<PAGE>   1
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
                                                                       DRAFT # 1
                                                                         7/30/97




                       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: June 30, 1997
                                -------------

_____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                      27,530,100
--------------------------------------            -----------------------------
                Class                             Outstanding at July 30 , 1997



<PAGE>   2

                                SEPRACOR INC.
                                      
                                    INDEX
                                      
PART I - FINANCIAL INFORMATION

Item 1.   Consolidated Condensed Financial Statements

          Consolidated Balance Sheets as of 
          June 30, 1997 and December 31, 1996 (Unaudited)               3

          Consolidated Statements of Operations for the
          Three and Six Month Periods Ended June 30, 1997
          and 1996 (Unaudited)                                          4

          Consolidated Statements of Cash Flows for the 
          Six Month Periods Ended June 30, 1997 and 1996 (Unaudited)    5

          Notes to Consolidated Interim Financial Statements            6


Item 2.   Management's Discussion and Analysis of Financial             9
          Condition and Results of Operations



PART II - OTHER INFORMATION                                            12


SIGNATURES                                                             15




                                      2
<PAGE>   3

                                  SEPRACOR INC.
                         CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
 (In thousands)                                         JUNE 30,         DECEMBER 31,
                                                          1997              1996
                                                       -----------       ------------
<S>                                                     <C>             <C>
            ASSETS
Current Assets:
    Cash and cash equivalents                           $  65,990       $  83,344
    Marketable securities                                  41,463          20,306
    Accounts receivable, net                                2,342           3,129
    Inventories                                             3,271           3,481
    Other current assets                                    2,015           1,588
                                                        ---------       ---------

    Total Current Assets                                  115,081         111,848

Property, plant and equipment, net                         18,789          17,045
Excess of investments over net assets acquired,net          8,935           9,254
Investment in affiliates                                      473           3,100
Other assets                                                5,729           5,442
                                                        ---------       ---------

    Total Assets                                        $ 149,007       $ 146,689
                                                        =========       =========

            LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

    Accounts payable                                    $   3,785       $   4,300
    Accrued expenses                                       15,261          12,174
    Notes payable and current portion
    of capital lease obligation and long-term debt            950             804
    Deferred revenue                                        3,023           3,646
                                                        ---------       ---------

    Total Current Liabilities                              23,019          20,924

Long-term debt and capital lease obligation                 3,924           4,387
Convertible subordinated debentures                        80,880          80,880
                                                        ---------       ---------

    Total Liabilities                                     107,823         106,191
                                                        ---------       ---------

Minority interest                                           3,825           4,006
Convertible redeemable preferred stock                      6,400           6,100

Stockholders' Equity:
    Common stock                                            2,752           2,727
    Additional paid-in capital                            215,256         214,399
    Unearned compensation, net                               (108)           (234)
    Accumulated deficit                                  (186,865)       (186,905)
    Equity adjustments                                        (76)            405
                                                        ---------       ---------

    Total Stockholders' Equity                             30,959          30,392
                                                        ---------       ---------

    Total Liabilities and Stockholders' Equity          $ 149,007       $ 146,689
                                                        =========       =========
</TABLE>

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

                                       3
<PAGE>   4



                                SEPRACOR INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                  FOR THE THREE AND SIX-MONTH PERIODS ENDED
                            JUNE 30,1997 AND 1996
                                 (UNAUDITED)

(In thousands, except per share amounts)
<TABLE>
<CAPTION>
                                     THREE MONTH PERIODS ENDED  SIX MONTH PERIODS ENDED,
                                             JUNE 30,                  JUNE 30,
                                             --------                  --------
                                        1997         1996        1997       1996
                                        ----         ----        ----       ----
                                                                        
                                                                        
<S>                                   <C>         <C>         <C>         <C>
REVENUES                                                                
                                                                        
Products                              $  1,606    $  3,869    $  4,994    $  6,826
R&D, license fees & royalties              779         673         830         829
                                      --------    --------    --------    --------
                                                                        
     Total Revenues                      2,385       4,542       5,824       7,655
                                                                        
Cost of goods sold                         994       2,071       2,926       3,333
                                      --------    --------    --------    --------
                                                                        
Gross margin                             1,391       2,471       2,898       4,322
                                                                        
OPERATING EXPENSES                                                      
                                                                        
Research and development                11,268       7,737      23,003      14,016
Sales and marketing                      1,416         844       2,477       1,876
Administration                           2,794       2,997       5,465       5,911
Patent costs                               343         183         655         403
                                      --------    --------    --------    --------
                                                                        
     Total Operating Expenses           15,821      11,761      31,600      22,206
                                                                        
(Loss) from operations                 (14,430)     (9,290)    (28,702)    (17,884)
                                                                        
OTHER INCOME(EXPENSE)                                                   
                                                                        
Interest income                          1,807       1,722       3,171       3,492
Interest expense                        (1,501)     (1,517)     (2,990)     (2,987)
Other income(expense)                       92         (59)        168         (73)
Equity in loss of investees             (1,385)     (2,094)     (2,071)     (5,375)
Gain on sale of ChiRex Inc.                 --          --      30,069          --
                                      --------    --------    --------    --------
                                                                        
     Total Other Income(Expense)          (987)     (1,948)     28,347      (4,943)
                                                                        
Net (loss) before minority                                              
  interests                            (15,417)    (11,238)       (355)    (22,827)
                                                                        
Minority interest in                                                    
  subsidiary                               226         (18)        395         492
                                      --------    --------    --------    --------
                                                                        
Net income (loss)                     $(15,191)   $(11,256)   $     40    $(22,335)
                                      ========    ========    ========    ========
                                                                        
Dividends on preferred stock              (150)         --        (300)         --
                                      --------    --------    --------    --------
                                                                        
Net (loss) applicable to                                                
  common shares                       $(15,341)   $(11,256)   $   (260)   $(22,335)
                                      ========    ========    ========    ========
                                                                        
Net (loss) per common and                                               
  common equivalent share             $  (0.56)   $  (0.42)   $  (0.01)   $  (0.83)
                                      ========    ========    ========    ========
                                                                        
Weighted average common                                                 
  shares outstanding                    27,499      26,910      27,452      26,872
                                      ========    ========    ========    ========

</TABLE>

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

                                        4
<PAGE>   5

                                  SEPRACOR INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
 (In thousands)                                              SIX MONTH PERIODS ENDED
                                                                      JUNE 30

                                                               1997             1996
                                                            ----------       ----------

<S>                                                         <C>              <C>      
Cash flows from operating activities:
Net income (loss)                                           $      40        $(22,335)
Adjustments to reconcile net loss to net cash
used in operating activities:
Minority interests in subsidiaries                               (395)           (492)
Gain on sale of equity investee                               (30,069)             --
Depreciation and amortization                                   2,284           1,621
Provision for doubtful accounts                                    93             142
Equity in investee losses                                       2,071           5,375
Loss on disposal of property and equipment                          5              10
Changes in operating assets and liabilities:
Accounts receivable                                               621             541
Inventories                                                       (70)             18
Other current assets                                             (497)           (467)
Accounts payable                                                 (389)            604
Accrued expenses                                                3,168           1,204
Deferred revenue                                                 (618)            463
                                                            ---------       ---------

Net cash (used in) operating activities                       (23,756)        (13,316)

Cash flows from investing activities:
Purchases of marketable securities                            (41,516)        (77,749)
Sales of marketable securities                                 20,358          31,500
Additions to property and equipment                            (3,540)         (7,391)
Proceeds from sale of equipment                                    --              90
Net proceeds from sale of equity investee                      30,625              --
Other assets                                                     (376)          1,574
                                                            ---------       ---------

Net cash provided by (used in)
investing activities                                            5,551         (51,976)

Cash flows from financing activities:
Net proceeds from issuances of common stock                     1,309             480
Borrowings of long term debt                                      150              --
Repayments of long term debt                                     (532)           (368)
(Repayments) borrowings under line of credit agreements            64          (2,255)
                                                            ---------       ---------

Net cash provided by (used in) financing activities               991          (2,143)

Effect of exchange rates on cash and cash equivalents            (140)             35
                                                            ---------       ---------
Net decrease in cash and cash equivalents                     (17,354)        (67,400)
Cash and cash equivalents at beginning of period               83,344         135,818
                                                            ---------       ---------
Cash and cash equivalents at end of period                  $  65,990       $  68,418
                                                            =========       =========
</TABLE>

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

                                        5
<PAGE>   6


                        SEPRACOR INC.
     NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS


1. Basis of presentation:

The accompanying consolidated 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
the Company's annual financial statements have been condensed or omitted. The
year-end consolidated condensed balance sheet data was derived from unaudited
financial statements, but does not include all disclosures required by generally
accepted accounting principles. The consolidated interim financial statements,
in the opinion of management, reflect all adjustments (including normal
recurring accruals) necessary for a fair presentation of the results for the
interim periods ended June 30, 1997 and 1996.

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, 1996, which are
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, filed with the Securities and Exchange Commission.


2. Inventories:

Inventories consist of the following:

                                    June 30,        December 31,
                                      1997             1996
                                      ----             ----

Raw materials                       $1,016            $1,155
Work in progress                       299               310
Finished goods                       1,956             2,016
                                    ------            ------

                                    $3,271            $3,481
                                    ======            ======

3. Net (Loss) Per Common Share:

For the three and six months ended June 30, 1996, net (loss) per common and
common equivalent share is computed based on net (loss) and the weighted
average number of common shares outstanding during the period. For the three and
six months ended June 30, 1997, primary net (loss) per share is calculated based
on the net (loss) adjusted for preferred stock dividend requirements and the
weighted average number of common shares outstanding during the period.



                                      6
<PAGE>   7


4. Other

The Financial Accounting Standards Board issued Statement Of Financial
Accounting Standard No. 128 ("SFAS 128"), "Earnings Per Share", which modifies
the way in which earnings per share ("EPS") is calculated and disclosed. Upon
adoption of this standard for the fiscal period ending December 31, 1997,
Sepracor will disclose basic EPS. Basic 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. The adoption of FAS 128
will not change the way EPS is presently calculated by Sepracor. 

The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standard No. 130, "Reporting Comprehensive Income." This Statement
requires that changes in comprehensive income be shown in a financial statement
that is displayed with the same prominence as other financial statements. The
Statement will become effective for fiscal years beginning after December 15,
1997. Sepracor will adopt the new standard beginning in the first quarter of the
fiscal year ending December 31, 1998.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SEAS No. 131). SFAS No. 131 specifies new
guidelines for determining a company's operating segments and related
requirements for disclosure. Sepracor is in the process of evaluating the
impact of the new standard on the presentation of the financial statements and
the disclosure therein. The Statement will become effective for fiscal years
beginning after December 15, 1997. Sepracor will adopt the new standard for the
fiscal year ending December 31, 1998.

5. ChiRex:

A registration statement for the offering to the public of the 3,489,301 shares
of ChiRex common stock held by Sepracor was declared effective by the Securities
and Exchange Commission on March 24, 1997. On March 31, 1997 Sepracor received
net proceeds of approximately $31,125,000 after payment of the underwriting
discounts and commissions but before payment of the other expenses associated
with the offering. As a result of this transaction, Sepracor recognized a gain
of $30,069,000 which was recorded as other income.

6. Litigation

Sepracor and BioSepra are defendants in three lawsuits brought by PerSeptive
Biosystems, Inc. ("PerSeptive") in the United States District Court for the
District of Massachusetts. In actions commenced in October 1993 and January
1995, PerSeptive alleged that Sepracor's and BioSepra's manufacture and sale of
HyperD chromatography media infringe four of PerSeptive's United States patents.
PerSeptive sought unspecified monetary damages as well as injunctive relief. In
a separate action, PerSeptive alleged that certain statements made by Sepracor
and BioSepra with respect to the performance of HyperD media, performance of
PerSeptive's POROS media, and the internal structures of POROS and HyperD media,
including statements made in BioSepra's prospectus dated March 24, 1994,
constitute false advertising. Two additional perfusion chromatography patents
have been issued to PerSeptive. The new perfusion chromatography patents, which
have not yet been asserted against Sepracor or BioSepra in the litigation,
contain claims similar to the other patents that Sepracor and BioSepra are
alleged to have infringed.

BioSepra has received an opinion from its patent counsel to the effect that a
properly informed court should conclude the manufacture, use and/or sale by
BioSepra or its customers of the present HyperD products do not infringe any
valid claims of the three United States patents relating to "perfusion
chromatography", which PerSeptive has asserted against Sepracor and BioSepra.
PerSeptive also alleges that another United States patent, which relates to the
chemistry of certain coatings applied during the manufacture of HyperD (the
"coatings patent"), is infringed by the manufacture, sale or use of HyperD.
Sepracor and BioSepra have asserted a counterclaim charging PerSeptive with
unfair competition.




                                      7
<PAGE>   8
In January 1996, the United States District Court for the District of
Massachusetts in part granted Sepracor's and BioSepra's request for summary
judgment with respect to three of PerSeptive's patents concerning "Perfusion
Chromatography". The Court ruled that the named inventors in the three
"perfusion" patents were not all of the inventors of the alleged inventions
claimed in those patents. PerSeptive moved to correct the inventorship of the
patents to include the unnamed inventors. The Court ruled in April 1997 that
PerSeptive's patents could not be corrected because of deceptive conduct by
the named inventors, and ordered entry of judgment in favor of the defendants.
In response, Sepracor and BioSepra requested that, in addition to dismissing
PerSeptive's infringement claims because the named inventor's deceptive conduct
prevented the patents from being corrected, the Court should also dismiss those
claims on the grounds that the patents were obtained as a result of inequitable
conduct. In that event, two theories would have been presented to the Appeals
Court upon appeal by PerSeptive.

Before any ruling on Sepracor's and BioSepra's request for entry of judgment
against PerSeptive on both theories, the United States Court of Appeals for the
Federal Circuit (to which all appeals of patents cases are directed) ruled in
an unrelated case that the deceptive intentions of named inventors are not
relevant to the question of whether a patent should be corrected, but are 
relevant to the question of inequitable conduct. In response to the new Appeals
Court decision, the Court is likely to modify its earlier ruling that
PerSeptive's patents could not be corrected because of the named inventors'
deceptive intent. Sepracor and BioSepra have requested that any modification
occur simultaneously with any decision by the District Court concerning
inequitable conduct. If the perfusion patents were obtained by inequitable
conduct, they would be invalid and unenforceable.

There can be no assurance that Sepracor and BioSepra will prevail in the
pending litigation, and an adverse outcome in any of the patent infringement
actions on any of the chromatography patents would have a materially adverse
effect on the Sepracor's future business and operation. BioSepra would be
required to repay to Beckman Instruments, Inc. ("Beckman") part of certain
payments if BioSepra terminates Beckman's right to use and sell HyperD media
because a court finds HyperD media infringes any third party patents.

Substantial funds have been and continue to be expended in connection with the
defense of the litigation. Sepracor has agreed to control the defense of the
litigation, and Sepracor and BioSepra share equally in expenses, net of
insurance payments. In addition, in the event of any settlement or judgment
adverse to BioSepra, Sepracor has agreed to indemnify BioSepra from and against
any damages that BioSepra is required to pay with respect to its manufacture,
use or sale HyperD media products occurring prior to March 24, 1994.

7. Summarized income statement information:

The following is the summarized income statement information for HemaSure Inc.
for the three and six month periods ended June 30, 1997:

<TABLE>
<CAPTION>
                             Six Months Ended             Three Months Ended   
                                 June 30                        June 30        
                           1997           1996            1997            1996 
                           ----           ----            ----            ---- 
HEMASURE                                       (in thousands)
--------            
                    
<S>                        <C>           <C>           <C>             <C>     
Net sales                  $ 1,068       $ 2,081       $   517         $ 2,000 
                                                                               
Loss                          (811)         (596)         (330)           (288)
(Loss) from                                                           
  continuing operations     (6,305)       (7,636)       (3,526)         (4,524)
                                                                               
  Net (loss)               $(6,634)      $(6,669)      $(3,744)        $(4,141)

</TABLE>                                                       

Chirex Inc. results are not shown as Sepracor sold its shares on March 31, 1997
and therefore did not consolidate any results for the three month period ended
June 30, 1997.



                                       8
<PAGE>   9

8. Subsequent Event:

In July 1997, the United States Patent and Trademark Office (PTO) declared an
interference between certain claims of Sepracor's issued method-of-use patent
on fexofenadine and certain claims of a patent application filed by Hoechst
Marion Roussel Inc. (HMR) which was filed in May 1992 and has not yet issued.
Fexofenadine, a non-sedating antihistamine for the treatment of allergic
rhinitis, is marketed by HMR as Allegra[TM]. The drug was launched in 1996.

In 1993, Sepracor licensed its US patent application to HMR in exchange for
milestone payments, and future royalty payments. In addition, HMR made an
equity investment in Sepracor. The patent was issued in December 1994, and
expires in 2012. Under the terms of the agreement, royalty payments to Sepracor
begin upon expiration of the composition-of-matter patent of fexofenadine in
2001. 

The primary objective of a patent interference, which can only be declared by
the PTO, is to determine which party was the first to invent when the same
invention is claimed, and to determine the scope of the individual parties'
surviving claims. Sepracor believes that the common claims involved in this
patent interference will survive this review, and HMR's obligations under the
license agreement would continue unchanged. In this event, Sepracor's patent
would continue in full force, and should provide enhanced protection against
potential generic competition of Allegra[TM]. However, in the event HMR's
patent application prevails, certain of their royalty obligations may
terminate. 

The license agreement between Sepracor and HMR provides for resolution by
arbitration in an effort to expedite resolution and minimize cost, in the event
that the PTO seeks to clarify inventorship.


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


RESULTS OF OPERATIONS

   Overview


The consolidated financial statements include the accounts of Sepracor Inc. and
its majority and wholly owned subsidiaries, including BioSepra, Versicor and
Sepracor Canada Limited.

A registration statement for the offering to the public of the 3,489,301 shares
of ChiRex common stock held by Sepracor was declared effective by the Securities
and Exchange Commission on March 24, 1997. On March 31, 1997 Sepracor received
net proceeds of approximately $31,125,000 after payment of the underwriting
discounts and commissions but before payment of the other expenses associated
with the offering. As a result of this transaction, Sepracor recognized a gain
of $30,069,000 which was recorded as other income.

         Three and six months ended June 30, 1997 and 1996

Product sales were $1,606,000 in the three months ended June 30, 1997 compared
to $3,869,000 in the same period in 1996. Product sales for the six months ended
June 30, 1997 were $4,994,000 compared to $6,826,000 in the same period in 1996.

Product sales are primarily attributable to BioSepra's sales of bioprocessing   
supplies and equipment. The decrease in revenue is attributed to fluctuations in
the timing of large production scale media orders and to the absence of
stocking orders from a major distributor of BioSepra's research instruments.  
The Company believes that sales of BioSepra's HyperD media products, which were
introduced in 1993, have been adversely affected by, and may continue to be
adversely affected by, the pending patent litigation with PerSeptive
BioSystems, Inc. ("PerSeptive") - see "Legal Proceedings". BioSepra's future
success will depend, in part, on its ability to generate increased sales of its
HyperD media products and ProSys Workstation.

Cost of products sold as a percentage of product sales was 62% for the three
months ended June 30, 1997 compared to 54% for the same period in 1996. Cost of
products sold as a percentage of product sales was 59% for the six months ended
June 30, 1997 compared to 49% for the same period in 1996. Higher costs in 1997
were the result of commercialization of new media and instrument products by
BioSepra. Management expects fluctuations in cost of products sold as a
percentage of product sales as product mix changes occur from period to period.

Research and development expenses were $11,268,000 in the three months ended
June 30, 1997 compared to $7,737,000 in the same period last year. Research and
development expenses were $23,003,000 for the six months ended June 30, 1997
compared to $14,016,000 in the same period last year. Research and development
spending was primarily focused on preclinical and clinical trials in the
Company's pharmaceutical program. The increase in the periods is primarily due
to the costs associated with Sepracor's Phase III clinical trials for
LevAlbuterol.




                                      9
<PAGE>   10

Sales and marketing, general and administrative and legal expense related to
patents were $4,553,000 for the three months ended June 30, 1997 compared to
$4,024,000 for the same period last year. Selling, marketing, administrative and
legal expense related to patents were $8,597,000 for the six months ended June
30, 1997 compared to $8,190,000 for the same period last year. The increase for
the three month period, is due to an increase in market research costs to
position LevAlbuterol in the market and costs related to infrastructure
development for a speciality sales force, offset by savings from personnel
reductions at BioSepra. The increase for the six month period is offset by the
reduction in bad debt expense due to collections of past due receivables at
BioSepra.

Equity in loss of investees was $1,385,000 for the three months ended June 30,
1997 compared to $2,094,000 in the same period last year. Equity in loss of
investees was $2,071,000 for the six months ended June 30, 1997 and $5,375,000
for the same period last year. The equity in loss consists of the Company's
portion of HemaSure's results for all periods presented and ChiRex's results
through March 31,1997. The decrease in 1997 as compared to 1996 primarily
relates to ChiRex's one-time write-offs of $11,076,000 (Sepracor's portion of
this was $3,544,000) from ChiRex's initial public offering and resulting
transactions in March 1996. 

Interest income, interest expense and other income(expense) was $398,000 for
the three months ended June 30, 1997 compared to $146,000 for the same period
in 1996. Interest income, interest expense and other income(expense) was
$349,000 for the six months ended June 30, 1997 compared to $432,000 for the
same period in 1996. The increase for the three month period is the result of a
Canadian tax refund, more favorable returns on investments and beneficial
foreign exchange rates at BioSepra. The decrease for the six month period is
due to a reduction in interest income as cash and marketable securities are
lower, offset by the favorable effect of foreign exchange rates and reduced
borrowings at BioSepra.

Minority interests in subsidiary resulted in a decrease of consolidated net loss
of $226,000 for the three months ended June 30, 1997 compared to an increase in
the consolidated net loss of $18,000 for the same period last year. Minority
interests in subsidiaries resulted in a decrease of consolidated net loss of
$395,000 for the six months ended June 30, 1997 compared to $492,000 for the
same period last year. The increase in the three month period is a result of
increased BioSepra losses over last year's second quarter offset by a reduction
in the percentage of minority interest. The decrease in the six month period is
due to a reduction in losses coupled with a reduction in the percentage of
minority interest.


LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents plus marketable securities of Sepracor and its
subsidiaries, including BioSepra, totaled $107,453,000 at June 30, 1997,
compared to $103,650,000 at December 31, 1996. Cash and cash equivalents plus
marketable securities of Sepracor, excluding BioSepra, at June 30, 1997 were
$103,618,000.

The net cash used in operating activities for the six months ended June 30,1997
was $23,756,000. The net cash used in operating activities includes net income
of $40,000 and non-cash charges of $4,453,000. This was offset by the gain
on sale of ChiRex of $30,069,000 and the minority interest in subsidiary portion
of the net loss of $395,000. The accounts payable and accrued expense balances
increased a total of $2,779,000 from the December 31, 1996 balances primarily
due to increased research and development accruals.

In 1994, Sepracor, BioSepra and HemaSure entered into an equipment leasing
arrangement that provides for a total of up to $2,000,000 of financing to
Sepracor and its subsidiaries for the purpose of financing capital equipment in
the U.S. All outstanding amounts are collateralized by the assets so financed
and are guaranteed by Sepracor. At June 30, 1997, there was $1,127,000
outstanding under this credit facility, of which Sepracor's portion was 
$313,000.



                                      10
<PAGE>   11

At June 30, 1997, Sepracor guaranteed $838,000 of outstanding bank borrowings
of BioSepra SA, BioSepra's wholly owned French subsidiary.

In 1994, Sepracor's wholly-owned subsidiary, Sepracor Canada Limited, entered
into two credit agreements with two Canadian provincial and federal business
development agencies for approximately $2,960,000 in term debt, of which
$2,590,000 is at an annual interest rate of 9.25% and $370,000 is interest free.
As of June 30, 1997, approximately $2,960,000 of such term debt had been
received by Sepracor Canada Limited. Sepracor Canada Limited also received a
grant of approximately $740,000.

In 1995, Versicor entered into a Convertible Subordinated Note Agreement ("the
Note Agreement") with Sepracor. Under this Note Agreement, Sepracor agrees to
loan to Versicor until October 2, 1998, such sums as Versicor may from time to
time request but may not exceed $4,700,000 of principal. The Note Agreement
shall accrue interest at the prime rate plus 1/2% (9% at March 31, 1997) not to
exceed 9.5%. The Note Agreement is convertible, at the option of Sepracor, into
Versicor Series B Convertible Preferred Stock by dividing the amount
outstanding, including principle and interest, by $0.7833. The amount of
principal and interest outstanding at June 30, 1997 under the Note Agreement was
$5,263,000.

In 1996, Versicor entered into a loan agreement with Sepracor. Under this
agreement, Sepracor agrees to loan to Versicor, such amounts as Versicor from
time to time requests but which may not exceed, in the aggregate principal
amount at any one time $7,500,000. As of June 23, 1997, this agreement was
amended to a Convertible Subordinated Note, providing that accumulated
principal and interest payments due to Sepracor, shall be convertible, at the
option of Sepracor, into Versicor Series A Convertible Preferred Stock, by
dividing the amount outstanding, including principal and interest, by $.7833.
The loan accrues interest equal to the prime rate minus 1/4% (8.25% at June 30,
1997). This rate is subject to change under certain circumstances. The total 
amount outstanding under this agreement was $5,869,000 at June 30, 1997.

In 1996, Sepracor, BioSepra and Versicor entered into a revolving credit
agreement with a commercial bank that provides for borrowing of up to an
aggregate of $10,000,000. BioSepra and Versicor can borrow up to $3,000,000
each. All borrowings are collateralized by certain assets of the companies. The
credit agreement contains covenants relating to minimum tangible capital base,
minimum cash or cash equivalents, minimum liquidity ratio and maximum leverage
for Sepracor and BioSepra. Sepracor is a guarantor of all outstanding
borrowings. At June 30, 1997, there was no amount outstanding under this
agreement. The annual interest rate on such borrowings is at the lower of the
prime rate or LIBOR plus 1.75%.

In 1996, Versicor entered into a term loan agreement with a commercial bank that
provides for borrowing of up to $3,000,000 for the purpose of financing capital
equipment purchases. No individual term loan can be less than $500,000 and shall
be payable in sixteen equal quarterly installments commencing on January 1, 1998
with the final payment of the balance on December 31, 2001 or such earlier date
that the balance shall have been reduced to zero. There were no amounts
outstanding under this term loan agreement at June 30, 1997. The annual interest
rate on such borrowings is at the bank's Fixed Quoted Rate plus 1/2% or the
prime rate.

Certain of the information contained in this Quarterly Report on Form 10-Q,
including information with respect to the Company's other plans and strategy for
business, consists of forward looking statements. Important factors that could
cause actual results to differ materially from the forward-looking statements
are described in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996. In addition, the Company will require substantial additional
funds for its research and product development programs, operating expenses, the
pursuit of regulatory approvals and expansion of its production, sales and
marketing capabilities. Adequate funds for these purposes, whether through
equity or debt financings, collaborative or other arrangements with corporate 


                                      11


<PAGE>   12

partners or from other sources, may not be available when needed or on terms
acceptable to the Company. Insufficient funds could require the Company to
delay, scale back or eliminate certain of its research and product development
programs or to license to third parties to commercialize products or
technologies that the Company would otherwise develop or commercialize itself.
While the Company believes that its available cash balances, will be sufficient
to meet its capital requirements into 1998 the Company may need to raise
additional funds to support its long-term product development and
commercialization programs. There can be no assurance that such capital will be
available on favorable terms, if at all. The Company's cash requirements may
vary materially from those now planned because of results of research and
development, results of product testing, relationships with customers, changes
in focus and direction of the Company's research and development programs,
competitive and technological advances, patent developments, the FDA regulatory
process, the capital requirements of BioSepra and Versicor, and other factors.

Because of the factors, the Company believes that period-to-period comparisons
of its financial results are not necessarily meaningful and it expects that its
results of operations may continue to fluctuate from period to period in the
future.

RECENTLY ISSUED ACCOUNTING STANDARDS

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standard No. 128 ("SFAS 128"), "Earnings per Share", which modifies
the way in which earnings per share (EPS) is calculated and disclosed. Upon
adoption of this standard for the fiscal period ending December 31, 1997,
Sepracor will disclose basic and diluted EPS and will restate all prior period
EPS data presented. Basic EPS excludes dilution and is computed by dividing
income available on common stockholder by the weighted-average number of common
shares outstanding for the period. Diluted EPS, similar to fully diluted EPS,
reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock
or resulted in the issuance of common stock that then shared in the earnings of
the entity. Management believes the adoption of SFAS 128 will not have a
material impact on reported earnings per share. 

The Financial Accounting Standards Board recently issued Statement of Financial
Accounting Standard No. 130, "Reporting Comprehensive Income." This Statement
requires that changes in comprehensive income be shown in a financial statement
that is displayed with the same prominence as other financial statements. The
Statement will become effective for fiscal years beginning after December 15,
1997. Sepracor will adopt the new standard beginning in the first quarter of
the fiscal year ending December 31, 1998.

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting, Standard No. 131, "Disclosures about Segments on an
Enterprise and Related Information" (SFAS No. 131). SFAS No. 131 specifies new
guidelines for determining a company's operating segments and related
requirements for disclosure. Sepracor is in the process of evaluating the impact
of the new standard on the presentation of the financial statements and the
disclosures therein. The Statement will become effective for fiscal years
beginning after December 15, 1997. The Company will adopt the new standard for
the fiscal year ending December 31, 1998.

                                     PART II
                                OTHER INFORMATION

Item 1. Legal proceedings

Sepracor and BioSepra are defendants in three lawsuits brought by PerSeptive
Biosystems, Inc. ("PerSeptive") in the United States District Court for the
District of Massachusetts. In actions commenced in October 1993 and January
1995, PerSeptive alleged that Sepracor's and BioSepra's manufacture and sale of
HyperD chromatography media infringe four of PerSeptive's United States patents.
PerSeptive sought unspecified monetary damages as well as injunctive relief. In
a separate action, PerSeptive alleged that certain statements made by Sepracor
and BioSepra with respect to the performance of HyperD media, performance of
PerSeptive's POROS media, and the internal structures of POROS and HyperD media,
including statements made in BioSepra's prospectus dated March 24, 1994,
constitute false advertising. Two additional perfusion chromatography patents
have been issued to PerSeptive. The new perfusion chromatography patents which
have not yet been asserted against the Sepracor or BioSepra in the litigation,
contain claims similar to the other patents that Sepracor and BioSepra are
alleged to have infringed.

BioSepra has received an opinion of its patent counsel to the effect that a
properly informed court should conclude the manufacture, use and/or sale by
BioSepra or its customers of the present HyperD products do not infringe any
valid claims of the three United States patents relating to "perfusion
chromatography", which PerSeptive has asserted against Sepracor and BioSepra.
PerSeptive also alleges that another United States patent, which relates to the
chemistry of certain coatings applied during the manufacture of HyperD (the
"coatings patent"), is infringed by the manufacture, sale or use of HyperD.
Sepracor and BioSepra have asserted a counterclaim charging PerSeptive with
unfair competition.





                                      12
<PAGE>   13
In January 1996, the United States District Court for the District of
Massachusetts in part granted Sepracor's and BioSepra's request for summary
judgment with respect to three of PerSeptive's patents concerning "Perfusion
Chromatography". The Court ruled that the named inventors in the three
"perfusion" patents were not all of the inventors of the alleged inventions
claimed in those patents. PerSeptive moved to correct the inventorship of the
patents to include the unnamed inventors. The Court ruled in April 1997 that
PerSeptive's patents could not be corrected because of deceptive conduct by
the named inventors, and ordered entry of judgment in favor of the defendants.
In response, Sepracor and BioSepra requested that, in addition to dismissing
PerSeptive's infringement claims because the named inventor's deceptive conduct
prevented the patents from being corrected, the Court should also dismiss those
claims on the grounds that the patents were obtained as a result of inequitable
conduct. In that event, two theories would have been presented to the Appeals
Court upon appeal by PerSeptive.

Before any ruling on Sepracor's and BioSepra's request for entry of judgment
against PerSeptive on both theories, the United States Court of Appeals for the
Federal Circuit (to which all appeals of patents cases are directed) ruled in
an unrelated case that the deceptive intentions of named inventors are not
relevant to the question whether a patent should be corrected, but are relevant
to the question of inequitable conduct. In response to the new Appeals Court
decision, the Court is likely to modify its earlier ruling that PerSeptive's
patents could not be corrected because of the named inventors' deceptive
intent. Sepracor and BioSepra have requested that any modification occur
simultaneously with any decision by the District Court concerning inequitable
conduct. If the perfusion patents were obtained by inequitable conduct, they
would be invalid and unenforceable.

There can be no assurance that the Sepracor and BioSepra will prevail in the
pending litigation, and an adverse outcome in any of the patent infringement
actions on any of the chromatography patents would have a materially adverse
effect on the Sepracor's future business and operation. BioSepra would be
required to repay to Beckman Instruments, Inc. ("Beckman") part of certain
payments if BioSepra terminates Beckman's right to use and sell HyperD media
because a court finds HyperD media infringes any third party patents.

Substantial funds have been and continue to be expended in connection with the
defense of the litigation. Sepracor has agreed to control the defense of the
litigation, and Sepracor and BioSepra share equally in expenses, net of
insurance payments. In addition, in the event of any settlement or judgment
adverse to BioSepra from and against any damages that BioSepra is required to
pay with respect to its manufacture, use or sale HyperD media products occurring
prior to March 24, 1994.



ITEMS 2 - 3. None







                                      13
<PAGE>   14
ITEM 4.       SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDER

At the Company's Annual Meeting of Stockholders held on May 14, 1997, the
following proposals were adopted by the vote specified below:


Proposal             Total For Each Director     Withheld From Each Director
--------             -----------------------     ---------------------------

Election of three 
Class I Directors:

James G. Andress            24,399,445                 134,593
Robert J. Cresci            24,383,645                 150,393
James F. Mrazek             24,410,265                 123,773



<TABLE>
<CAPTION>
                                   For           Against         Abstain       No Vote
                                   ---           -------         -------       -------

<S>                             <C>             <C>              <C>          <C>      
Approval of amendment to
the Company's 1991 Director
Stock Option Plan               21,430,832      1,105,866        108,354      1,888,986

Reapproval of the Company's
1991 Restated Stock
Option Plan                     22,327,158      1,029,330        111,183      1,066,367

To act upon such other
matters                         19,688,111      4,468,119        377,808              0
</TABLE>


ITEM  5.  None




ITEM  6.  Exhibits and Reports on Form 8-K

          a)   Exhibits
               27.1  Financial Data Schedule

          b)   Reports on Form 8-K 
               None


                                      14
<PAGE>   15
  
                                   SIGNATURES

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





                                      SEPRACOR INC.


Date:  August 13, 1997                     /s/ Timothy J. Barberich
                                           -------------------------------------
                                              Timothy J. Barberich
                                               President and Chief
                                                Executive Officer
                                          (Principal Executive Officer)





Date:  August 13, 1997

                                           /s/ Robert F. Scumaci
                                           -------------------------------------
                                             Robert F. Scumaci
                                           Senior Vice President
                                       of Finance and Administration
                                          (Principal Financial and
                                             Accounting Officer)




                                      15