<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

           (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For The Quarterly Period Ended June 30, 1998

                                       OR

          ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
               FOR THE TRANSITION PERIOD FROM _______ TO _______

                           COMMISSION FILE NO. 0-15098

                            JONES PHARMA INCORPORATED
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


                DELAWARE                             43-1229854
     (STATE OR OTHER JURISDICTION OF     (I.R.S. EMPLOYER IDENTIFICATION NO.)
      INCORPORATION OR ORGANIZATION)


  1945 CRAIG ROAD, ST. LOUIS, MISSOURI                  63146
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)              (ZIP CODE)



       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (314) 576-6100


INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS. YES [X]    NO [ ].

NUMBER OF SHARES OUTSTANDING OF REGISTRANT'S COMMON STOCK AS OF, AUGUST 2, 1998:
28,736,008





                                  PAGE 1 OF 18

<PAGE>   2
                            JONES PHARMA INCORPORATED

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                        PAGE
                                                                                                       NUMBER
                                                                                                       ------
<S>                                                                                                    <C>
Part I - Financial Information

     Item 1.  Financial Statements


         Condensed Consolidated Balance Sheets -
         December 31, 1997 and June 30, 1998                                                                 3


         Condensed Consolidated Statements of Income -
         six months ended June 30, 1997 and 1998                                                             4


         Condensed Consolidated Statements of Stockholders'
         Equity - six months ended June 30, 1997 and 1998                                                    5


         Condensed Consolidated Statements of Cash Flows -
         six months ended June 30, 1997 and 1998                                                         6 - 7


         Notes to Condensed Consolidated Financial Statements                                           8 - 11


     Item 2.  Management's Discussion and Analysis
                      of Results of Operations and Financial Condition                                 12 - 16



Part II - Other Information


     Item 1.  Legal Proceedings                                                                             17


Signatures                                                                                                  18
</TABLE>


                                       2
<PAGE>   3
                            JONES PHARMA INCORPORATED
                      CONDENSED CONSOLIDATED BALANCE SHEETS

          (In thousands of dollars except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                       December 31,      June 30,
                                                                                           1997            1998
                                                                                       ------------      --------
                                                                                                        (Unaudited)
<S>                                                                                    <C>               <C>     
ASSETS
Current assets:
       Cash and cash equivalents ................................................        $ 49,877        $114,574
       Accounts receivable, less allowance for doubtful accounts of
       $ 1,196 at December 31, 1997 and $ 1,336 at June 30, 1998 ................          13,650          10,101
       Inventories ..............................................................           7,299           6,497
       Deferred income taxes ....................................................           2,443           3,200
       Other ....................................................................             479           1,035
       Net assets of discontinued operations ....................................          10,883              --
                                                                                         --------        --------
Total current assets ............................................................          84,631         135,407
Net property, plant and equipment ...............................................          23,297          23,506
Net intangible assets ...........................................................          80,482          68,123
Other assets ....................................................................           2,219           2,718
Net assets of discontinued operations ...........................................          13,100              --
                                                                                         --------        --------
Total assets ....................................................................        $203,729        $229,754
                                                                                         ========        ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
       Accounts payable and accrued expenses ....................................        $  4,631        $ 11,032
       Income taxes payable .....................................................           1,450             796
                                                                                         --------        --------
Total current liabilities .......................................................           6,081          11,828
Deferred income taxes ...........................................................           5,922           3,516
Stockholders' equity:
       Preferred stock, $.01 par value; 5,000,000 shares authorized; no shares
       issued or outstanding ....................................................              --              --

       Common stock, $.04 par value; 75,000,000 authorized, 28,647,300 issued and
       outstanding at December 31, 1997 and 28,715,883 at June 30, 1998 .........           1,146           1,149

       Contributed capital ......................................................         109,129         109,355
       Retained earnings ........................................................          81,451         103,906
                                                                                         --------        --------
Total stockholders' equity ......................................................         191,726         214,410
                                                                                         --------        --------
Total liabilities and stockholders' equity ......................................        $203,729        $229,754
                                                                                         ========        ========
</TABLE>


                             See accompanying notes.



                                       3
<PAGE>   4
                            JONES PHARMA INCORPORATED
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)
               (In thousands of dollars except per share amounts)

<TABLE>
<CAPTION>
                                                                       Three Months Ended                  Six Months Ended
                                                                            June 30,                            June 30,
                                                                    -------------------------         -------------------------
                                                                      1997             1998             1997             1998
                                                                    --------         --------         --------         --------
<S>                                                                 <C>              <C>              <C>              <C>     
Sales from continuing operations ...........................        $ 18,999         $ 26,675         $ 40,636         $ 50,418
Cost of sales ..............................................           7,063            6,371           11,909           12,043
                                                                    --------         --------         --------         --------
Gross profit ...............................................          11,936           20,304           28,727           38,375
Selling, general and administrative expenses:
     Selling ...............................................           3,178            4,239            6,978            8,339
     General and administrative ............................           1,276            2,634            3,685            4,668
     Amortization ..........................................             868              945            1,588            1,922
     Nonrecurring charge ...................................              --           10,500               --           10,500
                                                                    --------         --------         --------         --------
          Total selling, general and administrative expenses           5,322           18,318           12,251           25,429
                                                                    --------         --------         --------         --------

Operating income from continuing operations ................           6,614            1,986           16,476           12,946
Other income (expense):
     Interest income .......................................             748            1,433            1,426            2,218
     Other .................................................             (72)              (2)            (178)             (31)
                                                                    --------         --------         --------         --------
Income before taxes from continuing operations .............           7,290            3,417           17,724           15,133
Provision for income taxes .................................           2,708            5,412            6,673            9,864
                                                                    --------         --------         --------         --------
Income (loss) from continuing operations ...................           4,582           (1,995)          11,051            5,269
Income from discontinued operations (net of taxes):
     Gain on sale of discontinued operations ...............              --           17,079               --           17,079
     Income from discontinued operations ...................           1,794              468            3,443            1,689
                                                                    --------         --------         --------         --------
          Income from discontinued operations ..............           1,794           17,547            3,443           18,768
                                                                    --------         --------         --------         --------
Net income .................................................        $  6,376         $ 15,552         $ 14,494         $ 24,037
                                                                    ========         ========         ========         ========

Earnings (loss) per share:
     Basic:   Continuing operations ........................        $    .16         $   (.07)        $    .39         $    .18
              Discontinued operations ......................             .06              .61              .12              .65
                                                                    --------         --------         --------         --------
                                                                    $    .22         $    .54         $    .51         $    .83
                                                                    ========         ========         ========         ========
     Diluted: Continuing operations ........................        $    .16         $   (.07)        $    .38         $    .18
              Discontinued operations ......................             .06              .60              .12              .64
                                                                    --------         --------         --------         --------
                                                                    $    .22         $    .53         $    .50         $    .82
                                                                    ========         ========         ========         ========
</TABLE>

                             See accompanying notes.


                                       4
<PAGE>   5
                            JONES PHARMA INCORPORATED
            CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                   (UNAUDITED)
                     Six Months Ended June 30, 1997 and 1998

          (In thousands of dollars except share and per share amounts)

<TABLE>
<CAPTION>
                                 Number of shares        Preferred     Common      Contributed        Retained     
                               Preferred    Common         Stock        Stock         Capital         Earnings           Total
                               ---------   ----------     ------     -----------    -----------      -----------     -----------
<S>                            <C>         <C>            <C>        <C>            <C>              <C>             <C>        
Balance at December 31, 1996       --      28,435,451     $   --     $     1,137    $   108,582      $    52,200     $   161,919
Exercise of stock options ...      --         198,624         --               8            595               --             603
Shares tendered in payment                
  of option exercise price ..      --         (10,182)        --              --           (340)              --            (340)
Return of escrowed shares ...      --          (2,693)        --              --            (87)              --             (87)
Net income ..................      --              --         --              --             --           14,494          14,494
Cash dividend declared -                  
  common stock ($.045                     
  per share) ................      --              --         --              --             --           (1,287)         (1,287)
                                -----      ----------     ------     -----------    -----------      -----------     -----------
Balance at June 30, 1997 ....      --      28,621,200     $   --     $     1,145    $   108,750      $    65,407     $   175,302
                                =====      ==========     ======     ===========    ===========      ===========     ===========

Balance at December 31, 1997       --      28,647,300     $   --     $     1,146    $   109,129      $    81,451     $   191,726
Exercise of stock options ...      --          71,460         --               3            226               --             229
Shares tendered in payment of             
option price ................      --          (2,877)        --              --             --               --              --
Net income ..................      --              --         --              --             --           24,037          24,037
Cash dividend declared -                  
  common stock ($.050                     
  per share) ................      --              --         --              --             --           (1,582)         (1,582)
                                -----      ----------     ------     -----------    -----------      -----------     -----------
Balance at June 30, 1998 ....      --      28,715,883     $   --     $     1,149    $   109,355      $   103,906     $   214,410
                                =====      ==========     ======     ===========    ===========      ===========     ===========
</TABLE>



                             See accompanying notes.


                                       5
<PAGE>   6

                            JONES PHARMA INCORPORATED
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                            (In thousands of dollars)

<TABLE>
<CAPTION>
                                                                                   Six months ended
                                                                                       June 30,
                                                                                1997             1998
                                                                              ---------        ---------
<S>                                                                           <C>              <C>      
Cash flows from operating activities:
     Net income .......................................................          14,494           24,037
     Non-cash adjustments:
         Depreciation and amortization ................................           2,242            2,864
         Provision for uncollectibles .................................              22              140
         Nonrecurring charge ..........................................              --           10,500
         Pretax gain on sale of discontinued operations ...............              --          (30,616)
         Deferred income tax ..........................................              --           (3,163)
         Loss on asset sales ..........................................              19               --
     Change in assets and liabilities:
         Accounts receivable ..........................................          (2,822)           3,409
         Income tax receivable ........................................           1,562               --
         Inventories ..................................................          (1,515)             802
         Other current assets .........................................             694           (1,121)
         Accounts payable and accrued expenses ........................            (306)           6,401
         Income taxes payable .........................................              --             (653)
         Discontinued operations - non-cash charges and working capital           1,183               --
                                                                              ---------        ---------
              Net cash from operating activities ......................          15,573           12,600
                                                                              ---------        ---------
Cash flows from (used for) investing activities:
     Proceeds from sale of assets .....................................              33                3
     Product acquisitions .............................................         (22,800)              --
     Additions to property, plant and equipment .......................          (3,350)          (1,555)
     Proceeds from sale of discontinued operations ....................              --           55,000
     Investing activities - discontinued operations ...................            (278)              --
                                                                              ---------        ---------
              Net cash from (used for) investing activities ...........         (26,395)          53,448
Cash flows from (used for) financing activities:
     Payment of dividends .............................................          (1,847)          (1,580)
     Proceeds from exercise of stock options ..........................             263              229
                                                                              ---------        ---------
         Net cash from (used for) financing activities ................          (1,584)          (1,351)
                                                                              ---------        ---------
Increase (decrease) in cash and cash equivalents ......................         (12,406)          64,697
Cash and cash equivalents, beginning of period ........................          52,172           49,877
                                                                              ---------        ---------
Cash and cash equivalents, end of period ..............................       $  39,766        $ 114,574
                                                                              =========        =========
</TABLE>


                             See accompanying notes.


                                       6
<PAGE>   7
                            JONES PHARMA INCORPORATED
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CON'T)
                                   (UNAUDITED)

                            (In thousands of dollars)



Supplemental Disclosures of Cash Flow Information:

<TABLE>
<CAPTION>
                                              Six months ended
                                                   June 30,
                                              1997          1998
                                           ---------       -------
<S>                                        <C>             <C>    
Cash paid during the six months for:

Interest ...........................       $      --       $    --
                                           ---------       -------
Income taxes .......................       $   7,412       $27,992
                                           =========       =======
</TABLE>


                             See accompanying notes.



                                       7
<PAGE>   8

                            JONES PHARMA INCORPORATED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             June 30, 1997 and 1998

            (Dollars in thousands except share and per share amounts)


1.    GENERAL

The unaudited interim financial information reflects all adjustments (consisting
only of normal recurring accruals) which management considers necessary for a
fair presentation of the results of operations for such periods and is subject
to year-end adjustments. Certain footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted from the unaudited interim financial
information as permitted by rules and regulations of the Securities and Exchange
Commission. Management believes that the disclosures made are adequate to make
the information presented not misleading. The results for the interim periods
are not necessarily indicative of results for the full year. It is suggested
that these financial statements be read in conjunction with the Company's
audited financial statements and notes thereto for the year ended December 31,
1997, included in the 1997 Annual Report.

2.    DISCONTINUED OPERATIONS

On March 16, 1998, the Board of Directors of JONES PHARMA INCORPORATED ("JMED"
or the "Company") approved a plan to discontinue the Company's nutritional
supplements product line and contract manufacturing operations. On March 17,
1998, the Company signed a binding agreement with certain operating subsidiaries
of Twinlab Corporation (Twin) to sell a portion of this business for $55,000
cash on the April 30, 1998 closing date. A gain on the sale, of approximately
$17,000, net of taxes of approximately $13,500, has been recorded in the 1998
second quarter results. The accompanying consolidated statements of income
reflect the operating results, net of tax, of the Company's nutritional
supplements product line and contract manufacturing operations as discontinued
operations. Net sales associated with the discontinued operations approximate
$17,027 for the six months ended June 30, 1997 and $11,901 for the period
January 1, 1998 to April 30, 1998 (the sale date).

3.    NONRECURRING CHARGE

In June 1998, the Company recorded a non-cash accounting charge related to an
impairment of certain under-performing long-lived assets. As a result of the
Company's strategic review process of its product lines and related intangible
assets, the Company determined that a portion of the goodwill associated with
certain lower-margin pharmaceutical products had been impaired. The revised
carrying value of the respective goodwill was calculated on the basis of
discounted estimated future cash flows and resulted in a non-cash, after-tax
charge of $10,500, or $.36 per share.

This nonrecurring charge has no impact on the Company's 1998 cash flow or its
ability to generate cash flow in the future. Future amortization expense will be
reduced (both pre-tax and after-tax) by approximately $420 per year.





                                       8
<PAGE>   9

4.  EARNINGS PER SHARE

In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earnings per Share." Statement No. 128 replaced the calculation of primary and
fully diluted earnings per share with basic and diluted earnings per share.
Unlike primary earnings per share, basic earnings per share exclude any dilutive
effects of options, warrants, and convertible securities. Diluted earnings per
share are very similar to the previously reported fully diluted earnings per
share. All earnings per share amounts for all periods have been presented and,
where appropriate, restated to conform to the Statement No. 128 requirements.

The following table sets forth the computations of basic and diluted earnings
per share for the three months and six months ended June 30:

<TABLE>
<CAPTION>
                                                           Three Months Ended                          Six Months Ended
                                                                June 30,                                    June 30,
                                                   -----------------------------------        --------------------------------
                                                        1997                 1998                  1997              1998
                                                   --------------       --------------        --------------       -----------
                                                              (Unaudited)                                 (Unaudited)
<S>                                                <C>                  <C>                   <C>                  <C>        
Numerator for basic and diluted
  earnings per share:
     Income(loss) from continuing operations       $        4,582       $       (1,995)       $       11,051       $     5,269
     Income from discontinued operations ...                1,794               17,547                 3,443            18,768
                                                   --------------       --------------        --------------       -----------

                                                   $        6,376       $       15,552        $       14,494       $    24,037
                                                   ==============       ==============        ==============       ===========
Denominator for basic earnings per
     share-weighted average shares .........           28,609,000           28,712,000            28,537,000        28,697,000
Effect of dilutive stock options ...........              594,000              534,000               441,000           584,000
                                                   --------------       --------------        --------------       -----------

Denominator for diluted earnings per share .           29,203,000           29,246,000            28,978,000        29,281,000
                                                   ==============       ==============        ==============       ===========

Earnings(loss) per share:
     Basic:   Continuing operations ........       $          .16       $         (.07)       $          .39       $       .18
              Discontinued operations ......                  .06                  .61                   .12               .65
                                                   --------------       --------------        --------------       -----------
                                                   $          .22       $          .54        $          .51       $       .83
                                                   ==============       ==============        ==============       ===========

     Diluted: Continuing operations ........       $          .16       $         (.07)       $          .38       $       .18
              Discontinued operations ......                  .06                  .60                   .12               .64
                                                   --------------       --------------        --------------       -----------
                                                   $          .22       $          .53        $          .50       $       .82
                                                   ==============       ==============        ==============       ===========
</TABLE>




                                       9
<PAGE>   10

5. INVENTORIES

Inventories are valued at the lower of cost on a first-in, first-out basis or
market. Inventories used in continuing operations are comprised as follows:

<TABLE>
<CAPTION>
                                                                              December 31,    June 30,
                                                                                 1997           1998
                                                                                -------       -------
                                                                                             (Unaudited)
<S>                                                                             <C>           <C>    
Raw material.........................................................           $ 1,961       $ 2,447
Work-in-process......................................................               745           613
Finished goods.......................................................             4,593         3,437
                                                                                -------       -------
                                                                                $ 7,299       $ 6,497
                                                                                =======       ========
</TABLE>


6.  PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment used in continuing operations are as follows:

<TABLE>
<CAPTION>
                                                     December 31,        June 30,
                                                         1997              1998
                                                       --------          --------
                                                                        (Unaudited)
<S>                                                    <C>               <C>     
Land .........................................         $  2,059          $  2,073
Building and improvements ....................           11,298            11,550
Equipment and furniture ......................           13,057            14,924
Automobiles ..................................              591               591
Projects in process ..........................            1,416             1,154
                                                       --------          --------
                                                         28,421            30,292
Less accumulated depreciation and amortization           (5,124)           (6,786)
                                                       --------          --------
                                                       $ 23,297          $ 23,506
                                                       ========          ========
</TABLE>



                                       10
<PAGE>   11

7.  INTANGIBLE ASSETS

Intangible assets used in continuing operations are as follows:

<TABLE>
<CAPTION>
                                                    December 31,        June 30,
                                                        1997              1998
                                                      --------          --------
                                                                       (Unaudited)
<S>                                                   <C>               <C>     
Distribution systems, trademarks and licenses         $ 66,827          $ 66,827
Restrictive covenants and other intangibles .            7,624             7,710
Goodwill ....................................           14,534             4,033
                                                      --------          --------
                                                        88,985            78,570
Less accumulated amortization ...............           (8,503)          (10,447)
                                                      --------          --------
                                                      $ 80,482          $ 68,123
                                                      ========          ========
</TABLE>

8.  INCOME TAXES

The provisions for income taxes for the three month and six month periods ended
June 30, 1997 are based on estimated effective annual income tax rates of 37.1%
and 37.6%, respectively. For the three month and six month periods ended June
30, 1998, the provisions for income taxes reflect the nondeductibility of the
$10,500 nonrecurring charge. Excluding the effects of the nonrecurring charge,
the estimated effective income tax rate in 1998 approximates 38.5%.

9.  CONTINGENCIES

The Company currently carries product liability coverage of $20,000 per
occurrence and $20,000 in the aggregate on a "claims made" basis. In addition to
this policy, the Company carries a $5,000 umbrella policy. There is no assurance
that the Company's present insurance will cover any potential claims that may be
asserted in the future. In addition, the Company is subject to legal proceedings
and claims, which arise in the ordinary course of business.

The Company is a defendant in a number of lawsuits involving the manufacture and
sale of dexfenfluramine, fenfluramine, and phentermine (collectively,
"Fen/Phen"). The Company distributes Obenix, its branded phentermine product;
however, the Company does not manufacture Obenix or other Fen/Phen combinations.
The lawsuits are in their preliminary stages and it is too early to determine
what, if any, liability the Company may have with respect to the claims set
forth in these lawsuits. Management of the Company believes that the outcome of
these lawsuits will not have a material adverse effect on the Company's
business, financial condition, and results of operations.

The FDA announced in an August 14, 1997, Federal Register Notice that orally
administered drug products containing levothyroxine sodium are now classified as
new drugs. Manufacturers, who wish to continue to market these products, must
submit new drug application (NDA). After August 14, 2000, any levothyroxine
sodium product marketed without an approved NDA will be subject to regulatory
action. Levoxyl, with total sales of approximately $9,300 for the six months
ended June 30, 1997 and $14,900 for the six months ended June 30, 1998, was
marketed prior to the date of the FDA notice and therefore will continue to be
eligible for marketing until August 14, 2000. The FDA is allowing the Company
and other current manufacturers three (3) years to obtain approved NDA's. The
Company plans to dedicate significant resources to this NDA process during 1998
and 1999 and expects to incur costs in excess of $2,000 to secure an approved
NDA for Levoxyl.



                                       11
<PAGE>   12

                         PART I - FINANCIAL INFORMATION

           ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
                       OPERATIONS AND FINANCIAL CONDITION

The Company's decision to dispose of its nutritional supplements product line
and contract manufacturing operations requires a restatement of its historical
financial information under applicable accounting principles and regulations to
reflect such operations as `discontinued operations' (See Note 2 to the
Condensed Consolidated Financial Statements elsewhere in this report). As a
result of the Company's restatement of its historical financial information, the
comparative dollar values and percentage amounts used throughout Item 2 of this
report reflect this restatement and relate solely to the Company's continuing
pharmaceutical operations, unless otherwise indicated.

The following discussion contains forward-looking statements that involve risks
and uncertainties. The Company's actual results in future periods may differ
significantly from the results discussed in or anticipated by such
forward-looking statements.

                  ********************************************

The following table sets forth, for the interim periods indicated, the
percentages which certain components of the Consolidated Statements of Income
bear to product net sales and the percentage change of such components (based on
aggregate dollars) as compared to the prior year.

<TABLE>
<CAPTION>
                                                                                                                          INCREASE
                                                                                                                         (DECREASE)
                                                                                                                         AGGREGATE
                                                           THREE MONTHS ENDED                  SIX MONTHS ENDED            DOLLAR
                                                                 June 30,                           June 30,               AMOUNT
                                                         -----------------------           -----------------------       ----------
                                                          1997             1998             1997             1998
                                                         ------           ------           ------           ------
<S>                                                      <C>              <C>              <C>              <C>          <C>  
Sales from continuing operations ...............          100.0%           100.0%           100.0%           100.0%            24.1%
Cost of sales ..................................           37.2             23.9             29.3             23.9              1.1
                                                         ------           ------           ------           ------           ------
Gross profit ...................................           62.8             76.1             70.7             76.1             33.6
Selling, general and administrative expenses:
    Selling ....................................           16.7             15.9             17.2             16.5             19.5
    General and administrative .................            6.7              9.9              9.1              9.3             26.7
    Amortization ...............................            4.6              3.5              3.9              3.8             21.0
    Nonrecurring Charge ........................            0.0             39.4              0.0             20.8              N/A
                                                         ------           ------           ------           ------           ------
        Total selling, general and
          administrative expenses ..............           28.0             68.7             30.2             50.4            107.6
                                                         ------           ------           ------           ------           ------
Operating income from continuing operations ....           34.8              7.4             40.5             25.7            (21.4)
Interest income ................................            3.9              5.4              3.5              4.4             55.5
Other income (expense) .........................           (0.4)             0.0             (0.4)            (0.1)           (82.6)
                                                         ------           ------           ------           ------           ------
Income before taxes from continuing operations .           38.3             12.8             43.6             30.0            (14.6)
Provision for income taxes .....................           14.2             20.3             16.4             19.5            (47.8)
                                                         ------           ------           ------           ------           ------
Income (loss) from continuing operations .......           24.1             (7.5)            27.2             10.5            (52.3)
Income from discontinued operations (net of tax)            9.4             65.8              8.5             37.2            445.1
                                                         ------           ------           ------           ------           ------
Net income .....................................           33.5%            58.3%            35.7%            47.7%            65.8%
                                                         ======           ======           ======           ======           ======
</TABLE>


                                       12
<PAGE>   13

SALES FROM CONTINUING OPERATIONS
QUARTER ENDED JUNE 30:

Sales from continuing operations for the three months ended June 30, 1998
increased 40.4% to $26.7 million from $19.0 million for the three months ended
June 30, 1997. The Company's increase in sales from continuing operations in the
second quarter of 1998 results from the continued strong unit growth in both
Levoxyl and Tapazole product sales and the unusually low level of Endocrine
product sales in the second quarter of 1997 due to distributor forward buying of
Levoxyl and Tapazole in the first quarter of 1997. Endocrine product sales
increased $9.7 million in the second quarter of 1998 as compared to the second
quarter of 1997 consisting primarily of a $4.9 million increase in Levoxyl, a
$3.4 million increase in Tapazole, and Cytomel sales (acquired June 27, 1997) of
$2.0 million.

Veterinarian product sales increased 34% to $2.4 million, from $1.8 million in
the second quarter of 1998 as compared to the second quarter of 1997 due to unit
volume increases in Soloxine and Tussigon.

Critical Care product sales in the second quarter of 1998 were down
approximately 28.3% from $9.4 million to $6.7 million due to the decline in
Thrombin sales to Johnson & Johnson of approximately $1.0 million, the decline
in Thrombin-JMI sales due to the unusually heavy volume in the first quarter of
1998, the $.7 million of Brevital sales on backorder at June 30, 1998 due to
supplier production problems that are expected to be improved by the end of the
third quarter of 1998, and offset, in part, by the addition of Triostat sales
(acquired June 27, 1997), totaling $1.1 million.

SIX MONTHS ENDED JUNE 30:

Sales from continuing operations for the six months ended June 30, 1998
increased 24.1% over the same period of 1997, from $40.6 million to $50.4
million. The increase consists of a 47% increase in Endocrine product sales from
$20.9 million to $29.7 million, a 20% increase in Veterinarian product sales
from $3.9 million to $4.7 million, and a 1% increase in Critical Care product
sales from $15.9 million to $16.0 million.

The Endocrine product sales increase results primarily from a $5.2 million
increase in Levoxyl, a $2.5 million increase in Tapazole, and the addition of
$3.0 million of Cytomel sales, acquired June 27, 1997.

The Veterinarian product sales increase results from unit volume increases in
Soloxine and Tussigon.

Critical Care product sales remained relatively flat due to the decline in
Thrombin sales to Johnson & Johnson, the Brevital sales on backorder at June 30,
1998, discussed above, offset by the addition of Triostat product sales of $1.8
million, acquired on June 27, 1997. The decline in Thrombin sales to Johnson &
Johnson under contract in 1998 was expected and offers the Company the
opportunity to dedicate its Thrombin manufacturing facility exclusively for the
production of its branded Thrombin-JMI product.







                                       13
<PAGE>   14

GROSS PROFIT

Gross profit during the three months ended June 30, 1998 increased 70% or $8.4
million to $20.3 million from $11.9 million in the same period of 1997. As a
percentage of sales from continuing operations, margins increased from 62.8% in
the second quarter of 1997 to 76.1% in the second quarter of 1998. The increase
resulted from lower than normal margins in the second quarter of 1997 due to the
forward buying of two of the Company's higher margin products, Levoxyl and
Tapazole, in the first quarter of 1997. In addition, the 1998 gross margin
increase reflects the increase in sales volume of the higher margin Endocrine
products.

Gross profit for the six months ended June 30, 1998 increased 33.6% or $9.6
million to $38.4 million from $28.7 million. As a percentage of sales from
continuing operations, margins increased from 70.7% in 1997 to 76.1% in 1998.
The year-over-year improvement in gross margin reflects the increase in sales of
the higher margin Endocrine products.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling expenses increased 33.4% or $1.1 million to $4.2 million in the second
quarter of 1998 due to increases in sales commissions, administrative fees to
hospital buying groups, and increased sampling of products to physician
prescribers. As a percentage of sales from continuing operations, selling
expenses declined from 16.7% in the second quarter of 1997 to 15.9% in the
second quarter of 1998.

For the six months ended June 30, 1998, selling expenses increased 19.5% or $1.4
million to $8.3 million. The increase primarily results from increases in sales
commissions and increased sampling of products to physician prescribers. As a
percentage of sales from continuing operations, selling expenses declined from
17.2% for the six months ended June 30, 1997 to 16.5% for the six months ended
June 30, 1998.

General and administrative expenses increased $1.3 million to $2.6 million for
the second quarter of 1998. For the six months ended June 30, 1998, general and
administrative expenses increased $1.0 million to $4.7 million, from $3.7
million in 1997. The increase in 1998 over 1997 results primarily from increases
in bonuses, donations, and medical insurance claims. As a percentage of sales
from continuing operations, general and administrative expenses increased
slightly to 9.3% in 1998 from 9.1% in 1997.

Amortization expense increased in 1998 due to the intangibles acquired in
connection with the Cytomel and Triostat product acquisitions on June 27, 1997.

The nonrecurring charge of $10.5 million in 1998 relates to the write-down of
goodwill associated with certain lower-margin pharmaceutical products. The
nonrecurring charge has no impact on the Company's 1998 cash flow or its ability
to generate cash flow in the future. Future amortization expense will be reduced
(both pre-tax and after-tax) by approximately $.4 million per year.









                                       14
<PAGE>   15

OPERATING INCOME FROM CONTINUING OPERATIONS

Operating income from continuing operations during the second quarter of 1998
decreased $4.6 million to $2.0 million from $6.6 million in 1997 due to the
$10.5 million nonrecurring charge. Excluding the nonrecurring charge in the
second quarter of 1998, operating income from continuing operations increased
$5.9 million, or 89% over the second quarter of 1997. Operating income from
continuing operations for the six months ended June 30, 1998 decreased $3.5
million as compared to the same period of 1997, due to the nonrecurring charge
in 1998, discussed above. Excluding the nonrecurring charge, operating income
from continuing operations increased $7.0 million or 42% over the six months
ended June 30, 1997.

OTHER INCOME (EXPENSE)

Other income increased during the three months and six months ended June 30,
1998 as compared to the same periods of 1997 primarily due to the increase in
interest income earned on the $55 million of proceeds from the sale of the
Company's Nutritional Business on April 30, 1998.

INCOME TAXES

The provisions for income taxes for the three month and six month periods ended
June 30, 1997 are based on estimated effective annual income tax rates of 37.1%
and 37.6%, respectively. For the three month and six month periods ended June
30, 1998, the provisions for income taxes reflect the nondeductibility of the
$10.5 million nonrecurring charge. Excluding the effects of the nonrecurring
charge, the estimated effective income tax rate in 1998 approximates 38.5%.

INCOME FROM CONTINUING OPERATIONS

Income from continuing operations for the second quarter of 1998 decreased $6.6
million to a loss of $2.0 million and for the six months ended June 30, 1998,
decreased $5.8 million to $5.3 million, as a result of the $10.5 million
nonrecurring charge discussed above.

Excluding the nonrecurring charge, income from continuing operations for the
second quarter of 1998 increased $3.9 million or 86% as compared to the second
quarter of 1997 and for the six months ended June 30, 1998, increased $4.7
million or 43% as compared to the six months ended June 30, 1997.

INCOME FROM DISCONTINUED OPERATIONS

Income from discontinued operations includes an approximate $17 million (net of
tax) gain from the sale of the Company's Nutritional Business on April 30, 1998.
In addition, income from discontinued operations includes the after-tax
operating results of the Company's discontinued businesses prior to the sale of
the Nutritional Business on April 30, 1998.

NET INCOME

Net income for the three months ended June 30, 1998 increased $9.2 million over
the same period of 1997 and for the six months ended June 30, 1998 increased
$9.5 million over the same period of 1997. The $17 million after-tax gain from
the sale of the Company's Nutritional Business, less the $10.5 million after-tax
nonrecurring charge accounted for $6.5 million of the quarter-over-quarter and
year-over-year net income increase.



                                       15
<PAGE>   16

EARNINGS PER SHARE

Diluted earnings per share from continuing operations, excluding the $10.5
million after-tax, nonrecurring charge, totaled $.29 and $.54 for the quarter
and six months ended June 30, 1998 as compared to $.16 and $.38 for the same
periods of 1997. The earnings per share increases of 81% for the second quarter
of 1998 as compared to 1997, and 42% for the six months ended June 30, 1998 as
compared to June 30, 1997, represent net income growth computed on relatively
flat average shares outstanding.

BALANCE SHEET INFORMATION

The Company's current ratio decreased from 13.9:1 as of December 31, 1997 to
11.4:1 as of June 30, 1998 although working capital increased to $123.6 million
at June 30, 1998 from $78.6 million at December 31, 1997 primarily due to an
increase in cash of $64.7 million offset by the disposal of current assets of
discontinued operations and an increase in current liabilities of $5.7 million.


LIQUIDITY AND CAPITAL RESOURCES

Since inception the Company has financed its operations primarily through cash
flow from operations, public and private sales of equity securities and
borrowings under revolving credit facilities. At June 30, 1998 and December 31,
1997, the Company had cash and cash equivalents of $114.6 million and $49.9
million, respectively. The increase in cash during the six months ended June 30,
1998 of $64.7 million reflects the proceeds, net of tax, from the sale of the
Company's Nutritional Business and on-going positive cash flow from operations.
The Company believes that available resources and anticipated cash flows from
operations are adequate to meet currently anticipated operating needs and to
fund future acquisitions. While the Company does not maintain current lines of
credit, it believes it has sufficient borrowing capacity in the event that
acquisition opportunities cannot be funded from existing resources.

Total assets increased $26.0 million to $229.8 million at June 30, 1998 from
$203.7 million at December 31, 1997 primarily due to the increase in cash
discussed above, offset by the disposal of assets of discontinued operations and
the $10.5 million write-off of goodwill reflected as a nonrecurring charge.
Total liabilities increased $3.3 million to $15.3 million at June 30, 1998 from
$12.0 million at December 31, 1997 primarily due to the increase in accrued
liabilities associated with discontinued operations.

Inventories decreased to $6.5 million at June 30, 1998 compared to $7.3 million
at December 31, 1997. Accounts receivable decreased to $10.1 million at June 30,
1998 from $13.7 million at December 31, 1997 due to higher sales levels in the
month of December 1997 vs. the month of June 1998, and due to the Company's
concentrated effort on improving collections. In days outstanding, accounts
receivable decreased from 54 days at December 31, 1997 to 43 days at June 30,
1998.

The Company has experienced only moderate raw material and labor price increases
in recent years. While the Company has passed some price increases along to
customers, the Company has primarily benefited from rapid sales growth, negating
most inflationary pressures. The Company's manufacturing operations are not
capital intensive and, as such, the impact of inflation on the property, plant,
and equipment and associated depreciation expense of the Company has been
minimal.



                                       16
<PAGE>   17

                           PART II - OTHER INFORMATION


Item 1. LEGAL PROCEEDINGS

SHIMSHOCK LITIGATION

The Company is a defendant in a lawsuit filed on or about January 9, 1998, in
the Superior Court of California, County of San Mateo and styled as Eugene
Shimshock, et.al. vs. Marianne Truta, et.al., Cause No. 400614. This lawsuit is
a wrongful death and survival action brought by the plaintiffs with respect to
the death of a child who died during a dental procedure. The doctors who
performed the procedures have been named as defendants as have manufacturers and
distributors of several pharmaceutical products. The lawsuit contains no
specific allegations that a product of the Company's was involved and the
Company has tendered defense of this lawsuit to its insurance carriers for
handling. This lawsuit is in its preliminary stage and it is too early to
determine what, if any, liability the Company will have with respect to the
claims set forth in this lawsuit. Management of Company does not believe that
the outcome of this lawsuit will have a material adverse effect on the Company's
financial condition.


CHOMPERS WARNING LETTER

The Company has received a Warning Letter from the Food and Drug Administration
with respect to a dietary supplement known as "Chompers" which was manufactured
by JMI-Phoenix. The Warning Letter alleged that the product was produced with
contaminated plaintain and was therefore adulterated and misbranded under
certain provisions of the Federal Food, Drug and Cosmetic Act. The Company also
received a claim from a person alleging that she was injured from contaminated
Chompers. The Company does not believe that its product was contaminated and
denies any wrongdoing in this matter. The Company has notified its insurance
carrier of the aforementioned claim. Management of the Company does not believe
that any potential liability with respect to either the Warning Letter or the
aforementioned claim will have a material adverse effect on the Company's
financial condition.


                                       17
<PAGE>   18
                                   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.

                                       JONES PHARMA INCORPORATED



Date:    August 14, 1998               By: /s/ Dennis M. Jones
     -----------------------------         -------------------------------------
                                           Dennis M. Jones, President




Date:    August 14, 1998               By: /s/ Judith A. Jones
     -----------------------------         -------------------------------------
                                           Judith A. Jones
                                           Executive Vice President and
                                           Principal Financial and Accounting 
                                           Officer

                                       18