|UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549                                                                                                                                                                                                                                                                           
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|FORM 10-Q                                                                                                                                                                                                                                                                                                                                         
|Quarterly Report Pursuant to Section 13 or 15 (d) of 
the Securities Exchange Act of 1934                                                                                                                                                                                                                                                         
|For quarter ended
March 31, 2002                                                                                                                                                                                                                                                                                                                  
|Alpharma Inc.
(Exact name of registrant as specified in its charter)                                                                                                                                                                                                                                                                              
|Delaware
(State of Incorporation)                                                                                                                                                                                                                                                                                                                 
|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 April 29, 2002:                                                                                                                                                                                                                               
|Class A Common Stock, $.20 par value -- 39,333,697 shares
Class B Common Stock, $.20 par value -- 11,872,897 shares                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                  









ALPHARMA INC.

INDEX







|                                                                                                              | Page No.
|------------------------------------------------------------------------------------------------------------- | --------
|PART I.  FINANCIAL INFORMATION                                                                                |         
|Item 1.  Financial Statements                                                                                 |         
|Consolidated Condensed Balance Sheet as of March 31,
2002 and December 31, 2001                               | 3       
|Consolidated Statement of Income for the Three Months
Ended March 31, 2002 and 2001                           | 4       
|Consolidated Condensed Statement of Cash Flows for the
Three Months Ended March 31, 2002 and 2001             | 5       
|Notes to Consolidated Condensed Financial Statements                                                          | 6 - 16  
|Item 2.   Management's Discussion and Analysis of Financial
              Condition and Results of Operations | 17 - 23 
|Item 3.   Quantitative and Qualitative Disclosures about
              Market Risk                            | 23      
|PART II.  OTHER INFORMATION                                                                                   |         
|Item 6.   Exhibits and Reports on Form 8-K                                                                    | 24      
|Signatures                                                                                                    | 25      





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

|                                           | March 31,2002 | December 31,2001
|------------------------------------------ | ------------- | ----------------
|ASSETS                                     |               |                 
|Current assets:                            |               |                 
|Cash and cash equivalents                  | $      9,689  | $     14,894    
|Accounts receivable, net                   | 222,325       | 259,246         
|Inventories                                | 345,740       | 331,773         
|Prepaid expenses and other current assets  | 61,655        | 56,608          
|Total current assets                       | 639,409       | 662,521         
|                                           |               |                 
|Property, plant and equipment, net         | 486,969       | 482,206         
|Goodwill                                   | 746,336       | 870,621         
|Intangible assets, net                     | 392,862       | 266,581         
|Other assets and deferred charges          | 101,475       | 108,079         
|                                           |               |                 
|Total assets                               | $2,367,051    | $2,390,008      
|                                           |               |                 
|LIABILITIES AND STOCKHOLDERS' EQUITY       |               |                 
|Current liabilities:                       |               |                 
|Current portion of long-term debt          | $     26,369  | $     25,691    
|Short-term debt                            | 25,192        | 4,647           
|Accounts payable and accrued expenses      | 294,708       | 297,388         
|Accrued and deferred income taxes          | 22,070        | 15,429          
|                                           |               |                 
|Total current liabilities                  | 368,339       | 343,155         
|                                           |               |                 
|Long-term debt:                            |               |                 
|Senior                                     | 509,862       | 551,173         
|Senior subordinated notes                  | 200,000       | 200,000         
|Convertible subordinated notes             | 171,074       | 279,081         
|Deferred income taxes                      | 101,316       | 100,154         
|Other non-current liabilities              | 23,381        | 24,829          
|                                           |               |                 
|Stockholders' equity:                      |               |                 
|Class A Common Stock                       | 7,925         | 6,548           
|Class B Common Stock                       | 2,375         | 2,375           
|Additional paid-in capital                 | 1,043,438     | 905,099         
|Retained earnings                          | 49,839        | 83,677          
|Accumulated other comprehensive loss       | (103,555)     | (99,140)        
|Treasury stock, at cost                    | (6,943)       | (6,943)         
|Total stockholders' equity                 | 993,079       | 891,616         
|Total liabilities and stockholders' equity | $2,367,051    | $2,390,008      
|                                           |               |                 

See notes to the consolidated condensed financial statements.



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





|                                                             | Three Months EndedMarch 31,
|------------------------------------------------------------ | ---------------------------
|                                                             | 2002                       
|                                                             |                            
|Total revenue                                                | $272,678                   
|Cost of sales                                                | 162,289                    
|Gross profit                                                 | 110,389                    
|Selling, general and administrative expenses                 | 76,905                     
|Research and development                                     | 17,005                     
|Operating income                                             | 16,479                     
|Interest expense                                             | (18,926)                   
|Other income (expense), net                                  | (48,649)                   
|Income (loss) before income taxes and
    extraordinary item | (51,096)                   
|Provision (benefit) for income taxes                         | (20,003)                   
|Income (loss) before extraordinary item                      | (31,093)                   
|                                                             |                            
|Extraordinary item, net of tax                               | (443)                      
|Net income (loss)                                            | $(31,536)                  
|                                                             |                            
|Earnings per common share:                                   |                            
|Basic                                                        |                            
|Income (loss) before extraordinary item                      | $(0.68)                    
|Net income (loss)                                            | $(0.69)                    
|Diluted                                                      |                            
|Income (loss) before extraordinary item                      | $(0.68)                    
|Net income (loss)                                            | $(0.69)                    
|                                                             |                            
|Dividends per common share                                   | $.045                      





See notes to the consolidated condensed financial statements.

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

|                                                                                      | Three Months EndedMarch 31,
|------------------------------------------------------------------------------------- | ---------------------------
|                                                                                      | 2002                       
|Operating Activities:                                                                 |                            
|Net income (loss)                                                                     | $(31,536)                  
|Adjustments to reconcile net income to net cash provided
    by operating activities: |                            
|Depreciation and amortization                                                         | 18,964                     
|Interest accretion on convertible debt                                                | 1,885                      
|Expenses for exchange of convertible notes, net of tax                                | 29,306                     
|Changes in assets and liabilities:                                                    |                            
|(Increase) decrease in accounts receivable                                            | 29,644                     
|(Increase) decrease in inventory                                                      | (16,238)                   
|Increase (decrease) in accounts payable, accrued expenses 
       and taxes payable   | 4,973                      
|Other, net                                                                            | (1,222)                    
|Net cash provided by operating activities                                             | 35,776                     
|                                                                                      |                            
|Investing Activities:                                                                 |                            
|Capital expenditures                                                                  | (18,261)                   
|Other loans, net                                                                      | --                         
|Purchase of intangible assets                                                         | (2,885)                    
|Net cash used in investing activities                                                 | (21,146)                   
|                                                                                      |                            
|Financing Activities:                                                                 |                            
|Dividends paid                                                                        | (2,302)                    
|Reduction of senior long-term debt                                                    | (41,436)                   
|Net advances under lines of credit                                                    | 20,628                     
|Proceeds from issuance of common stock                                                | 3,524                      
|Net cash used in financing activities                                                 | (19,586)                   
|                                                                                      |                            
|Net cash flows from exchange rate changes                                             | (249)                      
|                                                                                      |                            
|Decrease in cash                                                                      | (5,205)                    
|Cash and cash equivalents at beginning of year                                        | 14,894                     
|Cash and cash equivalents at end of period                                            | $9,689                     

See notes to the consolidated condensed financial statements.



1.  	General



2.

In the fourth quarter of 2001 the Company completed the acquisition of the OPB (See Notes 4 and 9) and entered into a $900,000 credit agreement ("2001 Credit Facility") to finance the acquisition and replace its previous credit agreement.  The 2001 Credit Facility includes restrictive covenants that require the calculation of EBITDA, as defined in the credit facility, on a rolling four quarter basis and pro-forma for the acquisition of the OPB.  The Company is in compliance with these covenants as of March 31, 2002.



Based on the above actions, combined with expected improvement in operating profit in 2002 relative to 2001, the Company fully expects to comply with these covenants throughout 2002.  Additionally, the company believes it has the ability to further reduce operating or capital expenditures and sufficient access to capital such that debt could be further reduced if these actions become necessary to comply with the covenants.





|Inventories consist of the following: | March 31,2002 | December 31, 2001
|------------------------------------- | ------------- | -----------------
|                                      |               |                  
|Finished product                      | $183,383      | $175,884         
|Work-in-process                       | 56,644        | 54,050           
|Raw materials                         | 105,713       | 101,839          
|                                      | $345,740      | $331,773         

Included at December 31, 2001 and March 31, 2002 are raw materials totaling approximately $4,200 related to a product which is subject to regulatory approval and litigation (see Note 8).

4.      Long-Term Debt

Long-term debt consists of the following:

|                                                                                                               | March 31,2002 | December 31,2001
|-------------------------------------------------------------------------------------------------------------- | ------------- | ----------------
|Senior debt:                                                                                                   |               |                 
|U.S. Dollar Denominated:                                                                                       |               |                 
|2001 Credit Facility                                                                                           | $494,594      | $535,000        
|Industrial Development Revenue Bonds                                                                           | 6,720         | 6,720           
|                                                                                                               |               |                 
|Denominated in Other Currencies                                                                                | 34,917        | 35,144          
|Total senior debt                                                                                              | 536,231       | 576,864         
|                                                                                                               |               |                 
|Subordinated debt:                                                                                             |               |                 
|12% Senior Subordinated notes due 2009                                                                         | 200,000       | 200,000         
|3%  Convertible Senior Subordinated
       Notes due 2006 (6.875% yield), 
       including interest accretion | 136,867       | 188,270         
|5.75% Convertible Subordinated Notes  due 2005                                                                 | 34,207        | 90,811          
|Total subordinated debt                                                                                        | 371,074       | 479,081         
|                                                                                                               |               |                 
|Total long-term debt                                                                                           | 907,305       | 1,055,945       
|Less, current maturities                                                                                       | 26,369        | 25,691          
|                                                                                                               | $880,936      | $1,030,254      

Senior Debt:

At closing, the 2001 Credit Facility provided for (i) a $300,000 six year revolving credit facility; (ii) a $175,000 six year Term Loan A; and (iii) a $425,000 seven year Term Loan B.  In December 2001 the Company prepaid $65,000 of the Term A and Term B loans resulting in the maximum amount available to be borrowed under the 2001 Credit Facility being reduced to $835,000.  In March 2002, the Company prepaid an additional $35,000 of the Term A and Term B loans which further reduced maximum availability to $800,000.  As a result of the $35,000 term loan reduction, the Company has recorded an extraordinary expense for the early extinguishment of debt of $727 ($443 after tax) in the first quarter of 2002.

Under the terms of the 2001 Credit Facility the Company is required to have a specified percentage of its total indebtedness at a fixed interest rate.   To comply with this requirement, in January 2002 the Company entered into a standard interest rate swap in order to fix the interest rate on $60,000 of its variable rate borrowings under the 2001 credit facility.   As a result of an additional reduction in fixed rate indebtedness due to the exchanges of subordinated debt in March 2002 (discussed below), the Company settled this interest rate swap and entered into a standard interest rate swap to effectively fix the interest rate on $100,000 of its variable rate borrowings at a fixed rate of 7.8%.   Realized and unrealized gains and losses on these swaps were not material to the Company's results of operations for the quarter ended March 31, 2002.

Subordinated Debt:

In March 2002, the Company completed an exchange of 3,433,104 shares of its Class A Common Stock for a portion of its 3% Convertible Subordinated Notes due 2006 ("06 Notes") having an approximate principal value of $53,300.  The exchange resulted in a non-cash pre-tax charge of $26,982 ($16,487 after tax) in the first quarter of 2002 (classified in Other, net).

In March 2002, the Company completed an exchange of 3,266,850 shares of its Class A Common Stock for a portion of its  5.75% Convertible Subordinated Notes due 2005 ("05 Notes") having an approximate principal value of $56,600.  The exchange resulted in a non-cash pre-tax charge of $20,980 ($12,819 after tax) in the first quarter of 2002 (classified in Other, net).

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 and convertible debt when appropriate.

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



|(Shares in thousands)                | Three Months Ended
|------------------------------------ | ------------------
|                                     | March 31,2002     
|Average shares outstanding - basic   | 45,400            
|Stock options                        | ----              
|Convertible debt                     | ----              
|Average shares outstanding - diluted | 45,400            

The amount of dilution attributable to the stock options, determined by the treasury stock method, depends on the average market price of the Company's common stock for each period. At March 31, 2002 and 2001 stock options to purchase approximately 2,100,000 and 550,000 shares, respectively, were not included in the computation of diluted EPS because the option price was greater than the average market price of the Class A Common shares.

Subordinated notes issued in March 1998 ("05 Notes"), convertible into 6,744,481 shares of common stock at $28.59 per share, and subordinated notes issued in June 1999 ("06 Notes") convertible into 5,294,301 shares of common stock at $32.11 per share were included in the computation of diluted EPS for the three months ended March 31, 2001.

For the three months ended March 31, 2002 stock options to purchase approximately 90,000 shares and the effects of the 05 and 06 Notes (convertible into 2,831,496 and 5,122,806 shares, respectively) were not included in the calculation of diluted EPS because the result was antidilutive.

The numerator for the calculation of basic EPS is net income (loss) for all periods. The numerator for the calculation of diluted EPS includes an add back for interest expense and debt cost amortization, net of income tax effects, related to the 05 and 06 Notes when applicable.

A reconciliation of net income (loss) used for basic to diluted EPS is as follows:



|                                                                   | Three Months Ended
|------------------------------------------------------------------ | ------------------
|                                                                   | March 31, 2002    
|                                                                   |                   
|Net income (loss) - basic                                          | $(31,536)         
|Adjustments under the if-converted
   converted method, net of tax | ----              
|Adjusted net income (loss) - diluted                               | $(31,536)         

6.      Supplemental Data

|                                            | Three Months Ended
|------------------------------------------- | ------------------
|                                            | March 31,2002     
|Other income (expense), net:                |                   
|Expense for exchange of convertible notes   | $(47,962)         
|Interest income                             | 567               
|Foreign exchange losses, net                | (846)             
|Amortization of debt costs                  | (1,266)           
|Litigation/Insurance settlements            | 561               
|Income from joint venture carried at equity | 258               
|Other, net                                  | 39                
|                                            | $(48,649)         
|                                            |                   
|Supplemental cash flow information:         |                   
|                                            |                   
|Cash paid for interest                      | $10,535           
|Cash paid (refunded) for income taxes, net  | $(14,601)         
|                                            |                   
|Other non-cash financing activities:        |                   
|                                            |                   
|Exchange of convertible notes into equity   | $109,892          

7.      Reporting Comprehensive Income

SFAS 130, "Reporting Comprehensive Income" requires foreign currency translation adjustments and certain other items to be included in other comprehensive loss. Total comprehensive loss amounted to approximately $35,951 and $4,653 for the three months ended March 31, 2002 and 2001, respectively. The only components of accumulated other comprehensive loss for the Company are foreign currency translation adjustments.



8.      Contingent Liabilities and Litigation

A class action lawsuit has been filed in the United States District Court for the District of New Jersey.  This class action has been brought on behalf of all persons who acquired the Company's securities between April 28, 1999 and October 30, 2000.  The Company is named as a defendant along with one of its board members, one of its current officers and two of its former officers.  The class action complaint alleges that, among other things, the plaintiffs were damaged when they acquired the Company's securities because, as a result of (1) alleged irregularities in the Company's animal health business in Brazil, (2) allegedly improper revenue recognition practices and (3) the October 2000 revision of its financial results for 1999 and 2000, the Company's previously issued financial statements were materially false and misleading, thereby artificially inflating the price of the Company's securities.  The complaint alleges violations of Sections 10(b), 20(a) and Rule 10b-5 of the Securities and Exchange Act of 1934.  The plaintiffs seek damages in unspecified amounts.  The Company has moved to dismiss the complaint on legal grounds, and discovery is stayed pending the determination of that motion.  Based on the Company's preliminary investigation, the Company believes it has meritorious defenses which it intends to vigorously assert against the class action.  Additionally, the Company has filed a claim on its own behalf and on behalf of each of the named individual defendants under its directors' and officers' insurance policies and believes that insurance coverage exists to the extent of the policy limits for the costs incurred in defending the claims and any adverse judgment or settlement, subject to the terms, conditions and exclusions of the relevant insurance policy.  Based upon the facts as presently known, the Company does not believe that it is likely that the class action will result in liability which will be material to the Company's financial position.  However, because of the early stage of this matter, it is not possible for the Company to conclude that resolution of the lawsuit will not be material to the Company's financial position or its results of operations or cash flows in the quarter or year in which it occurs.

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. While initial efforts to reverse the ban in court were unsuccessful, the Company is continuing to pursue initiatives based on scientific evidence available for the product, to limit the effects of this ban. 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, if either the EU acts to prevent the importation of meat products from countries that allow the use of bacitracin based products or there is an expansion of the ban to additional countries where the Company has material sales of bacitracin based products, the resultant loss of sales could be material to the financial condition and results of operations of the Company.

In response to the Company's submission to the FDA of its ANDA filed under paragraph IV for Gabapentin capsules, the Company was sued on June 11, 1998, by Warner-Lambert Company, which is now owned by Pfizer Inc., in the U.S. District Court for the District of New Jersey for alleged patent infringement under two U.S. patents.  In response to the Company's submission to the FDA of its ANDA filed under paragraph IV for Gabapentin tablets, the Company was sued on December 12, 1999,by Pfizer in the U.S. District Court for the District of New Jersey for alleged patent infringement under the same two U.S. patents.  The ANDAs submitted seek FDA approval to market the Company's Gabapentin capsules and tablets prior to the expiration of Pfizer's patents.  In the Company's ANDAs, the Company certified to Pfizer and the FDA that its proposed generic Gabapentin capsules and tablets will not infringe the patents and that the patents are believed to be invalid or unenforceable.  In the litigation concerning the Company's Gabapentin capsules, the Company filed a motion for summary judgment of non-infringement of the two patents, which was subsequently denied.  The Company filed in the tablet litigation, and renewed in the capsule litigation, the Company's motion of summary judgment of non-infringement on Pfizer's patents.  These motions are under consideration by the district court.  Discovery is complete and the case is awaiting trial.  No trial date has been set, but the two cases have been consolidated for trial.

During the lawsuits regarding Gabapentin tablets and capsules, Pfizer received a third patent covering a Gabapentin formulation with low chloride levels.  After learning of this patent, the Company certified to the FDA under Paragraph IV that the Company's proposed Gabapentin capsule and tablet, as disclosed in its previously filed ANDAs, do not infringe this patent and this patent is invalid or unenforceable.  In June 2000, Pfizer sued the Company in the District Court for the District of New Jersey for patent infringement under this patent.  The Company submitted to the court a motion for summary judgment that neither the capsule nor tablet product infringes this patent.  This motion is under consideration by the Court and has not yet been ruled on.  Fact discovery has closed and expert discovery is scheduled to close in June 2002.  No trial date has been set.  Unless and until the Company receives marketing authorization from the FDA and decides to market its Gabapentin tablets or capsules, the Company would, at most, only be liable to Pfizer for its legal costs and not any monetary damages. To date, the Company does not have FDA marketing approval and has not marketed these pharmaceuticals. There is the possibility that as a result of this litigation the Company could be prevented from marketing the Company's Gabapentin capsules or tablets until Pfizer's patents expire.

In anticipation of the launch of Gabapentin, the Company entered into a supply agreement with the manufacturer of the active ingredient (the "API") of Gabapentin under which the Company has acquired API inventory.  Approximately $4,200 of raw material inventory has been acquired and paid for as of March 31, 2002.  The terms of the Company's agreement with the API supplier may require additional payments to the supplier based on the sale price of the finished product.  Additionally, if the API on hand at March 31, 2002 is unsold after certain defined periods of time, up to an additional $20,600 may become payable.  The Company cannot predict the outcome of the Gabapentin litigation; however, in the event of an unfavorable outcome, or other factors preventing the Company from selling the finished product, the Company will reassess the net realizable value of the API inventory, and may incur a charge to write-down API inventory on hand to this net realizable value and record any required contingent payments under the supply agreement.  The maximum charge could range from $24,800 based on inventory currently on hand, to $63,000 if all planned API purchases to prepare for a launch of this product are made.

The Company is engaged in disputes with two suppliers regarding certain obligations with respect to contracts under which the Company obtains raw materials.  While management believes the resolutions of these disputes will not be material to the Company's financial position, they could be material to the Company's results of operations or cash flows in the period in which resolution occurs.

In September 2001, a fire occurred at one of the Company's Animal Health facilities.  The Company has incurred approximately $15,200 in costs related to general and certain environmental cleanup at the facility. As of March 31, 2002, the Company has received insurance reimbursements of $5,000 and recorded a corresponding net receivable from the Company's insurers in the amount of $10,200 as the Company believes the costs incurred related to the incident are covered by its insurance.  The Company does not expect this incident to have a material impact on its financial position, results of operations, or cash flows.

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 Acquisitions - Faulding Acquisition

On July 12, 2001, the Company entered into a definitive agreement to acquire the generic and proprietary oral solid dose pharmaceuticals business ("OPB acquisition") in the U.S. and China of F.H. Faulding & Co. Limited from Mayne Nickless Limited for total consideration of $660,000 in cash (approximately $670,000 including direct acquisition related costs). On October 2, 2001, Mayne closed its tender offer for Faulding's shares after having accepted the tender of more than 90% of Faulding's shares. On October 5, 2001, Alpharma gained operational and economic control of OPB subject to certain limitations. On December 12, 2001 Mayne acquired 100% of Faulding's shares and transferred the OPB to the Company in accordance with the acquisition agreement.

The acquisition has been accounted for as a purchase in accordance with Statement of Financial Accounting Standards No. 141, "Business Combinations". The fair value of the assets acquired and liabilities assumed based on a preliminary valuation and the results of OPB operations are included in the Company's consolidated financial statements beginning on the date of acquisition, December 12, 2001.

The acquisition of the Oral Pharmaceuticals Business includes the operations of Purepac Pharmaceuticals and Faulding Laboratories in the United States and Foshan Faulding Pharmaceutical China. The Oral Pharmaceuticals Business includes research, development, manufacturing, sales and marketing of generic and proprietary oral solid dose pharmaceuticals in the United States and China.  In the fiscal year ending June 30, 2001, the OPB had net sales of $205,200 comprised of US net sales of $190,700 and China net sales of $14,500.

Pro forma Information:

The following unaudited pro forma information on results of operations assumes the purchase of the Faulding business discussed above as if the businesses had combined at the beginning of 2001:







|            | Pro Forma
Three Months EndedMarch 31, 2001
|----------- | ------------------------------------------
|            |                                           
|Revenue     | $313,900                                  
|Net income  | $  16,600                                 
|Basic EPS   | $      0.41                               
|Diluted EPS | $      0.39                               
|            |                                           



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 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 acquisition occurred at the beginning of the period, or of future results of operations of the consolidated entities.

10.     Business Segment Information

The Company's reportable segments are as follows; International Generics ("IG") formerly International Pharmaceuticals Division, Active Pharmaceutical Ingredients ("API") formerly Fine Chemicals Division , U.S. Human Pharmaceuticals ("USHP"), and Animal Health ("AH").   IG and API are managed by a single management team as part of Human Pharmaceuticals International ("HPI").  Segment data includes immaterial intersegment revenues which are eliminated in the consolidated accounts.



|                             | Three Months Ended March 31,
|---------------------------- | ----------------------------
|                             | 2002                        
|                             | Revenues                    
|                             |                             
|IG                           | $71,200                     
|API                          | 19,337                      
|HPI                          | 90,537                      
|                             |                             
|USHP                         | 113,474                     
|Total Human Pharmaceuticals  | 204,011                     
|                             |                             
|Animal Health                | 70,516                      
|                             |                             
|Unallocated and eliminations | (1,849)                     
|                             | $272,678                    

11.     Recent Accounting Pronouncements

SFAS 141 and 142.  In June 2001, the Financial Accounting Standards Board issued SFAS 141, "Business Combinations," and SFAS 142, "Goodwill and Other Intangible Assets."  SFAS  141 applies to all business combinations initiated after June 30, 2001, and requires these business combinations be accounted for using the purchase method of accounting.   SFAS 142 applies to all goodwill and intangibles acquired in a business combination.  SFAS 141 also requires that, upon adoption of SFAS 142, certain intangible assets be reclassified into or out of goodwill. Under SFAS 142, all goodwill and certain intangibles determined to have indefinite lives, including goodwill and indefinite lived intangibles acquired before initial

The company adopted the provisions of SFAS 141 for business combinations initiated after June 30, 2001, including the acquisition of the OPB (see Note 9).  The reclassification provisions of SFAS 141 and transition and disclosure provisions of SFAS No. 142 were implemented with first quarter 2002 reporting, and the company expects to adopt the remaining provisions, particularly the transitional goodwill impairment test, in the second quarter.





Goodwill

The changes in the carrying amount of goodwill for the quarter ended March 31, 2002, are as follows:



|                                                 | Total    
|------------------------------------------------ | ---------
|Balance December 31, 2001                        | $870,621 
|Net intangible asset reclassifications and other | (121,172)
|Foreign exchange translation                     | (3,113)  
|                                                 |          
|Balance March 31, 2002                           | $746,336 

Net intangible asset reclassifications represent product rights (as discussed above) which had been separately identified but which had been classified as Goodwill for financial reporting purposes prior to the adoption of SFAS 142. All goodwill is not subject to amortization as of January 1, 2002.  The Company has assigned intangibles and goodwill to identified reporting units but has not completed the first step test for impairment.  This will be completed as required by June 30, 2002.

Goodwill is attributable to the Company's reportable segments as follows:





|IG   | $223,096
|---- | --------
|API  | 4,592   
|USHP | 454,726 
|AH   | 63,922  
|     | $746,336

Earnings Excluding Goodwill Amortization

For the 3 month period ended March 31, 2001, the statement of income adjusted to exclude amortization expense related to goodwill and related taxes is as follows:





|                 | As Reported | As Adjusted
|---------------- | ----------- | -----------
|Operating Income | $47,208     | $51,800    
|Net Income       | $23,807     | $27,600    
|EPS - diluted    | $0.52       | $0.60      



SFAS 144.  During August 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 144 "Accounting for the Impairment of Disposal of Long-Lived Assets," which provides guidance on the accounting for the impairment or disposal of long-lived assets. For long-lived assets to be held and used, the new rules continue previous guidance to recognize impairment when the undiscounted cash flows will not recover its carrying amount. The impairment to be recognized will continue to be measured as the difference between the carrying amount and fair value of the asset. The computation of fair value now removes goodwill from consideration and incorporates a probability weighted cash flow estimation approach.  The previous guidance provided in SFAS 121 is to be applied to assets to be disposed of by sale.  Additionally, assets qualifying for discontinued operations treatment have been expanded beyond the former operating segment approach. Long-lived assets to be disposed by other than sale will now recognize impairment at the date of disposal, but will be considered assets to be held and used until that time.  The Company has adopted SFAS 144 as of January 1, 2002.  The adoption of SFAS 144 did not have a material impact on the Company's consolidated results of operations, financial position or cash flows.

SFAS 143.   In July, 2001, the Financial Accounting Standards Board issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 addresses financial accounting and reporting for legal obligations associated with the retirement of tangible long-lived assets and the associated retirement costs. The Company is currently evaluating the effects the new rules may have on its financial statements and expects to adopt SFAS 143 on January 1, 2003.

SFAS 145. In May 2002 the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 145. "Rescission of FAS Nos. 4, 44, and 64. Amendment of FAS 13, and Technical Corrections as of April 2002." The statement rescinds SFAS 4 (as amended by SFAS 64), which required extraordinary item treatment for gains and losses on extinguishments of debt, and SFAS 44, which does not affect the Company. Additionally, the statement amends certain provisions of SFAS 13 and other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The provisions of SFAS 145 related to extinguishments of debt are effective for the Company beginning January 1, 2003, and all other provisions are effective for transactions occurring on or financial statements issued after May 15, 2002. The Company is currently evaluating the impact of this statement on its financial statements.



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

Overview

Most comparisons of 2002 consolidated results are affected by the Company's acquisition of the Faulding Oral Pharmaceuticals business ("OPB acquisition") and the financing required to complete the acquisition.

In addition, in 2001 and continuing in 2002 the Company completed reorganization, refocus and other actions which intended to improve future operations of its operating divisions including a de-leveraging program to reduce its debt.  Also among these other actions was a change in marketing strategy in AH which decreased the offering of both extended payment terms and price discounts.

Most comparisons of 2002 consolidated results were also affected by the Company's adoption of Financial Accounting Standard No. 142 ("FAS 142") effective January 1, 2002 which states that goodwill is no longer subject to amortization.  The first quarter of 2001 includes approximately $4.6 million of goodwill amortization expense which was not included in 2002 ($.07 per share diluted).

Results of Operations - Three months ended March 31, 2002

Total revenue increased $3.4 million (1.2%) in the three months ended March 31, 2002 compared to 2001.  Operating income in 2002 was $16.5 million, a decrease of $30.7 million compared to 2001.  The company recorded a net loss of $31.5 million ($.69 per share) compared to net income of $23.8 million ($.52 per diluted share) in 2001.  2002 results include significant charges and expenses related to the required acquisition accounting for OPB, de-leveraging activities and severance related to reorganization and restructuring.  The following table summarizes the effect of identified transactions on the 2002 statement of income:



Quarter Ended March 31, 2002 versus Quarter Ended March 31, 2001



2002 Identified Transactions





|($ in millions)                               | 2002
Reported | OPB Acquisition | De-leveraging | Severance | Total   | 2002 Adjusted | 2001Reported
|--------------------------------------------- | ------------- | --------------- | ------------- | --------- | ------- | ------------- | ------------
|Revenue                                       | $272.7        | $ ---           | $ ---         | $ ---     | $ ---   | $272.7        | $269.3      
|                                              |               |                 |               |           |         |               |             
|Cost of Sales                                 | 162.3         | 5.3             | ---           | .1        | 5.4     | 156.9         | 147.5       
|                                              |               |                 |               |           |         |               |             
|Gross Profit                                  | 110.4         | (5.3)           | ---           | (.1)      | (5.4)   | 115.8         | 121.8       
|                                              |               |                 |               |           |         |               |             
|Selling, General & Admin.                     | 93.9          | -------         | ---           | 2.4       | 2.4     | 91.5          | 74.6        
|                                              |               |                 |               |           |         |               |             
|Operating Income (Loss)                       | 16.5          | (5.3)           | ---           | (2.5)     | (7.8)   | 24.3          | 47.2        
|                                              |               |                 |               |           |         |               |             
|Interest Expense                              | (18.9)        | ---             | ---           | ---       | ---     | (18.9)        | (8.7)       
|                                              |               |                 |               |           |         |               |             
|Other Income (Expense)                        | (48.7)        | -------         | (48.0)        | -------   | (48.0)  | (.7)          | (1.1)       
|                                              |               |                 |               |           |         |               |             
|Pre Tax Income (Loss)                         | (51.1)        | (5.3)           | (48.0)        | (2.5)     | (55.8)  | 4.7           | 37.4        
|                                              |               |                 |               |           |         |               |             
|Taxes                                         | (20.0)        | (2.0)           | (18.7)        | (.8)      | (21.5)  | 1.5           | 13.6        
|                                              |               |                 |               |           |         |               |             
|Net Income (Loss) - Before Extraordinary Item | (31.1)        | (3.3)           | (29.3)        | (1.7)     | (34.3)  | 3.2           | 23.8        
|                                              |               |                 |               |           |         |               |             
|Extraordinary Item                            | (.4)          | ---             | (.4)          | ---       | (.4)    | ------        | ------      
|                                              |               |                 |               |           |         |               |             
|Net Income (Loss)                             | $(31.5)       | $  (3.3)        | $(29.7)       | $(1.7)    | $(34.7) | $  3.2        | $ 23.8      
|                                              |               |                 |               |           |         |               |             
|                                              |               |                 |               |           |         |               |             
|Gross Profit %                                | 40.5%         |                 |               |           |         | 42.5%         | 45.2%       
|                                              |               |                 |               |           |         |               |             
|Operating expenses as % of revenues           | 34.4%         |                 |               |           |         | 33.6%         | 27.7%       
|                                              |               |                 |               |           |         |               |             
|Operating income as % of revenues             | 6.1%          |                 |               |           |         | 8.9%          | 17.5%       



A discussion of the 2002 identified transactions follows:

OPB Acquisition

The OPB acquisition closed on December 12, 2001 and in accordance with Statement of Financial Accounting Standards No. 141 "Business Combinations" was accounted for by the purchase method.  Required adjustments for purchase accounting included a step-up of finished goods inventory of $7.1 million of which $1.8 million was expensed as the acquired inventory was sold in December 2001.  The remaining balance of $5.3 million was expensed as the inventory was sold in the first quarter of 2002 ($.07 per share).

De-leveraging Activities

In the fourth quarter of 2001, the company adopted a comprehensive de-leveraging plan, including a number of actions including expense, capital spending and working capital controls.  In March 2002, the company prepaid $35.0 million of senior debt and recorded an extraordinary charge for early extinguishment of debt ($.7 million pretax, $.4 million after tax).  In addition, the Company issued 6.7 million new shares in exchange for $110 million of outstanding convertible notes and recorded a non-cash expense of $48.0 million pretax, $29.7 million after tax ($.65 per share)

Severance for Reorganization and Restructuring

In the first quarter 2002, the Company continued its management reorganization and this resulted in charges for severance of approximately $2.5 million pretax, $1.7 million after tax ($.04 per share).

Results of Operations (excluding identified transactions and goodwill amortization) - Three months ended March 31, 2002:



|Three Months Ended March 31,                               | Revenues |        | Operating Income (loss)
|---------------------------------------------------------- | -------- | ------ | -----------------------
|                                                           | 2002     | 2001   |                        
|                                                           |          |        |                        
|International Generics  ("IG") (previously IPD)            | $71.2    | $69.8  |                        
|                                                           |          |        |                        
|Active Pharmaceutical Ingredients ("API") (previously FCD) | 19.3     | 16.9   |                        
|                                                           |          |        |                        
|Human Pharmaceutical International                         | 90.5     | 86.7   |                        
|                                                           |          |        |                        
|US Human Pharmaceuticals (USHP)                            | 113.5    | 65.7   |                        
|                                                           |          |        |                        
|Total Human Pharmaceuticals                                | 204.0    | 152.4  |                        
|                                                           |          |        |                        
|Animal Health                                              | 70.5     | 118.0  |                        
|                                                           |          |        |                        
|Unallocated and Eliminations                               | (1.8)    | (1.1)  |                        
|                                                           |          |        |                        
|Total                                                      | $272.7   | $269.3 |                        

1. Adjusted for 2002 identified transactions
2. Adjusted to exclude goodwill amortization on the same basis as 2002



Revenues in USHP increased $47.7 million (73%) due to the inclusion of the OPB ($56.0  million), which was acquired in December 2001.  Revenues in the liquid and topical business declined primarily due the recall of two products and lower net pricing.

Revenues in IG increased $1.4 million (2%) due to volume increases in the UK and other markets, new product introductions and the inclusion of the Chinese business of OPB.  These increases were substantially offset by price declines primarily in the UK and the effects of translation of currencies into the US dollar.  Pricing in the UK has stabilized at year end 2001 levels but is down significantly compared to the first quarter of 2001.

Revenues in API increased $2.4 million (14%) compared to 2001 primarily due to significant volume increases in Vancomycin and Amphotericin.

Animal Health ("AH") revenues were $70.5 million compared to $118.0 million in 2001.  The first quarter of 2001 includes $34.5 million in revenue related to the financial statement revision which modified the timing of revenue recognition from the time an order was segregated in a third party warehouse and billed to when the order was delivered.  The poultry, swine and cattle markets were stable in the first quarter of 2002 relative to year end 2001 but lower compared to the first quarter of



On a company-wide basis gross profit declined $11.5 million as reported and $6.1 million excluding the identified transactions, primarily OPB inventory write up required by purchase accounting.  As a percentage of sales, overall gross profit was 40.6% as reported, 42.4% excluding OPB purchase accounting and 45.2% in 2001.  The reduction in gross margin dollars excluding identified transactions represents increases for the inclusion of OPB and volume increases in IG's UK business being more than offset by reductions for the financial statement revision effect on AH, lower pricing in IG and USHP, and volume declines in AH and USHP.  USHP margins were negatively impacted by manufacturing variances caused by production slowdowns related to product recalls.

Operating Expenses



O

Operating income decreased by $30.7 million as reported and by $27.5 million excluding identified transactions and goodwill amortization.  The Company believes the change in operating income can be approximated as follows:



|                                                                                                | IG    | API  | USHP  | AH     | Unallocated | Total 
|----------------------------------------------------------------------------------------------- | ----- | ---- | ----- | ------ | ----------- | ------
|2001 as reported                                                                                | $6.1  | $7.9 | $5.8  | $33.7  | $(6.3)      | $47.2 
|                                                                                                |       |      |       |        |             |       
|Adjustment for goodwill amortization                                                            | 2.9   | ---- | ..6   | 1.1    | ----        | 4.6   
|                                                                                                |       |      |       |        |             |       
|2002 identified transactions                                                                    | (.4)  | (.1) | (5.3) | (.9)   | (1.1)       | (7.8) 
|                                                                                                |       |      |       |        |             |       
|2001 financial statement revision                                                               | ----- | ---- | ---   | (20.9) | ----        | (20.9)
|                                                                                                |       |      |       |        |             |       
|Net margin improvement (decrease) due to volume, price, new products, acquisitions and expenses | (2.5) | 1.6  | 5.5   | (11.0) | ----        | (6.4) 
|                                                                                                |       |      |       |        |             |       
|Other                                                                                           | --    | --   | ----  | ----   | (.2)        | (.2)  
|2002 as reported                                                                                | $6.1  | $9.4 | $6.6  | $2.0   | $(7.6)      | $16.5 



Interest expense was $18.9 million compared to $8.7 million in 2001.  The increase results from debt incurred to finance the OPB acquisition which was offset slightly by lower interest rates in 2002.



Other, net was $48.7 million expense in 2002 compared to $1.1 million expense in 2001.  The increase is primarily attributable to expenses of $48.0 million for the two exchanges of common stock for convertible notes in March 2002.



The tax provision (benefit) in 2002 was approximately 39.1% including identified transactions as compared to 36.3% in 2001.  The Company currently estimates its 2002 effective tax rate at approximately 31% excluding identified transactions.



In 2002, in accordance with GAAP, the Company reported an extraordinary item due to the early extinguishment of debt.  The Company prepaid $35.0 million of term debt resulting in a pre-tax loss of $.7 million and after tax loss of $.4 million ($.01 per share).

Financial Condition

At March 31, 2002, stockholders' equity was $993.1 million compared to $891.6 million at December 31, 2001.  The ratio of long-term debt to equity was 0.88:1 at March 31, 2002 and 1.16:1 at December 31, 2001.  The increase in stockholders' equity in 2002 mainly represents the exchanges of convertible debentures to equity and other equity issuances totaling approximately $140.0  million offset by a net loss of $31.5 million, a negative currency translation adjustment and dividends.



Cash flow from operations for the three months of 2002 was $35.8 million compared to $2.2 million in 2001.  2002 cash flow benefited from reduced accounts receivable balances principally in Animal Health due to the change in marketing strategy.  Net cash refunded for taxes of $14.6 million also contributed to the 2002 cash flow.  Partially offsetting cash flow sources was an increased investment in inventory due mainly to AH which increased inventories in a product which it presently buys from a third party supplier but will commence manufacturing in 2003.  The increased inventory is meant to satisfy customer requirements during the transition period. In addition, the $29.3 million net expense on the exchange of a portion of the two series of convertible notes was non-cash and therefore does not impact cash from operations.







.





Item 3. Quantitative and Qualitative Disclosures about Market Risk

Quantitative Disclosure - There has been a change in the Company's market risk with respect to derivative financial instruments.  The Company entered into an interest rate swap in the first quarter 2002 for $100 million.

The interest rate swap fixes the interest for three month periods and is settled prior to quarter end.  The fair market value of the swap has been recognized in the financials and is not material.  The change in value of the interest rate swap resulting from a 10% movement in interest rates would be less than $1.0 million

Qualitative Disclosure - This information is set forth under the caption "Derivative Financial Instruments" included in Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2001.

___________

Statements made in this Form 10-Q, 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 10-K for the year ended December 31, 2001.









PART II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

(a)      Exhibits



3.2  Amended and restated By-laws of the Company, effective as of January 31, 2002, are filed as an exhibit to this report.

10.1  Separation letter agreement between the Company and Bruce Andrews dated March 28, 2002 is filed as an exhibit to this report.

10.2  Employment agreement dated April 12, 2002 between the Company and Matthew Farrell is filed as an Exhibit to this report

(b)       Reports on Form 8-K

On January 9, 2002, the Company filed a report on Form 8-K reporting in Item 5 "Other Events"-- certain exchange transactions of common stock for convertible debentures on December 26 and 28, 2001.

On February 19, 2002, the Company filed a report on Form 8-K/A reporting in Item 2--the acquisition of the generic oral solid dose pharmaceutical businesses of FH Faulding & Co. Limited from Mayne Nickless Limited and in Item 7--filed the financial statements for the acquired business and Item 7 (b) the required pro forma financial statements.

On March 8, 2002, the Company filed a report on Form 8-K reporting in Item 5 "Other Events"--Risk Factors relating to the Company and its business





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: May 14, 2002 | /s/ Matthew Farrell                                                          
|                   | Matthew Farrell
Executive Vice President, Finance and
Chief Financial Officer