UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

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

                                    FORM 10-Q

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

                  For the quarterly period ended June 29, 2003

                         Commission File Number 1-10827


                         PHARMACEUTICAL RESOURCES, INC.
             (Exact name of registrant as specified in its charter)


         DELAWARE                                               22-3122182
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                               Identification No.)


One Ram Ridge Road, Spring Valley, New York                       10977
 (Address of principal executive offices)                       (Zip Code)


       Registrant's telephone number, including area code: (845) 425-7100



     Indicate  by check mark  whether the  Registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes  X     No
                                             -----     -----

     Indicate by check mark whether the Registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act). Yes X      No
                                               -----     -----


       Number of shares of Common Stock outstanding as of August 7, 2003:
                                   33,807,186

<PAGE>

                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                         PHARMACEUTICAL RESOURCES, INC.
                           CONSOLIDATED BALANCE SHEETS
                      (In Thousands, Except Share Amounts)
                                  (Unaudited)
<TABLE>
<CAPTION>
                      ASSETS                               JUNE 29,          DECEMBER 31,
                      ------                                 2003               2002
                                                          -----------        ------------
<S>                                                        <C>               <C>
Current assets:
  Cash and cash equivalents                                $107,123           $65,121
  Accounts receivable, net of allowances of
   $31,765 and $36,257                                       99,140            55,310
  Inventories, net                                           57,576            51,591
  Prepaid expenses and other current assets                   5,874             6,089
  Deferred income tax assets                                 30,210            32,873
                                                             ------            ------
    Total current assets                                    299,923           210,984

Property, plant and equipment, at cost less
 accumulated depreciation and amortization                   37,326            27,055

Unexpended industrial revenue bond proceeds                   2,000             2,000

Intangible assets, net                                       34,838            35,692

Goodwill                                                     24,662            24,662

Other assets                                                    697             1,064
                                                                ---             -----
   Total assets                                            $399,446          $301,457
                                                            =======           =======

         LIABILITIES AND SHAREHOLDERS' EQUITY
         ------------------------------------
Current liabilities:
  Current portion of long-term debt                            $504              $596
  Accounts payable                                           22,654            14,637
  Payables due to distribution agreement partners            20,441            18,163
  Accrued salaries and employee benefits                      7,286             5,175
  Accrued expenses and other current liabilities             11,427            10,034
  Income taxes payable                                       46,122            26,074
                                                             ------            ------
     Total current liabilities                              108,434            74,679
                                                            -------            ------

Long-term debt, less current portion                          1,445             2,426
                                                              -----             -----

Deferred income tax liabilities, net                          3,085             3,562
                                                              -----             -----

Commitments and contingencies

Shareholders' equity:
  Preferred Stock, par value $.0001 per share; authorized
   6,000,000 shares; none issued and outstanding
  Common Stock, par value $.01 per share; authorized
    90,000,000 shares; issued and outstanding 33,454,343
    and 32,804,480 shares                                       334               328
  Additional paid-in capital                                138,622           118,515
  Retained earnings                                         147,526           101,947
                                                            -------           -------
    Total shareholders' equity                              286,482           220,790
                                                            -------           -------
Total liabilities and shareholders' equity                 $399,446          $301,457
                                                            =======           =======

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

                                         -2-
</TABLE>

<PAGE>

<TABLE>
                                PHARMACEUTICAL RESOURCES, INC.
                          CONSOLIDATED STATEMENTS OF OPERATIONS AND
                                      RETAINED EARNINGS
                           (In Thousands, Except Per Share Amounts)
                                         (Unaudited)
<CAPTION>
                                              SIX MONTHS ENDED          THREE MONTHS ENDED
                                           JUNE 29,      JUNE 30,       JUNE 29,    JUNE 30,
                                             2003          2002           2003        2002
                                             ----          ----           ----        ----
<S>                                        <C>         <C>              <C>         <C>
Revenues:
  Net product sales                        $209,485    $182,263         $108,801    $101,755
  Other revenues                             12,788           -            7,060           -
                                           --------    --------         --------    --------
Total revenues                              222,273     182,263          115,861     101,755
Cost of goods sold                          106,000      96,573           54,891      55,340
                                           --------    --------         --------    --------
      Gross margin                          116,273      85,690           60,970      46,415
Operating expenses (income):
  Research and development                   11,120       6,937            4,651       4,063
  Selling, general and administrative        30,105      16,363           18,215       8,847
  Settlements                                     -      (9,051)               -           -
  Acquisition termination charges                 -       4,278                -          10
                                           --------    --------         --------    --------
      Total operating expenses               41,225      18,527           22,866      12,920
                                           --------    --------         --------    --------
      Operating income                       75,048      67,163           38,104      33,495
Other expense, net                              (44)       (102)             (10)       (213)
Interest income, net                            333         381              164         127
                                           --------    --------         --------    --------
Income before provision for income taxes     75,337      67,442           38,258      33,409
Provision for income taxes                   29,758      26,302           15,112      13,029
                                           --------    --------         --------    --------
Net income                                   45,579      41,140           23,146      20,380

Retained earnings, beginning of period      101,947      22,493          124,380      43,253
                                           --------    --------         --------    --------
Retained earnings, end of period           $147,526     $63,633         $147,526     $63,633
                                           ========    ========         ========    ========

Net income per share of common stock:
  Basic                                       $1.38       $1.28             $.70        $.64
                                           ========    ========         ========    ========
  Diluted                                     $1.34       $1.25             $.68        $.62
                                           ========    ========         ========    ========

Weighted average number of
  common shares outstanding:
  Basic                                      33,021      32,069           33,153      32,089
                                           ========     ========        ========    ========
  Diluted                                    33,953      32,869           34,197      32,898
                                           ========     ========        ========    ========


   The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>

                                             -3-
<PAGE>
<TABLE>
<CAPTION>
                                PHARMACEUTICAL RESOURCES, INC.
                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        (In Thousands)
                                         (Unaudited)

                                                                        SIX MONTHS ENDED
                                                                        ----------------
                                                                      JUNE 29,      JUNE 30,
                                                                        2003         2002
                                                                        ----         ----
<S>                                                                   <C>          <C>
Cash flows from operating activities:
  Net income                                                           $45,579     $41,140

  Adjustments to reconcile net income to net cash
   provided by (used in) operating activities:
    Deferred income taxes                                                2,186      (8,867)
    Depreciation and amortization                                        3,916       2,358
    Inventory reserves                                                     602       1,403
    Allowances against accounts receivable                              (4,492)    (17,381)
    Settlements                                                              -      (9,051)
    Stock option activity                                                8,901      (2,254)
    Other                                                                    -         (23)

 Changes in assets and liabilities:
    Increase in accounts receivable                                    (39,338)     (1,331)
    Increase in inventories                                             (6,587)    (15,894)
    Increase in prepaid expenses and other assets                       (1,024)     (7,898)
    Increase in accounts payable                                         8,017       6,105
    Increase (decrease) in payables due to distribution
     agreement partners                                                  2,278     (16,651)
    Increase in accrued expenses and other liabilities                   3,504       1,250
    Increase in income taxes payable                                    20,048      19,328
                                                                      ---------   ---------
     Net cash provided by (used in) operating activities                43,590      (7,766)
                                                                      ---------   ---------
Cash flows from investing activities:
    Capital expenditures                                               (11,727)     (3,551)
    Acquisition of FineTech                                                  -     (32,581)
    Proceeds from sale of fixed assets                                       -          28
                                                                      ---------   ---------
      Net cash used in investing activities                            (11,727)    (36,104)
                                                                      ---------   ---------
 Cash flows from financing activities:
    Proceeds from issuances of Common Stock                             11,212         698
    Principal payments under long-term debt and other borrowings        (1,073)       (123)
                                                                      ---------   ---------
      Net cash provided by financing activities                         10,139         575
                                                                      ---------   ---------

Net increase (decrease) in cash and cash equivalents                    42,002     (43,295)
Cash and cash equivalents at beginning of period                        65,121      67,742
                                                                      ---------   ---------
Cash and cash equivalents at end of period                            $107,123    $24,447
                                                                      =========   =========

Supplemental disclosure of cash flow information
Cash paid during the six months for:
  Taxes                                                                 $1,583     $18,095
                                                                      =========   =========
  Interest                                                                 $58         $76
                                                                      =========   =========


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

                                             -4-
</TABLE>

<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  June 29, 2003
                    (In Thousands, Except Per Share Amounts)
                                   (Unaudited)

     Pharmaceutical Resources, Inc. (the "Company" or "PRX") operates, primarily
through its wholly-owned  subsidiary,  Par Pharmaceutical,  Inc. ("Par"), in one
business  segment,  the manufacture and distribution of generic  pharmaceuticals
principally  in the  United  States.  In  addition,  the  Company  develops  and
manufactures,  in small  quantities,  complex  synthetic  active  pharmaceutical
ingredients  through its wholly-owned  subsidiary,  FineTech  Laboratories  Ltd.
("FineTech"), based in Haifa, Israel, and sells a limited number of mature brand
name drugs  through an agreement  with Bristol  Myers Squibb  ("BMS").  Marketed
products  are  principally  in the solid oral  dosage form  (tablet,  caplet and
two-piece hard-shell  capsule).  The Company also distributes one product in the
semi-solid form of a cream and one oral suspension.

     As of June 24, 2003, the Company  changed its state of  incorporation  from
New Jersey to  Delaware.  The  reincorporation  was approved by the holders of a
majority of the Company's  outstanding shares of common stock,  voting in person
or by proxy,  at its Annual Meeting of  Shareholders  held on June 19, 2003. The
reincorporation was effected by merging the Company with and into Pharmaceutical
Resources,  Inc., a Delaware  corporation and then a wholly-owned  subsidiary of
the  Company,  with the  Delaware  corporation  surviving  (the  "Merger").  The
reincorporation  was effected primarily because the Company's board of directors
believed that  governance  under Delaware law would permit the Company to manage
its corporate  affairs more  effectively and  efficiently  than under New Jersey
law. The reincorporation did not result in any change in the Company's business,
management,  assets,  liabilities,  board  of  directors,  or  location  of  its
principal facilities or headquarters.

     Pursuant  to the  Merger,  each  share of  common  stock of the New  Jersey
corporation was automatically converted into one share of common stock, $.01 par
value,  of the Delaware  corporation.  It was not necessary for  shareholders to
exchange their existing stock  certificates  in the New Jersey  corporation  for
stock   certificates   of  the  Delaware   corporation.

     As a result of the reincorporation, the Company became the successor issuer
to the New Jersey  corporation  under the  Securities  Exchange Act of 1934,  as
amended (the  "Exchange  Act"),  and  succeeded to the New Jersey  corporation's
reporting obligations  thereunder.  Pursuant to Rule 12g-3(a) under the Exchange
Act, the Company's common stock is deemed  registered under Section 12(b) of the
Exchange Act.

     On May 23,  2003,  Par also  changed  its state of  incorporation  from New
Jersey to Delaware. The Par reincorporation was effected by merging Par with and
into  Par  Pharmaceutical,  Inc.,  a  Delaware  corporation  and a  wholly-owned
subsidiary  of the Company,  with the Delaware  corporation  surviving.  The Par
reincorporation  was approved by the Company as the sole  shareholder of each of
the merging entities.  The Par  reincorporation  was effected  primarily because
Par's board of  directors  believed  that  governance  under  Delaware law would
permit Par to manage its corporate affairs more effectively and efficiently than
under New Jersey law. The Par  reincorporation  was not  submitted for a vote to
the  Company's  shareholders  because  such  approval  was  not  required  under
applicable  law.  In  connection  with and prior to Par's  reincorporation,  Par
contributed  its New Jersey  operations to Par,  Inc., a  newly-formed  Delaware
corporation  and a wholly-owned  subsidiary of Par. Par, Inc.  provides  certain
managerial and administrative services to Par on a fee basis.

NOTE 1 - BASIS OF PREPARATION:

     The accompanying consolidated financial statements at June 29, 2003 and for
the  six-month  and  three-month  periods ended June 29, 2003 and June 30, 2002,
respectively,   are  unaudited;   however,  in  the  opinion  of  the  Company's
management,  such  statements  include  all  adjustments  (consisting  of normal
recurring  accruals)  necessary to provide a fair  statement of the  information
presented  therein.  The  consolidated  balance  sheet at December  31, 2002 was
derived from the Company's  audited  consolidated  financial  statements at such
date.

     Pursuant  to  accounting   requirements  of  the  Securities  and  Exchange
Commission  applicable  to  quarterly  reports  on Form 10-Q,  the  accompanying
consolidated financial statements and these notes do not include all disclosures
required by accounting  principles  generally  accepted in the United States for
audited financial  statements.  Accordingly,  these statements should be read in
conjunction  with  the  Company's  most  recent  annual  consolidated  financial
statements.

                                      -5-
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 29, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


     Results of operations for interim periods are not necessarily indicative of
those to be achieved for full fiscal years.  Certain  items on the  consolidated
financial  statements for the prior period have been  reclassified to conform to
the current period's financial statement presentation.

NOTE 2 - STOCK-BASED COMPENSATION:

     The Company accounts for stock-based employee compensation  arrangements in
accordance  with provisions of Accounting  Principles  Board ("APB") Opinion No.
25,  "Accounting for Stock Issued to Employees"  ("APB Opinion 25") and complies
with the disclosure  provisions of Statement of Financial  Accounting  Standards
("SFAS") No. 123, "Accounting for Stock-Based  Compensation" ("SFAS 123"). Under
APB Opinion 25,  compensation  expense is based on any difference as of the date
of a stock option grant,  between the fair value of the  Company's  common stock
and the option's per share exercise price.

     In December 2002, the Financial  Accounting Standards Board ("FASB") issued
SFAS  No.  148,  "Accounting  for  Stock-Based  Compensation  -  Transition  and
Disclosure  - an Amendment  of FASB  Statement  No. 123" ("SFAS 148") to provide
alternative methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee  compensation.  In addition,  this
Standard  amends the disclosure  requirements  of SFAS 123 to require  prominent
disclosure in both annual and interim  financial  statements about the method of
accounting for stock-based  employee  compensation and the effects of the method
used on reported results.

     The following  table  illustrates  the effects on net income and net income
per share of common stock if the Company had applied the fair value  recognition
provisions of SFAS 123 to its stock-based employee compensation:
<TABLE>
<CAPTION>

                                                SIX MONTHS ENDED          THREE MONTHS ENDED
                                                ----------------          ------------------
                                              JUNE 29,     JUNE 30,      JUNE 29,     JUNE 30,
                                               2003         2002          2003         2002
                                               ----         ----          ----         ----
<S>                                           <C>         <C>            <C>         <C>
Net income as reported                        $45,579     $41,140        $23,146     $20,380
Add: Total stock-based employee compensation
  expense included in reported net income,
  net of related tax effects                    1,263           -          1,263           -

Deduct: Total stock-based employee compensation
  expense determined under fair value based
  method for all awards, net of related tax
    effects                                    (5,311)     (3,440)        (2,672)     (1,843)
                                              --------     -------       --------     -------
Pro forma net income                          $41,531     $37,700        $21,737     $18,537
                                              ========    ========       ========    ========

As reported -Basic                              $1.38       $1.28           $.70        $.64
                                              ========    ========       ========    ========
As reported -Diluted                            $1.34       $1.25           $.68        $.62
                                              ========    ========       ========    ========

Pro forma -Basic                                $1.26       $1.18           $.66        $.58
                                              ========    ========       ========    ========
Pro forma -Diluted                              $1.22       $1.15           $.64        $.56
                                              ========    ========       ========    ========
</TABLE>

     As permitted  under SFAS 123, the Company  elected to follow APB Opinion 25
and related  interpretations  in accounting for stock-based  compensation to its
employees.  Pro forma information  regarding net income is required by SFAS 123,
as amended by SFAS 148. This required  information is to be determined as if the
Company had accounted for its  stock-based  compensation  to employees under the
fair value method of that  Standard.  The fair value of options  granted  during
each of the six and  three-month  periods ended June 29, 2003 and June 30, 2002,
respectively,  has been  estimated at the date of grant using the  Black-Scholes
stock option pricing model, based on the following assumptions:

                                      -6-
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 29, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


                                 SIX MONTHS ENDED           THREE MONTHS ENDED
                              JUNE 29,     JUNE 30,       JUNE 29,      JUNE 30,
                                2003         2002          2003         2002
                                ----         ----          ----         ----
Risk free interest rate           4.0%        4.3%           4.0%        4.3%
Expected term                 4.8 years   5.8 years      3.5 years   5.8 years
Expected volatility              63.6%       69.0%          64.0%       69.0%

     It is also assumed that no dividends will be paid during the entire term of
the  options.  The  weighted  average  fair  values of  options  granted  in the
six-month  periods ended June 29, 2003 and June 30, 2002 were $18.42 and $14.55,
respectively.  The  weighted  average  fair  values of  options  granted  in the
three-month  periods  ended  June 29,  2003 and June 30,  2002 were  $23.51  and
$14.55, respectively.

NOTE 3 - ACCOUNTS RECEIVABLE:                    JUNE 29,      DECEMBER 31,
                                                   2003           2002
                                                   ----           ----
                                                     (IN THOUSANDS)
   Trade accounts receivable, net of rebates
     and chargebacks                             $123,846        $90,812
   Other accounts receivable                        7,059            755
                                                 --------        -------
   Allowances:
   Doubtful accounts                                1,456          1,156
   Returns and allowances                          13,750         18,868
   Price adjustments                               16,559         16,233
                                                 --------        -------
                                                   31,765         36,257
   Accounts receivable,
    net of allowances                             $99,140        $55,310
                                                 ========        =======

     The trade accounts  receivable amounts presented above at June 29, 2003 and
December  31, 2002 are net of  provisions  for  customer  rebates of $25,161 and
$13,610,  and for  chargebacks  of $67,667 and $63,141,  respectively.  Customer
rebates are price  reductions  generally  given to  customers as an incentive to
increase  sales volume.  Rebates are generally  based on a customer's  volume of
purchases  made  during an  applicable  monthly,  quarterly  or  annual  period.
Chargebacks are price adjustments provided to wholesale customers for product it
resells  to  specific  healthcare  providers  on the basis of prices  negotiated
between the Company and the provider.

     The  accounts   receivable   allowances  include  provisions  for  doubtful
accounts,  returns  and  price  adjustments.   Price  adjustments  include  cash
discounts, sales promotions and shelf-stock adjustments. Cash or terms discounts
are given to  customers  that pay within a  specified  period of time.  Sales or
trade show promotions may be conducted by the Company where additional discounts
may be given on a new product or certain existing products as an added incentive
for the customer to purchase the Company's products. Shelf-stock adjustments are
typically provided to a customer when the Company lowers its invoice pricing and
provides a credit for the difference  between the old and new invoice prices for
the inventory the customer has on hand at the time of the price reduction.

     The Company will generally offer price  protection for sales of new generic
drugs  for  which it has a market  exclusivity  period.  Such  price  protection
accounts  for the fact that the prices of such  drugs  typically  will  decline,
sometimes  substantially,  when additional generic  manufacturers  introduce and
market a comparable  generic product  following the expiration of an exclusivity
period. Such price protection plans, which are common in the Company's industry,
generally provide for a shelf-stock  adjustment to customers with respect to the
customer's  remaining  inventory at the expiration of the exclusivity period for
the  difference  between  the  Company's  new  price  and the price at which the
Company  originally  sold the product.  In addition,  the Company may also offer
price  protection  with respect to existing  products  for which it  anticipates
significant price erosion through an increase in competition.

     The Company's exclusivity period for megestrol acetate oral suspension, the
generic version of BMS's Megace(R) Oral Suspension, expired in mid-January 2002.
One generic  competitor was granted  United States Food and Drug  Administration
("FDA")  approval to market another  generic  version of megestrol  acetate oral
suspension  and began  shipping the product to a limited  number of customers in

                                      -7-
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 29, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


the  second  quarter  of  2002,  but,  as of June  29,  2003,  had not  captured
significant market share. In addition, a second potential generic competitor was
granted FDA approval for megestrol  acetate oral  suspension in May 2003 and has
announced it expects to launch the product at some time in the third  quarter of
2003. At this time,  the Company  cannot  predict the effect of another  generic
competitor in the market.  Under its  accounting  policies,  the Company did not
record a price  protection  reserve for such  product as of June 29,  2003.  The
Company will continue to evaluate the effects of the competition and will record
a price protection reserve when, and as it deems necessary.

     The Company  recorded  other  revenues of $12,788 and $7,060 in the six and
three-month periods ended June 29, 2003 related to its share of Genpharm, Inc.'s
("Genpharm"),  a Canadian subsidiary of Merck KGaA, omeprazole gross profits. In
January 1999, the Company and Genpharm,  entered into a profit sharing agreement
(the "Genpharm Profit Sharing Agreement") pursuant to which the Company receives
a portion of the profits,  as such term is defined in the  agreement,  generated
from the sale of omeprazole,  the generic  version of Astra  Zeneca's  ("Astra")
Prilosec(R).  Under the terms of an agreement with Kremers Urban Development Co.
("KUDCo"),  a subsidiary of Schwarz Pharma AG of Germany,  Genpharm  received an
initial 15% share of KUDCo's profits,  as such term is defined in the agreement,
through early May 2003 with a subsequent  reduction  over time based on a number
of factors.  In fiscal year 2002,  the Company had agreed to reduce its share of
Genpharm's  profit  derived  from  omeprazole  pursuant to the  Genpharm  Profit
Sharing  Agreement from 30% to 25%. In December 2002, KUDCo launched  omeprazole
following  a  district  court  decision  in which it  prevailed,  but before any
decision was reached on appeal.  Astra has appealed the district  court's patent
infringement  decision.  The impact of KUDCo's omeprazole sales on the Company's
future revenues is presently  unclear to the Company since,  among other things,
Astra has  introduced a new drug,  Nexium(R),  in an apparent  attempt to switch
consumers using  Prilosec(R) and Astra's  decision to market a  non-prescription
form of Prilosec(R) along with Proctor & Gamble, all of which may reduce overall
generic sales of  omeprazole.  In August 2003, a generic  competitor  also began
selling  a form of  omeprazole  that  competes  with  the  prescription  form of
Prilosec(r).  The Company understands that this generic competitor has initiated
litigation against KUDCo alleging patent infringement.  The Company expects that
the impact of this  competition  will reduce its  revenues  from  omeprazole  in
future periods.

NOTE 4 - INVENTORIES, NET:
                                                     JUNE 29,      DECEMBER 31,
                                                       2003           2002
                                                       ----           ----
      Raw materials and supplies                     $18,274        $17,400
      Work in process and finished goods              39,302         34,191
                                                     -------        -------
                                                     $57,576        $51,591
                                                     =======        =======

     Included in selling, general and administrative expenses are shipping costs
of $1,349 and $1,337,  respectively,  for the  six-month  periods,  and $742 and
$745,  respectively,  for the three-month periods,  ended June 29, 2003 and June
30, 2002.

NOTE 5 - INTANGIBLE ASSETS, NET:
                                                         JUNE 29,   DECEMBER 31,
                                                           2003        2002
                                                           ----        ----
 BMS Asset Purchase Agreement, net of accumulated
     amortization of $2,229 and $1,393                    $9,471     $10,307
 Product License fees, net of accumulated
     amortization of $422 and $0                          10,380       9,199
 Genpharm Distribution Agreement, net of accumulated
     amortization of $3,611 and $3,250                     7,222       7,583
 Intellectual property, net of accumulated amortization
     of $841 and $451                                      5,739       6,129
 Genpharm Profit Sharing Agreement, net of accumulated
     amortization of $474 and $26                          2,026       2,474
                                                         -------     -------
                                                         $34,838     $35,692
                                                         =======     =======

     The Company recorded  amortization  expense related to intangible assets of
$2,457 and $1,031, respectively, for the six-month periods, and $1,448 and $711,
respectively,  for the  three-month  periods,  ended June 29,  2003 and June 30,

                                      -8-
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 29, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


2002. Annual amortization  expense in each of the next five years related to the
intangible  assets  currently  being  amortized is expected to be  approximately
$5,412 in 2003,  $5,955 in 2004,  $3,758 in 2005, $3,115 in 2006, $3,115 in 2007
and $8,445 thereafter.

NOTE 6 - SHORT-TERM DEBT:

     In December 1996, Par entered into a Loan and Security Agreement (the "Loan
Agreement")  with  General  Electric  Capital  Corporation  ("GECC").  The  Loan
Agreement,  as amended in December  2002,  provides Par with a revolving line of
credit expiring in March 2005. Pursuant to the Loan Agreement,  Par is permitted
to borrow up to the lesser of (i) the borrowing base established  under the Loan
Agreement or (ii) $30,000.  The borrowing base is limited to 85% of the eligible
accounts  receivable  plus  50%  of the  eligible  inventory  of  Par,  each  as
determined  from time to time by GECC. As of June 29, 2003,  the borrowing  base
was approximately $27,000. The interest rate charged on any borrowings under the
line of  credit  is based  upon a per  annum  rate of  2.25%  above  the  30-day
commercial paper rate for high-grade  unsecured notes adjusted monthly. The line
of credit with GECC is collateralized  by the assets of the Company,  other than
its real  property,  and is guaranteed by the Company.  In connection  with such
credit facility,  the Company has established a cash management  system pursuant
to which all cash and cash  equivalents  received  by any of such  entities  are
deposited into a lockbox  account over which GECC has sole operating  control if
there are amounts  outstanding under the line of credit. The deposits would then
be applied on a daily basis to reduce the amounts  outstanding under the line of
credit.  The  revolving  credit  facility  contains  covenants  based on various
financial  benchmarks.  As of June 29, 2003, no debt was  outstanding  under the
Loan Agreement.

NOTE 7 - INCOME TAXES:

     The Company  accounts for income taxes in accordance with the provisions of
SFAS No. 109,  "Accounting  for Income  Taxes",  which  requires  the Company to
recognize  deferred tax assets and liabilities  for the future tax  consequences
attributable to differences  between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. At June 29, 2003
and  December 31, 2002,  the Company had current  deferred  income tax assets of
$30,210  and  $32,873,   respectively,   consisting  of  temporary  differences,
primarily related to accounts receivable  reserves,  and net deferred income tax
liabilities  of  $3,085  and  $3,562,  respectively,   primarily  related  to  a
distribution agreement with Genpharm.

NOTE 8 - CHANGES IN SHAREHOLDERS' EQUITY:

     Changes  in the  Company's  Common  Stock and  Additional  Paid-in  Capital
accounts  during  the  six-month  period  ended June 29,  2003 were as  follows:

                                                             ADDITIONAL
                                         COMMON STOCK          PAID-IN
                                       SHARES     AMOUNT       CAPITAL
                                       ------     ------     ----------
Balance, December 31, 2002             32,804      $328       $118,515
  Exercise  of stock  options             647         6         11,093
  Compensatory arrangements                 3         -          9,014
Balance,  June 29, 2003                33,454      $334       $138,622
                                       ======      ====       ========

  Compensatory  arrangements  include the tax treatment related to the exercise
of stock options.

NOTE 9 - DISTRIBUTION AND SUPPLY AGREEMENTS:

SMITHKLINE BEECHAM CORPORATION.
     In connection with the legal settlement referred to in Note 12-Commitments,
Contingencies and Other Matters - Legal Proceedings, the Company entered into a
license and supply agreement (the "GSK Supply Agreement") with Smithkline
Beecham Corporation ("GSK") and certain of its affiliates, dated April 16, 2003,
pursuant to which Par is marketing a substitutable generic paroxetine
hydrochloride immediate release tablet supplied and licensed from GSK in the
Commonwealth of Puerto Rico. Under the GSK Supply Agreement, GSK has agreed to
manufacture the product and Par agreed to pay GSK a

                                      -9-
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 29, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


royalty  based on Par's net sales of the  product.  Par will also be entitled to
distribute the same product in the U.S. market once another  generic  paroxetine
hydrochloride  immediate release tablet fully substitutable for Paxil(R) becomes
available  there  (see  "Commitments,   Contingencies  and  Other  Matters-Legal
Proceedings").

NOTE 10 - EARNINGS PER SHARE:

     The Company had outstanding  stock options of 4,353 and 1,859 at the end of
the six-month periods and 4,262 and 2,058 at the end of the three-month  periods
ended June 29, 2003 and June 30, 2002,  respectively,  that were included in the
computation of diluted earnings per share because the exercise prices were lower
than the average  market  price of the Common Stock in the  respective  periods.
Outstanding  options  and  warrants  of 6 and 2,362 at the end of the  six-month
periods  ended June 29, 2003 and June 30, 2002 and 9 and 2,164 at the end of the
three-month  periods ended June 29, 2003 and June 30, 2002,  respectively,  were
not  included  in the  computation  of diluted  earnings  per share  because the
exercise  prices were greater than the average  market price of the Common Stock
in the respective periods. The following is a reconciliation of the amounts used
to calculate basic and diluted earnings per share:

<TABLE>
<CAPTION>
                                                SIX MONTHS ENDED         THREE MONTHS ENDED
                                              JUNE 29,     JUNE 30,      JUNE 29,     JUNE 30,
                                               2003         2002          2003         2002
                                               ----         ----          ----         ----
<S>                                           <C>         <C>            <C>         <C>
Net income                                    $45,579     $41,140        $23,146     $20,380

BASIC:
Weighted average number of common
  shares outstanding                           33,021      32,069         33,153      32,089

Net income per share of common stock            $1.38       $1.28           $.70        $.64
                                              =======     =======        =======     =======

ASSUMING DILUTION:
Weighted average number of common
  shares outstanding                           33,021      32,069         33,153      32,089
Effect of dilutive options                        932         800          1,044         809
                                              -------     -------        -------     -------
Weighted average number of common and common
   equivalent shares outstanding               33,953      32,869         34,197      32,898

Net income per share of common stock            $1.34       $1.25           $.68        $.62
                                              =======     =======        =======     =======
</TABLE>

NOTE 11 - NEW ACCOUNTING PRONOUNCEMENTS:

     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative  Instruments and Hedging Activities." This Statement amends Statement
133 for  decisions  made  (1) as part of the  Derivatives  Implementation  Group
process that effectively required amendments to Statement 133, (2) in connection
with  other  Board  projects  dealing  with  financial  instruments  and  (3) in
connection with  implementation  issues raised in relation to the application of
the  definition of a derivative,  in  particular,  the meaning of an initial net
investment  that is smaller  than would be required for other types of contracts
that would be expected to have a similar  response to changes in market factors,
the meaning of underlying, and the characteristics of a derivative that contains
financing components.  This Statement is effective for contracts entered into or
modified  after  June  30,  2003,   except  as  stated  below  and  for  hedging
relationships  designated  after June 30, 2003.  In  addition,  except as stated
below,  all provisions of this Statement  should be applied  prospectively.  The
provisions of this Statement that relate to Statement 133 Implementation  Issues
that have been effective for fiscal  quarters that began prior to June 15, 2003,
should  continue to be applied in  accordance  with their  respective  effective
dates. In addition,  certain  provisions,  which relate to forward  purchases or
sales of  when-issued  securities  or other  securities  that do not yet  exist,
should be applied to both  existing  contracts  and new  contracts  entered into
after June 30,  2003.  The  adoption of this  standard is not expected to have a
material  impact on the Company's  financial  position or results of operations.

     In January 2003 the FASB issued Financial Interpretation Number ("FIN") No.
46,  "Consolidation  of Variable  Interest  Entities" ("FIN No. 46"). FIN No. 46
addresses  whether certain types of entities,  referred to as variable  interest
entities ("VIEs"), should be consolidated in a company's financial statements. A
VIE is an  entity  that  either  (1) has  equity  investors  that  lack  certain
essential  characteristics of a controlling  financial  interest  (including the
ability to control the entity,  the  obligation to absorb the entity's  expected
losses and the right to receive the entity's expected residual returns),  or (2)
lacks sufficient equity to finance its own activities  without financial support
provided by other  entity's,  which in turn would be expected to absorb at least
some of the expected losses of the VIE. An entity should consolidate a VIE if it
stands  to  absorb a  majority  of the VIE's  expected  losses  or to  receive a
majority of the VIE's expected residual  returns.  The Company has evaluated the
impact  of the  adoption  of FIN No.  46,  and does not  believe  it will have a
material impact on its consolidated  financial position or consolidated  results
of operations.

     In November 2002 the FASB issued FIN No. 45,  "Guarantor's  Accounting  and
Disclosure  Requirements  for  Guarantees,   Including  Indirect  Guarantees  of
Indebtedness to Others" ("FIN No. 45"), an interpretation of FASB Statements No.
5,  57 and  107 and  rescission  of  FASB  Interpretation  No.  34.  FIN No.  45
elaborates  on the  disclosures  to be made by a  guarantor  in its  interim and
annual financial  statements about its obligations under certain guarantees that
it has issued. The initial recognition and measurement  provisions of FIN No. 45
are  applicable on a prospective  basis to guarantees  issued or modified  after
December 31, 2002. The adoption of this  interpretation  did not have a material
impact  on  the  Company's   consolidated   financial  position  or  results  of
operations.

                                      -10-
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 29, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


NOTE 12 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS:

     LEGAL PROCEEDINGS: On May 28, 2003, Asahi Glass Company ("Asahi Glass")
filed a complaint in the United States District Court for the Northern District
of Illinois against GlaxoSmithKline P.L.C. and affiliated entities, Pentech
Pharmaceuticals and Par alleging, among other things, violations of state and
federal anti-trust laws arising out of the Supply and Distribution Agreement
between GlaxoSmithKline and Par. Par denies any wrongdoing in connection with
this action and expects to file a motion to dismiss the complaint in August
2003. In the event the action continues following the court's determination of
the motion to dismiss, Par intends to defend vigorously this action and may
assert counterclaims against Asahi Glass and others.

     On April 18,  2003,  GSK and PRX,  through its  principal  subsidiary  Par,
announced that Pentech  Pharmaceuticals,  Inc. ("Pentech") and GSK had reached a
settlement of their patent  litigation over Pentech's  proposed  generic capsule
version of GSK's anti-depressant  Paxil(R) (paroxetine  hydrochloride).  Pentech
granted Par rights under Pentech's Abbreviated New Drug Application ("ANDA") for
paroxetine  hydrochloride  capsules.  The settlement allows Par to distribute in
Puerto Rico  substitutable  generic paroxetine  hydrochloride  immediate release
tablets supplied and licensed from GSK for a royalty to be paid to GSK.

     Under the  settlement,  Pentech  and Par  acknowledge  that the GSK  patent
covering  the  hemihydrate  form  of  paroxetine   hydrochloride  is  valid  and
enforceable and would be infringed by Pentech's  proposed capsule  product,  for
which Pentech has applied for FDA approval.  The same GSK patent was found valid
and  enforceable in a separate  patent  infringement  case in the U.S.  District
Court for the  Northern  District  of  Illinois  (Chicago)  against  Apotex Inc.
("Apotex").  Apotex was found not to infringe, and, the Company believes, GSK is
appealing  that ruling.  The  litigation and the settlement do not involve Paxil
CR(TM).

     Breath Ltd. of the Arrow Group filed an ANDA  (currently  pending  with the
FDA) for latanoprost  (Xalatan(R)),  which was developed by Breath Ltd. pursuant
to a joint  manufacturing  and  marketing  agreement  with the Company,  seeking
approval  to  engage  in  the  commercial  manufacture,  sale  and  use  of  one
latanoprost  drug  product  in the  United  States.  Par  subsequently  acquired
ownership  of the ANDA,  which  includes a Paragraph IV  certification  that the
patents in connection  with  Xalatan(R)  that are  identified in "Approved  Drug
Products with Therapeutic  Equivalence  Evaluations" are invalid,  unenforceable
and/or will not be infringed by Par's  generic  product.  Par believes  that its
ANDA is the first to be filed for this drug with a Paragraph  IV  certification.
As a result of the  filing of the ANDA,  Pharmacia  Corporation,  Pharmacia  AB,
Pharmacia  Enterprises,  S.A.,  Pharmacia and Upjohn Company and the Trustees of
Columbia  University  in the  City of New York  filed  lawsuits  against  Par on
December  14,  2001 in the United  States  District  Court for the  District  of
Delaware and on December 21, 2001 in the United  States  District  Court for the
District of New Jersey alleging patent infringement.  Pharmacia and Columbia are
seeking an injunction to prevent the Company from marketing its generic  product
prior to the expiration of their patents.  On February 8, 2002, Par answered the
complaint brought in the District of New Jersey and filed a counterclaim,  which
seeks a declaration that the patents-in-suit are invalid,  unenforceable  and/or
not infringed by Par's products. Par is also seeking a declaratory judgment that
the  extension  of the term of one of the  patents is  invalid.  All parties are
seeking to recover their  respective  attorneys' fees. On February 25, 2002, the
lawsuit  brought  in the  District  of  Delaware  was  dismissed  pursuant  to a
stipulation of the parties.  The case in the District of New Jersey is currently
in the expert discovery stage. Par intends to vigorously  defend the lawsuit and
pursue its counterclaim and the declaratory judgment sought by it. At this time,
it is not  possible  for the Company to predict  the outcome of the  plaintiffs'
claim for injunctive  relief,  Par's  counterclaim  or the claims for attorneys'
fees.

     Par,  among others,  was a defendant in three  lawsuits filed in the United
States  District  Court for the  Eastern  District of North  Carolina  (filed on
August 1, 2001,  October  30,  2001 and  November  16,  2001,  respectively)  by
aaiPharma Inc.,  involving patent  infringement  allegations  connected to three
patents related to polymorphic forms of fluoxetine  (Prozac(R)).  In March 2003,
Par settled its  lawsuits  with  aaiPharma  Inc.  The  settlement  has not had a
material  adverse  effect on the  Company's  financial  position  or  results of
operation.

                                      -11-
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 29, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


     The  Company  and/or Par is a party in certain  other  litigation  matters,
including product  liability and patent actions,  and the Company believes these
actions are  incidental  to the conduct of its  business  and that the  ultimate
resolution will not have a material  adverse effect on its financial  condition,
results of operations or liquidity. The Company intends to vigorously defend or,
in cases where the Company is plaintiff, prosecute these actions.

OTHER MATTERS:
     The  Company  announced  on June 19,  2003  that  Kenneth  I.  Sawyer,  its
chairman,  president and chief executive officer, would retire,  effective as of
July 1, 2003.  Mr.  Sawyer did retire on July 1, 2003 and the board of directors
is conducting a search for a new chairman and chief executive officer of PRX. In
the interim,  Scott Tarriff,  president and chief executive  officer of Par, and
Arie L. Gutman,  Ph.D.,  president and chief executive officer of PRX's FineTech
subsidiary, will both report to the Company's lead outside director. During this
transition period, Mr. Sawyer will remain a director and be available to consult
with the Company. The Company recorded a charge of $3,635,  included in selling,
general  and   administrative   expenses  on  the  consolidated   statements  of
operations,  in the second quarter of 2003 for Mr. Sawyer's  retirement package,
consisting of expenses for accelerated stock options, a severance  payment,  the
remainder of his 2003 salary and benefits.

     In December 2001, the Company made its first payment of a potential  equity
investment of up to $2,438 to be made over a period of time in HighRapids,  Inc.
("HighRapids"),  a Delaware corporation. High Rapids is a software developer and
the owner of patented rights to an artificial intelligence  generator.  Pursuant
to an agreement between the Company and HighRapids,  effective December 1, 2001,
the Company,  subject to its ongoing evaluation of HighRapids'  operations,  has
agreed to purchase  units,  consisting of secured debt,  evidenced by 7% secured
promissory  notes,  up to an aggregate  principal  amount of $2,425 and up to an
aggregate of 1,330 shares of the common stock of  HighRapids.  HighRapids is the
surviving   corporation  of  a  merger  with   Authorgenics,   Inc.,  a  Florida
corporation.  HighRapids is to utilize the  Company's  cash infusion for working
capital and operating expenses.  Through June 29, 2003, the Company had invested
$1,008. Due to HighRapids current operating losses and the Company's  evaluation
of its  short-term  prospects for  profitability,  the investment is expensed as
incurred  and  included  in other  expense  on the  consolidated  statements  of
operations.  As of June 29,  2003,  the Company  held  approximately  36% of the
outstanding common stock of HighRapids, and has the exclusive right to market to
the  pharmaceutical   industry  certain  regulatory  compliance  and  laboratory
software  currently  in  development.  HighRapids  has provided and is currently
providing certain software services to the Company. Mr. Sawyer is the President,
Chief Executive  Officer and a director of HighRapids,  for which he receives no
compensation.  Another director of the Company owns shares of HighRapids' common
stock (less than 1%) that he  acquired  prior to the  commitment  of the Company
discussed above.

     The Company and Three Rivers Pharmaceuticals,  LLC ("Three Rivers") entered
into a license and distribution  agreement under which the Company has agreed to
market  and  distribute  ribavirin  200 mg  capsules,  the  generic  version  of
Schering-Plough's   ("Schering's")  Rebetol(R),   which  is  indicated  for  the
treatment of chronic hepatitis, following approval by the FDA. In February 2003,
Three Rivers  reached a settlement  with  Schering in a patent  litigation  case
involving  Rebetol(R)  brand  ribavirin.  Under  the  terms  of the  settlement,
Schering  provided  a  non-exclusive  license  to Three  Rivers for all its U.S.
patents relating to this product.  In return for this license,  Three Rivers has
agreed  to pay  Schering  a  reasonable  royalty  based  upon net sales of Three
Rivers' and Par's generic ribavirin  product.  The parties were in litigation in
the U.S. District Court for the Western District of Pennsylvania.

     Three Rivers was also in litigation with ICN  Pharmaceuticals  Inc. ("ICN")
regarding  certain  patents that ICN asserts  relate to  ribavirin.  On July 16,
2003, the United States  District  Court for the Central  District of California
granted summary judgment of non-infringement regarding ribavirin to Three Rivers
(see "-Subsequent Events").

NOTE 13 - SUBSEQUENT EVENTS:

     On July  15,  2003,  the  Company  announced  that two  additional  patents
relating to megestrol acetate oral suspension have been issued to it by the U.S.
Patent Office. The Patent Office issued U.S. Patent Nos. 6,593,318 and 6,593,320
to the Company.  The Company  presently holds four patents relating to megestrol
oral suspension. The first two patents, U.S. Patent No. 6,028,065 and U.S.


                                      -12-
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 29, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

Patent No. 6,268,356, were issued on February 22, 2000 and July 31, 2001,
respectively.

     On July 16, 2003,  the Company  announced  that the United States  District
Court for the Central  District of California  had granted  summary  judgment of
non-infringement  regarding  ribavirin  to  Three  Rivers.  The  district  court
determined that the Three Rivers' product does not infringe any of three patents
asserted by ICN in the litigation.  Par has exclusive  marketing  rights for the
Three Rivers' ribavirin  product.  Three Rivers had earlier reached a settlement
of its patent litigation with Schering Plough Pharmaceuticals,  so this decision
appears to resolve the remaining  ongoing patent barriers to FDA approval of the
ANDA  filed by Three  Rivers.  The  timing of Par's  launch of this  product  is
uncertain at this time. Three Rivers has not obtained FDA approval,  and the FDA
has not made a  determination  of whether a generic 180-day  exclusivity  period
will be awarded solely to a generic competitor  involved in the lawsuit or Three
Rivers jointly with one or both of the other two generic competitors involved in
the lawsuit. The patent holder, ICN, may appeal the court decision.

                                      -13-
<PAGE>

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

     CERTAIN  STATEMENTS  IN  THIS  DOCUMENT  MAY  CONSTITUTE   "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE  SECURITIES  LITIGATION REFORM ACT
OF 1995,  INCLUDING THOSE CONCERNING  MANAGEMENT'S  EXPECTATIONS WITH RESPECT TO
FUTURE FINANCIAL  PERFORMANCE AND FUTURE EVENTS,  PARTICULARLY RELATING TO SALES
OF CURRENT  PRODUCTS AND THE  INTRODUCTION OF NEW  MANUFACTURED  AND DISTRIBUTED
PRODUCTS.   SUCH   STATEMENTS   INVOLVE   RISKS,   UNCERTAINTIES,   TRENDS   AND
CONTINGENCIES,  MANY OF WHICH ARE BEYOND THE CONTROL OF THE COMPANY, WHICH COULD
CAUSE ACTUAL RESULTS AND  PERFORMANCE TO DIFFER  MATERIALLY FROM THOSE EXPRESSED
HEREIN.  THESE  STATEMENTS ARE OFTEN,  BUT NOT ALWAYS,  MADE TYPICALLY BY USE OF
WORDS  OR  PHRASES  SUCH  AS  "ESTIMATE,"  "PLANS,"  "PROJECTS,"  "ANTICIPATES,"
"CONTINUING,"  "ONGOING,"  "EXPECTS,"  "BELIEVES"  OR SIMILAR WORDS AND PHRASES.
FACTORS  THAT MIGHT  AFFECT SUCH  FORWARD-LOOKING  STATEMENTS  SET FORTH IN THIS
DOCUMENT INCLUDE (i) INCREASED COMPETITION FROM NEW AND EXISTING COMPETITORS AND
PRICING   PRACTICES  FROM  SUCH  COMPETITORS   (ESPECIALLY  UPON  COMPLETION  OF
EXCLUSIVITY  PERIODS),  (ii)  PRICING  PRESSURES  RESULTING  FROM THE  CONTINUED
CONSOLIDATION BY THE COMPANY'S DISTRIBUTION CHANNELS,  (iii) THE AMOUNT OF FUNDS
AVAILABLE FOR INTERNAL  RESEARCH AND  DEVELOPMENT  AND RESEARCH AND  DEVELOPMENT
JOINT  VENTURES,  (iv)  RESEARCH AND  DEVELOPMENT  PROJECT  DELAYS OR DELAYS AND
UNANTICIPATED  COSTS IN OBTAINING  REGULATORY  APPROVALS,  (v)  CONTINUATION  OF
DISTRIBUTION RIGHTS UNDER SIGNIFICANT AGREEMENTS,  (vi) THE CONTINUED ABILITY OF
DISTRIBUTED PRODUCT SUPPLIERS TO MEET FUTURE DEMAND, (vii) THE COSTS AND OUTCOME
OF ANY  THREATENED OR PENDING  LITIGATIONS,  INCLUDING  PATENT AND  INFRINGEMENT
CLAIMS, (viii) UNANTICIPATED COSTS IN ABSORBING ACQUISITIONS,  (ix) OBTAINING OR
LOSING 180-DAY  MARKETING  EXCLUSIVITY ON PRODUCTS AND (x) GENERAL  INDUSTRY AND
ECONOMIC  CONDITIONS.  ANY FORWARD-LOOKING  STATEMENTS INCLUDED IN THIS DOCUMENT
ARE MADE  ONLY AS OF THE DATE  HEREOF,  BASED ON  INFORMATION  AVAILABLE  TO THE
COMPANY AS OF THE DATE HEREOF,  AND,  SUBJECT TO APPLICABLE LAW TO THE CONTRARY,
THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS.

THE FINANCIAL DATA CONTAINED IN THIS SECTION IS IN THOUSANDS.

RESULTS OF OPERATIONS

GENERAL

     The Company's net income of $45,579 for the six-month period ended June 29,
2003 increased $4,439 from $41,140 for the six-month period ended June 30, 2002.
Total revenues of $222,273 in the first six months of fiscal year 2003 increased
$40,010 from $182,263 in the corresponding period of fiscal year 2002, primarily
due to additional net sales of new products introduced  following the end of the
second  quarter 2002 and other  revenues from a profit  sharing  agreement  with
Genpharm related to omeprazole (Prilosec(R)).  The revenue growth helped produce
higher gross margins,  which increased to $116,273, or 52% of total revenues, in
the most recent six  months,  from  $85,690,  or 47% of total  revenues,  in the
corresponding  six-month period of 2002. In addition,  the Company  continued to
invest in research and development  activities.  Six-month  spending on research
and   development  of  $11,120  in  2003  increased  60%  from  $6,937  for  the
corresponding  six-month  period of 2002.  Selling,  general and  administrative
costs of $30,105 in the most recent six-month period increased  $13,742 from the
corresponding  period of the prior year,  primarily due to a charge of $3,635 in
the second  quarter  2003  related to a  retirement  package  for the  Company's
chairman,  president and chief executive officer,  higher legal fees,  insurance
costs and other costs that the  Company  believes  were  required to support its
growth, including expenses related to reviewing information systems,  additional
facilities,  personnel  and  strategic  analysis.  Prior year  results  included
income from  settlements of $9,051  related to the Company's  termination of its
litigation with BMS and acquisition  termination charges of $4,278 in connection
with its  termination of  negotiations  with  International  Specialty  Products
("ISP")  related to the  Company's  purchase of the combined  ISP FineTech  fine
chemical business based in Haifa, Israel and Columbus, Ohio.

     The  Company's  net  income  for the  second  quarter  of 2003 was  $23,146
compared to $20,380 for the second  quarter of the prior year,  reflecting  both
revenue  and gross  margin  increases,  primarily  from new  products  and other
revenues related to omeprazole. Second quarter 2003 revenues and gross margin of
$115,861 and $60,970 (53% of total  revenues),  respectively,  improved over the
prior year's  second  quarter  revenues and gross margin of $101,755 and $46,415
(46% of total  revenues).  Research and  development  expenses of $4,651 for the
most recent  three-month  period  were 14% higher  than  $4,063  incurred in the
corresponding  quarter  of  2002.  Selling,  general  and  administrative  costs
increased  $9,368 to  $18,215  in the  second  quarter  2003 from  $8,847 in the
corresponding  quarter of the prior  year due  primarily  to a  one-time  charge
associated with the retirement  package described above,  higher insurance costs
and additional costs required to support the Company's growth.

                                      -14-
<PAGE>

     In addition to its own product development program, the Company has several
strategic alliances through which it co-develops and distributes  products. As a
result of its internal  program and these  strategic  alliances,  the  Company's
pipeline  of  potential  products  includes  25 ANDAs  (seven of which have been
tentatively  approved),  pending with, and awaiting  approval from, the FDA. The
Company pays a percentage of the gross  profits on sales of products  covered by
its distribution agreements to its strategic partners.  Generally, products that
the Company develops internally,  and therefore without the requirement to share
gross profits with any strategic partners,  contribute higher gross margins than
products covered under its distribution agreements.

     In July 2001 and August  2001,  the FDA  granted  approvals  for three ANDA
submissions,  one each by Par,  Dr.  Reddy's  Laboratories  Ltd.  ("Reddy")  and
Alphapharm  Pty Ltd.,  an  Australian  subsidiary  of Merck KGaA,  for megestrol
acetate oral  suspension,  fluoxetine 40 mg capsules and fluoxetine 10 mg and 20
mg tablets,  respectively,  which, as first-to-file opportunities,  entitled the
Company to 180-day marketing  exclusivity periods for the products.  The Company
began marketing  megestrol acetate oral suspension,  which is not subject to any
profit  sharing  agreement,  in July 2001.  In August  2001,  the Company  began
marketing  fluoxetine 40 mg capsules under a  distribution  agreement with Reddy
and  fluoxetine  10 mg and 20 mg tablets  under a  distribution  agreement  with
Genpharm.   Generic  competitors  of  the  Company  received  180-day  marketing
exclusivity  periods  for the  generic  version  of  fluoxetine  10 mg and 20 mg
capsules, which the Company began selling in the first quarter of 2002 following
the  expiration  of such other  parties'  exclusivity  periods.  As the  Company
expected,  additional generic competitors, with products comparable to all three
strengths of its  fluoxetine  products,  began  entering the market in the first
quarter of 2002,  eroding  the  pricing  that the  Company  received  during the
exclusivity  periods,  particularly  on the 10 mg and 20 mg  strengths.  Despite
another FDA approval for a generic  megestrol  acetate  oral  suspension  in the
first quarter of 2002, the Company still  maintained a significant  share of the
market  for  this  product  as of June  29,  2003;  however,  a  second  generic
competitor  received FDA approval for megestrol  acetate oral  suspension in May
2003.  The Company  expects this second  competitor  to enter the market at some
time during the third quarter  2003.  Although  megestrol  oral  suspension  and
fluoxetine 40 mg capsules are expected to continue to  contribute  significantly
to the Company's overall  performance,  the growth of the Company's product line
through new product  introductions  and, to a lesser extent,  increased sales of
certain existing products have somewhat reduced the Company's  reliance on these
key products.

     Critical to the continued  growth of the Company is its introduction of new
manufactured   and   distributed   products  at  selling  prices  that  generate
significant gross margins. The Company, through its internal development program
and  strategic  alliances  and  relationships,  is committed to  developing  new
products  that have limited  competition  and longer  product  life  cycles.  In
addition to expected new product  introductions and  relationships,  the Company
plans to continue to invest in its  internal  research and  development  efforts
while,  at the same time,  seeking  acquisitions of  complimentary  products and
businesses,  additional first-to-file  opportunities,  vertical integration with
raw material  suppliers and unique  dosage forms and strengths to  differentiate
its products in the marketplace.  The Company is engaged in efforts,  subject to
FDA approval and other factors,  to introduce new products  through its research
and development  efforts and distribution and development  agreements with third
parties.  No assurance  can be given that the Company will obtain or develop any
additional  products  for  sale  or,  even  if  developed,  that  they  will  be
commercially  viable.  Execution of these strategies may require additional debt
or equity  financing and there can be no assurance that the Company will be able
to  obtain  any  required  financing  when  needed  and on terms  exceptable  or
favorable to it.

     Sales and gross margins of the Company's products are principally dependent
upon  (i)  the  pricing  of and  product  deletions  by  competitors,  (ii)  the
introduction of other generic drug manufacturers' products in direct competition
with  the  Company's  significant   products,   (iii)  the  ability  of  generic
competitors  to quickly  enter the market  after  patent or  exclusivity  period
expirations, diminishing the amount and duration of significant profits from any
one product, (iv) the continuation of existing distribution agreements,  (v) the
introduction  of  new  distributed   products,   (vi)  the  consolidation  among
distribution  outlets through mergers,  acquisitions and the formation of buying
groups, (vii) the willingness of generic drug customers, including wholesale and
retail customers, to switch among generic pharmaceutical  manufacturers,  (viii)
the approval of ANDAs and  introduction of new manufactured  products,  (ix) the
granting of potential marketing  exclusivity  periods,  (x) the extent of market
penetration  for the  existing  product  line  and (xi)  the  level of  customer
service.

REVENUES

     Total revenues of $222,273 for the six months ended June 29, 2003 increased
$40,010,  or 22%,  from  $182,263  for the  corresponding  period  of 2002.  The
increase  in revenues  was  primarily  due to higher net sales of new  products,
including tizanidine (Zanaflex(R)) and nizatidine (Axid(R)),  introduced in July
2002  and  sold  under   distribution   agreements   with  Reddy  and  Genpharm,
respectively,   and  torsemide   (Demadex(R))   and  minocycline   (Minocin(R)),
introduced in the second quarter 2003. In addition, the Company recognized other

                                      -15-
<PAGE>

revenues  of  $12,788  in the  first six  months  of 2003 from a profit  sharing
agreement  with Genpharm  related to  omeprazole.  Net sales of  fluoxetine  and
megestrol acetate oral suspension decreased $10,563 and $1,156, respectively, in
fiscal  2003.  Net sales of  distributed  products,  which  consist of  products
manufactured  under contract and licensed  products,  were approximately 54% and
58%,  respectively,  of the  Company's net sales in the first six months of 2003
and 2002. The Company is substantially  dependent upon distributed  products for
its overall sales and, as the Company  continues to introduce new products under
its distribution agreements,  it expects that this dependence will continue. Any
inability by suppliers to meet  expected  demand could  adversely  affect future
sales.

     Total revenues in the second quarter 2003 of $115,861 increased $14,106, or
14%, from $101,755 for the corresponding quarter of 2002, primarily due to sales
of new products and additional  revenues of $7,060  related to  omeprazole.  The
increased revenues in the second quarter 2003 were achieved despite decreases in
net sales of $5,588  and  $2,281  for  fluoxetine  and  megestrol  acetate  oral
suspension,  respectively, compared to the second quarter of the prior year. Net
sales of distributed  products were approximately 52% of the Company's total net
sales in the most recent quarter compared to approximately  58% of the total for
the corresponding quarter of last year.

     Pursuant to the Genpharm Profit Sharing  Agreement,  the Company receives a
portion of the profits, as defined in the Agreement, generated from KUDCo's sale
of omeprazole.  In December 2002, KUDCo launched omeprazole following a district
court  decision in which it  prevailed,  but before any  decision was reached on
appeal.  Astra has appealed the district court's patent  infringement  decision.
The impact of KUDCo's  omeprazole  sales on the  Company's  future  revenues  is
presently unclear to the Company since, among other things, Astra has introduced
a new  drug,  Nexium(R),  in an  apparent  attempt  to  switch  consumers  using
Prilosec(R)  and  Astra's  decision  to  market  a   non-prescription   form  of
Prilosec(R)  along with Proctor & Gamble,  all of which may reduce generic sales
of omeprazole. In August 2003, a generic competitor also began selling a form of
omeprazole that competes with the prescription form of Prilosec(R).  The Company
understands that this generic competitor has initiated  litigation against KUDCo
alleging  patent  infringement.  The  Company  expects  that the  impact of this
competition  will reduce its revenues  from  omeprazole  in future  periods.  In
December 2002, the Company began  recognizing  revenues  related to its share of
Genpharm  profits,  which  were  significantly  reduced  as  Genpharm  recovered
out-of-pocket  development  and  legal  expenses  incurred  during  the  product
development  process and  litigations.  The  development and legal expenses were
substantially  recovered  by  Genpharm  in  2002.  Although  there  can no  such
assurance, the Company anticipates revenues of up to $7,000 for the remainder of
fiscal year 2003 from its share of the profits on omeprazole.

     The Company's  exclusivity  period for fluoxetine  expired in  late-January
2002. As a result of generic competition beginning in the first quarter of 2002,
the sales price for  fluoxetine has  substantially  declined from the price that
the Company charged during the exclusivity  period.  Accordingly,  the Company's
sales and gross margins generated by fluoxetine  following the expiration of the
exclusivity period have been, and will continue to be, adversely affected.

     The  Company's  exclusivity  period for megestrol  acetate oral  suspension
expired in mid-January 2002. One generic  competitor was granted FDA approval to
market another  generic  version of megestrol  acetate oral suspension and began
shipping the product to a limited  number of customers in the second  quarter of
2002.  In  addition,  a second  potential  generic  competitor  was  granted FDA
approval for megestrol  acetate oral suspension in May 2003 and has announced it
expects to launch the  product  at some point in the third  quarter of 2003.  At
this time, the Company cannot predict  accurately the effect of another  generic
competitor in the market.  Megestrol  acetate oral  suspension is anticipated by
the Company to be a significant  profit  contributor for the remainder of fiscal
year 2003, despite the competition.  In accordance with its accounting policies,
the Company did not record a price protection reserve for megestrol acetate oral
suspension as of June 29, 2003. The Company will continue to evaluate the effect
of  competition  and will record a price  protection  reserve when, if and as it
deems necessary.

GROSS MARGIN

     The Company's gross margin of $116,273 (52% of total revenues) in the first
six months of fiscal year 2003  increased  $30,583  from  $85,690  (47% of total
revenues)  for the  corresponding  period of fiscal year 2002.  The gross margin
improvement  was  achieved  primarily  as a result of revenues  from  omeprazole
received  pursuant to the  Genpharm  Profit  Sharing  Agreement  and  additional
contributions from sales of new products, as described above.

     In  the  six-month   period  ended  June  29,  2003,   lower  gross  margin
contributions  from  fluoxetine  10 mg and 20 mg,  which are  subject  to profit
sharing agreements with Genpharm,  were substantially  offset by a higher margin
contribution  from  fluoxetine 40 mg due to an increase in the Company's  profit
sharing  percentage  under its  agreement  with Reddy  following  the end of the

                                      -16-
<PAGE>

Company's   exclusivity   period.   As  discussed  above,   additional   generic
manufacturers  introduced and began  marketing  comparable  fluoxetine  products
following the  expiration of the Company's  exclusivity  period in January 2002,
adversely  affecting  the  Company's  sales  volumes,  selling  prices and gross
margins  for  the  products,  particularly  the 10 mg and 20 mg  strengths.  The
Company's gross margin for megestrol  acetate oral suspension could also decline
when, and as, additional  manufacturers  introduce and market comparable generic
products. Megestrol acetate oral suspension contributed approximately $34,743 in
gross  margin  for the  six-month  period of 2003  compared  to  $35,860  in the
corresponding period of the prior year.

     Gross  margin for the  second  quarter  of 2003 was  $60,970  (53% of total
revenues)  compared  to $46,415  (46% of total  revenues)  in the  corresponding
quarter of the prior year. Additional gross margin contributions from omeprazole
revenues and higher margin new products,  particularly tizanidine and torsemide,
generated the higher gross margins in the second quarter of 2003.

     Inventory write-offs were $1,317 and $905 for the six-month and three-month
periods  ended  June 29,  2003,  respectively,  compared  to  $2,742  and  $977,
respectively,  for the  corresponding  periods  of the prior  year.  The  higher
six-month  write-offs  in 2002 included the write-off of inventory for a product
whose  launch was  delayed  due to  unexpected  patent  issues and  certain  raw
material not meeting the  Company's  quality  control  standards.  The inventory
write-offs,  taken in the normal course of business,  were related  primarily to
work in process  inventory not meeting the Company's  quality control  standards
and the disposal of finished products due to short shelf lives.

OPERATING EXPENSES

   RESEARCH AND DEVELOPMENT

     The  Company's  research  and  development  expenses of $11,120 for the six
months ended June 29, 2003  increased  $4,183,  or 60%,  from $6,937 for the six
months ended June 30, 2002. The higher  expenses were primarily  attributable to
biostudies,  including the  Company's  share of  Genpharm's  biostudy  costs for
products covered under their distribution agreements.  In addition, higher costs
were  incurred  for raw material and  development  work done by SVC Pharma,  the
Company's joint venture partnership.

     Research  and  development  expenses  for the  second  quarter of 2003 were
$4,651  compared to $4,063 for the  corresponding  quarter of 2002. The increase
was primarily attributable to higher spending for raw material.

     Although  there can be no such  assurance,  the  Company  expects its total
annual  research  and  development  expenses  for fiscal year 2003 to exceed the
total for fiscal year 2002 by  approximately  up to 30% to 40%.  The increase is
expected as a result of increased internal development  activity,  projects with
third parties and research and development venture activity.

     The Company currently has ten ANDAs for potential products (two tentatively
approved)  pending with, and awaiting  approval from, the FDA as a result of its
own  product  development  program.  The  Company  has in  process or expects to
commence  biostudies for at least eight additional products during the remainder
of fiscal year 2003.

     The Company and Genpharm have entered into a  distribution  agreement  (the
"Genpharm 11 Product  Agreement"),  dated April 2002, pursuant to which Genpharm
is  developing  products,  submitting  the  corresponding  ANDAs to the FDA and,
subsequently, has agreed to manufacture the potential products covered under the
Agreement.  Par will serve as the exclusive U.S. marketer and distributor of the
products,  pay a share of the costs,  including  development  and legal expenses
incurred to obtain final regulatory  approval,  and pay Genpharm a percentage of
the gross profits on all sales of products covered by this Agreement. Currently,
there are four ANDAs for potential products (one tentatively  approved) that are
covered by the Genpharm 11 Product Agreement pending with, and awaiting approval
from, the FDA. The Company is currently marketing one product under the Genpharm
11 Product Agreement.

     The Company and Genpharm  have also entered into a  distribution  agreement
(the "Genpharm  Distribution  Agreement"),  dated March 1998. Under the Genpharm
Distribution  Agreement,  Genpharm  pays  the  research  and  development  costs
associated  with the products  covered by the Genpharm  Distribution  Agreement.
Currently,  there  are five  ANDAs for  potential  products  (three  tentatively
approved) that are covered by the Genpharm Distribution  Agreement pending with,
and awaiting  approval  from,  the FDA.  The Company is  currently  marketing 19
products under the Genpharm Distribution Agreement.

                                      -17-
<PAGE>

     Genpharm and the Company  share the costs of  developing  products  covered
under an agreement (the "Genpharm Additional Product Agreement"), dated November
27, 2000.  The Company is currently  marketing  two products  under the Genpharm
Additional Product Agreement.

   SELLING, GENERAL AND ADMINISTRATIVE

     Selling,  general  and  administrative  costs  of  $30,105  (14%  of  total
revenues) for the six months ended June 29, 2003 increased  $13,742 from $16,363
(9% of total revenues) for the  corresponding  period of last year. The increase
in 2003 was primarily attributable to a charge of $3,635 related to a retirement
package for the  Company's  chairman,  president  and chief  executive  officer,
higher  product  liability and directors and officers  insurance  costs totaling
$2,004, legal fees associated with potential new product launches of $1,941 and,
to a lesser extent, a royalty paid to GSK on sales of paroxetine in Puerto Rico.
In addition,  the Company incurred expenses it believes are necessary to support
the  Company's  continued  growth,  including  costs for  personnel  of  $1,903,
corporate  strategic planning of $900,  additional  warehouse and administrative
office  facilities of $673,  information  system  reviews of $660 and accounting
fees of $504.  Distribution  costs include those related to shipping  product to
the  Company's  customers,  primarily  through the use of common  carriers or an
external distribution service.  Shipping costs of $1,349 in the first six months
of 2003 approximated  costs of $1,337 in the  corresponding  period of the prior
year.  The Company  anticipates  that it will  continue to incur a high level of
legal expenses  related to the costs of litigation  connected with potential new
product     introductions     (see    "Notes    to    Consolidated     Financial
Statements-Commitments,  Contingencies  and Other  Matters-Legal  Proceedings").
Selling,  general and administrative  costs are expected to continue to increase
over the remainder of 2003.

     The  Company  announced  on June 19,  2003  that  Kenneth  I.  Sawyer,  its
chairman,  president and chief executive officer, would retire,  effective as of
July 1, 2003.  Mr. Sawyer did retired on July 1, 2003 and the board of directors
is conducting a search for a new chairman and chief executive officer of PRX. In
the interim,  both Scott Tarriff,  president and chief executive officer of Par,
and Arie L.  Gutman,  Ph.D.,  president  and chief  executive  officer  of PRX's
FineTech subsidiary,  will report to the Company's lead outside director. During
this  transition  period,  Mr. Sawyer will remain a director and be available to
consult  with the  Company.  A  one-time  charge of $3,635  associated  with Mr.
Sawyer's  retirement  package was  recorded in the second  quarter of 2003.  The
retirement  package  consists of  expenses  for  accelerated  stock  options,  a
severance payment, the remainder of his 2003 salary and benefits.

     Selling,  general  and  administrative  costs  of  $18,215  (16%  of  total
revenues) for the second quarter 2003 increased  $9,368 from $8,847 (9% of total
revenues) for the corresponding quarter of last year. The increased costs in the
second  quarter  2003  consisted  of higher  costs for Mr.  Sawyer's  retirement
package,  insurance,  personnel,   information  system  improvements,   facility
expansion and legal fees.  Distribution  costs include those related to shipping
product to the Company's customers, primarily through the use of common carriers
or an  external  distribution  service.  Shipping  costs  of $742 in the  second
quarter  2003  approximated  costs of $745 in the  corresponding  quarter of the
prior year.

   SETTLEMENTS

     On March 5, 2002, the Company entered into the BMS Asset Purchase Agreement
and acquired the United  States  rights to five  products from BMS. The products
were the antihypertensives  Capoten(R) and Capozide(R), the cholesterol-lowering
medications Questran(R) and Questran Light(R), and Sumycin(R), an antibiotic. To
obtain the rights to these five  products,  the Company  agreed to terminate its
outstanding  litigation against BMS involving  megestrol acetate oral suspension
and buspirone,  and paid approximately  $1,024 in March 2002 and $1,025 in April
2003. The Company determined,  through an independent third party appraisal, the
fair value of the product rights received to be $11,700, which exceeded the cash
consideration of $2,049 and associated costs of $600 by $9,051. The $9,051 value
was assigned to the litigation  settlements and recorded as settlement income in
the first  quarter of 2002.  The fair value of the  product  rights  received is
being amortized on a straight-line basis over the seven-year period beginning in
March 2002, with the net amount  included in intangible  assets on the Company's
consolidated balance sheets.

   ACQUISITION TERMINATION CHARGES

     On March 15, 2002, the Company terminated its negotiations with ISP related
to the Company's  purchase of the combined ISP FineTech fine chemical  business,
based  in  Haifa,  Israel  and  Columbus,   Ohio.  At  that  time,  the  Company
discontinued   negotiations   with  ISP  as  a  result  of  various  events  and
circumstances   that  occurred   following  the  announcement  of  the  proposed
transaction. Pursuant to the termination of negotiations, the Company paid ISP a
$3,000  break-up  fee in March 2002,  which was  subject to certain  credits and
offsets,  and incurred $1,278 in related  acquisition  costs, both of which were
included in acquisition  termination  charges on the consolidated  statements of
operations.

                                      -18-
<PAGE>

OTHER EXPENSE

     Other  expenses for the  six-month and  three-month  periods ended June 29,
2003 of $44 and $10, respectively,  decreased from $102 and $213,  respectively,
in the  corresponding  periods of 2002.  Other  expenses  recorded in the second
quarter of 2002 included those related to the withdrawal of the Company's  shelf
registration  statement  during the  quarter.  Included in other  expense in all
covered periods was the Company's investment in High Rapids, which was partially
offset by net rental income from the Company's Congers facility.

INTEREST INCOME

     Net interest income of $333 and $164,  respectively,  for the six-month and
three-month  periods ended June 29, 2003 and $381 and $127 for the corresponding
periods of the prior  fiscal year was  primarily  derived  from money market and
other short-term investments.

INCOME TAXES

     The Company  recorded  provisions  for income taxes of $29,758 and $15,112,
respectively,  and $26,302 and  $13,029,  respectively,  for the  six-month  and
three-month  periods  ended  June  29,  2003  and  June  30,  2002  based on the
applicable  federal  and  state  tax rates  for  those  periods  (see  "Notes to
Consolidated Financial Statements-Income Taxes").

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

     The  Company's  critical  accounting  policies  are set forth in its Annual
Report on Form 10-K for the year  ended  December  31,  2002.  There has been no
change,  update  or  revision  to the  Company's  critical  accounting  policies
subsequent to the filing of the Company's  Form 10-K for the year ended December
31, 2002.

FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

     Cash and cash  equivalents of $107,123 at June 29, 2003  increased  $42,002
from $65,121 at December 31, 2002,  primarily due to cash provided by operations
and, to a lesser  extent,  proceeds from the issuance of shares of the Company's
common stock from the exercise of stock options. The Company invested $11,727 in
capital  improvements  during  the first six months of 2003,  primarily  for the
expansion of its  laboratories  in Spring Valley,  New York, its  administrative
offices  in  Woodcliff  Lake,  New  Jersey  and  its  warehouse   facilities  in
Montebello,  New  York.  In  addition,  the  Company  purchased  new  production
machinery  for its  packaging  lines and made  improvements  in its  information
technology.  The Company's cash balances are deposited  primarily with financial
institutions in money market funds and overnight  investments.  Working capital,
which includes cash and cash equivalents,  increased $55,184 to $191,489 at June
29, 2003 from  $136,305 at December 31, 2002,  primarily  from  increases in the
Company's cash position, accounts receivable and inventories partially offset by
higher income tax and accounts  payable.  The working  capital ratio of 2.77x at
June 29, 2003 was comparable to the ratio of 2.83x at December 31, 2002.

     A summary of the Company's material contractual  obligations and commercial
commitments as of June 29, 2003 were as follows:

                                                  AMOUNTS DUE IN FISCAL YEARS
                                                  ---------------------------
                              TOTAL       JUL-DEC                    2005 AND
OBLIGATION                 OBLIGATION      2003           2004      THEREAFTER
----------                 ----------      ----           ----      ----------
Operating leases          $19,741         $1,490         $2,937        $15,314
Industrial revenue bond     1,820            185            381          1,254
Other                         129             80             49              -
                          -------         ------         ------         ------

Total obligations         $21,690         $1,755         $3,367        $16,568
                          =======         ======         ======        =======

     In addition to its internal  research and development  costs,  the Company,
from time to time, enters into agreements with third parties with respect to the
development of new products and  technologies.  To date, the Company has entered
into   agreements   and  advanced   funds  or  has   commitments   with  several
non-affiliated  companies for products in various stages of  development.  These
types of payments or  commitments,  certain of which are  described  below,  are
either capitalized or expensed according to the Company's accounting policies.

                                      -19-
<PAGE>

     The  Company and Nortec  Development  Associates,  Inc.  (a Glatt  company)
("Nortec")  have entered into a binding  agreement in principle,  dated March 3,
2003, subject to final negotiation and execution of a definitive  agreement,  in
which the two companies  will develop  additional  products that are not part of
the two previous agreements between the Company and Nortec. During the first two
years of the Company's  arrangement  with Nortec,  Par will be obligated to make
aggregate  initial research and development  payments to Nortec in the amount of
$3,000, of which $500 has already been paid. On or before the second anniversary
of the  agreement  the Company will have the option to either (i)  terminate the
arrangement  with Nortec,  in which case the initial  research  and  development
payments will be credited  against any development  costs that the Company shall
owe Nortec at that time, or (ii) acquire all of the capital stock of Nortec over
the subsequent two years, including the first fifty (50%) percent of the capital
stock of Nortec over the third and fourth years of the  arrangement  for $4,000,
and the  remaining  capital  stock of Nortec  from its  owners at the end of the
fourth year for an additional $11,000.  The remaining terms of the agreement are
expected to be finalized in the third quarter of 2003.

     In the second  quarter of 2002,  the Company made  non-refundable  payments
totaling $1,000 pursuant to other agreements with Nortec,  which were charged to
research and development expenses as incurred.  Pursuant to the agreements,  the
Company  agreed to pay a total of $800 in  various  installments  related to the
achievement of certain  milestones in the development of two potential  products
and $600 for each product on the day of the first commercial sale.

     Pursuant to the Genpharm Profit Sharing  Agreement,  Genpharm has agreed to
pay the Company its share of profits  related to KUDCo's sale of  omeprazole  60
days after the month in which the product  was sold.  In  December  2002,  KUDCo
launched  omeprazole  following a district court decision in which it prevailed,
but before any decision  was reached on appeal.  Astra has appealed the district
court's  patent  infringement  decision.  In the first six  months of 2003,  the
Company  recognized  $12,788 of  revenues  related  to its share of profits  and
expects to record up to $7,000 in additional such revenues over the remainder of
fiscal year 2003. As of June 29, 2002, the Company has received cash payments of
$6,483 from Genpharm  pursuant to this  agreement  and although  there can be no
such  assurance,  expects to receive  approximately  $12,000 in additional  cash
payments over the remainder of fiscal year 2003.

     In November  2002,  the Company  amended its  agreement  with  Pentech (the
"Supply and Marketing  Agreement"),  dated November  2001, to market  paroxetine
hydrochloride  capsules.  Pursuant to the Supply and  Marketing  Agreement,  the
Company is  responsible  for all legal  expenses  up to $2,000,  which have been
expensed as incurred,  to obtain final  regulatory  approval.  Legal expenses in
excess of $2,000  are fully  creditable  against  future  profit  payments.  The
Company has agreed to reimburse Pentech for costs associated with the project of
up to $1,300 for fiscal year 2003, which are charged to research and development
expenses  as they are  incurred.  In the first six months of 2003,  the  Company
incurred  $514 in  research  and  development  costs  pursuant to the Supply and
Marketing Agreement.

     In July 2002,  the Company and Three  Rivers  entered  into a  distribution
agreement  (the "Three  Rivers  Distribution  Agreement"),  which was amended in
October 2002, to market and  distribute  ribavirin 200 mg capsules,  the generic
version of  Schering-Plough's  Rebetol(R).  Under the terms of the Three  Rivers
Distribution Agreement,  Three Rivers will supply the product and be responsible
for managing the regulatory process and ongoing patent litigation. Par will have
the  exclusive  right to sell  the  product  in  non-hospital  markets  upon FDA
approval and final marketing  clearance and pay Three Rivers a percentage of the
gross  profits (as defined in the  Agreement).  The  Company  paid Three  Rivers
$1,000 in November 2002,  which was charged to research and  development  during
the  period,  and has  agreed  to pay  Three  Rivers  $500  at such  time as Par
commercially launches the product.

     As of June  29,  2003,  the  Company  had  payables  owed  to  distribution
agreement  partners of $20,441,  related  primarily  to amounts due  pursuant to
profit sharing  agreements with strategic  partners.  The Company expects to pay
these amounts out of its working capital during the third quarter of 2003.

     In December 2001, the Company made its first payment of a potential  equity
investment  of up to  $2,438  to be made  over a period  of time in  HighRapids.
Pursuant to an agreement between the Company and HighRapids,  effective December
1,  2001,  the  Company,  subject  to  its  ongoing  evaluation  of  HighRapids'
operations,  has agreed to purchase units, consisting of secured debt, evidenced
by 7% secured  promissory  notes, up to an aggregate  principal amount of $2,425
and up to an  aggregate  of 1,330  shares  of the  common  stock of  HighRapids.
HighRapids  is to utilize the Company's  cash  infusion for working  capital and
operating  expenses.  Through June 29, 2003, the Company had invested  $1,008 of

                                      -20-
<PAGE>

its potential  investment.  Due to HighRapids'  current operating losses and the
Company's  evaluation  of  its  short-term  prospects  for  profitability,   the
investments  were  expensed as  incurred  and  included in other  expense on the
consolidated  statements of operations  (see-"Notes  to  Consolidated  Financial
Statements-Commitments, Contingencies and Other Matters-Other Matters").

     In April 2001, Par entered into a licensing agreement with Elan Transdermal
Technologies,  Inc.  ("Elan") to market a generic  clonidine  transdermal  patch
(Catapres TTS(R)). Under such agreement, Elan is responsible for the development
and manufacture of the product,  while Par is responsible  for marketing,  sales
and  distribution.  Pursuant to the  agreement,  the Company paid Elan $1,167 in
fiscal  year  2001  and  $833 in  2002,  which  were  charged  to  research  and
development expenses in the respective years. In addition, Par has agreed to pay
Elan $1,000  upon FDA  approval of the product and a royalty on all sales of the
product.

     The Company expects to continue to fund its operations,  including research
and development  activities,  capital  projects,  and its obligations  under the
existing distribution and development  arrangements discussed herein, out of its
working capital and, if necessary,  with  borrowings  against its line of credit
with GECC, if and to the extent available.  The Company has altered its plans to
move a portion of FineTech's  operation,  including  personnel and technological
resources to a  laboratory  facility in Rhode  Island.  The Company is currently
evaluating alternatives related to the proceeds from the industrial revenue bond
that were to be used for this operation (see "-Financing"). In fiscal year 2003,
the Company expects its capital spending to increase due to the expansion of its
laboratories and initiatives related to improvements to its information systems.
Although  there  can be no  such  assurance,  the  Company  anticipates  it will
continue to  introduce  new  products  and attempt to increase  sales of certain
existing  products,  in an effort to offset the loss of sales and any erosion of
gross margins from competition on any of its significant  products.  In addition
to expected new product introductions as part of its various strategic alliances
and  relationships,  the Company  plans to  continue  to invest in its  internal
research and  development  efforts while, at the same time,  seeking  additional
products  for  sale  through  new  and  existing   distribution   agreements  or
acquisitions of complimentary products and businesses,  additional first-to-file
opportunities,  vertical  integration  with raw  material  suppliers  and unique
dosage forms and strengths to differentiate its products in the marketplace. The
Company also seeks to reduce the overall  impact of its top selling  products by
adding  additional  products through new and existing  distribution  agreements.
Execution of the  Company's  strategies  may require  additional  debt or equity
financing and there can be no assurance  that the Company will be able to obtain
any required financing when needed and on terms acceptable or favorable to it.

FINANCING

     At June 29, 2003, the Company's total outstanding long-term debt, including
the current portion,  amounted to $1,949.  The amount consisted  primarily of an
industrial  revenue  bond  and  capital  leases  for  computer  equipment.   The
industrial  revenue bond, in the  principal  amount of $2,000,  is to be paid in
equal  monthly  installments  over a term of five years,  maturing on January 1,
2008.  The bond bears  interest  at 4.27% per annum and is subject to  covenants
based on various financial benchmarks. Execution of the Company's strategies may
require  additional debt or equity  financing and there can be no assurance that
the Company  will be able to obtain any  required  financing  when needed and on
terms acceptable or favorable to it.

     In December  1996,  Par entered into the Loan Agreement with GECC. The Loan
Agreement,  as amended in December  2002,  provides Par with a revolving line of
credit expiring in March 2005. Pursuant to the Loan Agreement,  Par is permitted
to borrow up to the lesser of (i) the borrowing base established  under the Loan
Agreement or (ii) $30,000.  The borrowing base is limited to 85% of the eligible
accounts  receivable  plus  50%  of the  eligible  inventory  of  Par,  each  as
determined  from time to time by GECC. As of June 29, 2003,  the borrowing  base
was approximately $27,000. The interest rate charged on any borrowings under the
line of  credit  is based  upon a per  annum  rate of  2.25%  above  the  30-day
commercial paper rate for high-grade  unsecured notes adjusted monthly. The line
of credit with GECC is collateralized  by the assets of the Company,  other than
real property,  and is guaranteed by the Company. In connection with such credit
facility, the Company has established a cash management system pursuant to which
all cash and cash  equivalents  received by any of such  entities are  deposited
into a lockbox  account over which GECC has sole operating  control if there are
amounts outstanding under the line of credit. The deposits would then be applied
on a daily basis to reduce the amounts outstanding under the line of credit. The
revolving  credit  facility  contains   covenants  based  on  various  financial
benchmarks.  As of the  date  hereof,  no debt is  outstanding  under  the  Loan
Agreement.

SUBSEQUENT EVENTS:

     On July  15,  2003,  the  Company  announced  that two  additional  patents
relating to megestrol acetate oral suspension have been issued to it by the U.S.
Patent Office. The Patent Office issued U.S. Patent Nos. 6,593,318 and 6,593,320
to the Company.  The Company  presently holds four patents relating to megestrol
oral  suspension.  The first two patents,  U.S.  Patent No.  6,028,065  and U.S.
Patent No.  6,268,356,  were  issued on  February  22,  2000 and July 31,  2001,
respectively.

                                      -21-
<PAGE>

     On July 16, 2003,  the Company  announced  that the United States  District
Court for the Central  District of California  had granted  summary  judgment of
non-infringement  regarding  ribavirin  to  Three  Rivers.  The  district  court
determined that the Three Rivers' product does not infringe any of three patents
asserted by ICN  Pharmaceuticals in the litigation.  Par has exclusive marketing
rights for the Three Rivers' ribavirin product. Three Rivers had earlier reached
a settlement of its patent litigation with Schering Plough  Pharmaceuticals,  so
this decision  appears to resolve the remaining  ongoing patent  barriers to FDA
approval of the ANDA filed by Three  Rivers.  The timing of Par's launch of this
product is uncertain at this time.  Three Rivers has not obtained FDA  approval,
and FDA has not made a determination  of whether a generic  180-day  exclusivity
period will be awarded solely to a generic competitor involved in the lawsuit or
Three   Rivers   jointly   with   one  or  both  of  the   other   two   generic
competitorsinvolved in the lawsuit. The patent holder, ICN Pharmaceuticals,  may
be able to appeal the court decision.

       ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     Not applicable.

                        ITEM 4. CONTROLS AND PROCEDURES.


     Based on the evaluation by the Executive Vice President and Chief Financial
Officer of the  Company as of the end of the  period  covered by this  quarterly
report,  the Company's  disclosure  controls and  procedures (as defined in Rule
13a-15(e)  and  15d-15(e)  under  the  Securities  Exchange  Act  of  1934)  are
effectively  designed to ensure that the information  required to be included in
this report has been  recorded,  processed,  summarized and reported on a timely
basis.  There has not been any change in the  Company's  internal  controls over
financial  reporting that have materially  affected,  or is reasonably likely to
materially affect, the Company's internal controls over financial reporting.

                                      -22-
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.
------  -----------------

     On May 28, 2003, Asahi Glass Company filed a complaint in the United States
District  Court for the Northern  District of Illinois  against  GlaxoSmithKline
P.L.C. and affiliated entities,  Pentech Pharmaceuticals and Par alleging, among
other things, violations of state and federal anti-trust laws arising out of the
Supply and Distribution  Agreement between  GlaxoSmithKline  and Par. Par denies
any  wrongdoing in  connection  with this action and expects to file a motion to
dismiss  the  complaint  in  August  2003.  In the event  the  action  continues
following  the court's  determination  of the motion to dismiss,  Par intends to
defend vigorously this action and may assert  counterclaims  against Asahi Glass
and others.

     On April 18,  2003,  GSK and PRX,  through its  principal  subsidiary  Par,
announced  that  Pentech  and GSK had  reached  a  settlement  of  their  patent
litigation   over  Pentech's   proposed   generic   capsule   version  of  GSK's
anti-depressant Paxil(R) (paroxetine hydrochloride).  Pentech granted Par rights
under  Pentech's  ANDA for  paroxetine  hydrochloride  capsules.  The settlement
allows  Par to  distribute  in  Puerto  Rico  substitutable  generic  paroxetine
hydrochloride  immediate  release  tablets  supplied and licensed from GSK for a
royalty to be paid to GSK.

     Under the  settlement,  Pentech  and Par  acknowledge  that the GSK  patent
covering  the  hemihydrate  form  of  paroxetine   hydrochloride  is  valid  and
enforceable and would be infringed by Pentech's  proposed capsule  product,  for
which Pentech has applied for FDA approval.  The same GSK patent was found valid
and  enforceable in a separate  patent  infringement  case in the U.S.  District
Court for the Northern District of Illinois (Chicago) against Apotex. Apotex was
found not to infringe,  and, the Company believes, GSK is appealing that ruling.
The litigation and the settlement do not involve Paxil CR(TM).

     Breath Ltd. of the Arrow Group filed an ANDA  (currently  pending  with the
FDA) for latanoprost  (Xalatan(R)),  which was developed by Breath Ltd. pursuant
to a joint  manufacturing  and  marketing  agreement  with the Company,  seeking
approval  to  engage  in  the  commercial  manufacture,  sale  and  use  of  one
latanoprost  drug  product  in the  United  States.  Par  subsequently  acquired
ownership  of the ANDA,  which  includes a Paragraph IV  certification  that the
patents in connection  with  Xalatan(R)  that are  identified in "Approved  Drug
Products with Therapeutic  Equivalence  Evaluations" are invalid,  unenforceable
and/or will not be infringed by Par's  generic  product.  Par believes  that its
ANDA is the first to be filed for this drug with a Paragraph  IV  certification.
As a result of the  filing of the ANDA,  Pharmacia  Corporation,  Pharmacia  AB,
Pharmacia  Enterprises,  S.A.,  Pharmacia and Upjohn Company and the Trustees of
Columbia  University  in the  City of New York  filed  lawsuits  against  Par on
December  14,  2001 in the United  States  District  Court for the  District  of
Delaware and on December 21, 2001 in the United  States  District  Court for the
District of New Jersey alleging patent infringement.  Pharmacia and Columbia are
seeking an injunction to prevent the Company from marketing its generic  product
prior to the expiration of their patents.  On February 8, 2002, Par answered the
complaint brought in the District of New Jersey and filed a counterclaim,  which
seeks a declaration that the patents-in-suit are invalid,  unenforceable  and/or
not infringed by Par's products. Par is also seeking a declaratory judgment that
the  extension  of the term of one of the  patents is  invalid.  All parties are
seeking to recover their  respective  attorneys' fees. On February 25, 2002, the
lawsuit  brought  in the  District  of  Delaware  was  dismissed  pursuant  to a
stipulation of the parties.  The case in the District of New Jersey is currently
in the expert discovery stage. Par intends to vigorously  defend the lawsuit and
pursue its counterclaim and the declaratory judgment sought by it. At this time,
it is not  possible  for the Company to predict  the outcome of the  plaintiffs'
claim for injunctive  relief,  Par's  counterclaim  or the claims for attorneys'
fees.

     Par,  among others,  was a defendant in three  lawsuits filed in the United
States  District  Court for the  Eastern  District of North  Carolina  (filed on
August 1, 2001,  October  30,  2001 and  November  16,  2001,  respectively)  by
aaiPharma Inc.,  involving patent  infringement  allegations  connected to three
patents related to polymorphic forms of fluoxetine  (Prozac(R)).  In March 2003,
Par settled its  lawsuits  with  aaiPharma  Inc.  The  settlement  has not had a
material  adverse  effect on the  Company's  financial  position  or  results of
operation.

     The  Company  and/or Par is a party in certain  other  litigation  matters,
including product  liability and patent actions,  and the Company believes these
actions are  incidental  to the conduct of its business and that in the ultimate
resolution will not have a material  adverse effect on its financial  condition,
results of operations or liquidity. The Company intends to vigorously defend or,
in cases where the Company is plaintiff, prosecute these actions.

                                      -23-
<PAGE>

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
------  -----------------------------------------

     As of June 24, 2003, the Company  changed its state of  incorporation  from
New Jersey to  Delaware.  The  reincorporation  was approved by the holders of a
majority of the Company's  outstanding shares of common stock,  voting in person
or by proxy,  at its Annual Meeting of  Shareholders  held on June 19, 2003. The
reincorporation was effected by merging the Company with and into Pharmaceutical
Resources,  Inc., a Delaware  corporation and then a wholly-owned  subsidiary of
the Company, with the Delaware corporation surviving (the "Merger").

     Pursuant  to the  Merger,  each  share of  common  stock of the New  Jersey
corporation was automatically converted into one share of common stock, $.01 par
value, of the Delaware corporation. It is not necessary for Company shareholders
to exchange their existing stock  certificates of the New Jersey corporation for
stock certificates of the Delaware corporation.

     For further  information about the reincorporation and for a description of
the material  differences  between the rights of shareholders under the Business
Corporation Act of the State of New Jersey and the rights of stockholders  under
the  General  Corporation  Law of the  State of  Delaware,  please  refer to the
Company's Proxy  Statement,  filed with the Commission on May 13, 2003, which is
incorporated herein by reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
------  ---------------------------------------------------

     The  Company's  2003 Annual  Meeting of  Shareholders  was held on June 19,
2003. The votes for each proposal were as follows:

Proposal I - Approval of Election of two Class I Directors.

Proposal I Results           For           Withheld
------------------           ---           --------
Peter S. Knight           28,204,694       1,226,295
Scott L. Tarriff          28,954,292         476,697

Proposal II - Approval of the Reincorporation of the Company in Delaware.

                                                                         Broker
Proposal II Results       For            Against         Abstain       Non-Votes
-------------------       ---            -------         -------       ---------
                       20,930,202       1,119,443       368,715        8,012,629

Proposal III - Approval of Amendment to 2001 Performance Equity Plan to Increase
the  Aggregate  Number  of  Shares  Reserved  for  Issuance  From  4,000,000  to
5,500,000.

                                                                         Broker
Proposal III Results      For            Against         Abstain       Non-Votes
--------------------      ---            -------         -------       ---------
                       18,462,926       3,880,166        75,267        7,012,630

Proposal IV - Approval of  Amendment  to 1997  Directors'  Stock  Option Plan to
Increase the  Aggregate  Number of Shares that may be Issued under the Plan From
450,000 to 650,000 and  Extending the  Expiration  Date of the Plan from October
28, 2007 to October 28, 2013.

                                                                         Broker
Proposal IV Results       For            Against         Abstain       Non-Votes
-------------------       ---            -------         -------       ---------
                       18,480,013       3,660,415       277,931        7,012,630

ITEM 5.  OTHER INFORMATION.
------   -----------------

     In  June  2003,   a  large  group  of  brand  and  generic   pharmaceutical
manufacturers,  including the Company,  received  notice from the U.S.  Congress
that the  Committee  on  Energy  and  Commerce  (the  "Committte")  had begun an
industry-wide investigation into pharmaceutical reimbursements and rebates under
Medicaid.  In order to conduct the  investigation,  the  Committee has requested
certain  pricing and other  information  relating to certain  drugs  produced by
these  pharmaceutical  manfacturers  because the investigation has only recently
begun,  the Company is not in a position to determine  what action,  if any, the
federal  government  may take and what the impact such action  could have on our
business, prospects or financial conditions.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.
------   --------------------------------

      (a)  Exhibits:
           10.9.4    Amendment to Employment  Agreement,  dated as of June 2003,
                     by and between Pharmaceutical Resources, Inc., and Scott L.
                     Tarriff.

           10.9.5    Terms  of  Separation  from  Employment,   Consulting,  and
                     Post-Employment  Obligations,  dated as of June  18,  2003,
                     between  Pharmaceutical  Resources,  Inc.  and  Kenneth  I.
                     Sawyer.

                                      -24-
<PAGE>

           10.48     Amended and Restated License and Supply Agreement, dated as
                     of April 16,  2003,  among SB  Pharmco  Puerto  Rico  Inc.,
                     SmithKline  Beecham  Corporation,  Beecham Group p.l.c. and
                     Par Pharmaceutical, Inc.*

           10.49     Amended  and  Restated  Settlement  Agreement,  dated as of
                     April  16,  2003,  among  SmithKline  Beecham  Corporation,
                     Beecham  Group  p.l.c.  and Par  Pharmaceutical,  Inc.  and
                     Pentech Pharmaceuticals, Inc.*

           31.1      Certification  by the Executive Vice President  pursuant to
                     Rule 13a-14(a) of the Exchange Act.

           31.2      Certification  by the Chief Financial  Officer  pursuant to
                     pursuant to Rule 13a-14(a) of the Exchange Act.

           32.1      Certification  by the Executive Vice President  pursuant to
                     18 U.S.C.  Section 1350, as adopted pursuant to Section 906
                     of the Sarbanes-Oxley Act of 2002.

           32.2      Certification by the Chief Financial Officer pursuant to 18
                     U.S.C.  Section 1350, as adopted pursuant to Section 906 of
                     the Sarbanes-Oxley Act of 2002.

                     * Certain  portions of these exhibits have been omitted and
                     have been filed with the Securities and Exchange Commission
                     pursuant to a request for confidential treatment thereof.

      (b)  Reports on Form 8-K:

           On July 28, 2003,  July 9, 2003 and June 23, 2003,  the Company filed
           Current Reports on Form 8-K.

                                      -25-
<PAGE>

                                    SIGNATURE


     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.



                                  PHARMACEUTICAL RESOURCES, INC.
                                  ------------------------------
                                  (Registrant)




August 11, 2003                   /s/ Scott L. Tarriff
                                  --------------------
                                  Scott L. Tarriff
                                  EXECUTIVE VICE PRESIDENT




August 11, 2003                   /s/ Dennis J. O'Connor
                                  ----------------------
                                  Dennis J. O'Connor
                                  VICE PRESIDENT; CHIEF FINANCIAL OFFICER AND
                                     SECRETARY
                                  (Principal Accounting and Financial Officer)

                                      -26-
<PAGE>

                                  EXHIBIT INDEX


Exhibit Number                          Description
--------------                          -----------

    10.9.4    Amendment to Employment  Agreement,  dated as of June 18, 2003, by
              and between Pharmaceutical Resources, Inc., and Scott L. Tarriff.

    10.9.5    Terms   of   Separation   from   Employment,    Consulting,    and
              Post-Employment  Obligations,  dated as of June 18, 2003,  between
              Pharmaceutical Resources, Inc. and Kenneth I. Sawyer.

    10.48     Amended and  Restated  License and Supply  Agreement,  dated as of
              April 16,  2003,  among SB Pharmco  Puerto  Rico Inc.,  SmithKline
              Beecham Corporation,  Beecham Group p.l.c. and Par Pharmaceutical,
              Inc.*

    10.49     Amended and Restated Settlement  Agreement,  dated as of April 16,
              2003, among SmithKline Beecham  Corporation,  Beecham Group p.l.c.
              and Par Pharmaceutical, Inc. and Pentech Pharmaceuticals, Inc.*

    31.1      Certification  by the Executive  Vice  President  pursuant to Rule
              13a-14(a) of the Exchange Act.

    31.2      Certification  by the Chief  Financial  Officer  pursuant  to Rule
              13a-14(a) of the Exchange Act.

    32.1      Certification  by the  Executive  Vice  President  pursuant  to 18
              U.S.C.  Section  1350,  as adopted  pursuant to Section 906 of the
              Sarbanes-Oxley Act of 2002.

    32.2      Certification by the Chief Financial Officer pursuant to 18 U.S.C.
              Section  1350,   as  adopted   pursuant  to  Section  906  of  the
              Sarbanes-Oxley Act of 2002.

              * Certain  portions of these  exhibits  have been omitted and have
              been filed with the Securities and Exchange Commission pursuant to
              a request for confidential treatment thereof.

                                      -27-