<PAGE>



                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

(Mark One)

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended: JUNE 30, 2000

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
              SECURITIES EXCHANGE ACT OF 1934

                 For the transition period from _______to_______

                         COMMISSION FILE NUMBER 0-19410

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

                                  SEPRACOR INC.

             (Exact Name of Registrant as Specified in its Charter)

                         DELAWARE                     22-2536587
                (State or Other Jurisdiction of       (I.R.S. Employer
                 Organization or Incorporation)      Identification number)


                111 LOCKE DRIVE, MARLBOROUGH, MASSACHUSETTS 01752
               (Address of Principal Executive Offices) (Zip Code)

                                 (508) 481-6700
              (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 filing
requirements for the past 90 days. YES /X/ NO / /

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

COMMON STOCK, PAR VALUE $.10 PER SHARE, 73,201,137 SHARES OUTSTANDING AT AUGUST
7, 2000.


<PAGE>



                                  SEPRACOR INC.

                                      INDEX

<TABLE>

<S>                                                                 <C>

Part I - Financial Information

Item 1. Consolidated Condensed Financial Statements

     Consolidated Condensed Balance Sheets as of
     June 30, 2000 and December 31, 1999 (Unaudited) .............   3

     Consolidated Statements of Operations for the Three- and Six-
     Months Ended June 30, 2000 and 1999 (Unaudited) .............   4

     Consolidated Statements of Cash Flows for the Six-Months
     Ended June 30, 2000 and 1999 (Unaudited) ....................   5

     Notes to Consolidated Interim Financial Statements ..........   6

Item 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations ......................  10

Item 3. Quantitative and Qualitative Disclosures About Market Risk  17


Part II - Other Information

Item 1. Legal Proceedings ........................................  18

Item 4. Submission of Matters to a Vote of Security Holders ......  19

Item 6. Exhibits and Reports on Form 8-K .........................  19

Signatures .......................................................  20
</TABLE>


                                       2

<PAGE>


                           ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                               SEPRACOR INC.
                                  CONSOLIDATED CONDENSED BALANCE SHEETS
                                               (UNAUDITED)
                                             (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                       JUNE 30,   DECEMBER 31,
                                                                                         2000         1999
                                                                                       --------   ------------
<S>                                                                                    <C>         <C>
Assets

Current assets:
Cash and cash equivalents ..........................................................   $272,178     $59,488
Marketable securities ..............................................................    457,666     276,335
Accounts receivable, net ...........................................................      4,171       4,485
Inventories, net ...................................................................      6,592       4,455
Other current assets ...............................................................      4,579       5,277
                                                                                      ---------     -------
Total current assets ...............................................................    745,186     350,040

Property, plant and equipment, net .................................................     19,893      19,003
Investment in affiliates ...........................................................      3,568       3,141
Patents, intangible assets and other assets, net ...................................     45,041      34,451
                                                                                       --------    --------
Total assets .......................................................................   $813,688    $406,635
                                                                                       ========    ========



Liabilities and Stockholders' Equity (deficit)

Current liabilities:
Accounts payable ...................................................................     $8,211     $20,196
Accrued expenses ...................................................................     60,029      42,575
Loan guarantee of affiliate ........................................................      5,000       5,000
Notes payable and current portion of long-term debt and capital lease obligation....        120         120
Other current liabilities ..........................................................      3,859       2,078
                                                                                       --------     -------
Total current liabilities ..........................................................     77,219      69,969

Convertible subordinated debentures ................................................    852,898     489,475
Other long-term debt and capital lease obligations .................................      1,171       1,136
Other long-term liabilities ........................................................        405         826
                                                                                      ---------     -------
Total liabilities ..................................................................    931,693     561,406

Minority interest ..................................................................      3,119         934

Stockholders' equity (deficit)

Preferred stock ....................................................................         --          --
Common stock .......................................................................      7,312       6,748
Additional paid-in capital .........................................................    446,809     327,591
Unearned compensation, net .........................................................       (187)       (217)
Accumulated deficit ................................................................   (574,715)   (489,370)
Accumulated other comprehensive (loss) .............................................       (343)       (457)
                                                                                      ---------    --------
Total stockholders' equity (deficit) ...............................................   (121,124)   (155,705)
                                                                                      ---------    --------
Total liabilities and stockholders' equity (deficit) ...............................   $813,688    $406,635
                                                                                      =========    ========

</TABLE>


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

                                       3


<PAGE>
                                                   SEPRACOR INC.
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                                                   (UNAUDITED)
                                      (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED       SIX MONTHS ENDED
                                                                           -------------------     -------------------
                                                                            JUNE 30,   JUNE 30,    JUNE 30,    JUNE 30,
                                                                             2000       1999        2000        1999
                                                                           --------   --------    --------    --------
<S>                                                                        <C>         <C>        <C>          <C>
Revenues:
     Product sales ....................................................    $ 9,635      $4,947     $23,501      $5,227
     Collaborative research and development ...........................      3,573          13       3,573       2,390
     License fees .....................................................     20,000           3      20,000          11
     Royalties and other ..............................................      1,044          51       2,311         110
                                                                            ------    --------    --------    --------
        Total revenues ................................................     34,252       5,014      49,385       7,738

Cost of revenues:
     Product ..........................................................        754       1,135       5,524       1,280
     License fees .....................................................      2,000          --       2,000          --
     Royalties and other ..............................................        377          20         577          41
                                                                            ------    --------    --------    --------
        Total cost of revenues ........................................      3,131       1,155       8,101       1,321

        Gross margin ..................................................     31,121       3,859      41,284       6,417

Operating expenses:
     Research and development .........................................     38,507      24,122      70,512      42,562
     Selling, general and administrative and patents costs ............     22,979      13,242      45,581      23,650
                                                                            ------    --------    --------    --------
        Total operating expenses ......................................     61,486      37,364     116,093      66,212
                                                                            ------   ---------   ---------   ---------
Loss from operations ..................................................    (30,365)    (33,505)    (74,809)    (59,795)

Other income (expense):
     Interest income ..................................................     11,596       5,617      19,189      11,671
     Interest expense .................................................    (12,838)     (8,269)    (22,819)    (16,558)
     Other income (expense), net ......................................         36          82      (7,406)         62
     Equity in loss of investees ......................................       (659)       (825)       (989)     (2,509)
                                                                            ------   ---------   ---------   ---------
        Total other income (expense) ..................................     (1,865)     (3,395)    (12,025)     (7,334)
                                                                            ------   ---------   ---------   ---------
Net loss before minority interests ....................................    (32,230)    (36,900)    (86,834)    (67,129)
Minority interest in subsidiary .......................................        922         366       1,489         548
                                                                            ------    --------    --------    --------
Net loss from continuing operations ...................................    (31,308)    (36,534)    (85,345)    (66,581)
                                                                            ------    --------    --------    --------
Discontinued operations: Loss from discontinued operations
      (net of minority interests) .....................................         --         (69)         --        (345)
                                                                            ------    --------    --------    --------
Net loss ..............................................................   $(31,308)   $(36,603)   $(85,345)   $(66,926)
                                                                            ------    --------    --------    --------
Basic and diluted net loss per common share
     from continuing operations .......................................    $ (0.43)     $(0.56)     $(1.19)     $(1.02)
                                                                            ------    --------    --------    --------
Basic and diluted net loss per common share
     from discontinued operations .....................................         --      $(0.00)         --      $(0.00)
                                                                            ------   ---------    --------   ---------
Basic and diluted net loss per common share ...........................    $ (0.43)     $(0.56)     $(1.19)     $(1.02)
                                                                            ------    --------    --------    --------
Shares used in computing basic and diluted net loss per common share:
       Basic and diluted ..............................................     72,970      65,709      71,986      65,582
                                                                            ------    --------    --------    --------
</TABLE>

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

                                       4

<PAGE>
                                                     SEPRACOR INC.
                                         CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                     (UNAUDITED)
                                                   (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                            SIX MONTHS ENDED
                                                                                         JUNE 30,       JUNE 30,
                                                                                           2000          1999
                                                                                        -----------     --------
<S>                                                                                     <C>             <C>
Cash flows from operating activities:
Net loss ...............................................................................   $(85,345)   $(66,926)
Less: Loss from discontinued operations (net of minority interests) ....................         --        (345)
                                                                                           ---------   --------
         Net loss from continuing operations ...........................................    (85,345)    (66,581)

Adjustments to reconcile net loss from continuing operations to net cash used in
operating activities:
     Depreciation and amortization .....................................................      5,287       3,198
     Minority interests in subsidiaries ................................................     (1,489)       (548)
     Equity in investee losses .........................................................        989       2,509
     Other .............................................................................         70           6
Changes in operating assets and liabilities:
     Accounts receivable ...............................................................        280      (4,937)
     Inventories .......................................................................     (2,137)     (3,891)
     Other current assets ..............................................................        392      (2,105)
     Accounts payable ..................................................................    (11,985)     (2,549)
     Accrued expenses ..................................................................     17,454       4,038
     Other current liabilities .........................................................      1,780         298
                                                                                          ----------    -------
           Net cash used in operating activities .......................................    (74,704)    (70,562)

Cash flows from investing activities:
     Purchases of marketable securities ................................................   (508,510)   (325,906)
     Sales of and maturities of marketable securities ..................................    327,233     234,305
     Additions to property and equipment ...............................................     (3,419)     (4,000)
     Increase in restricted cash .......................................................         --      (1,000)
     Investment in affiliate ...........................................................         --      (2,000)
     BioSphere investment in affiliate .................................................       (920)         --
     Other assets ......................................................................       (737)        863
                                                                                          ----------    -------
           Net cash used in investing activities .......................................   (186,353)    (97,738)

Cash flows from financing activities:
     Net proceeds from issuance of common stock ........................................     21,549       3,628
     Net proceeds from BioSphere issuance of common stock ..............................      6,135          --
     Proceeds from sale of 5% debentures due 2007 ......................................    460,000          --
     Costs associated with issuance of 5% debentures due 2007 ..........................    (14,033)         --
     Costs associated with issuance of 7% debentures due 2005 ..........................         --        (276)
     Borrowings of long-term debt, capital leases and line of credit agreements ........         63          --
     Repayments of long-term debt, capital leases and line of credit agreements ........        (27)     (2,280)
                                                                                          ----------     ------
          Net cash provided by financing activities ....................................    473,687       1,072

Effect of exchange rate changes on cash and cash equivalents ...........................         60        (187)
                                                                                          ----------    -------
Net increase (decrease) in cash and cash equivalents ...................................    212,690    (167,415)

Net cash provided by discontinued operations ...........................................         --       9,940

Cash and cash equivalents at beginning of period .......................................     59,488     295,323
                                                                                          ---------    --------
Cash and cash equivalents at end of period .............................................   $272,178    $137,848

Non cash activities:
   Conversion of convertible subordinated debentures to shares of common stock .........    $96,577          --
Acquisition of BioSphere Medical:
    Liabilities assumed ................................................................         --     $(1,493)
    Fair value of assets acquired ......................................................         --      $1,493
</TABLE>

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

                                       5

<PAGE>

               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION:

The accompanying consolidated interim financial statements are unaudited and
have been prepared on a basis substantially consistent with the audited
financial statements. Certain information and footnote disclosures normally
included in Sepracor's annual financial statements have been condensed or
omitted. The year-end consolidated condensed balance sheet data was derived from
audited financial statements but does not include all disclosures required by
generally accepted accounting principles. The consolidated interim financial
statements, in the opinion of management, reflect all adjustments (including
normal recurring accruals) necessary for a fair presentation of the results for
the interim periods ended June 30, 2000 and 1999.

The consolidated results of operations for the interim periods are not
necessarily indicative of the results of operations to be expected for the
fiscal year. These consolidated interim financial statements should be read in
conjunction with the audited financial statements for the year ended December
31, 1999, which are contained in Sepracor's Annual Report on Form 10-K/A for the
year ended December 31, 1999, filed with the Securities and Exchange Commission.

The consolidated interim financial statements include the accounts of Sepracor
Inc. ("Sepracor" or the "Company") and its majority and wholly owned
subsidiaries, including BioSphere Medical Inc. ("BioSphere") and Sepracor Canada
Limited.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

A) New Accounting Pronouncements

In 1998, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standard ("SFAS") No. 133 "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments and for hedging activities. The
Company will adopt SFAS No. 133 in 2001, in accordance with SFAS 137, which
deferred the effective date of SFAS 133. The adoption of this standard in 2001
is not expected to have a material impact on the Company's consolidated
financial statements.

In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101") which summarizes certain of the staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. In June 2000, the SEC issued SAB 101B which delays the
implementation date of SAB 101 until no later than the fourth fiscal quarter
of fiscal years beginning after December 15, 1999. The Company is currently
in the process of evaluating the impact SAB 101 will have on its financial
position and results of operations.

In March 2000, the FASB issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation", which provides guidance for
issues that have arisen in applying APB No. 25, "Accounting for Stock Issued
to Employees". This Interpretation, which became effective July 1, 2000,
applies prospectively to new awards, exchanges or awards in a business
combination, modifications to outstanding awards, and changes in grantee
status that occur on or after July 1, 2000, except for the provisions related
to repricings and the definition of an employee which apply to awards issued
after December 31, 1998. Interpretation No. 44 is not expected to have a
material impact on the Company's financial position and results of operations.

B) Basic and Diluted Net (Loss) Per Common Share

Basic earnings (loss) per share ("EPS") excludes dilution and is computed by
dividing income available to common shareholders by the weighted-average number
of common shares outstanding for the period. Diluted EPS is based upon the
weighted-average number of common shares outstanding during the period plus the
additional weighted-average common equivalent shares during the period. Common
equivalent shares are not included in the per share calculations where the
effect of their inclusion would be anti-dilutive. Common equivalent shares
result from the assumed conversion of preferred stock and the assumed exercises
of outstanding stock options, the proceeds of which are then assumed to have
been used to repurchase outstanding common stock using the treasury stock
method. For the three and six months ended June 30, 2000 and 1999, basic and
diluted net loss per common share is computed based on the weighted-average
number of common shares outstanding during the period, because the effect of
common stock equivalents would be anti-dilutive.

Certain securities were not included in the computation of diluted earnings
(loss) per share for the three and six months ended June 30, 2000 and 1999,
because they would have an anti-dilutive effect due to net losses for such
periods. These securities include: (i) options to purchase 9,978,000 shares
of common stock with purchase prices of $1.25 to $92.25 per share for the
three and six months ended June 30, 2000 and options to purchase 10,772,000
shares of common stock with purchase prices of $1.00 to $59.13 per share for
the three and six months ended June 30, 1999; (ii) 13,708,000 shares of
common stock issuable upon conversion of the 6 1/4% convertible subordinated
debentures due 2005, the 7% convertible subordinated debentures due 2005 and
the 5% convertible subordinated debentures due 2007 for the three and six
months ended June 30, 2000, and (iii) 12,805,000 shares of common stock
issuable upon conversion of the 6 1/4% convertible subordinated debentures
due 2005 and the 7% convertible subordinated debentures due 2005 for the
three and six months ended June 30, 1999.

                                       6

<PAGE>






3. INVENTORIES, NET:

Inventories consist of the following:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                           JUNE 30, 2000               DECEMBER 31, 1999
--------------                                           -------------               -----------------
<S>                                                             <C>                         <C>
Raw materials                                                   $1,932                      $1,785
Work in progress                                                 1,251                         765
Finished goods                                                   3,409                       1,905
                                                           -----------                 -----------
                                                                $6,592                      $4,455
</TABLE>

The increase in inventory at June 30, 2000 is primarily due to increased
production of Xopenex.

4. PATENTS, INTANGIBLE ASSETS AND OTHER ASSETS, NET:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                            JUNE 30, 2000                 DECEMBER 31, 1999
--------------                                            -------------                 -----------------
<S>                         <C>                           <C>                                <C>
Deferred finance costs, net (1)                                 $23,177                            $12,720
Intangible assets and patents, net                               20,522                             20,922
Other assets                                                      1,342                                809
                                                            -----------                        -----------
                                                                $45,041                            $34,451
</TABLE>


(1) June 30, 2000 balance includes $14,033 of costs associated with the $460,000
of 5% convertible subordinated debentures due 2007 issued in the first quarter
of 2000.

5. CONVERTIBLE SUBORDINATED DEBENTURES:

<TABLE>
<CAPTION>
(IN THOUSANDS)                                                    JUNE 30, 2000        DECEMBER 31, 1999
--------------                                                    -------------        -----------------
<S>                                                              <C>                   <C>
6.25% convertible subordinated debentures due 2005 (1)(2)            $ 92,938                   $189,475
7.00% convertible subordinated debentures due 2005 (1)                299,960                    300,000
5.00% convertible subordinated debentures due 2007 (3)                460,000                         --
                                                                  -----------                -----------
                                                                     $852,898                   $489,475
</TABLE>


(1)  The decrease represents debentures converted into Sepracor common stock
     (conversion of $96,424 of principal amount of 6.25% convertible
     subordinated debentures in the first quarter of 2000 included costs of
     $7,497).

(2)  Deferred finance costs of approximately $2,373 were written off against
     additional paid-in capital as a result of the conversion of 6.25%
     convertible subordinated debentures in the first quarter of 2000.

(3)  Represents $460,000 in principal amount of 5% convertible subordinated
     debentures due 2007 issued in the first quarter of 2000.

6.  COMPREHENSIVE INCOME (LOSS):

Total comprehensive income (loss) is comprised of net income (loss), net
currency translation adjustments, and unrealized gain (loss) on
available-for-sale securities.




<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED        SIX MONTHS ENDED
(IN THOUSANDS)                                       JUNE 30,  JUNE 30,        JUNE 30,   JUNE 30,
                                                       2000      1999           2000        1999
                                                     -------   -------        --------   ---------
<S>                                                  <C>       <C>           <C>        <C>
Comprehensive income (loss):

    Net loss ....................................    $(31,308)  $(36,603)     $(85,345)  $(66,926)
    Cumulative translation adjustment ...........          85        269            60       (187)
    Unrealized gain .............................           5         --            54         --
                                                   ---------- ----------     ---------- ----------
    Total comprehensive income (loss) ...........    $(31,218)  $(36,334)     $(85,231)  $(67,113)
</TABLE>


7.   AGREEMENTS:

On April 13, 2000, the Company announced that the Federal Trade Commission
(the "FTC") closed its investigation, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), of the license
agreement that allows Eli Lilly and Company ("Lilly") and Sepracor to
exclusively develop and globally commercialize (R)-fluoxetine.
(R)-Fluoxetine, a new chemical entity, is a modified form of an active
ingredient found in Prozac(R). Upon

                                       7

<PAGE>

closing this transaction, the Company received an initial milestone payment
and license fee of $20,000,000. The Company has no further work to be
performed related to the agreement and  has recorded this as revenue in the
second quarter of 2000. The Company has also recorded $3,573,000 of
collaborative research and development revenue in the second quarter of 2000,
related to previous costs incurred in the development of (R)-fluoxetine under
the Lilly Agreement. The Company will also receive up to $70,000,000 in
additional milestone payments based on the progression of (R)-fluoxetine
through development. In addition to the initial milestone payment and license
fee and additional milestone payments, Sepracor will receive royalties on
(R)-fluoxetine worldwide sales, if any, beginning at product launch. In
exchange, Lilly will receive exclusive, worldwide rights to (R)-fluoxetine
for all indications and uses. Lilly is responsible for developmental work on
(R)-fluoxetine, regulatory submissions, product manufacturing, marketing and
sales.

8.  SUBSIDIARIES AND AFFILIATES:

BIOSPHERE
On February 4, 2000, BioSphere announced that it had completed a private
placement of approximately $5,900,000 of common stock and warrants. Investors
purchased 653,887 shares of BioSphere common stock and warrants to purchase
163,468 shares of common stock. As a result of this transaction, Sepracor's
ownership of BioSphere decreased from approximately 64% to 59% as of February
2000. The transaction resulted in Sepracor recording a gain of approximately
$2,771,000 through additional paid-in capital.

HEMASURE
On March 3, 2000, HemaSure Inc. ("HemaSure") announced that it had completed a
$28,000,000 private placement of common stock, consisting of 3,730,000 shares of
common stock, thereby reducing Sepracor's ownership to approximately 22%. The
transaction resulted in Sepracor recording a gain of approximately $1,417,000
through additional paid-in capital. Sepracor has recorded $659,000 and $989,000
as its share of HemaSure losses for the three- and six- month periods ended June
30, 2000, respectively.

9. LITIGATION:

On April 13, 2000, the Company announced that the Federal Trade Commission
closed its investigation, under the HSR Act, of the license agreement that
allows Lilly and Sepracor to exclusively develop and globally commercialize
(R)-fluoxetine.

HemaSure is a defendant in a lawsuit brought by Pall Corporation ("Pall")
regarding its LeukoNet System, which is no longer made or sold by HemaSure. In a
complaint filed in November 1996, Pall alleged that HemaSure's manufacture, use
and/or sale of the LeukoNet System infringed upon two patents held by Pall. Pall
dropped its allegations concerning infringement of one of the patents and
alleges only that HemaSure's LeukoNet System infringed U.S. Patent No. 4,952,572
(the "'572 Patent").

With respect to the allegations concerning the '572 Patent, HemaSure has
answered the complaint stating that it does not infringe any claim of the
asserted patents. Further, HemaSure has counterclaimed for declaratory judgment
of invalidity, noninfringement and unenforceability of the '572 Patent. Pall has
amended its complaint to add Lydall, Inc. ("Lydall"), whose subsidiary supplied
filter media for the LeukoNet product, as a co-defendant. HemaSure has filed for
summary judgment of noninfringement, and Pall has cross-filed for summary
judgment of infringement at the same time. Lydall supported HemaSure's motion
for summary judgment of noninfringement, and has filed a motion for summary
judgment that the asserted claims of the '572 Patent are invalid as a matter of
law. Discovery has been completed in the action. The Court held a hearing on the
summary judgment motions on April 18, 2000. No decision has been made on the
motions.

On April 5, 1999, HemaSure and Gambro BCT, Inc. ("Gambro BCT") filed a complaint
for declaratory relief against Pall in the U.S. District Court of Colorado.
HemaSure and Gambro BCT seek declaratory relief that Pall's U.S. Patent No's.
5,451,321, 5,229,012, 5,344,561, 5,501,795 and 5,863,436 are invalid and not
infringed by HemaSure's r\LS System and methods of using the r\LS System. Pall
moved to dismiss or transfer to the Eastern District of New York or, in the
alternative, to stay this action. HemaSure and Gambro BCT opposed Pall's motion.
On July 16, 1999, the United States District Court of Colorado denied Pall's
motion to transfer or, in the alternative, to stay the action, and the action is
proceeding. On September 30, 1999, the Court denied Pall's motion to dismiss the
action and the case is proceeding. On October 20, 1999, Pall submitted a
counterclaim alleging that HemaSure's r\LS System infringes its patents that are
the subject of the lawsuit and that HemaSure and Gambro BCT tortiously
interfered and unfairly competed with Pall's business. HemaSure and Gambro BCT
replied to Pall's counterclaim and denied Pall's allegations of tortious
interference, unfair competition and patent infringement.

On April 23, 1999, Pall filed a complaint against HemaSure and Gambro BCT in the
U.S. District Court of the Eastern District of New York alleging that HemaSure's
r\LS System infringes Pall's '572 Patent, and tortiously interfered and

                                       8

<PAGE>


unfairly competed with Pall's business. On May 19, 1999, Pall filed an amended
complaint adding Sepracor, Gambro, Inc. and Gambro, A.B., a Swedish company, of
which Gambro Inc. is a business unit, as defendants. Sepracor, HemaSure and
Gambro BCT have moved to dismiss, transfer, or stay the action, and Pall has
opposed the motion. On April 18, 2000, the parties stipulated in open court to
the dismissal without prejudice of Pall's suit against Sepracor, HemaSure and
Gambro BCT.

On July 13, 2000, Pall filed a Complaint in the United States District Court for
the District of Colorado alleging that HemaSure, Gambro, Inc., and Gambro AB are
infringing Pall's U.S. Patent No. 6,086,770. HemaSure plans to submit its reply
to the complaint denying the allegations of infringement.

HemaSure has engaged patent counsel to investigate the pending litigations.
HemaSure believes, based on its review of these matters, that a properly
informed court should conclude that the manufacture, use and/or sale by HemaSure
or its customers of the LeukoNet System and the r\LS System does not infringe
any valid enforceable claim of the Pall patents. However, there can be no
assurance that HemaSure will prevail in the pending litigations, and an adverse
outcome in a patent infringement action would have a material adverse effect on
HemaSure's financial condition and future business and operations, including the
possibility of significant damages in the litigations and an injunction against
the sale of the r\LS System if HemaSure does not prevail in the litigations.

10. SUBSEQUENT EVENT:

On July 31, 2000, BioSphere Medical, Inc. sold approximately $13,000,000 of its
common stock to a small group of investors in a private equity placement. Of
this amount, Sepracor purchased approximately $5,000,000. As a result of the
transaction, Sepracor's ownership in BioSphere decreased from approximately
58% to 56%.


                                       9

<PAGE>

                                     ITEM 2.

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

This Quarterly Report on Form 10-Q contains, in addition to historical
information, forward-looking statements within the meaning of section 21E of the
Securities Exchange Act of 1934, as amended. These forward looking statements
involve risk and uncertainties and are not guarantees of future perfomance.
Sepracor's actual results could differ significantly from the results discussed
in such forward-looking statements. See "Factors Affecting Future Operating
Results" below.

OVERVIEW

Sepracor is a specialty pharmaceutical company focused on the cost-effective
development of safer, purer and more effective drugs that are improved versions
of widely-prescribed pharmaceutical compounds.

The consolidated interim financial statements include the accounts of Sepracor
Inc. ("Sepracor" or the "Company") and its majority and wholly-owned
subsidiaries, including BioSphere Medical Inc. ("BioSphere") and Sepracor Canada
Limited.

On July 31, 2000, Sepracor purchased approximately $5,000,000 of common stock
of BioSphere as part of a private equity placement to a small group of
investors totaling approximately $13,000,000. As a result of the transaction,
Sepracor's ownership in BioSphere decreased from approximately 58% to 56%.

On April 13, 2000, the Company announced that the Federal Trade Commission
(the "FTC") closed its investigation, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), of the license
agreement that allows Eli Lilly and Company ("Lilly") and Sepracor to
exclusively develop and globally commercialize (R)-fluoxetine.
(R)-Fluoxetine, a new chemical entity, is a modified form of an active
ingredient found in Prozac(R). Upon closing this transaction, the Company
received an initial milestone payment and license fee of $20,000,000. The
Company has no further work to be performed related to the agreement and has
recorded this as revenue in the second quarter of 2000. The Company has also
recorded $3,573,000 of collaborative research and development revenue in the
second quarter of 2000, related to previous costs incurred in the development
of (R)-fluoxetine under the Lilly Agreement. The Company will also receive up
to $70,000,000 in additional milestone payments based on the progression of
(R)-fluoxetine through development. In addition to the initial milestone
payment and license fee and additional milestone payments, Sepracor will
receive royalties on (R)-fluoxetine worldwide sales, if any, beginning at
product launch. In exchange, Lilly will receive exclusive, worldwide rights
to (R)-fluoxetine for all indications and uses. Lilly is responsible for
developmental work on (R)-fluoxetine, regulatory submissions, product
manufacturing, marketing and sales.

On March 3, 2000, HemaSure Inc. ("HemaSure") announced that it had completed a
$28,000,000 private placement of 3,730,000 shares of its common stock, thereby
reducing Sepracor's ownership to approximately 22%. The transaction resulted in
Sepracor recording a net gain of approximately $1,417,000 through additional
paid-in capital.

In the first quarter of 2000, the Company issued $460,000,000 in principal
amount of 5% convertible subordinated debentures due 2007 (the "5% Debentures").
The 5% Debentures have an annual interest rate of 5% and are convertible at the
option of the holder into Sepracor common stock at $92.38 per share.

In February 2000, the Company converted $96,424,000 of its 6 1/4% convertible
subordinated debentures due 2005 (the "6 1/4% Debentures"). Costs related to the
conversion of the 6 1/4% Debentures, including inducements and other costs, were
approximately $7,497,000. Deferred finance costs of approximately $2,373,000
were written off against additional paid-in capital as a result of the
conversion.

On February 4, 2000, BioSphere announced that it had completed a private equity
placement of approximately $5,900,000 of common stock and warrants. Investors
purchased 653,887 shares of BioSphere common stock and warrants to purchase an
additional 163,468 shares of BioSphere common stock. As a result of this
transaction, Sepracor's ownership of BioSphere decreased from approximately 64%
to 59% as of February 2000. The transaction resulted in Sepracor recording a net
gain of approximately $2,771,000 through additional paid-in capital.

On January 20, 2000, the Company announced that its Board of Directors approved
a two-for-one stock split which was paid in the form of a 100% stock dividend on
February 25, 2000 to stockholders of record on February 1, 2000.

In May 1999, Sepracor commercially introduced Xopenex(R), a single-isomer
form of the leading bronchodilator, albuterol. Xopenex is the first
pharmaceutical product developed and commercialized by Sepracor.

During 2000, the Company expects that it will incur increasing expenses,
primarily in research and development and sales and marketing, as a result of
efforts to advance the development of its portfolio of pharmaceuticals and
drug candidates, and activities relating to the sales and marketing of
Xopenex. The Company also expects to continue to pursue additional corporate
partnering and alliance arrangements including out-licensing agreements,
co-promotion arrangements, development collaborations  and merger or
acquisition opportunities.

                                       10

<PAGE>

THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999

Product revenues were $9,635,000 and $23,501,000 for the three and six months
ended June 30, 2000, respectively, compared to $4,947,000 and $5,227,000,
respectively, for the same periods in 1999. The increase for the three and six
month periods ended June 30, 2000 is due primarily to sales of Xopenex, which
the Company commercially introduced in May 1999.

Collaborative research and development revenues were $3,573,000 for the three
and six months ended June 30, 2000, compared to $13,000 and $2,390,000,
respectively, for the same periods in 1999. The increase for the three months
ended June 30, 2000 is attributable to proceeds from the Lilly (R)-fluoxetine
agreement, and the increase for the six month period ended June 30, 2000 is also
due to proceeds from the Lilly (R)-fluoxetine agreement offset by the
termination of the research and development studies conducted by Sepracor under
the collaborative license agreement between Sepracor and Janssen Pharmaceutica
N.V ("Janssen"), dated January 30, 1998, for the development of norastemizole.

License fee revenues were $20,000,000 for the three and six months ended June
30, 2000, compared to $3,000 and $11,000, respectively, for the same periods
in 1999. The increase is attributable to initial milestone payments received
under the Lilly (R)-fluoxetine agreement.

Royalty and other revenues were $1,044,000 and $2,311,000 for the three and
six months ended June 30, 2000, respectively, compared to $51,000 and
$110,000, respectively, for the same periods in 1999. The increase in revenue
is due to proceeds from the royalty agreement with Hoechst Marion Roussel,
Inc. (now Aventis) under which Sepracor currently receives royalties on
non-U.S. sales of fexofenadine in countries where Sepracor holds issued
patents on fexofenadine. The increase is also due to other revenues generated
by BioSphere.

Cost of product revenues, as a percentage of product revenues, was 8% and 24%
for the three and six months ended June 30, 2000, respectively, compared to
23% and 24%, respectively, for the same periods in 1999. The decrease of cost
of product revenue for the three months ended June 30, 2000 is due to an
increase of sales of pharmaceutical products as a percentage of total product
sales which have a lower cost of product revenue, and is also due to
favorable manufacturing cost variances during this period. Included in the
cost of product revenues for the six months ended June 30, 2000 is a charge
of $2,766,000 for costs related to an isolated third party manufacturing
issue. When adjusted for this one time charge, the cost of revenue as a
percentage of product revenue for the six months ended June 30, 2000 becomes
approximately 12%. This decrease in the cost of revenue for the six months
ended June 30, 2000 is due principally to an increase of sales of
pharmaceutical products as a percentage of the Company's total product sales.

Cost of license fee revenues were $2,000,000 for the three and six months ended
June 30, 2000, compared to $0 for the same periods in 1999. The $2,000,000
represents sublicense fees owed under a license agreement with McLean Hospital
pertaining to patents related to the Lilly (R)-fluoxetine agreement.

Research and development expenses were $38,507,000 and $70,512,000 for the three
and six months ended June 30, 2000, respectively, compared to $24,122,000 and
$42,562,000, respectively, for the same periods in 1999. The increase is
primarily due to costs related to clinical studies being initiated and increased
personnel costs related to the quality control and clinical and regulatory
infrastructure development.

Selling, general and administrative and patent expenses were $22,979,000 and
$45,581,000 for the three and six months ended June 30, 2000, respectively,
compared to $13,242,000 and $23,650,000, respectively, for the same periods in
1999. The increase is primarily due to the addition of two third-party
contracted sales forces and sales and marketing infrastructure development.

The net of interest income, interest (expense) and other income (expense) was
$(1,206,000) and $(11,036,000) for the three and six months ended June 30,
2000, respectively, compared to $(2,570,000) and $(4,825,000), respectively,
for the same periods in 1999. The decrease in expense for the three month
period ended June 30, 2000 is attributable to additional interest income
earned on investments purchased with the proceeds of the 5% Debentures, while
the increase in expense for the six month period ended June 30, 2000 is
primarily the result of the conversion of $96,424,000 principal amount of 6
1/4% Debentures, which resulted in inducements and other costs of $7,497,000
in the first quarter of 2000 partially offset by additional net interest
income related to the 5% Debentures.

Equity in loss of investees was $659,000 and $989,000 for the three and six
months ended June 30, 2000, respectively, compared to $825,000 and $2,509,000,
respectively, for the same periods in 1999. The decrease is due to Sepracor no
longer recognizing Versicor losses as of May 1999, and due to Sepracor
maintaining a lower ownership percentage in HemaSure in 2000.

Minority interest in subsidiary from continuing operations resulted in a
decrease to consolidated net loss of $922,000 and $1,489,000 for the three and
six months ended June 30, 2000, respectively, compared to $366,000 and $548,000,
respectively, for the same periods in 1999. The fluctuation in minority interest
is the result of the minority interest in BioSphere increasing from
approximately 36% to 42% and due to BioSphere recording a larger net loss in the
three and six month periods ended June 30, 2000 than in the three and six month
periods ended June 30, 1999.

                                       11

<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents plus marketable securities totaled $729,844,000 at
June 30, 2000, compared to $335,823,000 at December 31, 1999.

The net cash used in operating activities for the six months ended June 30,
2000 was $74,704,000. The net cash used in operating activities includes a
net loss from continuing operations of $85,345,000 adjusted by non-cash
charges of $4,857,000. Inventory increased by $2,137,000 primarily due to
increased production of Xopenex inventory. Accounts payable decreased by
$11,985,000 due to the timing of cash disbursements. Accrued expenses
increased by $17,454,000 due primarily to increased research and development
and sales and marketing activities and additional accrued interest related to
the 5% Debentures.

The net cash used in investing activities for the six months ended June 30, 2000
was $186,353,000. Cash was invested primarily in net purchases of marketable
securities of $181,277,000 and purchases of property and equipment of
$3,419,000.

The net cash provided by financing activities for the six months ended June 30,
2000 was $473,687,000. The Company received approximately $445,967,000 in net
proceeds from the issuance of the 5% Debentures. The Company also received
approximately $21,549,000 in proceeds from the issuance of Sepracor common stock
and $6,135,000 from BioSphere's issuance of common stock.

In the first quarter of 2000, the Company issued $460,000,000 in principal
amount of 5% convertible subordinated debentures due 2007. The 5% Debentures
have an annual interest rate of 5% and are convertible into Sepracor common
stock at $92.38 per share.

In February 2000, the Company converted $96,424,000 of its 6 1/4% convertible
subordinated debentures due 2005. Costs related to the conversion of the 6 1/4%
Debentures, including inducements and other costs, were approximately
$7,497,000. Deferred finance costs of approximately $2,373,000 were written off
against additional paid-in capital as a result of the conversion.

The Company believes its existing cash and the anticipated cash flow from its
current strategic alliances and operations will be sufficient to support
existing operations for the near term. Sepracor's actual future cash
requirements, however, will depend on many factors, including the progress of
its preclinical, clinical, and research programs, the number and breadth of
these programs, achievement of milestones under these strategic alliance
arrangements, sales of its products, acquisitions, its ability to establish and
maintain additional strategic alliance and licensing arrangements, and the
progress of the Company's development efforts and the development efforts of its
strategic partners.

FACTORS AFFECTING FUTURE OPERATING RESULTS

You should carefully consider the following risks before making an investment
decision. You should also refer to the other information set forth in this
prospectus, and incorporated by reference in this prospectus. This prospectus
contains forward-looking statements that involve risks and uncertainties. Our
actual results could vary significantly from the results discussed in the
forward-looking statements. Some risks that could cause our results to vary are
disclosed below.

WE HAVE NEVER BEEN PROFITABLE AND WE MAY NOT BE ABLE TO GENERATE REVENUES
SUFFICIENT TO ACHIEVE PROFITABILITY. We have not been profitable since
inception, and it is possible that we will not achieve profitability. We
incurred net losses applicable to common shares on a consolidated basis of
approximately $85.3 million for the six months ended June 30, 2000 and $183.1
million for the year ended December 31, 1999. We expect to continue to incur
operating and capital expenditures. As a result, we will need to generate
significant revenues to achieve and maintain profitability. We cannot assure you
that we will achieve significant revenues or that we will ever achieve
profitability. Even if we do achieve profitability, we cannot assure you that we
can sustain or increase profitability on a quarterly or annual basis in the
future. If revenues grow more slowly than we anticipate or if operating expenses
exceed our expectations or cannot be adjusted accordingly, our business, results
of operations and financial conditions will be materially and adversely
affected. Our ability to generate profitability will depend in large part on
successful commercialization of our initial products and successful development
and commercialization of principal products under development. Failure to
successfully commercialize these products may have a material adverse effect on
our business.

WE WILL BE REQUIRED TO EXPEND SIGNIFICANT RESOURCES FOR RESEARCH, DEVELOPMENT,
TESTING AND REGULATORY APPROVAL OF OUR DRUGS UNDER DEVELOPMENT AND THESE DRUGS
MAY NOT BE DEVELOPED SUCCESSFULLY. We are focused on the development of improved
versions of widely prescribed pharmaceutical compounds which we refer to as
improved chemical entities, or ICEs. Most of our ICEs are still undergoing
clinical trials or are in the early stages of development. Our drugs may not
provide greater benefits or fewer side effects than the original versions of
these drugs and our research


                                       12

<PAGE>


efforts may not lead to the discovery of new drugs with improved
characteristics. All of our drugs under development will require significant
additional research, development, preclinical and/or clinical testing,
regulatory approval and a commitment of significant additional resources prior
to their commercialization. Our potential products may not:

- be developed successfully;

- be proven safe and efficacious in clinical trials;

- offer therapeutic or other improvements over comparable drugs;

- meet applicable regulatory standards;

- be capable of being produced in commercial quantities at acceptable costs; or

- be successfully marketed.

IF WE FAIL TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR FACE A
CLAIM OF INTELLECTUAL PROPERTY INFRINGEMENT BY A THIRD PARTY, THEN WE COULD LOSE
VALUABLE INTELLECTUAL PROPERTY RIGHTS, BE LIABLE FOR SIGNIFICANT DAMAGES OR BE
PREVENTED FROM COMMERCIALIZING OUR PRODUCTS. Our success depends in part on our
ability to obtain and maintain patents, protect trade secrets and operate
without infringing upon the proprietary rights of others. In the absence of
patent and trade secret protection, competitors may adversely affect our
business by independently developing and marketing substantially equivalent
products and technology and preventing us from marketing our products. It is
also possible that we could incur substantial costs in litigation if we are
required to defend ourselves in patent suits brought by third parties, or if we
are required to initiate litigation against others to protect our intellectual
property rights.

We have filed various patent applications covering the composition of, and the
methods of using, single-isomer or active-metabolite forms of various compounds
for specific applications. However, we may not be issued patents in respect of
the patent applications already filed or that we file in the future. Moreover,
the patent position of companies in the pharmaceutical industry generally
involves complex legal and factual questions, and recently has been the subject
of much litigation. No consistent policy has emerged from the U.S. Patent and
Trademark Office, generally known as the PTO, or the courts regarding the
breadth of claims allowed or the degree of protection afforded under patents and
other proprietary rights. Any patents we have obtained, or obtain in the future,
may be challenged, invalidated or circumvented. Moreover, the PTO may commence
interference proceedings involving our patents or patent applications. Any
challenge to, or invalidation or circumvention of, our patents or patent
applications could have a material adverse effect on our business.

Our ability to commercialize successfully any ICE will largely depend upon our
ability to obtain and maintain use patents of sufficient scope to prevent third
parties from developing similar or competitive products. Third parties,
typically drug companies, hold patents or patent applications covering the
composition of matter for most of the ICEs for which we have use patents or
patent applications. In each of these cases, unless we have or obtain a license
agreement, we generally may not commercialize the ICE until the expiration of
these third-party patents. Licenses may not be available to us on acceptable
terms, if at all. In addition, it would be costly for us to contest the validity
of a third-party patent or defend any claim that we infringe a third-party
patent. Moreover, litigation involving third-party patents may not be resolved
in our favor.

IF OUR PRODUCTS DO NOT RECEIVE GOVERNMENT APPROVAL, THEN WE WILL NOT BE ABLE TO
COMMERCIALIZE THEM. The U.S. Food and Drug Administration ("FDA") and similar
foreign agencies must approve the marketing and sale of pharmaceutical products
developed by us or our development partners. These agencies impose substantial
requirements on the manufacture and marketing of drugs. Our failure to obtain
regulatory approval on a timely basis and any unanticipated significant
expenditures on preclinical and clinical studies could adversely affect the
funds we will require to advance our products to commercialization and the
timing of the commercial introduction of, or our ability to, market and sell our
products.

The regulatory process to obtain marketing approval requires clinical trials of
a product to establish its safety and efficacy. Problems that may arise during
clinical trials include:

- results of clinical trials may not be consistent with preclinical study
  results;

- results from later phases of clinical trials may not be consistent with the
  results from earlier phases; and

- products may not be shown to be safe and efficacious.

Even if the FDA or similar foreign agencies grant us regulatory approval of a
product, the approval may be subject to limitations on the indicated uses for
which the product may be marketed or contain requirements for costly
post-marketing follow-up studies. Moreover, if we fail to comply with applicable
regulatory requirements, we may be subject to fines, suspension or withdrawal of
regulatory approvals, product recalls, seizure of products, operating
restrictions and criminal prosecution.


                                       13
<PAGE>


THE DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCTS COULD BE DELAYED OR
TERMINATED IF OUR COLLABORATIVE PARTNERS TERMINATE, OR FAIL TO PERFORM THEIR
OBLIGATIONS UNDER, THEIR AGREEMENTS WITH US OR IF ANY OF OUR COLLABORATION
AGREEMENTS IS SUBJECT TO LENGTHY GOVERNMENT REVIEW. We have entered into
collaboration arrangements with pharmaceutical companies. Our revenues under
these collaboration arrangements will consist primarily of milestone payments
and royalties on sales of products. Any such payments and royalties will depend
in large part on the efforts of our collaboration partners. If any of our
collaboration partners does not devote sufficient time and resources to its
collaboration arrangement with us, the potential commercial benefits of the
arrangement may not be realized by us, and our results of operations may be
adversely affected. In addition, if any of our collaboration partners were to
breach or terminate their agreements with us or fail to perform their
obligations to us in a timely manner, the development and commercialization of
the products could be delayed or terminated. Any delay or termination of this
type could have a material, adverse effect on our financial condition and
results of operations because we may be required to expend additional funds to
bring our products to commercialization, and milestone or royalty payments from
collaborative partners or revenue from product sales, if any, could be delayed
or terminated. Any failure or inability by us to perform some of our obligations
under a collaboration agreement could reduce or extinguish the benefits to which
we are otherwise entitled under the agreement.

Development and commercialization of some of our product candidates may depend
on our ability to enter into additional collaboration agreements with
pharmaceutical companies to fund all or part of the costs of development and
commercialization of such product candidates. There can be no assurance that we
will be able to enter into collaboration agreements for ICEs in the future or
that the terms of the collaboration agreements, if any, will be favorable to us.
The inability to enter into collaboration agreements in the future could delay
or preclude the development, manufacture and/or marketing of some of our drugs
and could have a material adverse effect on our financial condition and results
of operations because:

- we may be required to expend additional funds to advance the drugs to
  commercialization;

- revenue from product sales could be delayed; or

- we may elect not to commercialize the drugs.

We are required to file a notice under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, for certain agreements containing
exclusive license grants and to delay the effectiveness of any such exclusive
license until the expiration or earlier termination of the notice and waiting
period under the HSR Act. If the expiration or termination of the notice and
waiting period under the HSR Act is delayed because of lengthy government
review, or if the Federal Trade Commission or Department of Justice successfully
challenges such a license, development and commercialization could be delayed or
precluded and our business could be adversely affected.

WE HAVE LIMITED SALES AND MARKETING EXPERIENCE AND EXPECT TO INCUR SIGNIFICANT
EXPENSES IN DEVELOPING A SALES FORCE. IN ADDITION, OUR LIMITED SALES AND
MARKETING EXPERIENCE MAY RESTRICT OUR SUCCESS IN COMMERCIALIZING OUR PRODUCTS.
We currently have very limited sales and marketing experience. If we
successfully develop and obtain regulatory approval for the products we are
currently developing, we expect to license some of them to large pharmaceutical
companies and market and sell others through our direct specialty sales forces
or through other arrangements, including co-promotion arrangements. We have
established a direct sales force to market Xopenex, our single isomer form
of albuterol. As we begin to enter into co-promotion arrangements or market and
sell additional products directly, we will need to significantly expand our
sales force. We expect to incur significant expense in expanding our direct
sales force. Our limited experience in developing, maintaining and expanding a
direct specialty sales force may restrict our success in commercializing our
products.

Our ability to realize significant revenues from direct marketing and sales
activities depends on our ability to attract and retain qualified sales
personnel in the pharmaceutical industry and competition for these persons is
intense. If we are unable to attract and retain qualified sales personnel, we
will not be able to successfully expand our marketing and direct sales force on
a timely or cost effective basis. We may also need to enter into additional
co-promotion arrangements with third parties where our own direct sales force is
neither well situated nor large enough to achieve maximum penetration in the
market. We may not be successful in entering into any co-promotion arrangements,
and the terms of any co-promotion arrangements may not be favorable to us. We
cannot control the level of effort and quality of service provided by
co-promoters or any third party sales force. If the level of effort provided by
these third parties is not adequate, our revenues may be adversely affected.

IF WE DO NOT MAINTAIN CURRENT GOOD MANUFACTURING PRACTICES, THEN THE FDA
COULD REFUSE TO APPROVE MARKETING APPLICATIONS. WE DO NOT HAVE THE CAPABILITY
TO MANUFACTURE IN SUFFICIENT QUANTITIES ALL OF THE PRODUCTS WHICH MAY BE
APPROVED FOR SALE AND DEVELOPING AND OBTAINING THIS CAPABILITY WILL BE TIME
CONSUMING AND EXPENSIVE. The FDA and other regulatory authorities require
that our products be manufactured according to their Good Manufacturing
Practices standards. Our failure to maintain current Good Manufacturing
Practices compliance and/or scale up our manufacturing processes could lead
to refusal by the FDA to approve marketing applications. Failure in either
respect could also be the basis for action by the FDA to withdraw approvals
previously granted and for other regulatory action.

                                       14
<PAGE>


Failure to increase our manufacturing capabilities may mean that even if we
develop promising new products, we may not be able to produce them. We currently
operate a manufacturing plant that is compliant with current Good Manufacturing
Practices that we believe can produce commercial quantities of Xopenex and
support the production of our other possible products in amounts needed for our
clinical trials. However, we will not have the capability to manufacture in
sufficient quantities all of the products which may be approved for sale.
Accordingly, we will be required to spend money to expand our current
manufacturing facility, build an additional manufacturing facility or contract
the production of these drugs to third-party manufacturers.

We currently have a supply contract with ChiRex Inc. that commits us to purchase
through December 31, 2001 all of our annual requirements of those drugs that we
will market directly through our specialty sales force, provided ChiRex meets
certain pricing, supply and quality control conditions. If ChiRex experiences
delays or difficulties in producing, packaging or delivering the drugs, market
introduction and subsequent sales of the drugs that we market through our
specialty sales force could be adversely affected. Under this supply agreement,
however, we retain the right to manufacture commercial quantities of our drugs
in our Nova Scotia manufacturing plant.

IF WE OR OUR COLLABORATION PARTNERS FAIL TO OBTAIN AN ADEQUATE LEVEL OF
REIMBURSEMENT FOR OUR FUTURE PRODUCTS OR SERVICES BY THIRD PARTY PAYORS, THERE
MAY BE NO COMMERCIALLY VIABLE MARKETS FOR OUR PRODUCTS OR SERVICES. The
availability and levels of reimbursement by governmental and other third party
payors affects the market for any pharmaceutical product or service. These third
party payors continually attempt to contain or reduce the costs of healthcare by
challenging the prices charged for medical products and services. In certain
foreign countries, particularly the countries of the European Union, the pricing
of prescription pharmaceuticals is subject to governmental control. We may not
be able to sell our products profitably if reimbursement is unavailable or
limited in scope or amount.

In both the United States and certain foreign jurisdictions, there have been a
number of legislative and regulatory proposals to change the healthcare system.
Further proposals are likely. The potential for adoption of these proposals
affects or will affect our ability to raise capital, obtain additional
collaboration partners and market our products.

We expect to experience pricing pressure for our existing products and any
future products for which marketing approval is obtained due to the trend toward
managed healthcare, the increasing influence of health maintenance organizations
and additional legislative proposals.

WE COULD BE EXPOSED TO SIGNIFICANT LIABILITY CLAIMS THAT COULD PREVENT OR
INTERFERE WITH OUR PRODUCT COMMERCIALIZATION EFFORTS. We may be subjected to
product liability claims that arise through the testing, manufacturing,
marketing and sale of human health care products. These claims could expose us
to significant liabilities that could prevent or interfere with our product
commercialization efforts. Product liability claims could require us to spend
significant time and money in litigation or to pay significant damages. Although
we maintain product liability insurance coverage for both the clinical trials
and commercialization of our products, it is possible that we will not be able
to obtain further product liability insurance on acceptable terms, if at all,
and that our insurance coverage may not provide adequate coverage against all
potential claims.

WE HAVE SIGNIFICANT LONG-TERM DEBT AND WE MAY NOT BE ABLE TO MAKE INTEREST OR
PRINCIPAL PAYMENTS WHEN DUE. As of June 30, 2000, our total long-term debt was
approximately $854.1 million and our stockholders' equity (deficit) was ($121.1)
million. None of the 6 1/4% Debentures issued by us in February 1998, the 7%
convertible subordinated debentures due 2005 issued by us in December 1998 (the
"7% Debentures") nor the 5% Debentures issued by us in February 2000 restricts
our ability or our subsidiaries ability to incur additional indebtedness,
including debt that ranks senior to the 6 1/4% Debentures, the 7% Debentures and
the 5% Debentures. Additional indebtedness that we incur may rank senior to or
on parity with these debentures in certain circumstances. Our ability to satisfy
our obligations will depend upon our future performance, which is subject to
many factors, including factors beyond our control. It is possible that we will
be unable to meet our debt service requirements on any of our outstanding
Debentures. Moreover, we may be unable to repay any of our outstanding
Debentures at maturity or otherwise in accordance with the debt instruments.

IF SUFFICIENT FUNDS TO FINANCE OUR BUSINESS ARE NOT AVAILABLE TO US WHEN
NEEDED OR ON ACCEPTABLE TERMS, THEN WE MAY BE REQUIRED TO DELAY, SCALE BACK,
ELIMINATE OR ALTER OUR STRATEGY FOR OUR PROGRAMS.We may require additional
funds for our research and product development programs, operating expenses,
the pursuit of regulatory approvals, license or acquisition opportunities and
the expansion of our production, sales and marketing capabilities.
Historically we have satisfied our funding needs through collaboration
arrangements with corporate partners, equity or debt financing. We cannot
assure you that these funding sources will be available to us when needed in
the future, or, if available, will be on terms acceptable to us. Insufficient
funds could require us to delay, scale back or eliminate certain of our
research and product development programs or to license third parties to
commercialize products or technologies that we would otherwise develop or
commercialize ourselves. Our cash requirements may vary materially from those
now planned because of factors including:


                                       15
<PAGE>



-    increased research and development expenses;
-    patent developments;
-    licensing or acquisition opportunities;
-    relationships with collaboration partners;
-    the FDA regulatory process;
-    our capital requirements; and
-    selling and marketing expenses in connection with commercialization of
     products.

WE EXPECT TO FACE INTENSE COMPETITION AND OUR COMPETITORS HAVE GREATER RESOURCES
AND CAPABILITIES THAN WE HAVE. DEVELOPMENTS BY OTHERS MAY RENDER OUR PRODUCTS OR
TECHNOLOGIES OBSOLETE OR NONCOMPETITIVE. We expect to encounter intense
competition in the sale of our future products. If we are unable to compete
effectively, our financial condition and results of operations could be
materially adversely affected because we may use our financial resources to seek
to differentiate ourselves from our competition and because we may not achieve
our product revenue objectives. Many of our competitors and potential
competitors, which include pharmaceutical companies, biotechnology firms,
universities and other research institutions, have substantially greater
resources, manufacturing and marketing capabilities, research and development
staff and production facilities than we have. The fields in which we compete are
subject to rapid and substantial technological change. Our competitors may be
able to respond more quickly to new or emerging technologies or to devote
greater resources to the development, manufacture and marketing of new products
and/or technologies than we can. As a result, any products and/or technologies
that we develop may become obsolete or noncompetitive before we can recover
expenses incurred in connection with their development.

FLUCTUATIONS IN THE DEMAND FOR PRODUCTS, THE TIMING OF COLLABORATIVE
ARRANGEMENTS, EXPENSES AND THE RESULTS OF OPERATIONS OF OUR SUBSIDIARIES WILL
CAUSE FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS, WHICH COULD CAUSE
VOLATILITY IN OUR STOCK PRICE. Our quarterly operating results are likely to
fluctuate significantly, which could cause our stock price to be volatile. These
fluctuations will depend on factors which include:

-    the timing of collaboration agreements for development of our
     pharmaceutical candidates and development costs for those pharmaceuticals;
-    the timing of receipt of upfront, milestone or royalty payments under
     collaboration agreements;
-    the timing of product sales and market penetration;
-    the timing of operating expenses, including selling and marketing expenses
     and the costs of expanding and maintaining a direct sales force;
-    the timing of expenses we may incur with respect to any license or
     acquisitions of products or technologies; and
-    the losses of BioSphere, a 58% owned consolidated subsidiary of Sepracor,
     and of HemaSure, a 22% owned affiliate of Sepracor.

FAILURE BY US TO IDENTIFY AND REMEDIATE ALL YEAR 2000 RISKS COULD CAUSE A
DISRUPTION IN OUR BUSINESS. In prior periods and years, we discussed the
progress of our plans to prepare for any system or processing failures which
could result from computer programs recognizing dates represented as "00" as the
year 1900 rather than the year 2000. There have been no significant disruptions
in critical information technology and non-information technology systems and we
believe those systems successfully responded to the Year 2000 date change. Costs
relating to this Year 2000 issue have not been material. We are not aware of any
material problems resulting from Year 2000 issues, either with our internal
systems, or with the products and services of third parties. We will continue to
monitor our mission critical computer applications and those of vendors and
suppliers throughout the year 2000 to ensure that we promptly address any issues
that may arise. In the event that we experience disruptions as a result of the
Year 2000 problem, our business could be seriously harmed.


                                       16
<PAGE>

                                     ITEM 3.
           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Market Risk

The Company is exposed to market risk from changes in interest rates and equity
prices, which could affect its future results of operations and financial
condition. These risks are described in the Company's Annual Report on Form
10-K/A for the year ended December 31, 1999. As of June 30, 2000, there have
been no material changes to the market risks described in the Company's Annual
Report on Form 10-K/A for the year ended December 31, 1999. Additionally, the
Company does not anticipate any near-term changes in the nature of its market
risk exposures or in management's objectives and strategies with respect to
managing such exposures.




                                       17
<PAGE>

                                     PART II
                                OTHER INFORMATION

Item 1.  Legal proceedings.

On April 13, 2000, the Company announced that the Federal Trade Commission
closed its investigation, under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, of the license agreement that allows Eli Lilly and Company
and Sepracor to exclusively develop and globally commercialize (R)-fluoxetine.

HemaSure is a defendant in a lawsuit brought by Pall Corporation ("Pall")
regarding its LeukoNet System, which is no longer made or sold by HemaSure. In a
complaint filed in November 1996, Pall alleged that HemaSure's manufacture, use
and/or sale of the LeukoNet System infringed upon two patents held by Pall. Pall
dropped its allegations concerning infringement of one of the patents and
alleges only that HemaSure's LeukoNet System infringed U.S. Patent No. 4,952,572
(the "'572 Patent").

With respect to the allegations concerning the '572 Patent, HemaSure has
answered the complaint stating that it does not infringe any claim of the
asserted patents. Further, HemaSure has counterclaimed for declaratory judgment
of invalidity, noninfringement and unenforceability of the '572 Patent. Pall has
amended its complaint to add Lydall, Inc. ("Lydall"), whose subsidiary supplied
filter media for the LeukoNet product, as a co-defendant. HemaSure has filed for
summary judgment of noninfringement, and Pall has cross-filed for summary
judgment of infringement at the same time. Lydall supported HemaSure's motion
for summary judgment of noninfringement, and has filed a motion for summary
judgment that the asserted claims of the '572 Patent are invalid as a matter of
law. Discovery has been completed in the action. The Court held a hearing on the
summary judgment motions on April 18, 2000. No decision has been made on the
motions.

On April 5, 1999, HemaSure and Gambro BCT, Inc. ("Gambro BCT") filed a complaint
for declaratory relief against Pall in the U.S. District Court of Colorado.
HemaSure and Gambro BCT seek declaratory relief that Pall's U.S. Patent No's.
5,451,321, 5,229,012, 5,344,561, 5,501,795 and 5,863,436 are invalid and not
infringed by HemaSure's r\LS System and methods of using the r\LS System. Pall
moved to dismiss or transfer to the Eastern District of New York or, in the
alternative, to stay this action. HemaSure and Gambro BCT opposed Pall's motion.
On July 16, 1999, the United States District Court of Colorado denied Pall's
motion to transfer or, in the alternative, to stay the action, and the action is
proceeding. On September 30, 1999, the Court denied Pall's motion to dismiss the
action and the case is proceeding. On October 20, 1999, Pall submitted a
counterclaim alleging that HemaSure's r\LS System infringes its patents that are
the subject of the lawsuit and that HemaSure and Gambro BCT tortiously
interfered and unfairly competed with Pall's business. HemaSure and Gambro BCT
replied to Pall's counterclaim and denied Pall's allegations of tortious
interference, unfair competition and patent infringement.

On April 23, 1999, Pall filed a complaint against HemaSure and Gambro BCT in the
U.S. District Court of the Eastern District of New York alleging that HemaSure's
r\LS System infringes Pall's '572 Patent, and tortiously interfered and unfairly
competed with Pall's business. On May 19, 1999, Pall filed an amended complaint
adding Sepracor, Gambro, Inc. and Gambro, A.B., a Swedish company, of which
Gambro Inc. is a business unit, as defendants. Sepracor, HemaSure and Gambro BCT
have moved to dismiss, transfer, or stay the action, and Pall has opposed the
motion. On April 18, 2000, the parties stipulated in open court to the dismissal
without prejudice of Pall's suit against Sepracor, HemaSure and Gambro BCT.

On July 13, 2000, Pall filed a Complaint in the United States District Court for
the District of Colorado alleging that HemaSure, Gambro, Inc., and Gambro AB are
infringing Pall's U.S. Patent No. 6,086,770. HemaSure plans to submit its reply
to the complaint denying the allegations of infringement.

HemaSure has engaged patent counsel to investigate the pending litigations.
HemaSure believes, based on its review of these matters, that a properly
informed court should conclude that the manufacture, use and/or sale by HemaSure
or its customers of the LeukoNet System and the r\LS System does not infringe
any valid enforceable claim of the Pall patents. However, there can be no
assurance that HemaSure will prevail in the pending litigations, and an adverse
outcome in a patent infringement action would have a material adverse effect on
HemaSure's financial condition and future business and operations, including the
possibility of significant damages in the litigations and an injunction against
the sale of the r\LS System if HemaSure does not prevail in the litigations.


                                       18
<PAGE>


Items 2 - 3.      None

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

     The Company's Annual Meeting of Stockholders was held on May 24, 2000 (the
"Annual Meeting"). The proposals approved at the Annual Meeting are further
specified below:

1.   The following persons were elected directors (Class I) to serve subject to
the By-laws of the Company until the annual meeting of stockholders in 2003 and
thereafter until his successor is duly elected and qualified.

<TABLE>
<CAPTION>
                                       For              Withheld Authority
                                       ---              ------------------
         <S>                        <C>                 <C>
         James G. Andress           67,214,101        136,999
         Robert J. Cresci           67,210,513        140,587
         James P. Mrazek            67,216,103        134,997
</TABLE>

         The terms of office of the following directors continued after the
Annual Meeting:

         Timothy J. Barberich
         Digby W. Barrios
         Keith Mansford, Ph.D.
         Alan A. Steigrod

2.       The stockholders approved an amendment to the Company's Restated
Certificate of Incorporation, as amended, increasing from 140,000,000 to
240,000,000 the number of authorized shares of Common Stock.

<TABLE>
<CAPTION>
             For                Against       Abstain          Broker Non-Votes
             ---                -------       -------          ----------------
         <S>                   <C>            <C>             <C>
         66,094,039            1,216,354       40,707                --
</TABLE>

3.       The stockholders approved the Company's 2000 Stock Incentive Plan.

<TABLE>
<CAPTION>
             For                Against        Abstain          Broker Non-Votes
             ---                -------        -------          ----------------
         <S>                  <C>              <C>               <C>
         50,822,685           16,453,204        75,211               --
</TABLE>

Item 5.   None

Item 6.   Exhibits and Reports on Form 8-K

a)        Exhibits

        3.1      Restated Certificate of Incorporation of the Registrant, as
                 amended
       27.1      Financial Data Schedule

b)        Reports on Form 8-K

          1. Current Report on Form 8-K filed with the Securities and Exchange
Commission on April 20, 2000



                                       19
<PAGE>


                                  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.

                                  SEPRACOR INC.

Date:   August 11, 2000        /s/ Timothy J. Barberich
                               -------------------
                               Timothy J. Barberich
                               CHAIRMAN AND CHIEF EXECUTIVE OFFICER
                               (PRINCIPAL EXECUTIVE OFFICER)

Date:   August 11, 2000        /s/ Robert F. Scumaci
                               -------------------
                               Robert F. Scumaci

                               SENIOR VICE PRESIDENT, OF FINANCE
                               AND ADMINISTRATION, AND TREASURER
                              (PRINCIPAL ACCOUNTING OFFICER)


                                       20
<PAGE>


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
Exhibit
Number        Description
-------       -----------
<S>           <C>
 3.1          Restated Certificate of Incorporation of the Registrant, as amended
27.1          Financial Data Schedule
</TABLE>