease in accounts receivable                                     8,628           14,216
      (Increase) in inventory                                           (18,314)          (3,788)
      (Decrease) in accounts payable,
        accrued expenses and taxes payable                               (3,560)          (3,198)
      Other, net                                                          1,259              893
                                                                      ---------        ---------
           Net cash provided by operating activities                     25,114           35,238
                                                                      ---------        ---------

Investing Activities:
  Capital expenditures                                                  (15,050)         (13,652)
  Loan to Ascent Pediatrics                                              (4,000)              --
  Purchase of businesses, net of cash acquired                         (173,626)        (197,044)
                                                                      ---------        ---------
    Net cash used in investing activities                              (192,676)        (210,696)
                                                                      ---------        ---------

Financing Activities:
  Dividends paid                                                         (2,488)          (2,286)
  Proceeds from sale of convertible
   subordinated debentures                                              170,000          192,850
  Proceeds from senior long-term debt                                   277,000          187,522
  Reduction of senior long-term debt                                   (278,858)        (180,494)
  Net advances (repayment) under lines of credit                          4,020          (12,074)
  Payments for debt issuance costs                                       (8,445)          (4,105)
  Proceeds from issuance of common stock                                 14,431            1,365
                                                                      ---------        ---------
         Net cash provided by financing activities                      175,660          182,778
                                                                      ---------        ---------

Exchange Rate Changes:
  Effect of exchange rate changes
    on cash                                                              (1,519)            (189)
  Income tax effect of exchange rate
    changes on intercompany advances                                      1,523               93
                                                                      ---------        ---------
         Net cash flows from exchange
                  rate changes                                                4              (96)
                                                                      ---------        ---------

Increase (decrease) in cash                                               8,102            7,224
Cash and cash equivalents at
  beginning of year                                                      14,414           10,997
                                                                      ---------        ---------
Cash and cash equivalents at
  end of period                                                       $  22,516        $  18,221
                                                                      ---------        ---------
</TABLE>

   The accompanying notes are an integral part of the consolidated condensed
                             financial statements.

                                 Page 5 of 32

<PAGE>   6

                        ALPHARMA INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (In Thousands of dollars)
                                  (Unaudited)

1.       General

         The accompanying consolidated condensed financial statements include
all adjustments (consisting only of normal recurring accruals) which are, in the
opinion of management, considered necessary for a fair presentation of the
results for the periods presented. These financial statements should be read in
conjunction with the consolidated financial statements of Alpharma Inc. and
Subsidiaries included in the Company's 1998 Annual Report on Form 10-K. The
reported results for the three and six month periods ended June 30, 1999 are not
necessarily indicative of the results to be expected for the full year.

2.       Inventories

         Inventories consist of the following:

<TABLE>
<CAPTION>
                                                              June 30,               December 31,
                                                                1999                    1998
                                                              --------               ------------
<S>                                                        <C>                     <C>
         Finished product                                     $88,965                $ 68,834
         Work-in-process                                       27,951                  25,751
         Raw materials                                         36,001                  43,733
                                                              -------                 -------
                                                             $152,917                $138,318
                                                              =======                 =======
</TABLE>

3.       Long-Term Debt

         In January 1999, the Company signed a $300,000 credit agreement ("1999
Credit Facility") with a consortium of banks arranged by the Union Bank of
Norway, Den norske Bank A.S., and Summit Bank. The agreement replaced the prior
revolving credit facility and a U.S. short-term credit facility and increased
overall credit availability. The prior revolving credit facility was repaid in
February 1999 by drawing on the 1999 Credit Facility.

         The 1999 Credit Facility provides for (i) a $100,000 six year Term
Loan; and (ii) a revolving credit agreement of $200,000 with an initial term of
five years with two possible one year extensions.

         The 1999 Credit Facility has several financial covenants, including an
interest coverage ratio, total debt to earnings before interest, taxes,
depreciation and amortization ("EBITDA"), and equity to asset ratio.

         Interest on the facility will be at the LIBOR rate with a margin of
between .875% and 1.6625% depending on the ratio of total debt to EBITDA.
Margins can increase based on the ratio of equity to total assets.

                                 Page 6 of 32

<PAGE>   7
                        ALPHARMA INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (In Thousands of dollars)
                                  (Unaudited)

         Primarily as a result of the Company's acquisition of the Isis Group,
the equity to total asset ratio at June 30, 1999 was 24.5%. The ratio falling
below 25% requires a prospective increase in the margin on debt outstanding
under the 1999 Credit Agreement of .75% (2.25% aggregate margin) and requires
the Company to achieve a minimum 25% ratio within six months.

         In June 1999, the Company issued $170,000 principal amount of 3.0%
Convertible Senior Subordinated Notes due 2006 (the "06 Notes"). The 06 Notes
will pay cash interest of 3% per annum, calculated on the initial principal
amount of the Notes. The Notes will mature on June 1, 2006 at a price of
134.104% of the initial principal amount. The payment of the principal amount of
the Notes at maturity (or earlier, if the Notes are redeemed by the Company
prior to maturity), together with cash interest paid over the term of the Notes,
will yield investors 6.875% per annum. The interest accrued but which will not
be paid prior to maturity (3.875% per annum) is reflected as long-term debt in
the accounts of the Company. The 06 Notes are redeemable by the Company after
June 16, 2002.

         The Notes are convertible at any time prior to maturity, unless
previously redeemed, into 31.1429 shares of the Company's Class A Common stock
per one thousand dollars of initial principal amount of 06 Notes. This ratio
results in an initial conversion price of $32.11 per share. The number of shares
into which a 06 Note is convertible will not be adjusted for the accretion of
principal or for accrued interest.

         The net proceeds from the offering of approximately $164,000 were used
to retire outstanding senior long-term debt principally outstanding under the
1999 Credit Facility. This created the capacity under the 1999 Credit Facility
to finance the acquisition of Isis Pharma in the second quarter. (See Note 4.)

Long-term debt consists of the following:

<TABLE>
<CAPTION>

                                                                                     June 30,         December 31,
                                                                                     --------         ------------
                                                                                       1999               1998
                                                                                       ----               ----
<S>                                                                             <C>                  <C>
Senior debt:
   U.S. Dollar Denominated:
     1999 Revolving Credit Facility                                                  $190,000                   -
       (6.5 - 6.6%)
     Prior Revolving Credit Facility                                                                     $180,000
       (6.6 - 7.0%)                                                                         -
     A/S Eksportfinans                                                                      -               7,200
     Industrial Development Revenue Bonds:
       Baltimore County, Maryland

</TABLE>

                                 Page 7 of 32


<PAGE>   8


                        ALPHARMA INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (In Thousands of dollars)
                                  (Unaudited)

<TABLE>
<S>                                                       <C>                     <C>                <C>
          (7.25%)                                                                       3,930             4,565
          (6.875%)                                                                      1,200             1,200
       Lincoln County, NC                                                               4,500             4,500
     Other, U.S.                                                                          232               504

   Denominated in Other Currencies:
     Mortgage notes payable (NOK)                                                      40,208            42,224
     Bank and agency development loans (NOK)                                            7,094             7,991
     Other, foreign                                                                        17                53
                                                                                     --------          --------
   Total senior debt                                                                  247,181           248,237
                                                                                     --------          --------

Subordinated debt:
   5.75% Convertible Subordinated Notes
         due 2005                                                                     125,000           125,000
   5.75% Convertible Subordinated
         Note due 2005 - Industrier Note                                               67,850            67,850
      3% Convertible Senior Subordinated
              Notes due 2006 (6.875% yield),
              including interest accretion                                            170,512              -
                                                                                     --------          --------

   Total subordinated debt                                                            363,362           192,850
                                                                                     --------          --------

     Total long-term debt                                                             610,543           441,087
     Less, current maturities                                                           9,258            12,053
                                                                                     --------          --------
                                                                                     $601,285          $429,034
                                                                                     ========          ========
</TABLE>

4.        Business Acquisitions

Cox:

         On May 7, 1998, the Company's IPD acquired all of the capital stock of
Cox Investments Ltd. and its wholly owned subsidiary, Arthur H. Cox and Co.,
Ltd. and all of the capital stock of certain related marketing subsidiaries
("Cox") from Hoechst AG for a total purchase price including direct costs of the
acquisition of approximately $198,000. Cox's operations are included in IPD and
are located primarily in the United Kingdom with distribution operations located
in Scandinavia and the Netherlands. Cox is a generic pharmaceutical manufacturer
and marketer of tablets, capsules, suppositories, liquids, ointments and creams.

         The acquisition was accounted for in accordance with the purchase
method. The fair value of the assets acquired and liabilities assumed and the
results of Cox's operations are included in the Company's consolidated financial
statements beginning on the acquisition date, May 7, 1998. The Company is
amortizing the acquired goodwill (approximately $160,000) over 35 years using
the straight line method.

                                 Page 8 of 32

<PAGE>   9


                        ALPHARMA INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (In Thousands of dollars)
                                  (Unaudited)


Jumer:

         On April 16, 1999, the Company's IPD acquired the generic
pharmaceutical business Jumer Laboratories SARL and related companies of the
Cherqui group ("Jumer") in Paris, France for approximately $26.4 million, which
includes the assumption of debt which was repaid subsequent to closing. The
acquisition consisted of products, trademarks and registrations.

         The acquisition was accounted for in accordance with the purchase
method. The preliminary fair value of the assets acquired and liabilities
assumed and the results of Jumer's operations is included in the Company's
consolidated financial statements beginning on the acquisition date, April 16,
1999. The Company is amortizing the acquired intangibles and goodwill based on
preliminary estimates of lives generally over an average of 15 years using the
straight line method.

Isis:

         On June 18, 1999, the Company's IPD acquired all of the capital stock
of Isis Pharma GmbH and its subsidiary, Isis Puren ("Isis") from Schwarz Pharma
AG for approximately $153 million in cash, and a further purchase price
adjustment equal to any increase (or decrease) in the net assets of Isis from
January 1, 1999 to the date of acquisition. Isis operates a generic and branded
pharmaceutical business in Germany. The acquisition consisted of personnel
(approximately 200 employees; 140 of whom are in the sales force) and product
registrations and trademarks. No plant, property or manufacturing equipment were
part of the acquisition.

         The Company financed the $153 million purchase price under its 1999
Credit Facility. On June 2, 1999, the Company repaid borrowings under the 1999
Credit Facility with a substantial portion of the proceeds from the issuance of
the 06 Notes. Such repayment created the capacity under the 1999 Credit Facility
to incur the borrowings used to finance the acquisition of Isis.

         The acquisition was accounted for in accordance with the purchase
method. The preliminary fair value of the assets acquired and liabilities
assumed and the results of Isis operations are included in the Company's
consolidated financial statements beginning on June 15, 1999. The Company is
amortizing the acquired intangibles and goodwill based on preliminary estimates
of lives over an average of approximately 18 years using the straight line
method.

                                 Page 9 of 32


<PAGE>   10
                        ALPHARMA INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (In Thousands of dollars)
                                  (Unaudited)

Proforma Information:

         The following pro forma information on results of operations assumes
the purchase of all businesses discussed above as if the companies had combined
at the beginning of each period presented:

<TABLE>
<CAPTION>
                                                         Proforma                           Proforma
                                                    Three Months Ended                  Six Months Ended
                                                         June 30,                           June 30,
                                                         --------                           --------
                                                  1999             1998*              1999             1998*
                                                  ----             ----               ----             ----
<S>                                            <C>                 <C>              <C>                <C>
Revenue                                        $180,900          $174,600          $356,100         $346,700
Net income                                       $8,500            $7,100           $15,300          $12,500
Basic EPS                                         $0.31             $0.28             $0.56            $0.49
Diluted EPS                                       $0.30             $0.28             $0.55            $0.49
</TABLE>

* Excludes actual non-recurring charges related to the acquisition of Cox of
$3,130 after tax or $0.12 per share.

         These unaudited pro forma results have been prepared for comparative
purposes only and include certain adjustments, such as additional amortization
expense as a result of acquired intangibles and goodwill and an increased
interest expense on acquisition debt. They do not purport to be indicative of
the results of operations that actually would have resulted had the acquisitions
occurred at the beginning of each respective period, or of future results of
operations of the consolidated entities.

5.       Earnings Per Share

         Basic earnings per share is based upon the weighted average number of
common shares outstanding. Diluted earnings per share reflect the dilutive
effect of stock options, warrants and convertible debt when appropriate.

         A reconciliation of weighted average shares outstanding for basic to
diluted weighted average shares outstanding is as follows:

<TABLE>
<CAPTION>
(Shares in thousands)                               Three Months Ended                   Six Months Ended
                                                    ------------------                   ----------------
                                               June 30,          June 30,          June 30,          June 30,
                                                 1999              1998              1999              1998
                                                 ----              ----              ----              ----
<S>                                          <C>                <C>               <C>                <C>
Average shares
outstanding - basic                            27,503             25,384            27,379            25,367
Stock options                                     353                174               380               171
Warrants                                            -                235                 -               219
Convertible debt                                6,744               -                 -                 -
                                               ------             ------            ------            ------
Average shares
outstanding - diluted                          34,600             25,793            27,759            25,757
                                               ======             ======            ======            ======
</TABLE>

                                 Page 10 of 32

<PAGE>   11


                        ALPHARMA INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (In Thousands of dollars)
                                  (Unaudited)

         The amount of dilution attributable to the options and warrants
determined by the treasury stock method depends on the average market price of
the Company's common stock for each period.

         Subordinated debt, convertible into 6,744,481 shares of common stock at
$28.59 per share, was included in the computation of diluted EPS for the three
months ended June 30, 1999. The calculation of the assumed conversion was
antidilutive for all other periods presented. In addition the 06 Notes,
convertible into 5,294,301 shares of common stock at $32.11 per share, were not
included in the computation of diluted EPS because the calculation of the
assumed conversion was antidilutive for all periods presented.

         The numerator for the calculation of both basic and diluted is net
income for all periods presented except the three months ended June 30, 1999. A
reconciliation of net income for basic to diluted is as follows:

<TABLE>
<CAPTION>
                                                         Three Months Ended                Six Months Ended
                                                       -----------------------        -------------------------
                                                       June 30,        June 30,        June 30,        June 30,
                                                         1999            1998            1999            1998
                                                         ----            ----            ----            ----
<S>                                                   <C>               <C>           <C>             <C>
Net income - basic                                       $7,772           $2,305        $15,208          $7,707
Adjustments under if -
  converted method, net of tax                            1,870             -              -                -
                                                          -----            -----        --------          -----
Adjusted net income - diluted                            $9,642           $2,305        $15,208          $7,707
                                                          =====            =====         ======           =====
</TABLE>

6.       Supplemental Data

<TABLE>
<CAPTION>
                                                         Three Months Ended                Six Months Ended
                                                       ------------------------        ------------------------
                                                       June 30,        June 30,        June 30,        June 30,
                                                         1999            1998            1999            1998
                                                         ----            ----            ----            ----
<S>                                                   <C>               <C>            <C>              <C>
Other income (expense), net:
    Interest income                                        258              188            444             268
    Foreign exchange losses, net                            29             (280)          (268)           (488)
    Amortization of debt costs                            (367)            (218)          (657)           (293)
    Litigation settlement                                   -                -           1,000              -
    Income from joint venture
      carried at equity                                    348               -             648              -
    Gain (loss) on sale of
      assets                                               (56)             681            (56)            681
    Other, net                                            (234)              12           (190)             14
                                                          ----             ----           ----            ----
                                                         $ (22)           $ 383          $ 921           $ 182
                                                          ====             ====           ====            ====
</TABLE>

                                 Page 11 of 32


<PAGE>   12


                        ALPHARMA INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (In Thousands of dollars)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                                           Six Months Ended
                                                       June 30,        June 30,
                                                         1999            1998
                                                         ----            ----
<S>                                                  <C>              <C>
Supplemental cash flow
information:

Cash paid for interest (net of
 amount capitalized)                                   $13,226           $9,710
Cash paid for income taxes
 (net of refunds)                                      $ 7,660           $3,043

Detail of Businesses Acquired:
    Fair value of assets                              $213,087         $230,740
    Liabilities                                         38,558           33,229
                                                       -------          -------
    Cash paid                                          174,529          197,511
    Less cash acquired                                     903              467
                                                       -------          -------
    Net cash paid for
     acquisitions                                     $173,626         $197,044
                                                       =======          =======
</TABLE>

7.       Reporting Comprehensive Income

         As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income." SFAS
130 requires foreign currency translation adjustments to be included in other
comprehensive income (loss). Total comprehensive income (loss) amounted to
approximately $(1,505) and $1,974 for the three months ended June 30, 1999 and
1998, respectively. Total comprehensive income (loss) amounted to approximately
$(8,371) and $1,792 for the six months ended June 30, 1999 and 1998. The only
components of accumulated other comprehensive income (loss) for the Company are
foreign currency translation adjustments.

8.       Contingent Liabilities and Litigation

         The Company is one of multiple defendants in 72 lawsuits (after the
dismissal in the second quarter of 1999 of 8 lawsuits) alleging personal
injuries and seven class actions for medical monitoring resulting from the use
of phentermine distributed by the Company and subsequently prescribed for use in
combination with fenflurameine or dexfenfluramine manufactured and sold by other
defendants (Fen-Phen Lawsuits). None of the plaintiffs have specified an amount
of monetary damage. Because the Company has not manufactured, but only
distributed phentermine, it has demanded defense and indemnification from the
manufacturers and the insurance carriers of manufacturers from whom it has
purchased the phentermine. The Company has received a partial reimbursement of
litigation costs from one of the manufacturer's

                                 Page 12 of 32

<PAGE>   13
                        ALPHARMA INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (In Thousands of dollars)
                                  (Unaudited)

carriers. The plaintiff in 34 of these lawsuits has agreed to dismiss the
Company without prejudice but such dismissals must be approved by the Court.
Based on an evaluation of the circumstances as now known, including but not
solely limited to: 1) the fact that the Company did not manufacture
phentermine, 2) it had a diminimus share of the phentermine market and 3) the
presumption of some insurance coverage, the Company does not expect that the
ultimate resolution of the current Fen-Phen lawsuits will have a material
impact on the financial position or results of operations of the Company.

         Bacitracin zinc, one of the Company's feed additive products has been
banned from sale in the European Union (the "EU") effective July 1, 1999. The
Company's request for a court injunction to prevent the imposition of the ban
was rejected. The Company is continuing to actively pursue other initiatives,
based on scientific evidence available for the product, to limit the effects of
this ban although an assurance of success cannot be given. In addition, certain
other countries, not presently material to the Company's sales of bacitracin
zinc have either followed the EU's ban or are considering such action. The
existing governmental actions negatively impact the Company's business but are
not material to the Company's financial position or results of operations.
However, an expansion of the ban to further countries where the Company has
material sales of bacitracin based products could be material to the financial
condition and results of operations of the Company.

         The Company and its subsidiaries are, from time to time, involved in
other litigation arising out of the ordinary course of business. It is the view
of management, after consultation with counsel, that the ultimate resolution of
all other pending suits should not have a material adverse effect on the
consolidated financial position or results of operations of the Company.

9.    Business Segment Information

         The Company's reportable segments are five decentralized divisions
(i.e. International Pharmaceuticals Division ("IPD"), Fine Chemicals Division
("FCD"), U.S. Pharmaceuticals Division ("USPD"), Animal Health Division ("AHD")
and Aquatic Animal Health Division ("AAHD"). Each division has a president and
operates in distinct business and/or geographic area. Segment data includes
immaterial intersegment revenues which are eliminated in the consolidated
accounts.

                                 Page 13 of 32


<PAGE>   14


                        ALPHARMA INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (In Thousands of dollars)
                                  (Unaudited)

         The operations of each segment are evaluated based on earnings before
interest and taxes. Corporate expenses and certain other expenses or income not
directly attributable to the segments are not allocated.

<TABLE>
<CAPTION>
                                                             Three Months Ended June 30,
                                 ------------------------------------------------------------------------------------
                                        1999                  1998                   1999                1998
                                        ----                  ----                   ----                ----
                                                  Revenues                                     Income
                                                  --------                                     ------
<S>                                 <C>                   <C>                     <C>                   <C>
IPD                                   $68,055               $47,095                $7,565                  $420
USPD                                   42,315                39,122                 2,322                 1,621
FCD                                    16,019                13,612                 6,192                 4,847
AHD                                    35,103                38,633                 9,151                 8,648
AAHD                                    2,522                 2,293                  (920)                 (309)
Unallocated and
 eliminations                            (175)               (1,242)               (3,264)               (3,508)
                                      -------               -------
                                     $163,839              $139,513
                                      =======               =======
Interest expense                                                                   (8,857)               (6,489)
                                                                                  -------               -------
  Pretax income                                                                  $ 12,189               $ 5,230
                                                                                  =======                ======
</TABLE>

<TABLE>
<CAPTION>
                                                               Six Months Ended June 30,
                                        ---------------------------------------------------------------------
                                        1999                  1998                   1999                1998
                                        ----                  ----                   ----                ----
                                                  Revenues                                   Income
                                                  --------                                   ------
<S>                                  <C>                   <C>                   <C>                <C>
IPD                                   $128,200               $82,457               $13,022              $2,400
USPD                                    81,751                76,163                 4,443               2,341
FCD                                     31,452                25,893                11,946               8,438
AHD                                     75,574                77,580                18,501              16,933
AAHD                                     4,634                 6,011                (1,840)               (312)
Unallocated and
 eliminations                           (1,013)               (2,029)               (5,762)             (4,872)
                                       -------               -------
                                      $320,598              $266,075
                                       =======               =======
Interest expense                                                                   (16,323)            (10,979)
                                                                                   -------             -------
  Pretax income                                                                   $ 23,987            $ 13,949
                                                                                   =======             =======
</TABLE>

         At December 31, 1998 IPD identifiable assets were $379,217. Due
primarily to the acquisitions of Jumer and Isis the identifiable assets of IPD
at June 30, 1999 are approximately $579,000.

10.    Strategic Alliances

Joint Venture:

         In January 1999, the AHD contributed the distribution business of its
Wade Jones Company ("WJ") into a partnership with G&M Animal Health

                                 Page 14 of 32


<PAGE>   15



                        ALPHARMA INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (In Thousands of dollars)
                                  (Unaudited)

Distributors and T&H Distributors. The WJ distribution business which was merged
had annual sales of approximately $30,000 and assets (primarily accounts
receivable and inventory) of less than $10,000. The Company owns 50% of the new
entity, WYNCO LLC ("WYNCO"). The Company accounts for its interest in WYNCO
under the equity method.

         WYNCO is a regional distributor of animal health products and services
primarily to integrated poultry and swine producers and independent dealers
operating in the Central South West and Eastern regions of the U.S. WYNCO is the
exclusive distributor for the Company's animal health products. Manufacturing
and premixing operations at WJ remain part of the Company.

Ascent Loan Agreement and Option:

         On February 4, 1999, the Company entered into a loan agreement with
Ascent Pediatrics, Inc. ("Ascent") under which the Company may provide up to
$40,000 in loans to Ascent to be evidenced by 7 1/2% convertible subordinated
notes due 2005. Pursuant to the loan agreement, up to $12,000 of the proceeds of
the loans can be used for general corporate purposes, with $28,000 of proceeds
reserved for projects and acquisitions intended to enhance growth of Ascent. All
potential loans are subject to Ascent meeting a number of terms and conditions
at the time of each loan. As of June 30, 1999, the Company had advanced $4,000
to Ascent under the agreement. Subsequently, the Company advanced $1,500 to
Ascent in July 1999.

         In addition, Ascent and the Company have entered into an agreement
under which the Company will have the option during the first half of 2002 to
acquire all of the then outstanding shares of Ascent for cash at a price to be
determined by a formula based on Ascent's operating income.

         The above transactions were approved by Ascent's stockholders in July
of 1999.

11.    Recent Accounting Pronouncements

         In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS 133). SFAS 133, as amended in 1999, is
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000 (January 1, 2001 for the Company). SFAS 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of

                                 Page 15 of 32


<PAGE>   16

                        ALPHARMA INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                           (In Thousands of dollars)
                                  (Unaudited)

derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction.

         SFAS 133 is not expected to have a material impact on the Company's
consolidated results of operations, financial position or cash flows.

12.      Subsequent Events

         In July 1999, the Company made the decision to rationalize Aquatic
Animal Health production capacity by closing its Bellevue, Washington plant and
severing all 21 employees. The plant is expected to be closed and all employees
terminated by the end of 1999.

         The plant closing will require a charge for severance, lease costs and
other exit activities in the third quarter of 1999 (presently estimated at
between $2,000 and $3,000 pre-tax). The closing plan and charge will be
finalized by the end of the third quarter of 1999.

                                 Page 16 of 32

<PAGE>   17


Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

Overview

         Operations in the first six months of 1999 improved relative to the
comparable period in 1998. During the 1999 period a number of transactions
occurred, including:

-        In January, the Company contributed the distribution business of our
         Wade Jones subsidiary into a joint venture with two similar third-party
         distribution businesses. The new entity, WYNCO, which is a regional
         distributor of animal health products in the Central South West and
         Eastern regions of the U.S., is 50% owned by Alpharma.

-        In January, the Company replaced its revolving credit facility and
         existing domestic short term credit lines with a $300.0 million
         syndicated facility which provides for increased borrowing capacity.

-        In February, USPD entered into an agreement with Ascent Pediatrics,
         Inc., a branded pediatric pharmaceutical company, under which USPD may
         provide up to $40 million in loans subject to Ascent meeting agreed
         terms and conditions. In addition, the Company will have the option to
         acquire Ascent in 2002 for a price based on Ascent's operating income.
         These transactions were approved by Ascent's stockholders in July of
         1999. See "Financial Condition" below for additional information.

-        In April, the Company's IPD purchased a French generic pharmaceutical
         business for approximately $26.4 million in cash.

-        In June, the Company issued $170.0 million initial principal amount of
         3% Convertible Senior Subordinated Notes due in 2006.

-        In June, the Company's IPD acquired the Isis Pharma Group, a German
         generic pharmaceutical business for approximately $153.0 million in
         cash.

                                 Page 17 of 32


<PAGE>   18


            Results of Operations - Six Months Ended June 30, 1999

         Total revenue increased $54.5 million (20.5%) in the six months ended
June 30, 1999 compared to 1998. Operating income in 1999 was $39.4 million, an
increase of $14.6 million, compared to 1998. Net income was $15.2 million ($.55
per share diluted) compared to $7.7 million ($.30 per share diluted) in 1998.
Results for 1998 include non-recurring charges resulting from the Cox
acquisition which reduced income by $3.1 million ($.12 per share).

         Revenues increased in the Human Pharmaceuticals business by $56.9
million and were $3.4 million lower in the Animal Health business. Currency
translation of international sales into U.S. dollars was not a major factor in
the increases or decreases of any business segment.

         Changes in revenue and major components of change for each division in
the six month period ended June 30, 1999 compared to June 30, 1998 are as
follows:

         Revenues in IPD increased by $45.7 million due primarily to the
acquisitions in 1998 and 1999 ($40.8 million aggregate increase due mainly to
the Cox acquisition). The introduction of new products and limited pricing
improvements which were offset partially by lower volume in certain markets
account for the balance of the IPD increase. Revenues in FCD increased by $5.6
million due mainly to volume increases in vancomycin and amphotericin. USPD
revenues increased $5.6 million due to volume increases in existing and new
products and revenue from licensing activities offset partially by lower net
pricing. AHD revenues decreased $2.0 million due to increased volume in the
poultry and cattle markets being offset entirely by sales previously recorded by
Wade Jones company now being recorded by WYNCO, the Company's joint venture
distribution company. (i.e. WYNCO joint venture revenues are not included in the
Company's consolidated sales effective in January 1999 when the joint venture
commenced.) AAHD sales were $1.4 million lower due to market developments which
resulted in lower vaccine volume in the Norwegian salmon market.

         On a consolidated basis, gross profit increased $29.6 million and the
gross margin percent increased to 44.4% in 1999 compared to 42.3% in 1998. Gross
profit in 1998 was reduced by a $1.3 million charge related to the acquisition
of Cox.

                                 Page 18 of 32


<PAGE>   19


         A major portion of the dollar increase in the Company's consolidated
gross profits was recorded in IPD and results from the 1998 and 1999
acquisitions (particularly Cox). Other increases are attributable to higher
volume, manufacturing cost reductions and yield efficiencies in AHD and FCD and
sales of new products and licensing activities in IPD and USPD.

         Partially offsetting increases were volume decreases in certain IPD
markets, lower vaccine sales by AAHD and lower net pricing primarily in USPD.

         Operating expenses increased $15.0 million and represented 32.1% of
revenues in 1999 compared to 33.0% in 1998. A portion of the increase is
attributable to the 1998 and 1999 acquisitions which include operating expenses
and amortization of intangible assets acquired. Other increases included
professional and consulting fees for litigation and administrative actions to
attempt to reverse the European Union ban on bacitracin zinc, consulting
expenses for information technology and acquisitions, and annual increases in
compensation including incentive programs. Operating expenses in 1998 include a
write off of in- process research and development of $2.1 million and $.2
million for severance related to the Cox acquisition.

         Operating income increased $14.6 million (59.2%). IPD accounted for
$10.6 million of the increase primarily due to 1998 and 1999 acquisitions, the
absence of 1998 acquisition charges related to Cox, price increases and new
product sales. Increased operating income was recorded by AHD due primarily to
increased volume, by USPD due to higher volume and licensing activities net of
pricing reductions, and by FCD due to increased volume. Increases in certain
operating expenses and lower AAHD income due to market developments offset
increased operating income to some extent.

         Interest expense increased in 1999 by $5.3 million due primarily to
debt incurred to finance the acquisitions of Cox and other 1998 and 1999
acquisitions.

         Other, net was $.9 million income in 1999 compared to $.2 million
income in 1998. Other, net in 1999 includes patent litigation settlement income
of $1.0 million and equity income from the WYNCO joint venture of $.6 million.
1998 included gains on property sales of $.7 million.

                                 Page 19 of 32

<PAGE>   20


Results of Operations -  Three Months Ended June 30, 1999

         Total revenue increased $24.3 million (17.4%) in the three months ended
June 30, 1999 compared to 1998. Operating income in 1999 was $21.1 million, an
increase of $9.7 million, compared to 1998. Net income was $7.8 million ($.28
per share diluted) compared to $2.3 million ($.09 per share diluted) in 1998.
Results for 1998 include non-recurring charges resulting from the Cox
acquisition which reduced income by $3.1 million ($.12 per share).

         Revenues increased in the Human Pharmaceuticals business by $26.6
million and declined by $3.3 million in the Animal Health business. Currency
translation of international sales into U.S. dollars was not a major factor in
the increases or decreases of any business segment.

         Changes in revenue and major components of change for each division in
the three month period ended June 30, 1999 compared to June 30, 1998 are as
follows:

         Revenues in IPD increased by $21.0 million due primarily to the
acquisitions in 1998 and 1999 ($15.5 million primarily due to Cox), the
introduction of new products and selected price increases. Revenues in FCD
increased by $2.4 million due mainly to volume increases in vancomycin and
amphotericin. USPD revenues increased $3.2 million due to volume increases in
existing and new products and revenue from licensing activities offset partially
by lower net pricing. AHD revenues decreased $3.5 million due to sales
previously recorded by Wade Jones company now being recorded by Wynco, the
company's joint venture distribution company. (i.e. Wynco joint venture revenues
are not included in the Company's consolidated sales effective in January 1999
when the joint venture commenced.) AHD revenues in core product lines increased
in volume partially offsetting the reduction due to the establishment of the
joint venture. AAHD sales were approximately the same in a seasonally slow
second quarter of both years.

         On a consolidated basis, gross profit increased $14.6 million and the
gross margin percent increased to 45.1% in 1999 compared to 42.4% in 1998. The
second quarter of 1998 was negatively effected by the $1.3 million charge
related to the Cox acquisition and the gross margin percent without the charges
was 43.3%.

                                 Page 20 of 32


<PAGE>   21



         A major portion of the increase in dollars was recorded by IPD and is
mainly attributable to the 1998 and 1999 acquisitions (primarily Cox). Other
increases are attributable to higher volume, manufacturing cost reductions and
yield efficiencies in USPD, AHD and FCD and sales of new products and licensing
activities in IPD and USPD.

         Partially offsetting increases were volume decreases in certain IPD
markets, and lower net pricing primarily in USPD.

         Operating expenses increased $4.9 million and represented 32.2% of
revenues in 1999 compared to 34.3% in 1998. The increase results mainly from
operating expenses including amortization of intangible assets related to 1998
and 1999 acquisitions. Charges for in-process R&D and severance related to the
Cox acquisition of $2.3 million are included in the 1998 amounts.

         Operating income increased $9.7 million. On a comparable basis without
the charge in the second quarter of 1998 related to Cox operating income
increased $6.1 million (41.1%). Not including the Cox charges IPD operating
income increased $3.5 million due to 1998 and 1999 acquisitions, increased
pricing and new product sales. Increases were recorded by AHD due primarily to
increased volume, by USPD due to volume increases exceeding price declines and
by FCD due to increased volume. AAHD operating income declined due to
unfavorable market developments.

         Interest expense increased in 1999 by $2.4 million due primarily to
debt incurred to finance the acquisition of Cox and other 1998 and 1999
acquisitions.

Taxes

         The effective tax rate for the three and six months ended June 30, 1999
was 36.2% and 36.6% compared to 55.9% and 44.7% in the comparable periods in
1998. The primary reason for the higher rate in 1998 was the charge related to
the acquisition of Cox included a $2.1 million expense for in-process research
and development which is not tax benefited.

Management Actions

         The dynamic nature of our business gives rise, from time to time, to
additional opportunities to rationalize personnel functions and operations to
increase efficiency and profitability.

                                 Page 21 of 32




<PAGE>   22


Management is continuously reviewing these opportunities and may take actions in
the future which could be material to the results of operations in the quarter
they are announced.

         In this regard, the AAHD in July 1999 concluded a study of production
capacity and recommended that the AAHD's Bellevue Washington facility be closed
by the end of 1999. The proposal was approved by executive management and 21
affected employees were informed in July 1999. The action will require charges
in the third quarter of 1999 for severance, lease costs and other exit
activities. The plan will be finalized in the third quarter. The charges are
presently estimated to be in a range of $2.0 to $3.0 million before tax.

Year 2000

General

       The Year 2000 ("Y2K") issue is primarily the result of certain computer
programs and embedded computer chips being unable to distinguish between the
year 1900 and 2000. As a result, the Company along with all other business and
governmental entities, is at risk for possible miscalculations of a financial
nature and systems failures which may cause disruptions in its operations. The
Company can be affected by the Y2K readiness of its systems or the systems of
the many other entities with which it interfaces, directly or indirectly.

       The Company began its program to address its potential Y2K issues in late
1996 and has organized its activities to prepare for Y2K at the division level.
The divisions have focused their efforts on three areas: (1) information systems
software and hardware; (2) manufacturing facilities and related equipment; (i.e.
embedded technology) and (3) third-party relationships (i.e. customers,
suppliers, and other). Information system and hardware Y2K efforts are being
coordinated by an IT steering committee composed of divisional personnel.

       The Company and the divisions have organized their activities and are
monitoring their progress in each area by the following four phases:

         Phase 1:  Awareness/Assessment - identify, quantify and prioritize
                   business and financial risks by area.


                                 Page 22 of 32


<PAGE>   23


         Phase 2:  Budget/Plan/Timetable - prepare a plan including costs and
                   target dates to address phase 1 exposures.

         Phase 3:  Implementation - execute the plan prepared in phase 2.

         Phase 4:  Testing/Validation - test and validate the implemented plans
                   to insure the Y2K exposure has been eliminated or mitigated.

State of Readiness

         The Company summarizes its divisions' state of readiness at June 30,
1999 as follows:

Information Systems and Hardware

<TABLE>
<CAPTION>
                                                                         Quarter forecasted for
                                     Approximate range                   substantial
Phase                                of completion                       completion
-----                                -------------                       -----------
<S>                                 <C>                                 <C>
1                                    100%                                Completed
2                                    100%                                Completed
3                                    90 - 100%                           3rd Quarter 1999
4                                    80 - 95%                            3rd Quarter 1999
</TABLE>

Embedded Factory Systems

<TABLE>
<CAPTION>
                                                                         Quarter forecasted for
                                     Approximate range                   substantial
Phase                                of completion                       completion
-----                                -------------                       -----------
<S>                                 <C>                                 <C>
1                                    100%                                Completed
2                                    100%                                Completed
3                                    75 -100%                            3rd Quarter 1999
4                                    75 -100%                            3rd Quarter 1999
</TABLE>

                                 Page 23 of 32


<PAGE>   24


Third Party Relationships

<TABLE>
<CAPTION>
                                                                         Quarter forecasted
                                     Approximate range                   for substantial
Phase                                of completion                       completion
-----                                -------------                       -----------
<S>                                 <C>                                 <C>
1                                    100% (a)                            Completed (a)
2                                    90 - 100%  (a)                      3rd Quarter 1999(a)
3                                    85 - 90% (a) (b)                    3rd Quarter 1999(a,b)
4                                    75 - 85%(a) (b)                     3rd Quarter 1999(a,b)
</TABLE>


(a)      Refers to significant identified risks - (e.g. customers, suppliers of
         raw materials and providers of services) does not include exposures
         that relate to interruption of utility or government provided services.

(b)      Awaiting completion of vendor response and follow-up due diligence to
         Y2K readiness surveys.

Cost

         The Company expects the costs directly associated with its Y2K efforts
to be between $2.5 and $3.0 million of which approximately $2.0 million has been
spent to date. The cost estimates do not include additional costs that may be
incurred as a result of the failure of third parties to become Y2K compliant or
costs to implement any contingency plans.

Risks

         The Company had previously identified the following significant
reasonably possible Y2K problems:

         -    Possible problem: the inability of significant sole source
              suppliers of raw materials or active ingredients to provide an
              uninterrupted supply of material necessary for the manufacture of
              Company products.

         -    Possible problem: the failure to properly interface caused by
              noncompliance of significant customer operated electronic
              ordering systems.

         -    Possible problem: the shutdown or malfunctioning of Company
              manufacturing equipment.

                                 Page 24 of 32

<PAGE>   25

         Since these possible problems were initially identified, risk
remediation progress has, in the opinion of the Company, reduced the likelihood
of these Y2K risks:

         -    Sole source suppliers: substantially all major sole source
              suppliers were certified by Company inspection or have self
              certified as Y2K compliant as of June 30, 1999.

         -    E-Commerce risk: the Company has been advised by a third party
              engaged to review this area that it is Y2K compliant with respect
              to E-Commerce as of June 30, 1999.

         -    Shutdown of manufacturing equipment: plants were tested during
              vacation shutdowns and no significant Y2K problems were identified
              as a result of the testing.

         Based on the assessment and remediation efforts to date, which are
substantially complete, the Company does not believe that the Y2K issue will
have a material adverse effect on its financial condition or results of
operation. The Company believes that any effect of the Year 2000 issue will be
mitigated because of the Company's divisional operating structure, which is
diverse both geographically and with respect to customer and supplier
relationships. Therefore, the adverse effect of most individual failures should
be isolated to an individual product, customer or Company facility. However,
there can be no assurance that the systems of third parties on which the Company
relies will be converted in a timely manner, or that a failure to properly
convert by another company would not have a material adverse effect on the
Company.

         The Company's Y2K program is an ongoing process that may uncover
additional exposures and all estimates of costs and completion are subject to
change as the process continues.

Financial Condition

         Working capital at June 30, 1999 was $168.3 million compared to $165.0
million at December 31, 1998. The current ratio was 1.87 to 1 at June 30, 1999
compared to 1.97 to 1 at year end. Long-term debt to stockholders' equity was
2.22:1 at June 30, 1999 compared to 1.61:1 at December 31, 1998.

                                 Page 25 of 32

<PAGE>   26



         The change in the Company's long-term debt to equity ratio was
primarily the result of the issuance of $170 million initial principal amount of
3% Convertible Senior Subordinated Notes in the second quarter of 1999 to reduce
revolving credit debt and thereby create sufficient financing capacity to
purchase the Isis Pharma Group, a German generic pharmaceutical business, for
approximately $153.0 million.

         All balance sheet captions decreased as of June 30, 1999 compared to
December 1998 in U.S. Dollars as the functional currencies of the Company's
principal foreign subsidiaries, the Norwegian Krone, Danish Krone and British
Pound, depreciated versus the U.S. Dollar in the six months of 1999 by
approximately 3%, 13% and 5%, respectively. In addition, the Company's
operations in Brazil were negatively affected due to the decline of its currency
versus the U.S. Dollar. These decreases in balance sheet captions impact to some
degree the above mentioned ratios. The approximate decrease due to currency
translation of selected captions was: accounts receivable $5.0 million,
inventories $4.2 million, accounts payable and accrued expenses $4.0 million,
and total stockholders' equity $23.6 million. The $23.6 million decrease in
stockholder's equity represents accumulated other comprehensive loss for the six
months ended June 30, 1999 resulting from the strengthening of the U.S. dollar.

         In February 1999, the Company's USPD entered into an agreement with
Ascent Pediatrics, Inc. ("Ascent") under which USPD may provide up to $40
million in loans to Ascent to be evidenced by 7 1/2% convertible subordinated
notes due 2005. Up to $12 million of the proceeds of the loans can be used only
for general corporate purposes, with $28 million of proceeds reserved for
approved projects and acquisitions intended to enhance growth of Ascent. All
potential loans are subject to Ascent meeting a number of terms and conditions
at the time of each loan. The exact timing and/or ultimate amount of loans to be
provided cannot be predicted. As of July 30, 1999, $5.5 million has been
advanced and in the third and fourth quarters of 1999 additional amounts are
expected to be requested. The outstanding loan and future loans to Ascent are
subject to a risk of collectibility. Ascent has incurred operating losses since
its inception. For the first six months of 1999 Ascent reported revenues of $3.6
million and a net loss of $7.2 million. An important element of Ascent's
business plan contemplated the late 1999 commercial introduction of two
pediatric pharmaceutical products which require FDA approval.

                                 Page 26 of 32


<PAGE>   27


Ascent has stated in its Form 10-Q Report for the quarter ended June 30, 1999
that, in August 1999, it received a major deficiency letter from the FDA with
regard to its application for one of these approvals which will delay commercial
introduction of the relevant drug; possibly significantly beyond the time
originally anticipated.

         As a result of this delay in drug introduction, Ascent has informed the
Company that, without any further action, it now forecasts that its accumulated
losses will exceed the combined sum of its stockholders' equity and indebtedness
subordinate to the Company's loans during the first half of 2000. However,
Ascent, one of its major stockholders and the Company are discussing actions
intended to mitigate the effect of these delays. The Company is required to
recognize losses, up to the amount of its loans, to the extent Ascent has
accumulated losses in excess of its stockholders' equity and the indebtedness
subordinate to the Company's loans. The Company is further required to assess
the general collectability of its loans to Ascent and make any appropriate
reserves. The Company can limit further loans to Ascent in certain
circumstances.

         In addition, the Company has signed a technology license and option
agreement and asset purchase agreement for an animal health product which will
require up to a $20 million expenditure in 1999 subject to fulfillment of all
conditions necessary to closing. Additional amounts will be required in future
years if the product is successfully licensed in a number of markets.

         At June 30, 1999, the Company had $22.5 million in cash and
approximately $93.0 million available under existing lines of credit. In January
1999, the Company replaced its prior $180.0 million revolving credit facility
and domestic short term lines of credit with a $300.0 million credit facility.
In addition, European short term credit lines were set at $30.0 million. The
credit facility provides for a $100.0 million six-year term loan and a $200.0
million revolving credit facility with an initial five-year term with two
possible one-year extensions. The credit facility has several financial
covenants, including an interest coverage ratio, total debt to EBITDA ratio, and
equity to asset ratio. Interest on borrowings under the facility is at LIBOR
plus a margin of between .875% and 1.6625% depending on the ratio of total debt
to EBITDA.

                                 Page 27 of 32


<PAGE>   28


Such margins can be higher based on the equity to asset ratio and, as described
below, are currently .75% higher. We believe that the combination of cash from
operations and funds available under existing lines of credit will be sufficient
to cover our currently planned operating needs and firm commitments in 1999.

         The Company expects to continue its pursuit of complementary
acquisitions or alliances, both in human pharmaceuticals and animal health that
can provide new products and market opportunities as well as leverage existing
assets. In order to accomplish any individually significant acquisition or
combination of acquisitions, the Company will need to obtain additional
financing in the form of equity related securities and/or borrowings. Any
significant new borrowings require the Company meet the debt covenants included
in the 1999 Credit Facility. In this regard, the Company's acquisition of the
Isis Group resulted in an equity to total asset ratio at June 30, 1999 of 24.5%.
The ratio falling below 25% requires a prospective increase in the interest rate
margin on debt under the 1999 Credit Agreement of .75% and requires the Company
to achieve a minimum 25% ratio within six months. A failure to meet the minimum
ratio by December 18, 1999 would constitute an event of default under the 1999
Credit Facility and could have a material adverse effect on the Company.

         The ratio can be improved above the 25% requirement by decreasing total
assets and/or increasing equity. In fact, at June 30, 1999 in the aggregate
either a $6.3 million increase in equity or a $25.0 million decrease in assets
would have resulted in a 25% ratio. However, based on current operating plans
and growth objectives it is likely that assets will be increased in the next six
months and currently forecasted income will not increase equity at a sufficient
rate to meet the ratio because of the increase in assets. Additionally, equity
is increased or decreased by currency movements which can increase or decrease
the ratio. For example, had the actual currency rates as of July 31, 1999 been
applied to June 30, 1999 accounts, the Company would have met the 25% ratio. The
Company is considering various options, including a possible equity offering, to
meet the ratio and is filing a shelf registration statement with the Securities
and Exchange Commission for such purpose. The Company believes it will be
successful in reaching the required 25% ratio.

=================


                                 Page 28 of 32


<PAGE>   29



Statements made in this Form 10Q, are forward-looking statements made pursuant
to the safe harbor provisions of the Securities Litigation Reform Act of 1995.
Such statements involve certain risks and uncertainties that could cause actual
results to differ materially from those in the forward looking statements.
Information on other significant potential risks and uncertainties not discussed
herein may be found in the Company's filings with the Securities and Exchange
Commission including its Form 10K for the year ended December 31, 1998.

                                 Page 29 of 32

<PAGE>   30


PART II.    OTHER INFORMATION

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

(a)      Alpharma Inc. annual meeting was held on June 10, 1999.

(b)      Proxies were solicited by Alpharma Inc. and there was no solicitation
         in opposition to the nominees listed in the proxy statement. All such
         nominees were elected to the classes indicated in the proxy statement
         pursuant to the vote of the stockholders as follows:

<TABLE>
<CAPTION>
                                                                                  Votes
                                                                                  -----
         Class A Directors                                            For                      Withheld
         -----------------                                            ---                      --------
        <S>                                                     <C>                           <C>
         Thomas G. Gibian                                           15,898,939                  92,604
         Peter G. Tombros                                           15,899,713                  91,830
         Erik Hornnaess                                             15,899,711                  91,832

         Class B Directors
         -----------------
         I. Roy Cohen                                                9,500,000                       0
         Glen E. Hess                                                9,500,000                       0
         Gert W. Munthe                                              9,500,000                       0
         Einar W. Sissener                                           9,500,000                       0
         Erik G. Tandberg                                            9,500,000                       0
         0yvin A. Br0ymer                                            9,500,000                       0
</TABLE>


(c) An Amendment to Article IV of the Company's Certificate of Incorporation,
was approved by a vote of:

                      For                           24,826,804
                      Against                          587,459
                      Abstain                           77,280
                      No Vote                                0

(d) An Amendment to the Company's Non-Employee Stock Option Plan, as amended,
was approved by a vote of:

                      For                           21,847,041
                      Against                        3,616,560
                      Abstain                           27,942
                      No Vote                                0

                                 Page 30 of 32


<PAGE>   31




Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         3.1   Certificate of Amendment to the Amended and Restated Certificate
               of Incorporation of the Company effective July 22, 1999.

         10.1  The Company's Non-Employee Stock Option Plan, as amended through
               June, 1999.

         10.2  Supplemental Agreement dated as of July 1, 1999 by and among
               Ascent, Alpharma USPD Inc. and the Company relating to the
               various agreements between these parties filed as Exhibits to
               the Company's Form 8-K dated February 23, 1999.

         27.1  Incorporated by Reference to Quarterly Report on Form 10-Q Filed
               by the Company on August 9, 1999.

(b)      Reports on Form 8-K

         On June 16, 1999, the Company filed a report on Form 8-K dated June 2,
1999 reporting Item 5. "Other Events". The event reported was the issuance of
Convertible Senior Subordinated Notes due 2006.

         On July 2, 1999, the Company filed a report on Form 8-K dated June 18,
1999 reporting Item 2. "Acquisition or Disposition of Assets". The event
reported was the acquisition of all the capital stock of Isis Pharma GmbH and
its subsidiary, Isis Puren ("Isis"). The financial statements of Isis and
required pro forma financials were not available at that time.

                                 Page 31 of 32

<PAGE>   32

                                  SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                    Alpharma Inc.
                                    (Registrant)




Date:  August 27, 1999              /s/ Jeffrey E. Smith
                                    --------------------
                                    Jeffrey E. Smith
                                    Vice President, Finance and
                                    Chief Financial Officer

                                 Page 32 of 32