<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

                                   (Mark One)

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

                 For the Quarterly period ended: March 31, 1999

       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              Exchange Act of 1934

             For the transition period from          to
                                           ---------   ---------


                         COMMISSION FILE NUMBER 0-19410
                                               ---------

                                  SEPRACOR INC.
                                  -------------
             (Exact Name of Registrant as Specified in its Charter)


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


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


                                 (508) 481-6700
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 YES /X/ NO / /

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

COMMON STOCK, PAR VALUE $.10 PER SHARE, 32,811,144 SHARES OUTSTANDING AT MAY 11,
1999.

<PAGE>


                                  SEPRACOR INC.

                                      INDEX

<TABLE>
<S>                                                                            <C>
Part I - Financial Information

Item 1. Consolidated Condensed Financial Statements

         Consolidated Condensed Balance Sheets as of
         March 31, 1999 and December 31, 1998 (Unaudited)                        3

         Consolidated Statements of Operations for the Three
         Month Periods Ended March 31, 1999 and 1998
         (Unaudited)                                                             4

         Consolidated Statements of Cash Flows for the Three Month
         Periods Ended March 31, 1999 and 1998 (Unaudited)                       5

         Notes to Consolidated Interim Financial Statements                      6

Item 2. Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                    11

Item 3. Quantitative and Qualitative Disclosure About Market Risk               21

Part II - Other Information                                                     21

Item 1. Legal Proceedings                                                       21

Item 6. Exhibits and Reports on Form 8-K                                        22

Signatures                                                                      23

</TABLE>


                                       2

<PAGE>


                                 SEPRACOR INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>


                                                           March 31,   December 31,
                                                             1999          1998
                                                          ----------   ------------
<S>                                                       <C>          <C>      
                             ASSETS

Current Assets:
 Cash and cash equivalents                                $ 179,999    $ 295,323
 Marketable securities                                      282,488      204,274
 Accounts receivable, net                                     6,350        3,162
 Inventories                                                  6,208        3,572
 Other current assets                                         3,081        2,258
                                                          ----------   ------------
Total Current Assets                                        478,126      508,589

Property, plant and equipment, net                           18,433       17,882
Deferred financing costs, net                                14,419       15,119
Excess of investments over net assets acquired, net           4,798        4,896
Investment in affiliates                                      2,883        1,490
Other assets                                                  3,610        3,337
                                                          ----------   ------------
  Total Assets                                            $ 522,269    $ 551,313
                                                          ----------   ------------
                                                          ----------   ------------

         LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current Liabilities:

 Accounts payable                                         $   8,275    $  10,132
 Accrued expenses                                            32,735       31,915
 Notes payable and current portion
   of capital lease obligation and long-term debt             2,872        2,786
 Deferred revenue and other current liabilities               2,779        2,542
                                                          ----------   ------------
  Total Current Liabilities                                  46,661       47,375

Loan guarantee of affiliate                                   5,000        5,000
Long-term debt and capital lease obligation                   2,716        2,629
Convertible subordinated debentures                         489,475      489,475
                                                          ----------   ------------
  Total Liabilities                                         543,852      544,479
                                                          ----------   ------------
Minority interest                                             2,226        2,445

Stockholders' Equity (Deficit):
 Common stock                                                 3,279        3,266
 Additional paid-in capital                                 310,188      307,668
 Unearned compensation, net                                    (134)        (144)
 Accumulated deficit                                       (336,635)    (306,311)
 Accumulated other comprehensive income (loss)                 (507)         (90)
                                                          ----------   ------------
  Total Stockholders' Equity (Deficit)                      (23,809)       4,389
                                                          ----------   ------------
  Total Liabilities and Stockholders' Equity (Deficit)    $ 522,269    $ 551,313
                                                          ----------   ------------
                                                          ----------   ------------

</TABLE>


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

                                       3

<PAGE>


                                  SEPRACOR INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR THE THREE MONTH PERIODS ENDED
                             MARCH 31, 1999 and 1998
                                  (Unaudited)
                    (In thousands, except per share amounts)


<TABLE>
<CAPTION>

                                                                      Three month periods ended
                                                                       March 31,      March 31,
                                                                          1999         1998
                                                                          ----         ----
<S>                                                                     <C>         <C>     
Revenues:

Product                                                                 $  2,576    $  1,890
Collaborative research and development                                     2,426       1,863
License fees                                                                  21       5,072
Royalties                                                                     59          54
                                                                        --------    --------
     Total Revenues                                                        5,082       8,879

Cost of revenues:
Product                                                                    1,162         964
License fees                                                                  --         400
Royalties                                                                     21          18
                                                                         -------    --------
     Total Cost of Revenues                                                1,183       1,382

Gross Margin                                                               3,899       7,497

     Operating Expenses:

Research and development                                                  18,744      13,367
Sales and marketing                                                        7,009       2,441
Administration                                                             3,850       1,965
Restructuring recoveries                                                      --        (351)
Patent costs                                                               1,016         464
                                                                        --------    --------
     Total Operating Expenses                                             30,619      17,886

Loss from operations                                                     (26,720)    (10,389)

     Other income (expense):

Interest income                                                            6,054       2,812
Interest expense                                                          (8,290)     (3,100)
Other income (expense)                                                       (21)       (109)
Equity in loss of investees                                               (1,684)       (887)

     Total Other Income (Expense)                                         (3,941)     (1,284)

Net loss before minority interests                                       (30,661)    (11,673)

Minority interest in subsidiary                                              337         (45)
                                                                        --------    --------
Net loss                                                                $(30,324)   $(11,718)
                                                                        --------    --------
                                                                        --------    --------
Dividends on preferred stock                                                  --        (150)
                                                                        --------    --------
Net loss applicable to
     common shares                                                      $(30,324)   $(11,868)
                                                                        --------    --------
                                                                        --------    --------
Basic and diluted net loss per common share                             $  (0.93)   $  (0.43)
                                                                        --------    --------
Shares used in computing basic and diluted net loss per common share:
Basic and diluted                                                         32,727      27,910
                                                                        --------    --------

</TABLE>


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


                                       4

<PAGE>


                                  Sepracor Inc.
                      Consolidated Statements of Cash Flows
                                   (Unaudited)
                                 ( in thousands)


<TABLE>
<CAPTION>

                                                                   Three month periods ended
                                                                    March 31,     March 31, 
                                                                      1999          1998 
                                                                    ----------   ----------
<S>                                                                 <C>          <C>       
Cash flows from operating activities:
Net (loss)                                                          $ (30,324)   $ (11,718)
Adjustments to reconcile net loss to net cash
  used in operating activities:
Minority interests in subsidiaries                                       (337)          45
Depreciation and amortization                                           1,762        1,000
Provision for doubtful accounts                                           (44)         (13)
Equity in investee losses                                               1,684          887
Issuance of warrants                                                       --           30
Loss on disposal of property and equipment                                  4            1
Changes in operating assets and liabilities:
Accounts receivable                                                    (2,603)      (1,917)
Inventories                                                            (2,529)        (443)
Other current assets and liabilities                                     (376)      (1,174)
Accounts payable                                                       (2,138)        (987)
Accrued expenses                                                          374        4,324
Deferred revenue                                                          (38)         122
                                                                    ----------   ----------
Net cash (used in) operating activities:                              (34,565)      (9,843)
                                                                    ----------   ----------
Cash flows from investing activities:
Purchases of marketable securities                                   (135,213)     (82,490)
Sales of marketable securities                                         57,000       10,000
Additions to property and equipment                                    (1,616)        (926)
Proceeds from sale of equipment                                             2            3
Investment in affiliate                                                (2,000)          --   
Acquisition of subsidiary, net of cash acquired                           289           --   
Other assets                                                              (14)         (43)
                                                                    ----------   ----------
Net cash used in investing activities:                                (81,552)     (73,456)
                                                                    ----------   ----------
Cash flows from financing activities:
Proceeds from sale of convertible subordinated debentures                  --      189,475
Costs associated with sale of convertible subordinated debentures        (276)      (5,976)
Repurchase of series B redeemable exchangeable preferred stock             --       (6,850)
Net proceeds from issuances of common stock                             1,456          620
Repayments of long term debt and capital leases                          (288)        (124)
Borrowings under line of credit agreements                                  6        2,000
                                                                    ----------   ----------
Net cash provided by financing activities                                 898      179,145
                                                                    ----------   ----------
Effect of exchange rates on cash and cash equivalents                    (105)         (32)
                                                                    ----------   ----------
Net increase (decrease) in cash and cash equivalents                 (115,324)      95,814
Cash and cash equivalents at beginning of period                      295,323       82,579
                                                                    ----------   ----------
Cash and cash equivalents at end of period                          $ 179,999    $ 178,393
                                                                    ----------   ----------
                                                                    ----------   ----------

</TABLE>


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

                                       5

<PAGE>


                                     ITEM 1.
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.  Basis of presentation:

The accompanying consolidated interim financial statements are unaudited and
have been prepared on a basis substantially consistent with the audited
financial statements. Certain information and footnote disclosures normally
included in Sepracor's annual financial statements have been condensed or
omitted. The year-end consolidated condensed balance sheet data was derived from
audited financial statements but does not include all disclosures required by
generally accepted accounting principles. The consolidated interim financial
statements, in the opinion of management, reflect all adjustments (including
normal recurring accruals) necessary for a fair presentation of the results for
the interim periods ended March 31, 1999 and 1998.

The results of operations for the interim periods are not necessarily indicative
of the results of operations to be expected for the fiscal year. These
consolidated interim financial statements should be read in conjunction with the
audited financial statements for the year ended December 31, 1998, which are
contained in Sepracor's Annual Report on Form 10-K for the year ended December
31, 1998, filed with the Securities and Exchange Commission.

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


2.  Inventories:

Inventories consist of the following:

<TABLE>
<CAPTION>

                  March 31,   December 31,
                    1999         1998
                   ------       ------
<S>                <C>          <C>   
Raw materials      $2,269       $  956
Work in progress    1,472          136
Finished goods      2,467        2,480
                   ------       ------
                   $6,208       $3,572
                   ------       ------
                   ------       ------

</TABLE>


                                        6


<PAGE>


3.  Basic and diluted net (loss) per common share

Basic earnings (loss) per share ("EPS") excludes dilution and is computed by
dividing income available to common shareholders by the weighted average number
of common shares outstanding for the period. Diluted EPS is based upon the
weighted average number of common shares outstanding during the period plus the
additional weighted average common equivalent shares during the period. Common
equivalent shares are not included in the per share calculations where the
effect of their inclusion would be anti-dilutive. Common equivalent shares
result from the assumed conversion of preferred stock and convertible debt and
the assumed exercises of outstanding stock options, the proceeds of which are
then assumed to have been used to repurchase outstanding stock options using the
treasury stock method. For the three months ended March 31, 1999 and 1998, basic
and diluted net loss per common share is computed based on the weighted-average
number of common shares outstanding during the period, because the effect of
common stock equivalents would be anti-dilutive.

Included in the three months ended March 31, 1999 and 1998 net loss applicable
to common shares is $0 and $150,000, respectively, of dividends relating to
Series B Redeemable Exchangeable Preferred Stock. Certain securities were not
included in the computation of diluted earnings per share for the three months
ended March 31, 1999 and 1998, because they would have an anti-dilutive effect
due to net losses for such periods. These securities include: (i) options to
purchase 5,440,479 shares of common stock with purchase prices of $1.50 to
$118.25 per share for the three months ended March 31, 1999 and options to
purchase 3,451,667 shares of common stock with purchase prices of $1.00 to
$42.50 per share for the three months ended March 31, 1998; and (ii) 6,402,381
shares of common stock for issuance upon conversion of 7% subordinated
convertible debentures due 2005 and 6 1/4% subordinated convertible debentures
due 2005 for the three months ended March 31, 1999 and 8,109,735 shares of
common stock for issuance upon conversion of 7% subordinated convertible
debentures due 2002 and 6 1/4% subordinated convertible debentures due 2005 for
the three months ended March 31, 1998.

4.  Comprehensive Income

Total comprehensive income is comprised of net income (loss) and net currency
translation adjustments.

<TABLE>
<CAPTION>

(in thousands)                      Three month periods ended
                                      March 31,    March 31,
                                       1999         1998
                                     ----------   ----------
<S>                                  <C>         <C>      
Comprehensive income (loss):
 Net loss                            $(30,324)   $(11,718)
 Cumulative translation adjustment       (417)        (39)
                                     ----------   ----------
Total comprehensive income (loss)    $(30,741)   $(11,757)
                                     ----------   ----------
                                     ----------   ----------

</TABLE>


                                            7

<PAGE>


5.  Business Segments

Sepracor primarily assesses performance and makes operating decisions based 
on Sepracor. Sepracor represents the primary pharmaceutical business, which 
excludes BioSepra and equity investments in HemaSure Inc. ("HemaSure") and 
Versicor Inc. ("Versicor"). Financial information by segment area is 
presented below with adjustments and eliminations, which are primarily made 
up of equity in investee losses and minority interests.

<TABLE>
<CAPTION>

                                                          Eliminations/
Three Months Ended March 31, 1999     Sepracor  Biosepra   Adjustments    Total
---------------------------------     --------  --------   -----------    -----
<S>                                   <C>       <C>         <C>          <C>    
Revenue from unaffiliated customers   $ 2,445   $2,637      $   --       $ 5,082
Equity in investee losses                  --       --       1,684         1,684
Net loss                               28,006      975       1,343        30,324

</TABLE>

6.  Summarized financial information regarding affiliates

On February 25, 1999, Sepracor entered into an agreement with HemaSure pursuant
to which Sepracor invested $2,000,000 in HemaSure in exchange for 1,333,334
shares of HemaSure common stock and for warrants to purchase 667,000 of
additional shares of HemaSure common stock. Sepracor's ownership percentage of
HemaSure is approximately 42%. Sepracor has recorded $1,226,000 as its share of
HemaSure losses for the three month period ended March 31, 1999. At March 31,
1999, Sepracor's investment in HemaSure was $774,000.

Sepracor's ownership percentage of Versicor is approximately 22%. Sepracor 
has recorded $458,000 as its share of Versicor losses for the three month 
period ended March 31, 1999. At March 31, 1999, Sepracor's investment in 
Versicor was $2,109,000.

The following is the summarized income statement information for the Company's
subsidiaries HemaSure and Versicor for the three month periods ended March 31,
1999 and 1998:

<TABLE>
<CAPTION>

                               Three month periods ended
(in thousands)                    March 31,   March 31,
                                    1999        1998
                                  -------    --------
<S>                               <C>        <C>    
HemaSure:

Net sales                         $     4    $    25
Gross profit (loss)                  (330)      (632)
Loss from continuing operations    (2,543)    (3,467)
Net income (loss)                 $(2,918)   $(3,429)

Versicor:

Net sales                         $   100    $    --
Gross profit (loss)                   100         --
Loss from continuing operations    (2,061)    (4,034)
Net loss                          $(2,082)   $(4,034)

</TABLE>


                                        8

<PAGE>


7.  Litigation

On February 12, 1999, the Federal Trade Commission ("FTC") issued a request 
for additional information or documentary materials relating to the Company's 
exclusive license agreement with Eli Lilly and Company ("the Lilly 
Agreement"). The purpose of the request was to investigate whether or not the 
Lilly Agreement constitutes a violation of Section 5 of the Federal Trade 
Commission Act and Section 7 of the Clayton Act. The Company is in the 
process of responding to the request. At the conclusion of its investigation, 
the FTC could institute proceedings seeking to modify the Lilly Agreement or 
to prevent it from becoming effective. While the Company believes that the 
Lilly Agreement does not constitute a violation of the above-mentioned laws, 
the Company is unable to predict the outcome of the proceeding.

In July 1997, the United States Patent and Trademark Office (the "PTO") informed
Sepracor that it had declared an interference between Sepracor's previously
issued method-of-use patent on fexofenadine to treat allergic rhinitis and
another similar patent application of Sepracor, and Hoechst Marion Roussel
Inc.'s ("HMRI") method-of-use patent application on the anti-histaminic effects
of fexofenadine on hepatically impaired patents. The primary objective of a
patent interference, which can only be declared by the PTO, is to determine the
first to invent any overlapping subject matter claimed by more than one party.
In the course of an interference, the parties typically present evidence
relating to their inventive activities as to the overlapping subject matter. The
PTO then reviews the evidence to determine which party has the earliest legally
sufficient inventive date, and, therefore, is entitled to a patent claiming the
overlapping subject matter.

If Sepracor prevails in the interference, Sepracor will retain all of its claims
in its issued patent. If, however, Sepracor loses the interference, HMRI will be
issued a U.S. patent containing its claims involved in the interference and may
not be obligated to pay Sepracor milestone or royalty payments pursuant to the
terms of the license agreement whereby Sepracor licensed its U.S. patent rights
covering fexofenadine to HMRI in 1993. In May 1998, HMRI filed an action in
Belgium alleging that Sepracor's European patent relating to fexofenadine is
invalid in Belgium, or is not infringed by HMRI's sales of fexofenadine in
Belgium and Germany. In September 1998, Sepracor commenced infringement
proceedings in the United Kingdom against HMRI and related companies for
infringement of Sepracor's European patent relating to fexofenadine. Sepracor
and HMRI have agreed to resolve the interference by arbitration. The arbitrator
has been selected and a decision, once rendered, must be submitted to the PTO
for final approval. The proceedings are ongoing and the Company is unable to
predict the timing of the arbitrator's decision or the outcome.

HemaSure is a defendant in two lawsuits brought by Pall Corporation ("Pall"). 
In complaints filed in February 1996 and November 1996, Pall alleged that 
HemaSure's manufacture, use and/or sale of the LeukoNet product infringes 
upon three patents held by Pall.

On October 14, 1996, in connection with the first action concerning U.S. Patent
No. 5,451,321 (the "'321 Patent"), HemaSure filed a motion for summary judgment
of noninfringement. Pall filed a cross motion for summary judgment of
infringement at the same time.

In October 1997, the U.S. District Court of the Eastern District of New York
granted in part Pall's summary judgment motion and held that the LeukoNet
product infringes a single claim from the '321 Patent. HemaSure has terminated
the manufacture, use, sale and offer for sale of the filter subject to the
court's order. HemaSure appealed the October 1997 decision to the Court of
Appeals for the Federal Circuit. Oral arguments were heard in February 1999.
HemaSure now awaits a decision from the Federal Circuit. Remaining discovery
relating to the damages phase of the first action has been completed.

With respect to the second action concerning U.S. Patent No. 4,952,572 (the 
"'572 Patent"), HemaSure has answered the complaint stating that it does not 
infringe any claim of the asserted patents. Further, HemaSure has 
counterclaimed for declaratory judgment of invalidity, noninfringement and 
unenforceability of the '572 Patent. Pall has amended its complaint to add 
Lydall, Inc. ("Lydall"), whose subsidiary supplied filter media for the 
LeukoNet product, as a co-defendant. HemaSure has filed for summary judgment 
of noninfringement, and Pall has cross-filed for summary judgment of 
infringement at the same time. Lydall supported HemaSure's motion for summary 
judgment of noninfringement, and has served a motion for summary judgment 
that the asserted claims of the '572 Patent are invalid as a matter of law. 
Discovery has been completed in the action.

On April 5, 1999, HemaSure and COBE BCT, Inc. filed a complaint for 
declaratory relief against Pall in the U.S. District Court of Colorado. 
HemaSure and COBE BCT, Inc. seek declaratory relief that Pall's U.S. patent 
No's. 4,925,572, 5,229,012, 5,344,561, 5,451,321, 5,501,795 and 5,863,436 are 
invalid and not infringed by HemaSure's r\LS filter and methods of using the 
r\LS filter. No response has been filed.

On April 23, 1999, Pall filed a complaint against HemaSure and COBE BCT, Inc. 
in the Eastern District of New York alleging that HemaSure's r\LS filter 
infringes Pall's '572 patent, tortuously interfered and unfairly competed 
with Pall's business. HemaSure was served with the complaint on April 30, 
1999.

HemaSure believes, based on advice of its patent counsel, that a properly 
informed court should conclude that the manufacture, use and/or sale by 
HemaSure or its customers of the LeukoNet product and the r\LS product did 
not infringe any valid enforceable claim of the two asserted Pall patents. 
HemaSure also believes, based on advice of its patent counsel, that a 
properly informed court should conclude that the manufacture, use and/or sale 
by the Company or its customers of the r\LS filter do not infringe any valid 
enforceable claims of the Pall patents. However, there can be no assurance 
that HemaSure will prevail in the pending litigation, and an adverse outcome 
in a patent infringement action would have a material adverse effect on 
HemaSure's financial condition and future business and operations.

                                        9

<PAGE>


8.  Subsequent Events

SEPRACOR

On May 14, 1999, Sepracor announced that Johnson & Johnson has elected not to 
exercise its option to co-promote norastemizole.

Under the terms of the agreement between Sepracor and Johnson & Johnson, 
Sepracor has worldwide rights to all Johnson & Johnson intellectual property 
covering norastemizole, including the right to reference data from the 
astemizole New Drug Application ("NDA"), for Sepracor's norastemizole NDA 
filing. In exchange, Johnson & Johnson will receive a royalty on Sepracor's 
product sales.

HEMASURE

On May 4, 1999, HemaSure announced it had completed a private placement
financing with COBE Laboratories, Inc. ("COBE"), which is wholly-owned by Gambo
AB, a leading international medical technology and healthcare company.
HemaSure has also amended and restated its distribution agreement with COBE.

COBE purchased 4.5 million shares of HemaSure common stock for an aggregate 
purchase price of $9.0 million. As a result of this investment, COBE owns 
30.2 percent of HemaSure's outstanding common stock. The agreement also 
provides COBE with an option to purchase an additional $3 million of HemaSure 
common stock at any time between August 3, 1999 and May 3, 2000. Should COBE 
exercise its option, the number of shares to be issued will be based upon the 
average closing price of HemaSure's common stock for the thirty-day period 
prior to the exercise. As a result of the transaction Sepracor's ownership of 
HemaSure is reduced to 29%. Sepracor will recognize 29% of HemaSure's losses 
as equity in investee losses.

BIOSEPRA

On April 15, 1999, BioSepra entered into a definitive agreement to sell its
biopharmaceutical drug purification and research consumable business to Life
Technologies for $12 million in cash, subject to certain adjustments at closing.
The closing is expected to occur within 60 days and is subject to the
satisfaction of certain closing conditions.


                                       10

<PAGE>


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

This Quarterly Report on Form 10-Q contains, in addition to historical
information, forward-looking statements, which involve risk and uncertainties.
Sepracor's actual results could differ significantly from the results discussed
in such forward-looking statements. See "Factors Affecting Future Operating
Results" below.

OVERVIEW

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

On May 14, 1999, Sepracor announced that Johnson & Johnson elected not to 
exercise its option to co-promote norastemizole. Sepracor will continue to 
fund clinical development and marketing of the drug, which is currently in 
Phase III clinical trials.

Under the terms of the agreement between Sepracor and Johnson & Johnson, 
Sepracor has worldwide rights to all Johnson & Johnson intellectual property 
covering norastemizole, including the right to reference data from the 
astemizole New Drug Application ("NDA"), for Sepracor's norastemizole NDA 
filing. In exchange, Johnson & Johnson will receive a royalty on Sepracor's 
product sales.

On March 26, 1999, Sepracor announced it had received final approval from the 
U.S. Food and Drug Administration to market Xopenex(TM) (levalbuterol HC1) 
inhalation solution in two dosage strengths for use with a nebulizer for the 
treatment and prevention of bronchospasm. Xopenex is the therapeutically 
active (R)-isomer of racemic albuterol.

On February 25, 1999, Sepracor entered into an agreement with HemaSure Inc. 
("HemaSure") pursuant to which Sepracor invested $2,000,000 in HemaSure in 
exchange for 1,333,334 shares of HemaSure common stock and for warrants to 
purchase 667,000 of additional shares of HemaSure common stock. Sepracor's 
ownership percentage of HemaSure was approximately 42%, thereby making 
HemaSure an affiliate and reportable under the equity method. Sepracor has 
recorded $1,226,000 as its share of HemaSure losses for the three month 
period ended March 31, 1999. At March 31, 1999, Sepracor's investment in 
HemaSure was $774,000.

On February 25, 1999, BioSepra acquired 51% of the outstanding common stock 
of BioSphere Medical, S.A. ("BioSphere"). BioSepra acquired the 51% ownership 
by granting an exclusive license pertaining to certain patents and technology 
and the transfer of certain other technology to Biosphere. BioSepra has the 
option to acquire the remaining 49% of the outstanding common stock of 
BioSphere through December 31, 2004. The results of operations for BioSphere 
are included in BioSepra's operations from the date of acquisition. The 
historical results of operations of BioSphere are not material to BioSepra's 
financial statements.

                                       11

<PAGE>


THREE MONTH PERIODS ENDED MARCH 31, 1999 AND 1998

License fees were $20,440 and $5,000,000 for the three months ended March 31,
1999 and 1998, respectively. The decrease in revenue is due primarily to the
$5,000,000 one-time license payment, which Sepracor received under a license
agreement with Schering-Plough Corporation in 1998.

Product revenues were $2,576,000 and $1,890,000 for the three months ended 
March 31, 1999 and 1998, respectively. The increase in revenue is primarily 
attributed to improved sales performance in Europe for BioSepra's 
chromatography business and the inclusion of the operations of BioSphere 
Medical S.A. in the results of BioSepra for the three month period ended 
March 31, 1999.

Collaborative research and development revenue was $2,426,000 and $1,863,000 for
the three months ended March 31, 1999 and 1998, respectively. The increase is
the result of additional research and development studies being conducted by
Sepracor under the collaborative license agreement between Sepracor and Janssen
Pharmaceutica N.V. ("Janssen"), dated January 30, 1998, for the development of
norastemizole (the "Janssen Norastemizole Agreement").

Cost of product revenues, as a percentage of product revenues, were 45% and 51%
for the three months ended March 31, 1999 and 1998, respectively. The decrease
is primarily due to more favorable product mix by BioSepra.

Research and development expenses were $18,744,000 and $13,367,000 in the three
months ended March 31, 1999 and 1998, respectively. The increase is primarily
due to increased personnel costs related to the quality assurance, quality
control and regulatory infrastructure development as well as increased costs
related to several clinical studies being conducted.

Sales and marketing expenses were $7,009,000 and $2,441,000 for the three months
ended March 31, 1999 and 1998, respectively. The increase is due primarily to
costs related to the hiring and operation of a specialty sales force for
Xopenex(TM) and the introduction of various marketing programs for the
commercial launch of Xopenex(TM).

General and administrative expenses were $3,850,000 and $1,965,000 for the three
months ended March 31, 1999 and 1998, respectively. The increase primarily
consists of Sepracor's recognition of $368,000 of additional amortization of
deferred financing costs as a result of the debenture offerings in February and
December 1998, and an increase of $823,000 in BioSepra's legal and other
professional fees incurred for the sale of the process media business and
acquisition of BioSphere.

Legal expenses related to patents were $1,016,000 and $464,000 for the three 
months ended March 31, 1999 and 1998, respectively. The increase consists 
primarily of $552,000 of costs related to patent filings of Sepracor and in 
connection with the patent interference with HMRI. See "Legal proceedings".

Interest income, interest expense and other income (expense) was ($2,257,000)
and ($397,000) in the three months ended March 31, 1999 and 1998, respectively.
The increase in expense is primarily the result of increased interest expense
related to the Company's 6 1/4% Convertible Subordinated Debentures due 2005
issued in February 1998 and the 7% Convertible Subordinated Debentures due 2005
issued in December 1998, offset by an increase in interest income due to an
increase of the average daily cash balance available for investment.

Equity in loss of investees were $1,684,000 and $887,000 for the three months
ended March 31, 1999 and 1998, respectively. In the three months ended March 31,
1999, the equity in investee loss consists of the Company's portion of HemaSure
and Versicor Inc.("Versicor") losses. In the three months ended March 31, 1998,
the equity in investee loss consists of Sepracor's portion of Versicor losses.
The increase in loss is primarily due to Sepracor's recognition of HemaSure
losses in 1999 partially offset by lower Versicor losses in the first quarter of
1999.

Minority interest in subsidiary resulted in a decrease to consolidated net loss
of $382,000 for the three months ended March 31, 1999, compared to a increase in
net loss of $45,000 for the same period in 1998. The fluctuation in minority
interest is the result of BioSepra's fluctuation in earnings.


                                       12

<PAGE>


Liquidity and Capital Resources

Cash and cash equivalents plus marketable securities of Sepracor and its
subsidiaries, including BioSepra, totaled $462,487,000 at March 31,1999,
compared to $499,598,000 at December 31, 1998. Cash and cash equivalents plus
marketable securities of Sepracor, excluding BioSepra, at March 31, 1999 were
$461,071,000.

The net cash used in operating activities for the three months ended March 31,
1999 was $34,565,000. The net cash used in operating activities includes a net
loss of $30,324,000 adjusted by non-cash charges of $3,068,000. Inventory
balances at March 31, 1999 increased a total of $2,529,000 from the December 31,
1998 balances, primarily due to Sepracor's recording of $2,379,000 of
Xopenex(TM) inventories. Accounts receivable increased by $2,603,000 primarily
due to $2,378,000 of research and development revenue under the Janssen
Norastemizole Agreement, and accounts payable decreased by $2,138,000 due to the
timing of cash disbursements made.

The net cash used in investing activities for the three months ended March 31,
1999 was $81,552,000. Cash was invested primarily in net purchases of marketable
securities of $78,213,000, in purchases of property and equipment of $1,616,000,
and in an investment of $2,000,000 in HemaSure.

We anticipate our existing capital resources and available bank borrowings 
will be sufficient to finance our operations through at least the next three 
years.

In December 1998, Sepracor entered into a license agreement (the "Lilly
(R)-fluoxetine Agreement") with Eli Lilly and Company ("Lilly") under which
Sepracor granted to Lilly exclusive worldwide rights to Sepracor's patents
covering (R)-fluoxetine. (R)-fluoxetine is a new chemical entity patented by
Sepracor, which is a modified form of an active ingredient found in Prozac(R),
marketed by Lilly. Under the terms of the Lilly (R)-fluoxetine Agreement, and
subject to clearance under the Hart Scott Rodino Antitrust Improvements Act of
1976, as amended (the "HSR Act"), Sepracor will receive an initial milestone
payment and license fee of $20,000,000 and up to $70,000,000 in additional
milestone payments, based on the progression of (R)-fluoxetine through
development. In addition, Sepracor will receive royalties on (R)-fluoxetine
worldwide sales, if any, beginning upon first commercial sale. Under the HSR
Act, Sepracor has received a request from the Federal Trade Commission for
additional information in connection with the Lilly (R)-fluoxetine Agreement.
Sepracor plans to fully respond to the request and expects the Lilly
(R)-fluoxetine Agreement to become effective as soon as the Federal Trade
Commission completes its review.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133 "Accounting for Derivative Instruments and
Hedging Activities" ("SFAS 133"). This statement establishes accounting and
reporting standards for derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities. The
statement requires companies to recognize all derivatives as either assets or
liabilities, with the instruments measured at fair value. The accounting for
changes in fair value, gains or losses, depends on the intended use of the
derivative and its resulting designation. The statement is effective for fiscal
years beginning after June 15, 1999. The Company will adopt SFAS 133 by January
1, 2000. The Company expects no impact from SFAS 133 as it currently has no
derivatives.


                                       13

<PAGE>


FACTORS AFFECTING FUTURE OPERATING RESULTS

Certain of the information contained in this Quarterly Report on Form 10-Q,
including information with respect to the safety, efficacy and potential
benefits of Sepracor's ICEs (Improved Chemical Entities) under development and
the scope of patent protection with respect to these products and information
with respect to the other plans and strategy for Sepracor's business and the
business of the subsidiaries and certain affiliates of Sepracor, consists of
forward-looking statements. Important factors that could cause actual results to
differ materially from the forward-looking statements include the following:

Sepracor Has Operating Losses: Sepracor has not been profitable since inception,
and it is possible that it will not achieve profitability. Sepracor incurred net
losses applicable to common shares on a consolidated basis of approximately
$93,433,000 for the year ended December 31, 1998 and $30,324,000 for the three
month period ended March 31, 1999. Sepracor expects to continue to incur losses
in future periods.

Many of Sepracor's Products are in the Early Stage of Product Development and
May Not Be Developed Successfully: Sepracor is focused on the development of
ICEs. Most of Sepracor's ICEs are still undergoing clinical trials or are at the
early stages of development. Sepracor's drugs may not provide greater benefits
or fewer side effects than the original versions of these drugs and its research
efforts may not lead to the discovery of new drugs with improved
characteristics. All of Sepracor's drugs under development will require
significant additional research, development, preclinical and/or clinical
testing, regulatory approval and a commitment of significant additional
resources prior to their commercialization. Sepracor's potential products may
not:

    o    be developed successfully;

    o    be proven safe and efficacious in clinical trials;

    o    offer therapeutic or other improvements over comparable drugs;

    o    meet applicable regulatory standards;

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

    o    be successfully marketed.

There Are Uncertainties Involved with Patents: Sepracor's success depends in
part on its ability to obtain and maintain patents, protect trade secrets and
operate without infringing upon the proprietary rights of others. Sepracor has
filed various patent applications covering the composition of, and the methods
of using, single-isomer or active-metabolite forms of various compounds for
specific applications.

Sepracor may not be issued patents in respect of the patent applications already
filed or that it may file in the future. Moreover, the patent position of
companies in the pharmaceutical industry generally involves complex legal and
factual questions, and recently has been the subject of much litigation. No
consistent policy has emerged from the U.S. Patent and Trademark Office, or the
PTO or the courts regarding the breadth of claims allowed or the degree of
protection afforded under patents and other proprietary rights. Therefore, any
patents Sepracor has obtained, or obtains in the future, may be challenged,
invalidated or circumvented.


                                       14

<PAGE>


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

Developing new products and processes is expensive and time consuming.
Therefore, it is important for Sepracor to obtain patent and trade secret
protection for significant new technologies, products and processes. Protection
of Sepracor's proprietary rights from unauthorized third-party use requires that
the rights either be covered by valid and enforceable patents or be maintained
in confidence as trade secrets. Some of the technology that Sepracor uses in its
products is not covered by any patents or patent applications. In the absence of
patent protection, competitors may adversely affect Sepracor's business by
developing independently substantially equivalent technology. This independent
development may circumvent any trade secret protection applicable to Sepracor's
products.

Sepracor is Involved In a Patent Interference: In July 1997, the PTO informed
Sepracor that it had declared an interference between Sepracor's use patent on
fexofenadine to treat allergic rhinitis and another similar use patent
application filed by it, and HMRI's use patent application on the
anti-histaminic effects of fexofenadine on hepatically impaired patients. The
primary objective of a patent interference, which only the PTO can declare, is
to determine which party first invented the overlapping subject matter claimed
by more than one party. In the course of an interference, the parties typically
present evidence relating to their invention of the overlapping subject matter.
The PTO then reviews the evidence and issues a patent in the overlapping subject
matter to the party it believes has the earliest legally sufficient date of
invention.

The process to resolve an interference can take many years and the outcome of
interferences varies considerably. If Sepracor loses the interference, HMRI will
be issued a U.S. patent for the overlapping subject matter. Further, HMRI may
not be obligated to pay the milestone or royalty payments called for in the
existing agreement in which Sepracor licenses its U.S. patent rights covering
fexofenadine to HMRI. If Sepracor prevails in the interference, it will retain
all of its claims in Sepracor's issued patent. A favorable decision, however,
does not ensure meaningful protection of Sepracor's proprietary rights.

Sepracor is using arbitration to resolve the interference, and the arbitration
proceeding is ongoing. The arbitrator may or may not render a decision during
the first half of 1999. Once rendered, the arbitrator's decision must be
submitted to the PTO for final approval.

There is No Certainty that Sepracor will Obtain Government Approvals; The
Approval Process is Costly and Lengthy: The U.S. Food and Drug Administration,
or the FDA, and similar foreign agencies must approve the marketing and sale of
pharmaceutical products developed by Sepracor or its development partners. The
regulatory process to obtain marketing approval requires clinical trials of a
product to establish its safety and efficacy. Problems that may arise during
clinical trials include:

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

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

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


                                       15

<PAGE>


The clinical trial and regulatory approval process can take many years and
require substantial expenditures. Sepracor may not obtain regulatory approval
for products on a timely basis, if at all. With respect to certain of Sepracor's
ICEs, Sepracor has been able to shorten the regulatory approval process by
relying on the parent drug's preclinical and clinical toxicology data already on
file with the FDA. However, it is possible that the FDA will not permit Sepracor
to use this strategy in the future. Accordingly, Sepracor may be required to
expend significant resources to complete preclinical and clinical studies for
its other ICEs which would significantly delay the regulatory approval process.

Sepracor's failure to obtain regulatory approval on a timely basis and any
unanticipated significant expenditures on preclinical and clinical studies could
adversely affect Sepracor's financial condition. Even if the FDA grants Sepracor
regulatory approval of a product, such approval may be subject to limitations on
the indicated uses for which the product may be marketed or contain requirements
for costly post-marketing follow-up studies.

If Sepracor fails to comply with applicable regulatory requirements, it may be
subject to fines, suspension or withdrawal of regulatory approvals, product
recalls, seizure of products, operating restrictions and criminal prosecutions.

Risks Due to Sepracor's Limited Sales and Marketing Experience: Sepracor
currently has very limited sales and marketing experience. If Sepracor
successfully develops and obtains regulatory approval for the products it is
currently developing, Sepracor expects to license some of them to large
pharmaceutical companies and market and sell others through its direct specialty
sales forces or through other arrangements, including co-promotion arrangements.
Sepracor has established a direct sales force to market its single isomer form
of albuterol, Xopenex. Further, as Sepracor begins to enter into co-promotion
arrangements or market and sell additional products directly, Sepracor will need
to significantly expand its sales force. Sepracor expects to incur significant
expense in expanding its direct sales force.

Sepracor's ability to realize significant revenues from direct marketing and
sales activities depends on its ability to attract and retain qualified sales
personnel in the pharmaceutical industry. If Sepracor is unable to attract and
retain qualified sales personnel, Sepracor will not be able to successfully
expand its marketing and direct sales force on a timely or cost effective basis.
Further, Sepracor's sales and marketing efforts may not be successful, and the
need to comply with FDA limits on drug product marketing, including limits on
claims of comparative safety or efficacy, may inhibit the effectiveness of such
marketing. In addition, Sepracor will need to enter into co-promotion
arrangements with third parties where its direct sales force is neither well
situated nor large enough to achieve maximum penetration in the market. Sepracor
may not be successful in entering into any such arrangements, and the terms of
any such arrangements may not be favorable to it.

Manufacturing Uncertainties: Sepracor currently operates a manufacturing plant
that is cGMP compliant and that it believes can produce commercial quantities of
Xopenex and support the production of its other possible products in amounts
needed for its clinical trials. Sepracor believes it has the capability, without
additional expansion, to scale up its manufacturing processes and manufacture
sufficient amounts of the products, which may be approved for sale. However,
Sepracor will not have the capability to manufacture in sufficient quantities
all of the products which may be approved for sale. Accordingly, Sepracor may be
required to spend money to expand its current manufacturing facility, build an
additional manufacturing facility or contract the production of these drugs to
third-party manufacturers.

Sepracor currently has a supply contract with ChiRex that commits Sepracor to
purchase through December 31, 2001 all of its annual requirements of those drugs
that it will market directly through its specialty sales force, provided ChiRex
meets certain pricing, supply and quality control conditions. Under this supply
agreement, however, Sepracor retains the right to manufacture commercial
quantities of its drugs in its Nova Scotia manufacturing plant.


                                       16

<PAGE>


Sepracor may not successfully scale up its manufacturing processes or maintain
cGMP compliance. Failure in either respect can lead to refusal by the FDA to
approve marketing applications. Failure to maintain cGMP compliance may also be
the basis for action by the FDA to withdraw approvals previously granted and for
other regulatory action.

Sepracor Will Be Exposed to Product Liability Claims and Maintain Product
Liability Insurance: Sepracor's business exposes it to the risk of product
liability claims that are inherent in the testing, manufacturing, marketing and
sale of human health care products. Sepracor maintains limited product liability
insurance coverage for both the clinical trials and commercialization of its
products. It is possible that Sepracor will not be able to obtain further
product liability insurance on acceptable terms, if at all, and that insurance
subsequently obtained will not provide adequate coverage against all potential
claims. If Sepracor is unable to obtain insurance at acceptable cost or
otherwise protect against potential product liability claims, Sepracor could be
exposed to significant liabilities. These liabilities could prevent or interfere
with Sepracor's product commercialization efforts.

Sepracor Depends on Collaborative Partners: Sepracor's ability to commercialize
certain drugs that Sepracor develops is likely to depend significantly on its
continued ability to enter into collaborative agreements with pharmaceutical
companies to fund all or part of the costs to complete the development of such
drugs and to manufacture and/or market such drugs. To date, Sepracor has entered
into five such collaborative agreements. Sepracor has licensed to HMRI its U.S.
patent rights to fexofenadine, which is marketed by HMRI as Allegra(R), and is
entitled to receive royalties on all U.S. sales of Allegra when the patent on
the parent drug expires. Sepracor, however, is currently party to an
interference involving Allegra which, if decided against Sepracor, could result
in the loss of all or substantially all of the royalties to which it is entitled
under the license agreement on future sales of Allegra. See " - Sepracor is
Involved in a Patent Interference." Sepracor has also licensed its worldwide
patent rights in desloratadine to Schering-Plough, pursuant to which it is
entitled to receive royalties from Schering-Plough upon the initial sale of the
product. Sepracor has entered into an agreement with Janssen with respect to the
joint development and co-promotion of norastemizole. Sepracor has exclusively
licensed its norcisapride rights to Janssen, and is entitled to receive
royalties on product sales beginning upon the first commercial sale. These
royalties will escalate upon achievement of sales volume milestones. Sepracor
has exclusively licensed its (R)-fluoxetine rights to Lilly, and, in addition to
initial license and development milestone payments, is entitled to receive
royalties on product sales beginning upon the first commercial sale. This
agreement will be effective on the next business day following the expiration or
earlier termination of the notice and waiting period under the HSR Act. Under
the HSR Act, Sepracor has received a request from the Federal Trade Commission
for additional information in connection with the Lilly (R)-fluoxetine Agreement
and plans to fully respond to the request.

In each of these collaborative arrangements and, to the extent that Sepracor
enters into additional collaborative arrangements, Sepracor depends upon the
efforts of its collaboration partners, and these efforts may not be successful.
If any of Sepracor's collaboration partners were to breach or terminate their
agreements with Sepracor or fail to perform their obligations to Sepracor in a
timely manner, the development and commercialization of the products could be
delayed or terminated. Any delay or termination of this type could have a
material, adverse effect on Sepracor's financial condition and results of
operations. Any failure or inability by Sepracor to perform certain of its
obligations under a collaborative agreement could reduce or extinguish the
benefits to which Sepracor is otherwise entitled under the agreement. Sepracor
may not be able to enter into collaborative agreements for ICEs in the future
and the terms of the collaborative agreements, if any, may not be favorable to
Sepracor.


                                       17

<PAGE>


Sepracor is Highly Leveraged: As of March 31, 1999, Sepracor's total long-term
debt was approximately $492,200,000 and its stockholders' deficit was
approximately $23,809,000. Neither the 6-1/4% convertible subordinated
debentures due 2005 nor the 7% convertible subordinated debentures due 2005
restrict Sepracor's ability or its subsidiaries' ability to incur additional
indebtedness, including debt that ranks senior to the 6-1/4% debentures or the
7% debentures. Additional indebtedness of Sepracor may rank senior to or pari
passu with the 6-1/4% debentures or the 7% debentures in certain circumstances.
Sepracor's ability to satisfy its obligations will depend upon Sepracor's future
performance, which is subject to many factors, including factors beyond its
control. It is possible that Sepracor will be unable to meet its debt service
requirements on the 6-1/4% debentures or the 7% debentures. Moreover, Sepracor
may be unable to repay the 6-1/4% debentures or 7% debentures at maturity or
otherwise in accordance with the debt instruments.

Sepracor May Need Additional Funds: Sepracor may require additional funds for
its research and product development programs, operating expenses, the pursuit
of regulatory approvals and the expansion of Sepracor's production, sales and
marketing capabilities. Historically Sepracor has satisfied its funding needs
through collaborative arrangements with corporate partners or equity or debt
financings. Sepracor cannot assure you that these funding sources will be
available to it when needed in the future, or, if available, will be on terms
acceptable to Sepracor. Insufficient funds could require Sepracor to delay,
scale back or eliminate certain of its research and product development programs
or to license third parties to commercialize products or technologies that
Sepracor would otherwise develop or commercialize itself. Sepracor's cash
requirements may vary materially from those now planned because of factors
including:

    o    increased research and development expenses;

    o    patent developments;

    o    relationships with collaborative partners;

    o    the FDA regulatory process; and

    o    Sepracor's capital requirements.

Sepracor Faces Intense Competition: Sepracor expects to encounter intense
competition in the sale of its future products. Sepracor's competitors include
pharmaceutical companies, biotechnology firms, universities and other research
institutions. The fields in which Sepracor competes are subject to rapid and
substantial technological change. Developments by others may render Sepracor's
products or technologies obsolete or noncompetitive. Many of Sepracor's
competitors and potential competitors have substantially greater resources,
manufacturing and marketing capabilities, research and development staff and
production facilities than Sepracor has.

Fluctuation of Sepracor's Quarterly Operating Results: Sepracor's quarterly
operating results are likely to fluctuate significantly. These fluctuations will
depend on factors, which include:

    o    the timing of collaborative agreements for Sepracor's pharmaceutical
         development candidates and development costs for those pharmaceuticals;

    o    the timing of product sales and market penetration;

    o    the timing of operating expenses, including marketing expenses and the
         costs of expanding and maintaining a direct sales force;

    o    the timing of significant orders for the products of BioSepra; and

    o    the losses of HemaSure and Versicor, to the extent Sepracor is required
         to recognize these losses.


                                       18

<PAGE>


Sepracor's operating results may be affected by the future operating results of
its subsidiaries: Factors that may affect the future operating results of
Sepracor include the ability of BioSepra to obtain additional financing, the
dependence on BioSepra sales of HyperD media, which was introduced in 1993, and
BioSepra's ability to sell its products to customers at the early stage of their
product development cycles.

Additional factors that may affect the future operating results of Sepracor
include the ability of HemaSure to obtain additional financing and HemaSure's
ability to develop commercially viable products.

Because of the foregoing factors, past financial results should not be relied
upon as an indication of future performance. Sepracor believes that
period-to-period comparisons of its financial results are not necessarily
meaningful and it expects that its results of operations may fluctuate from
period to period in the future.

YEAR 2000 ISSUE  

The year 2000 issue is the result of computer programs being written using two
digits (rather than four) to define the applicable year. Any of Sepracor's
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000, which could result in miscalculation or
system failures. In 1996, Sepracor began a comprehensive project, fully
supported by senior management, to determine the risks and impacts of the Year
2000, or Y2K, computer problem on Sepracor's ability to operate into the next
century. This plan took into account Sepracor's status as a pharmaceutical
research and development company, and its transition to a fully-developed
pharmaceutical company, with research and development, manufacturing,
distribution and sales functions. The project relates to the following areas:
(i) Sepracor's internal systems (including information technology systems, such
as financial systems, and non-information technology systems, such as telephones
and facilities); and (ii) the readiness of Sepracor's vendors. As an emerging
pharmaceutical company, direct customers are not expected to play a critical
role in Sepracor's Y2K analysis. In addition, Sepracor's products under
development will not require Y2K compliance.

Department managers in every business area participate in the project, under the
leadership of a Y2K Project Manager. Sepracor began this project in 1996 so as
to incorporate Y2K readiness into its business strategy, and to identify and
replace non-compliant systems and procedures as part of its normal operating
plan and budget.

Y2K State of Readiness: Sepracor has completed its assessment of the impact 
of Y2K on its present and future operations, and has identified computer and 
micro-processor based systems, both hardware and software driven, which could 
potentially be affected by the turnover to the next century. These components 
and systems have been tested for Y2K compliance. A small group of 
non-critical systems are scheduled to be replaced and or upgraded to reach 
compliance as part of our regular business operations plan in the second 
quarter of 1999. 

Sepracor's goal at this point is to be fully Y2K compliant no later than July,
1999. The term "Y2K compliant" as used herein means that all Sepracor systems,
procedures, and products will correctly identify and process without error all
dates, including those calculations which reference leap years, and one or more
centuries.

                                       19

<PAGE>


We are now in the process of requesting Y2K Compliance certification from our 
customers and vendors, and completing any contingency planning that might be 
indicated by this process.  To date, most companies are either fully 
compliant, or plan to be within our timeframe for the completion of this 
project. In addition to written requests for Y2K certification, Sepracor is 
contacting several key suppliers who provide power, telecommunications, or 
other critical resources to the Company, to review their Y2K status. We have 
also completed a review of the outsourcing companies who package, test and 
distribute our products and found them to be in compliance with all Y2K 
issues.

Y2K Costs: Costs related to Year 2000 issues are funded through the 
information technology operating budget and represent an immaterial portion 
of this IT budget. Spending associated with Y2K issues has not caused us to 
defer any other IT projects.

To date, Sepracor has spent approximately $200,000 to retrofit or replace
computer-based systems, which were identified as lacking compliance. This
included the migration of all of Sepracor's desktop computers to an operating
status Sepracor considers to be Y2K certified, through software upgrades or full
system replacements. Sepracor's key telecommunications systems were also
upgraded and/or replaced. These costs have been minimal due to the fact that Y2K
compliance has been a prerequisite to all new systems acquisitions and
maintenance upgrades.

Sepracor estimates that it will incur approximately $250,000 in additional 
direct costs to complete its Y2K certification efforts. These costs include a 
contract with an independent testing firm to perform a platform and system 
review of Sepracor's IT-based systems by June 1999. At this time, Sepracor 
also plans to contract with an independent auditor to perform a full review 
of its compliance efforts, including contingency planning. The additional 
funding will also be used to address any system or process replacement 
requirements that may be identified as these reviews progress.

Y2K Risks: Sepracor relies on third-party suppliers and service providers. If 
these or other parties experience Y2K failures or malfunctions there could be 
an adverse impact on the Company's ability to conduct operations, including 
conducting continued pharmaceutical development efforts and manufacturing 
pharmaceutical products. At this time, the Company does not anticipate this 
worst case scenario to occur, nor does Sepracor anticipate any major 
interruptions in its ability to provide products and services to our 
customers.

Y2K Contingency Plans: The Company has not formalized a contingency plan to 
date because there are almost no legacy systems at Sepracor and very few 
potential issues have surfaced to date. A more formal contingency planning 
effort will be addressed after the certification process is completed in June 
1999. This contingency plan will include alternate vendor selection if 
necessary and also address potential manual procedures in areas where systems 
will not operate properly.

                                       20

<PAGE>


                                     ITEM 3.
           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Information concerning market risk is contained on pages 24 and 25 of the
registrant's 1998 annual report to stockholders and is incorporated by reference
to such annual report.


                                     PART II
                                OTHER INFORMATION

Item 1.  Legal proceedings.

On February 12, 1999, the Federal Trade Commission ("FTC") issued a request 
for additional information or documentary materials relating to the Company's 
exclusive license agreeemnt with Eli Lilly and Company ("the Lilly 
Agreement"). The purpose of the request was to investigate whether or not the 
Lilly Agreement constitutes a violation of Section 5 of the Federal Trade 
Commission Act and Section 7 of the Clayton Act. The Company is in the 
process of responding to the request. At the conclusion of its investigation, 
the FTC could institute proceedings seeking to modify the Lilly Agreement or 
to prevent it from becoming effective. While the Company believes that the 
Lilly Agreement does not constitute a violation of the above-mentioned laws, 
the Company is unable to predict the outcome of the proceeding.

In July 1997, the PTO informed Sepracor that it had declared an interference 
between Sepracor's previously issued method-of-use patent on fexofenadine to 
treat allergic rhinitis and another similar patent application of Sepracor, 
and Hoechst Marion Roussel Inc.'s ("HMRI") method-of-use patent application 
on the anti-histaminic effects of fexofenadine on hepatically impaired 
patents. The primary objective of a patent interference, which can only be 
declared by the PTO, is to determine the first to invent any overlapping 
subject matter claimed by more than one party. In the course of an 
interference, the parties typically present evidence relating to their 
inventive activities as to the overlapping subject matter. The PTO then 
reviews the evidence to determine which party has the earliest legally 
sufficient inventive date, and, therefore, is entitled to a patent claiming 
the overlapping subject matter.

If Sepracor prevails in the interference, Sepracor will retain all of its claims
in its issued patent. If, however, Sepracor loses the interference, HMRI will be
issued a U.S. patent containing its claims involved in the interference and may
not be obligated to pay Sepracor milestone or royalty payments pursuant to the
terms of the license agreement whereby Sepracor licensed its U.S. patent rights
covering fexofenadine to HMRI in 1993. In May 1998, HMRI filed an action in
Belgium alleging that Sepracor's European patent relating to fexofenadine is
invalid in Belgium, or is not infringed by HMRI's sales of fexofenadine in
Belgium and Germany. In September 1998, Sepracor commenced infringement
proceedings in the United Kingdom against HMRI and related companies for
infringement of Sepracor's European patent relating to fexofenadine. Sepracor
and HMRI have agreed to resolve the interference by arbitration. The arbitrator
has been selected and a decision, once rendered, must be submitted to the PTO
for final approval. The proceedings are ongoing and the Company is unable to
predict its outcome.

HemaSure is a defendant in two lawsuits brought by Pall Corporation ("Pall"). In
complaints filed in February 1996 and November 1996, Pall alleged that
HemaSure's manufacture, use and/or sale of the LeukoNet product infringes upon
three patents held by Pall.

On October 14, 1996, in connection with the first action concerning U.S. Patent
No. 5,451,321 (the "'321 Patent"), HemaSure filed a motion for summary judgment
of noninfringement. Pall filed a cross motion for summary judgment of
infringement at the same time.

In October 1997, the U.S. District Court of the Eastern District of New York
granted in part Pall's summary judgment motion and held that the LeukoNet
product infringes a single claim from the '321 Patent. HemaSure has terminated
the manufacture, use, sale and offer for sale of the filter subject to the
court's order. HemaSure appealed the October 1997 decision to the Court of
Appeals for the Federal Circuit. Oral arguments were heard in February 1999.
HemaSure now awaits a decision from the Federal Circuit. Remaining discovery
relating to the damages phase of the first action has been completed.


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<PAGE>


With respect to the second action concerning U.S. Patent No. 4,952,572 (the 
"'572 Patent"), HemaSure has answered the complaint stating that it does not 
infringe any claim of the asserted patents. Further, HemaSure has 
counterclaimed for declaratory judgment of invalidity, noninfringement and 
unenforceability of the '572 Patent. Pall has amended its Complaint to add 
Lydall, Inc. ("Lydall"), whose subsidiary supplied filter media for the 
LeukoNet product, as a co-defendant. HemaSure has filed for summary judgment 
of noninfringement, and Pall has cross-filed for summary judgment of 
infringement at the same time. Lydall supported HemaSure's motion for summary 
judgment of noninfringement, and has served a motion for summary judgment 
that the asserted claims of the '572 Patent are invalid as a matter of law. 
Discovery has been completed in the action.

On April 5, 1999, HemaSure and COBE BCT, Inc. filed a complaint for 
declaratory relief against Pall in the U.S. District Court of Colorado. 
HemaSure and COBE BCT, Inc. seek declaratory relief that Pall's U.S. patent 
No's. 4,925,572, 5,229,012, 5,344,561, 5,451,321, 5,501,795 and 5,863,436 are 
invalid and not infringed by HemaSures r\LS filter and methods of using the 
r\LS filter. No response has been filed.

On April 23, 1999, Pall filed a complaint against HemaSure and COBE BCT, Inc. 
in the Eastern District of New York alleging that HemaSure's r\LS filter 
infringes Pall's '572 patent, tortuously interfered and unfairly competed 
with Pall's business. HemaSure was served with the complaint on April 30, 
1999.

HemaSure believes, based on advice of its patent counsel, that a properly 
informed court should conclude that the manufacture, use and/or sale by 
HemaSure or its customers of the LeukoNet product and the r\LS product did 
not infringe any valid enforceable claim of the two asserted Pall patents. 
HemaSure also believes, based on the advice of its patent counsel, that a 
properly informed court should conclude that the manufacture, use and/or 
sale by the Company or its customers of the r\LS filter do not infringe any 
valid enforceable claism of the Pall patents. However, there can be no 
assurance that HemaSure will prevail in the pending litigations, and an 
adverse outcome in a patent infringement action would have a material adverse 
effect on HemaSure's financial condition and future business and operations.


Item 6.  Exhibits and Reports on Form 8-K

a)       Exhibits:

         27.1 Financial Data Schedule
         27.2 Financial Data Schedule Restated
         99.1 Pages 24 and 25 of Sepracor's 1998 Annual Report filed as 
              Exhibit 13 to the Company's Annual Report on Form 10-K for the 
              year ended December 31, 1998 as filed with the SEC (which is 
              not deemed filed except to the extent that portions thereof are 
              expressly incorporated by reference herein).

b)       Reports on Form 8-K

         None


                                       22

<PAGE>


                                   SIGNATURES

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

                                       SEPRACOR INC.

Date:    May 17, 1999                  /s/ Timothy J. Barberich
                                       -----------------------------
                                           Timothy J. Barberich
                                           President and Chief
                                            Executive Officer
                                       (Principal Executive Officer)


Date:    May 17, 1999                  /s/ Robert F. Scumaci
                                       -----------------------------
                                           Robert F. Scumaci
                                          Senior Vice President
                                       of Finance and Administration
                                       (Principal Accounting Officer)


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