UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

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

                  For the quarterly period ended March 30, 2003

                         COMMISSION FILE NUMBER: 1-10827


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


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


     ONE RAM RIDGE ROAD, SPRING VALLEY, NEW YORK                   10977
          (Address of principal executive offices)               (Zip Code)


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



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

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



         Number of shares of Common Stock outstanding as of May 9, 2003:
                                   33,286,896

<PAGE>



                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                         PHARMACEUTICAL RESOURCES, INC.
                           CONSOLIDATED BALANCE SHEETS
                        (In Thousands, Except Share Data)

                                                     MARCH 30,    DECEMBER 31,
                                ASSETS                 2003         2002
                                ------                 ----         ----
                                                    (Unaudited)   (Audited)
Current assets:
  Cash and cash equivalents                         $ 85,487         $65,121
  Accounts receivable, net of allowances of
   $40,019 and $36,257                                72,177          55,018
  Inventories, net                                    51,397          51,591
  Prepaid expenses and other current assets            4,307           6,381
  Deferred income tax assets                          26,973          32,873
                                                      ------          ------
   Total current assets                              240,341         210,984

Property, plant and equipment, at cost less
 accumulated depreciation and amortization            30,401          27,055

Unexpended industrial revenue bond proceeds            2,000           2,000

Intangible assets, net                                34,387          35,692

Goodwill                                              24,662          24,662

Other assets                                           1,054           1,064
                                                       -----           -----

   Total assets                                     $332,845        $301,457
                                                     =======         =======


                  LIABILITIES AND SHAREHOLDERS' EQUITY
                  ------------------------------------

Current liabilities:
  Current portion of long-term debt                     $544            $596
  Accounts payable                                    15,553          14,637
  Payables due to distribution agreement partners     18,386          18,163
  Accrued salaries and employee benefits               4,142           5,175
  Accrued expenses and other current liabilities      11,554          10,034
  Income taxes payable                                32,526          26,074
                                                      ------          ------
     Total current liabilities                        82,705          74,679
                                                      ------          ------

Long-term debt, less current portion                   1,534           2,426
                                                       -----           -----

Deferred income tax liabilities, net                   3,139           3,562
                                                       -----           -----

Commitments and contingencies

Shareholders' equity:
  Common Stock, par value $.01 per share; authorized:
    90,000,000 shares; issued and outstanding:
    32,942,109 and 32,804,480 shares                     329             328
  Additional paid-in capital                         120,758         118,515
  Retained earnings                                  124,380         101,947
                                                     -------         -------
    Total shareholders' equity                       245,467         220,790
                                                     -------         -------
    Total liabilities and shareholders' equity     $ 332,845        $301,457
                                                     =======         =======




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

                                       2
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                    CONSOLIDATED STATEMENTS OF OPERATIONS AND
                                RETAINED EARNINGS
                    (In Thousands, Except Per Share Amounts)
                                   (Unaudited)



                                                       THREE MONTHS ENDED
                                                       ------------------
                                                      MARCH 30,   MARCH 31,
                                                       2003       2002
                                                       ----       ----

Revenues:
  Net product sales                                 $100,684     $80,508
  Other revenues                                       5,728           -
                                                       -----    --------
Total revenues                                       106,412      80,508
Cost of goods sold                                    51,109      41,233
                                                      ------      ------
Gross margin                                          55,303      39,275
                                                      ------      ------
Operating expenses (income):
  Research and development                             6,469       2,874
  Selling, general and administrative                 11,890       7,516
  Settlements                                              -      (9,051)
  Acquisition termination charges                          -       4,268
                                                    --------       -----
     Total operating expenses                         18,359       5,607
                                                      ------       -----
     Operating income                                 36,944      33,668
Other (expense) income                                   (34)        111
Interest income, net                                     169         254
                                                         ---         ---
Income before provision for income taxes              37,079      34,033
Provision for income taxes                            14,646      13,273
                                                      ------      ------
Net income                                            22,433      20,760
Retained earnings, beginning of period               101,947      22,493
                                                     -------      ------
Retained earnings, end of period                    $124,380     $43,253
                                                     =======      ======

Net income per share of common stock:
  Basic                                                 $.68        $.65
                                                         ===         ===
  Diluted                                               $.67        $.63
                                                         ===         ===

Weighted average number of
  common shares outstanding:
  Basic                                               32,886      32,048
                                                      ======      ======
  Diluted                                             33,634      32,868
                                                      ======      ======











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

                                       3
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In Thousands)
                                   (Unaudited)
                                                          THREE MONTHS ENDED
                                                          ------------------
                                                           MARCH 30, MARCH 31,
                                                             2003      2002
                                                             ----      ----

Cash flows from operating activities:
  Net income                                              $22,433   $20,760

  Adjustments to reconcile net income
   to net cash provided by operating activities:
   Deferred income taxes                                    5,477      (145 )
   Depreciation and amortization                            1,750       930
   Inventory reserves                                        (881)    1,698
   Allowances against accounts receivable                   3,762   (16,561)
   Settlements                                                  -    (9,051 )
   Tax benefit from exercise of stock options               1,092       170
   Other                                                        -         5

  Changes in assets and liabilities:
   (Increase) decrease in accounts receivable             (20,921)   36,736
   Decrease (increase) in inventories                       1,075   (14,544)
   Decrease (increase) in prepaid expenses and
    other assets                                            2,379    (6,496)
   Increase in accounts payable                               916     4,853
   Increase (decrease) in payables due to distribution
    agreement partners                                        223   (10,363)
   Increase in accrued expenses and other liabilities         487     1,741
   Increase in income taxes payable                         6,452     2,010
                                                            -----     -----

      Net cash provided by operating activities            24,244    11,743
                                                           ------    ------

Cash flows from investing activities:
      Capital expenditures                                 (4,086)   (2,055)
                                                            -----     -----
     Net cash used in investing activities                 (4,086)   (2,055)
                                                            -----     -----

Cash flows from financing activities:
    Proceeds from issuances of Common Stock                 1,152       175
    Principal payments under long-term debt and
     other borrowings                                        (944)       (59)
                                                              ---         --
     Net cash provided by financing activities                208        116
                                                              ---        ---

Net increase in cash and cash equivalents                  20,366      9,804
Cash and cash equivalents at beginning of period           65,121     67,742
                                                           ------     ------
Cash and cash equivalents at end of period                $85,487    $77,546
                                                           ======     ======
Supplement disclosure of cash flow information
Cash paid during the year for:  Taxes                     $ 1,625    $11,238
                                                          -------    =======
                                Interest                       33         42
                                                          =======    -------













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

                                       4
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 30, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)



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

NOTE 1 - BASIS OF PREPARATION:

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

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

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

NOTE 2 - STOCK-BASED COMPENSATION:

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


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

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


                                                       THREE MONTHS ENDED
                                                       ------------------
                                                       MARCH 30, MARCH 31,
                                                         2003      2002
                                                         ----      ----
NET INCOME AS REPORTED                                 $22,433   $20,760
  Total stock-based employee compensation expense
   based method for all awards, net of related tax
   effects                                              (2,638)   (1,597)
                                                         -----     -----

PRO FORMA NET INCOME                                   $19,795   $19,163

NET INCOME PER SHARE OF COMMON STOCK:
  AS REPORTED -BASIC                                     $.68       $.65
  AS REPORTED -DILUTED                                   $.67       $.63

  PRO FORMA -BASIC                                       $.60       $.60
  PRO FORMA - DILUTED                                    $.59       $.58

     As permitted  under SFAS 123, the Company  elected to follow APB Opinion 25
and  related  interpretations  in  accounting  for  stock-based  awards  to  its
employees.  Pro-forma  information regarding net income is required by SFAS 123,
as amended by SFAS 148. This required  information is to be determined as if the
Company had accounted  for its  stock-based  awards to employees  under the fair
value  method of that  standard.  The fair value of options  granted  during the
three-month  periods ended March 30, 2003 and March 31, 2002, has been estimated
at the date of grant using the Black-Scholes  stock option pricing model,  based
on the following weighted average assumptions:

                                                      THREE MONTHS ENDED
                                                      ------------------
                                                       MARCH 30,   MARCH 31,
                                                         2003        2002
                                                         ----        ----
Risk free interest rate                                  4.3%         4.3%
Expected term                                         4.9 years     3.0 years
Expected volatility                                     63.7%        67.7%

     It is assumed  that no  dividends  will be paid for the entire  term of the
options.  The  weighted  average  fair  values of  options  granted in the first
quarter of fiscal years 2003 and 2002 were $17.88 and $14.28, respectively.



NOTE 3 - ACCOUNTS RECEIVABLE:
                                                        MARCH 30, DECEMBER 31,
                                                          2003        2002
                                                          ----        ----
     Gross accounts receivable                         $112,196     $91,275
                                                        -------      ------

     Allowances:
     Doubtful accounts                                    1,306       1,156
     Returns and allowances                              17,940      18,868
     Price adjustments                                   20,773      16,233
                                                         ------      ------
                                                         40,019      36,257
     Accounts receivable,
     net of allowances                                  $72,177     $55,018
                                                         ======      ======

     The gross accounts  receivable amounts above at March 30, 2003 and December
31, 2002 are net of provisions for customer rebates of $18,478 and $13,610,  and
chargebacks  of $57,866 and $63,141,  respectively.  Customer  rebates are price
reductions  generally  given to  customers  as an  incentive  to increase  sales
volume.  Rebates are generally  based on a customer's  volume of purchases  made
during an applicable monthly,  quarterly or annual period. Chargebacks are price
adjustments  given to a  wholesale  customer  for product it resells to specific
healthcare  providers on the basis of prices negotiated  between the Company and
the provider.

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

                                       5
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 30, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


price  reduction.  With respect to sales of new generic drugs for which it has a
market exclusivity period, the Company will generally offer price protection and
issue shelf-stock  adjustments.  Price protection accounts for the fact that the
prices of such drugs  typically  will  decline,  sometimes  substantially,  when
additional  generic  manufacturers  introduce  and market a  comparable  generic
product following the expiration of an exclusivity period. Such price protection
plans,  which are common in the  Company's  industry,  generally  provide  for a
credit to customers  with respect to the customer's  remaining  inventory at the
expiration of the  exclusivity  period for the difference  between the Company's
new price and the price at which the Company originally sold the product.

     The Company's exclusivity period for megestrol acetate oral suspension, the
generic version of BMS's Megace(R) Oral Suspension, expired in mid-January 2002.
One generic  competitor was granted  United States Food and Drug  Administration
("FDA")  approval to market another  generic  version of megestrol  acetate oral
suspension  and began  shipping the product to a limited  number of customers in
the second quarter of 2002, but has not captured  significant  market share.  In
addition,  a second  potential  generic  competitor was granted FDA approval for
megestrol  acetate oral  suspension  in May 2003 and has announced it expects to
launch the product early in the third quarter of 2003. At this time, the Company
cannot predict the effect of another generic competitor in the market. According
to its  accounting  policies,  the  Company  did not  record a price  protection
reserve for such  product as of March 30,  2003.  The Company  will  continue to
evaluate  the  effects  of the  potential  competition  and will  record a price
protection reserve when and if it deems necessary.

     The  Company   recorded  other  revenues  of  $5,728  and  a  corresponding
receivable  in the first  quarter 2003 related to its share of Genpharm,  Inc.'s
("Genpharm"),  a Canadian  subsidiary  of Merck  KGaA,  omeprazole  profits.  In
January 1999, the Company and Genpharm,  entered into a profit sharing agreement
(the "Genpharm Profit Sharing Agreement") pursuant to which the Company receives
a portion of the profits,  as defined in the Agreement,  generated from the sale
of omeprazole,  the generic version of Astra Zeneca's ("Astra") Prilosec(R).  In
November 2001, the FDA granted Genpharm 180-day marketing  co-exclusivity for 10
mg and 20 mg doses of  omeprazole.  The  exclusivity  would  have  allowed  only
Genpharm and/or Andrx Corporation ("Andrx"), a pharmaceutical company located in
Fort  Lauderdale,  Florida,  to enter the market during the exclusivity  period.
Under the Genpharm Profit Sharing Agreement, the Company was entitled to receive
at least 30% of profits  generated by Genpharm  based on the sale of omeprazole.
In November 2002, Genpharm and Andrx, in conjunction with KUDCo, a subsidiary of
Schwarz Pharma AG of Germany,  relinquished  exclusivity rights for 10 mg and 20
mg doses of  omeprazole,  thereby  allowing  KUDCo to enter  the  market  with a
generic version of Prilosec(R).  As a result, KUDCo received final ANDA approval
from the FDA for its  generic  version  of  Prilosec(R).  Under  the terms of an
agreement  with  KUDCo,  Genpharm is  receiving  an initial 15% share of KUDCo's
profits, as defined in

                                       6
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 30, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


their  agreement,  with a  subsequent  reduction  over time based on a number of
factors.  The  Company  reduced  its share of  Genpharm's  profit  derived  from
omeprazole pursuant to the Genpharm Profit Sharing Agreement from 30% to 25%. In
December 2002, KUDCo launched  omeprazole  following a successful district court
decision,  but before any decision was reached on appeal. Astra has appealed the
district  court's  patent  infringement  decision.  The full  impact of  KUDCo's
omeprazole launch on the Company's  revenues is presently  unclear since,  among
other things, Astra has introduced a new drug, Nexium(R), in an apparent attempt
to  switch  consumers  using  Prilosec(R)  and  Astra's  decision  to  market  a
non-prescription  form of Prilosec(R) along with Proctor & Gamble,  all of which
may reduce generic sales of omeprazole.

NOTE 4 -INVENTORIES, NET:
                                                        MARCH 30, DECEMBER 31,
                                                          2003        2002
                                                          ----        ----
     Raw materials and supplies, net                    $18,819     $17,400
     Work in process and finished goods, net             32,578      34,191
                                                         ------      ------
                                                        $51,397     $51,591
                                                        =======     =======

      Included in selling,  general and  administrative  expenses  are  shipping
costs of $607 and $592,  respectively,  for the three-month  periods ended March
30, 2003 and March 31, 2002
..

NOTE 5 - INTANGIBLE ASSETS, NET:
                                                        MARCH 30, DECEMBER 31,
                                                          2003        2002
                                                          ----        ----

     BMS Asset Purchase Agreement, net of
      accumulated amortization of $1,811 and
      $1,393                                             $9,889     $10,307
     Product License fees                                 8,903       9,199
     Genpharm Distribution Agreement, net of
      accumulated  amortization of $3,431 and $3,250      7,402       7,583

     Intellectual property, net of accumulated
      amortization of $661 and $451                       5,919       6,129

     Genpharm Profit Sharing Agreement, net of
      accumulated amortization of $226 and $26            2,274       2,474
                                                          -----       -----
                                                        $34,387     $35,692
                                                        =======     =======

     The Company recorded  amortization  expense related to intangible assets of
$1,009 and $320, respectively,  for the three-month periods ended March 30, 2003
and March 31, 2002. Annual  amortization  expense in each of the next five years
related to these intangible assets currently being amortized,  is expected to be
approximately  $4,174 in 2003,  $4,530 in 2004,  $3,115 in 2005, $3,115 in 2006,
$3,115 in 2007 and $8,444 thereafter.

     Pursuant to the  Genpharm  Profit  Sharing  Agreement,  the Company  paid a
non-refundable  fee of $2,500,  which is included in intangible  assets,  net of
accumulated  amortization,  on the consolidated  balance sheets.  The Company is
amortizing  the fee  over  the  cash  flows  generated  by  omeprazole  over its
estimated  useful  life.  Amortization  of $200 for the first  quarter  2003 was
charged to cost of goods sold.

NOTE 6 - SHORT-TERM DEBT:

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

NOTE 7 - INCOME TAXES:

     The Company  accounts for income taxes in accordance with the provisions of
Statement of Financial  Accounting  Standards  No. 109,  "Accounting  for Income
Taxes",  which  requires  the  Company  to  recognize  deferred  tax  assets and

                                       7
<PAGE>

liabilities for the future tax consequences  attributable to differences between
the financial  statement carrying amounts of existing assets and liabilities and
their respective tax bases. At March 30, 2003 and December 31, 2002, the Company
had current  deferred  income tax assets of $26,973 and  $32,873,  respectively,
consisting of temporary  differences,  primarily related to accounts  receivable
reserves,  and net  deferred  income  tax  liabilities  of  $3,139  and  $3,562,
respectively, primarily related to a distribution agreement with Genpharm.

NOTE 8 - CHANGES IN SHAREHOLDERS' EQUITY:

     Changes  in the  Company's  Common  Stock and  Additional  Paid-in  Capital
accounts during the three-month period ended March 30, 2003 were as follows:

                                                                   ADDITIONAL
                                                COMMON STOCK         PAID-IN
                                            SHARES       AMOUNT      CAPITAL
                                            ------       ------      -------
     Balance, December 31, 2002              32,804        $328    $118,515
      Exercise of stock options                 136           1         635
      Compensatory arrangements                   2           -       1,608
                                                  -           -       -----
     Balance, March 30, 2003                 32,942        $329    $120,758
                                             ======         ===     =======

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

NOTE 9 - EARNINGS PER SHARE:

     Outstanding  options of 4,410 and 1,701 as of March 30,  2003 and March 31,
2002,  respectively,  were included in the  computation of diluted  earnings per
share  because the exercise  prices were lower than the average  market price of
the Common Stock in the respective periods.  Outstanding options and warrants of
9 and 2,034 as of March 30,  2003 and March  31,  2002,  respectively,  were not
included in the  computation of diluted  earnings per share because the exercise
prices were  greater  than the average  market  price of the Common Stock in the
respective  periods.  The following is a  reconciliation  of the amounts used to
calculate basic and diluted earnings per share:

                                                      THREE MONTHS ENDED
                                                      ------------------
                                                       MARCH 30, MARCH 31,
                                                         2003      2002
                                                         ----      ----
NET INCOME                                             $22,433   $20,760
BASIC:
Weighted average number of common
  shares outstanding                                   32,886     32,048

NET INCOME PER SHARE OF COMMON STOCK                     $.68       $.65
                                                          ===        ===
ASSUMING DILUTION:
Weighted average number of common
  shares outstanding                                   32,886     32,048
Effect of dilutive options                                748        820
                                                          ---        ---
Weighted average number of common
   shares outstanding                                  33,634     32,868

NET INCOME PER SHARE OF COMMON STOCK                     $.67       $.63
                                                          ===        ===

                                       8
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 30, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)



NOTE 10 - NEW ACCOUNTING PRONOUNCEMENTS:

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


NOTE 11 - COMMITMENTS, CONTINGENCIES AND OTHER MATTERS:

  LEGAL PROCEEDINGS:

     Breath Ltd. filed an Abbreviated New Drug Application  ("ANDA")  (currently
pending  with the FDA) for  latanoprost  (Xalatan(R)),  which was  developed  by
Breath Ltd. of the Arrow Group pursuant to a joint manufacturing and marketing

                                       9
<PAGE>

                         PHARMACEUTICAL RESOURCES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 30, 2003
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)


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

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

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

  OTHER MATTERS:
     In December 2001, the Company made the first payment of a potential  equity
investment of up to $2,438 to be made over a period of time in HighRapids,  Inc.
("HighRapids"),  a Delaware  corporation  and  software  developer  and owner of
patented  rights  to  an  artificial  intelligence  generator.  Pursuant  to  an
agreement  between the Company and HighRapids,  effective  December 1, 2001, the
Company, subject to its ongoing evaluation of HighRapids' operations, has agreed
to  purchase  units,  consisting  of  secured  debt,  evidenced  by  7%  secured
promissory  notes,  up to an aggregate  principal  amount of $2,425 and up to an
aggregate of 1,330 shares of the common stock of  HighRapids.  HighRapids is the
surviving   corporation  of  a  merger  with   Authorgenics,   Inc.,  a  Florida
corporation.  HighRapids is to utilize the  Company's  cash infusion for working
capital and operating expenses. Through March 30, 2003, the Company had invested
$888 of its potential investment. Due to HighRapids current operating losses and
the Company's  evaluation of its  short-term  prospects for  profitability,  the
investment  is  expensed  as  incurred  and  included  in other  expense  on the
consolidated  statements of  operations.  As of March 30, 2003, the Company held
approximately  33% of the  outstanding  common stock of  HighRapids  and has the
exclusive  right to market to the  pharmaceutical  industry  certain  regulatory
compliance  and laboratory  software  currently in  development.  HighRapids has
provided and is currently  providing  certain software  services to the Company.
PRX's Chief Executive  Officer is the President,  Chief Executive  Officer and a
director of HighRapids, for which he receives no compensation.  Another director
of the Company  owns shares of  HighRapids'  common stock (less than 1%) that he
acquired prior to the commitment of the Company discussed above.

     The Company and Three Rivers  Pharmaceuticals,  LLC ("Three Rivers") have a
license and distribution agreement under which the Company expects to market and
distribute  ribavirin 200 mg capsules,  the generic version of Schering-Plough's
("Schering's")  Rebetol(R),  which is  indicated  for the  treatment  of chronic
hepatitis, following approval by the FDA. In February 2003, Three Rivers reached
a settlement with Schering in the patent  litigation  case involving  Rebetol(R)

                                       10
<PAGE>

brand  ribavirin.  Under the terms of the  settlement,  Schering  has provided a
non-exclusive  license to Three Rivers for all its U.S. patents relating to this
product.  In return for this license,  Three Rivers has agreed to pay Schering a
reasonable  royalty  based  upon net sales of Three  Rivers'  and Par's  generic
ribavirin product. The parties were in litigation in the U.S. District Court for
the Western  District of  Pennsylvania.  The agreement is subject to the Court's
dismissal of the relevant lawsuits.

     Three Rivers is also currently in litigation with Ribapharm, Inc. regarding
certain patents that Ribapharm asserts relate to ribavirin. A trial date in that
litigation  is scheduled  for June 2003.  Three  Rivers does not have  tentative
approval from the FDA at this time.

NOTE 12 - SUBSEQUENT EVENTS:

     On April 18, 2003,  GlaxoSmithKline ("GSK") and PRX, through its subsidiary
Par, announced that Pentech Pharmaceuticals,  Inc. ("Pentech") and GSK reached a
settlement in their patent  litigation over Pentech's  proposed  generic capsule
version of GSK's anti-depressant  Paxil(R) (paroxetine  hydrochloride).  Pentech
granted Par rights under Pentech's ANDA for paroxetine  hydrochloride  capsules.
The  settlement  allows Par to distribute in Puerto Rico  substitutable  generic
paroxetine  hydrochloride  immediate  release tablets supplied and licensed from
GSK for a royalty to be paid to GSK. The Company began  distributing the product
in Puerto Rico in May 2003.  Par will be entitled to distribute the same product
in the U.S. market once another generic version fully substitutable for Paxil(R)
becomes available there.


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

                                       11
<PAGE>


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

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

     THE FINANCIAL DATA CONTAINED IN THIS SECTION IS IN THOUSANDS.

RESULTS OF OPERATIONS

GENERAL

     The Company's net income of $22,433 for the three-month  period ended March
30, 2003 increased  $1,673 from $20,760 for the  three-month  period ended March
31, 2002.  Total  revenues of $106,412 in the first quarter 2003  increased 32%,
from $80,508 in the first quarter 2002, primarily due to additional net sales of
new  products  introduced  in 2002 and  other  revenues  from a  profit  sharing
agreement with Genpharm related to omeprazole (Prilosec(R)).  The revenue growth
continued to produce higher gross margins, which increased to $55,303, or 52% of
net sales, in the most recent quarter, from $39,275, or 49% of net sales, in the
corresponding  quarter of 2002.  The improved  results were  achieved  while the
Company  continued to invest in research  and  development.  First  quarter 2003
spending on research and  development of $6,469  increased 125%, from $2,874 for
the  corresponding  quarter of 2002.  First  quarter 2003  selling,  general and
administrative costs of $11,890 increased $4,374 from the corresponding  quarter
of the prior year,  primarily due to legal fees  associated  with  potential new
product  launches,  and higher costs  related to insurance,  information  system
improvements, marketing programs, distribution and personnel. Prior year results
included income from settlements of $9,051 related to the Company's  termination
of its  litigation  with BMS and  acquisition  termination  charges of $4,268 in
connection  with its termination of negotiations  with  International  Specialty
Products ("ISP") related to the Company's  purchase of the combined ISP FineTech
fine chemical business based in Haifa, Israel and Columbus, Ohio.

     In addition to its own product development program, the Company has several
strategic alliances through which it co-develops and distributes  products. As a
result of its internal  program and these  strategic  alliances,  the  Company's
pipeline  of  potential  products  includes  28 ANDAs  (seven of which have been
tentatively  approved),  pending with, and awaiting  approval from, the FDA. The
Company pays a percentage of the gross  profits on sales of products  covered by
its distribution agreements to its strategic partners.  Generally, products that
the Company develops internally,  and without having to split gross profits with
any strategic  partners,  contribute  higher gross margins than products covered
under distribution agreements.

     In July 2001 and August  2001,  the FDA  granted  approvals  for three ANDA
submissions,  one each by Par,  Dr.  Reddy's  Laboratories  Ltd.  ("Reddy")  and
Alphapharm  Pty Ltd.,  an  Australian  subsidiary  of Merck KGaA,  for megestrol
acetate oral  suspension,  fluoxetine 40 mg capsules and fluoxetine 10 mg and 20
mg tablets,  respectively,  which, as first-to-file opportunities,  entitled the

                                       12
<PAGE>

Company to 180-day  marketing  exclusivity  for the products.  The Company began
marketing megestrol acetate oral suspension,  which is not subject to any profit
sharing  agreements,  in July 2001. In August 2001, the Company began  marketing
fluoxetine 40 mg capsules covered under a distribution  agreement with Reddy and
fluoxetine 10 mg and 20 mg tablets  covered under a distribution  agreement with
Genpharm.   Generic  competitors  of  the  Company  received  180-day  marketing
exclusivity  for the generic  version of  fluoxetine  10 mg and 20 mg  capsules,
which the  Company  began  selling in the first  quarter of 2002  following  the
expiration of such other parties'  exclusivity  period. As the Company expected,
additional generic competitors,  with products comparable to all three strengths
of its  fluoxetine  products,  began entering the market in the first quarter of
2002,  eroding the  pricing  that the Company  received  during the  exclusivity
periods,  particularly on the 10 mg and 20 mg strengths. Despite another generic
approval for megestrol acetate oral suspension in the first quarter of 2002, the
Company  still  maintains a  significant  share of the market for this  product;
however, a second generic competitor received FDA approval for megestrol acetate
oral suspension in May 2003. The Company expects the second  competitor to enter
the market early in the third quarter 2003.  Although  megestrol oral suspension
and   fluoxetine   40  mg  capsules  are  expected  to  continue  to  contribute
significantly  to the  Company's  overall  performance,  the rapid growth of the
Company's  product  line  through  new  product  introductions  and, to a lesser
extent,  increased sales of certain existing  products have somewhat reduced its
reliance on each of these key products.

     Critical to the continued  growth of the Company is the introduction of new
manufactured   and   distributed   products  at  selling  prices  that  generate
significant gross margins. The Company, through its internal development program
and  strategic  alliances,  is committed to  developing  new products  that have
limited  competition and longer product life cycles.  In addition to new product
introductions  expected as part of its various strategic alliances,  the Company
plans to continue to invest in its  internal  research and  development  efforts
while seeking additional products for sale through new and existing distribution
agreements,  additional first-to-file  opportunities,  vertical integration with
raw material  suppliers and unique  dosage forms and strengths to  differentiate
its products in the marketplace.  The Company is engaged in efforts,  subject to
FDA approval  and other  factors,  to introduce  new products as a result of its
research and development  efforts and  distribution  and development  agreements
with third  parties.  No assurance  can be given that the Company will obtain or
develop any additional products for sale.

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

REVENUES

     Revenues in the first quarter 2003 of $106,412 increased  $25,904,  or 32%,
from first quarter 2002 revenues of $80,508.  The revenue increase was primarily
due to  higher  net  sales of new  products  introduced  in  2002,  particularly
tizanidine  (Zanaflex(R))  and  nizatidine  (Axid(R)),   which  are  sold  under
distribution agreements with Reddy and Genpharm,  respectively, and the addition
of five older brand products,  which are sold pursuant to an agreement with BMS.
In  addition,  the  Company  recognized  other  revenues  of $5,728 in the first
quarter  2003  from  a  profit  sharing   agreement  with  Genpharm  related  to
omeprazole. Net sales in the first quarter 2003 of fluoxetine,  particularly the
10 mg  and  20 mg  tablets,  decreased  $4,790,  while  megestrol  acetate  oral
suspension net sales increased $1,125 compared to the first quarter of the prior
year. Net sales of distributed products,  which consist of products manufactured
under  contract  and  licensed   products,   were  approximately  54%  and  56%,
respectively,  of the  Company's  net sales in the first quarter of fiscal years
2003 and 2002. The Company is substantially  dependent upon distributed products
for its overall sales,  and, as the Company  continues to introduce new products
under its  distribution  agreements,  it is expected that this  dependence  will
continue.  Any  inability by suppliers to meet expected  demand could  adversely
affect future sales.

     Pursuant to the Genpharm Profit Sharing  Agreement,  the Company receives a
portion of the profits, as defined in the Agreement, generated from KUDCo's sale
of  omeprazole.   In  December  2002,  KUDCo  launched  omeprazole  following  a
successful  district  court  decision,  but before any  decision  was reached on
appeal.  Astra has appealed the district court's patent  infringement  decision.

                                       13
<PAGE>

The full  impact of  KUDCo's  omeprazole  launch on the  Company's  revenues  is
presently  unclear since,  among other things,  Astra has introduced a new drug,
Nexium(R),  in an apparent  attempt to switch  consumers  using  Prilosec(R) and
Astra's  decision to market a  non-prescription  form of Prilosec(R)  along with
Proctor & Gamble,  all of which  may  reduce  generic  sales of  omeprazole.  In
December 2002, the Company began  recognizing  revenues  related to its share of
Genpharm  profits,  which  were  significantly  reduced  as  Genpharm  recovered
out-of-pocket  development  and  legal  expenses  incurred  during  the  product
development  and litigation  process.  The  development  and legal expenses were
substantially  recovered by Genpharm in 2002. The Company anticipates  recording
revenues  of up to $20,000 in fiscal  year 2003 from its share of the profits on
omeprazole.

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

     The  Company's  exclusivity  period for megestrol  acetate oral  suspension
expired in mid-January 2002. One generic  competitor was granted FDA approval to
market another  generic  version of megestrol  acetate oral suspension and began
shipping the product to a limited  number of customers in the second  quarter of
2002.  In  addition,  a second  potential  generic  competitor  was  granted FDA
approval for megestrol  acetate oral suspension in May 2003 and has announced it
expects to launch the product  early in the third quarter of 2003. At this time,
the Company  cannot  predict  the effect of another  generic  competitor  in the
market. Megestrol acetate oral suspension is still anticipated by the Company to
be a significant  profit contributor for fiscal year 2003, despite the potential
of competition.  In accordance with its accounting policies, the Company did not
record a price  protection  reserve for megestrol  acetate oral suspension as of
March 30, 2003.  The Company  will  continue to evaluate the effect of potential
competition and will record a price protection  reserve when, if and as it deems
necessary.

GROSS MARGIN

     The  Company's  gross  margin of  $55,303  (52% of net  sales) in the first
quarter  2003  increased  $16,028  from $39,275 (49% of net sales) for the first
quarter 2002. The gross margin improvement was achieved primarily as a result of
revenues  from  omeprazole  received  pursuant to the  Genpharm  Profit  Sharing
Agreement and additional  contributions from sales of higher margin new products
as described above.

     In the three-month period ended March 30, 2003, lower margin  contributions
from fluoxetine 10 mg and 20 mg, which are subject to profit sharing  agreements
with Genpharm,  were substantially  offset by a higher margin  contribution from
fluoxetine 40 mg due to an increase in the Company's  profit sharing  percentage
under  its  agreement  with  Reddy.  As  discussed  above,   additional  generic
manufacturers  introduced and began  marketing  comparable  fluoxetine  products
following the  expiration of the Company's  exclusivity  period in January 2002,
adversely  affecting  the  Company's  sales  volumes,  selling  prices and gross
margins  for  the  products,  particularly  the 10 mg and 20 mg  strengths.  The
Company's gross margin for megestrol  acetate oral suspension could also decline
when additional  manufacturers introduce and market comparable generic products.
Megestrol  acetate oral suspension  contributed  approximately  $16,780 in gross
margin for the first  quarter  2003  compared  to  $16,088 in the  corresponding
quarter of the prior year.

     Inventory  write-offs  of $412 in the first  quarter  2003  decreased  from
$1,765 in the first  quarter  2002.  The higher  write-offs in 2002 included the
write-off of inventory  for a product whose launch was delayed due to unexpected
patent issues and certain raw material not meeting the Company's quality control
standards.  The  inventory  write-offs,  taken in the normal course of business,
were related  primarily to work in process  inventory  not meeting the Company's
quality  control  standards  and the disposal of finished  products due to short
shelf lives.

OPERATING EXPENSES

  RESEARCH AND DEVELOPMENT

     The Company's  investment of $6,469 in research and  development  increased
substantially  for  the  quarter  ended  March  30,  2003  from  $2,874  for the
corresponding  quarter of 2002. The higher expenses were primarily  attributable
to biostudies,  including the Company's  share of Genpharm's  biostudy costs for
products covered under their distribution agreements.  In addition, higher costs
were incurred for  development  work  performed for the Company by  unaffiliated
companies and  development  work done by FineTech and SVC Pharma,  the Company's
joint venture partnership.

     Total research and  development  costs for fiscal year 2003 are expected to
exceed the total for fiscal year 2002 by approximately  30% to 40%. The increase

                                       14
<PAGE>

is expected as a result of increased internal  development activity and projects
with third parties,  increased research and development venture activity and the
inclusion of FineTech activities for a full year.

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

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

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

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

  SELLING, GENERAL AND ADMINISTRATIVE

     Selling, general and administrative costs of $11,890 (11% of net sales) for
the first  quarter  2003  increased  $4,374 from $7,516 (9% of net sales) in the
corresponding  quarter  of  last  year.  The  increase  in  2003  was  primarily
attributable  to higher legal fees of $1,320,  personnel costs of $945 and, to a
lesser extent,  costs for information  system  improvements,  product  liability
insurance,   marketing  and  distribution  costs  associated  with  new  product
introductions and higher sales volumes. Distribution costs include those related
to shipping product to the Company's  customers,  primarily through the use of a
common carrier or an external  distribution  service.  Shipping costs of $607 in
the first quarter 2003 were comparable to $592 in the  corresponding  quarter of
the prior year.  The Company  anticipates it will continue to incur a high level
of legal expenses related to the cost of litigation connected with potential new
product     introductions     (see    "Notes    to    Consolidated     Financial
Statements-Commitments,  Contingencies  and Other  Matters-Legal  Proceedings").
Although there can be no such  assurance,  selling,  general and  administrative
costs for the full year in 2003 are expected to increase by approximately 10% to
15% from fiscal year 2002.

  SETTLEMENTS

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

  ACQUISITION TERMINATION CHARGES

     On March 15, 2002, the Company terminated its negotiations with ISP related
to the Company's  purchase of the combined ISP FineTech fine chemical  business,
based  in  Haifa,  Israel  and  Columbus,   Ohio.  At  that  time,  the  Company
discontinued   negotiations   with  ISP  as  a  result  of  various  events  and

                                       15
<PAGE>

circumstances   that  occurred   following  the  announcement  of  the  proposed
transaction. Pursuant to the termination of negotiations, the Company paid ISP a
$3,000  break-up  fee in March 2002,  which was  subject to certain  credits and
offsets,  and incurred $1,268 in related  acquisition  costs, both of which were
included in acquisition  termination  charges on the consolidated  statements of
operations in the first quarter 2002.

OTHER EXPENSE/INCOME

     Other  expense was $34 for the first  quarter 2003 compared to other income
of $111 for the first  quarter  2002.  Other income in 2002  included a purchase
option pursuant to a lease agreement.

INTEREST INCOME

     Net interest income of $169 and $254, respectively,  for the first quarters
ended in 2003 and 2002  was  primarily  derived  from  money  market  and  other
short-term investments.

INCOME TAXES

     The Company  recorded  provisions  for income taxes of $14,646 and $13,273,
respectively,  for the  three-month  periods  ended March 30, 2003 and March 31,
2002 based on the applicable federal and state tax rates for those periods. (see
"Notes to Consolidated Financial Statements-Income Taxes").

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

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

FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

     Cash and cash  equivalents of $85,487 at March 30, 2003  increased  $20,366
from $65,121 at December 31, 2002,  primarily due to cash provided by operations
and, to a lesser  extent,  proceeds  from the issuance of shares of Common Stock
from the  exercise of stock  options.  In the first  quarter  2003,  the Company
invested  $4,086 in capital  improvements,  primarily  for the  expansion of its
laboratories  in Spring Valley,  New York,  administrative  offices in Woodcliff
Lake, New Jersey and warehouse facilities in Montebello,  New York. In addition,
the Company purchased new production  machinery for its packaging lines and made
improvements  in its  information  technology.  The  Company's  cash  balance is
primarily  deposited  with  financial  institutions  in money  market  funds and
overnight   investments.   Working   capital,   which  includes  cash  and  cash
equivalents,  increased  $21,331 to $157,636 at March 30, 2003 from  $136,305 at
December 31, 2002,  primarily  from increases in the Company's cash position and
accounts  receivable.  The working  capital ratio of 2.91x at March 30, 2003 was
comparable to the 2.83x at December 31, 2002.

     A summary of the Company's material contractual  obligations and commercial
commitments as of March 30, 2003 were as follows:

                                                 AMOUNTS DUE IN FISCAL YEARS
                                                 ---------------------------
                              TOTAL                              2005 AND
     OBLIGATION           OBLIGATION        2003        2004    THEREAFTER
     ----------           ----------        ----        ----    ----------
     Operating leases        $21,054       $2,812      $2,927      $15,315
     Industrial revenue bond   1,911          397         381        1,133
     Other                       167          147          20            -
                                 ---          ---          --     --------

     Total obligations       $23,132       $3,356      $3,328      $16,448
                              ======        =====       =====       ======

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

                                       16
<PAGE>

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

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

      Pursuant to the Genpharm Profit Sharing Agreement,  Genpharm has agreed to
pay the Company its share of profits  related to KUDCo's sale of  omeprazole  60
days after the month in which the product  was sold.  In  December  2002,  KUDCo
launched omeprazole  following a successful district court decision,  but before
any  decision was reached on appeal.  Astra has  appealed  the district  court's
patent  infringement  decision.  In first  quarter 2003 and December  2002,  the
Company  recognized  $5,728 and $755,  respectively,  of revenues related to its
share of Genpharm profits.  The Company  anticipates  recording up to $20,000 in
revenue and  receiving  up to $17,000 in cash in fiscal year 2003 from its share
of the profits on omeprazole.  To date, the Company  received cash payments from
Genpharm of $4,083 pursuant to this Agreement.

     In November  2002,  the Company  amended an  agreement  with  Pentech  (the
"Supply and Marketing  Agreement"),  dated November  2001, to market  paroxetine
hydrochloride capsules.  Pursuant to the Supply and Marketing Agreement,  Par is
responsible  for all legal  expenses up to $2,000,  which have been  expensed as
incurred,  to obtain  final  regulatory  approval.  Legal  expenses in excess of
$2,000 are fully  creditable  against  future profit  payments.  The Company has
agreed to reimburse  Pentech for costs  associated with the project up to $1,300
for fiscal year 2003, which are charged to research and development  expenses as
they are incurred.  In the first quarter 2003, Par incurred $257 in research and
development costs pursuant to the Supply and Marketing Agreement.

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

     As of March 30, 2003 the Company had payables due to distribution agreement
partners of $18,386, related primarily to amounts due pursuant to profit sharing
agreements with strategic partners. The Company expects to pay these amounts out
of its working capital during the second quarter of 2003.

     In December 2001, the Company made the first payment of a potential  equity
investment  of up to  $2,438  to be made  over a period  of time in  HighRapids.
Pursuant to an agreement between the Company and HighRapids,  effective December
1,  2001,  the  Company,  subject  to  its  ongoing  evaluation  of  HighRapids'
operations,  has agreed to purchase units, consisting of secured debt, evidenced
by 7% secured  promissory  notes, up to an aggregate  principal amount of $2,425
and up to an  aggregate  of 1,330  shares  of the  common  stock of  HighRapids.
HighRapids  is to utilize the Company's  cash  infusion for working  capital and
operating expenses. Through March 30, 2003, the Company had invested $888 of its
potential  investment.  Due to  HighRapids'  current  operating  losses  and the
Company's  evaluation  of  its  short-term  prospects  for  profitability,   the
investments  were  expensed as  incurred  and  included in other  expense on the
consolidated  statements of operations  (see-"Notes  to  Consolidated  Financial
Statements-Commitments, Contingencies and Other Matters-Other Matters").

                                       17
<PAGE>

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

     The Company expects to continue to fund its operations,  including research
and development  activities,  capital  projects,  and its obligations  under the
existing distribution and development  arrangements discussed herein, out of its
working capital and, if necessary, with available borrowings against its line of
credit  with GECC,  if and to the extent  available.  In  addition,  the Company
expects to fund the purchase and  installation of certain capital  equipment for
FineTech in Rhode Island from an industrial revenue bond issued for that purpose
(see  "-Financing").  In fiscal  year 2003,  the Company  expects its  increased
capital  spending to  continue  due to the  expansion  of its  laboratories  and
initiatives related to improvements to its information  systems.  Although there
can be no assurance,  the Company  anticipates it will continue to introduce new
products  and  attempt to increase  sales of certain  existing  products,  in an
effort to offset the loss of sales and gross margins from  competition on any of
its significant products. The Company also seeks to reduce the overall impact of
its top  products  by  adding  additional  products  through  new  and  existing
distribution agreements.

FINANCING

     At  March  30,  2003,  the  Company's  total  outstanding  long-term  debt,
including  the  current  portion,  amounted  to  $2,078.  The  amount  consisted
primarily  of an  industrial  revenue  bond  and  capital  leases  for  computer
equipment. The industrial revenue bond, in the principal amount of $2,000, is to
be paid in  equal  monthly  installments  over a term  of five  years,  maturing
January 1, 2008. The bond is secured by certain equipment of FineTech located in
Rhode  Island,  bears  interest  at 4.27% per annum and is subject to  covenants
based on various  financial  benchmarks.  In February 2003, the Company paid the
remaining balance on a mortgage loan.

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

SUBSEQUENT EVENTS


     On April 18, 2003, GSK and PRX, through its subsidiary Par,  announced that
Pentech and GSK reached a settlement in their patent  litigation  over Pentech's
proposed generic capsule version of GSK's  anti-depressant  Paxil(R) (paroxetine
hydrochloride).  Pentech  granted Par rights under Pentech's ANDA for paroxetine
hydrochloride  capsules.  The settlement allows Par to distribute in Puerto Rico
substitutable  generic  paroxetine   hydrochloride   immediate  release  tablets
supplied  and  licensed  from GSK for a royalty to be paid to GSK.  The  Company
began  distributing the product in Puerto Rico in May 2003. Par will be entitled
to distribute the same product in the U.S.  market once another  generic version
fully substitutable for Paxil(R) becomes available there.


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

                                       18
<PAGE>


            ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     Not applicable.


                        ITEM 4. CONTROLS AND PROCEDURES.


     Within the 90 days prior to the date of this  report,  the Company  carried
out an  evaluation,  under the  supervision  and with the  participation  of its
management,  including the Chief Executive Officer and Chief Financial  Officer,
of the effectiveness of the design and operation of its disclosure  controls and
procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the
Chief  Executive   Officer  and  Chief  Financial  Officer  concluded  that  the
disclosure  controls and  procedures  are  effective in timely  alerting them to
material  information  relating  to  the  Company  (including  its  consolidated
subsidiaries)  required to be included in its periodic  Securities  and Exchange
Commission filings.

     There were no significant  changes in internal controls or in other factors
that could  reasonably  be  expected  to  significantly  affect  these  controls
subsequent to the date of the evaluation referred to above.

                                       19
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

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

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

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

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

     (a)  Exhibits:

        10.9.4  Employment  Agreement,  dated as of December  18,  2002,  by and
                between Pharmaceutical Resources, Inc., and Dr. Arie Gutman.

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

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

     (b)  Reports on Form 8-K:

          On April 23, 2003, the Company filed a Current Report on Form 8-K.

                                       20
<PAGE>

                                    SIGNATURE




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



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




May 14, 2003              /s/ KENNETH I. SAWYER
                          -----------------------------------------
                          Kenneth I. Sawyer
                          CHIEF EXECUTIVE OFFICE AND CHAIRMAN OF THE
                          BOARD OF DIRECTORS
                          (Principal Executive Officer)




May 14, 2003              /s/ DENNIS J. O'CONNOR
                          ------------------------------------------
                          Dennis J. O'Connor
                          VICE PRESIDENT - CHIEF FINANCIAL OFFICER AND SECRETARY
                          (Principal Accounting and Financial Officer)

                                       21
<PAGE>

     CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


    I, Kenneth I. Sawyer,  Chief Executive Officer of Pharmaceutical  Resources,
    Inc., certify that:

1.  I have  reviewed  this  quarterly  report  on Form  10-Q  of  Pharmaceutical
    Resources, Inc.;

2.  Based on my  knowledge,  this  quarterly  report does not contain any untrue
    statement of a material fact or omit to state a material  fact  necessary to
    make the  statements  made, in light of the  circumstances  under which such
    statements  were made, not misleading  with respect to the period covered by
    this quarterly report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
    information  included  in  this  quarterly  report,  fairly  present  in all
    material  respects the financial  condition,  results of operations and cash
    flows of the  registrant  as of,  and for,  the  periods  presented  in this
    quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
    establishing and maintaining  disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a)  designed such disclosure controls and procedures to ensure that material
        information  relating  to the  registrant,  including  its  consolidated
        subsidiaries,  is made  known to us by  others  within  those  entities,
        particularly  during the period in which this quarterly  report is being
        prepared;

   b)   evaluated the effectiveness of the registrant's  disclosure controls and
        procedures  as of a date within 90 days prior to the filing date of this
        quarterly report (the "Evaluation Date"); and

   c)   presented  in  this   quarterly   report  our   conclusions   about  the
        effectiveness  of the disclosure  controls and  procedures  based on our
        evaluation as of the Evaluation Date;

5.  The registrant's other certifying officer and I have disclosed, based on our
    most recent evaluation, to the registrant's auditors and the audit committee
    of registrant's board of directors:

    a)  all  significant  deficiencies  in the design or  operation  of internal
        controls  which  could  adversely  affect  the  registrant's  ability to
        record, process, summarize and report financial data and have identified
        for the  registrant's  auditors  any  material  weaknesses  in  internal
        controls; and

     b) any fraud,  whether or not material,  that involves  management or other
        employees  who  have a  significant  role in the  registrant's  internal
        controls; and

6.  The  registrant's  other  certifying  officer and I have  indicated  in this
    quarterly report whether or not there were  significant  changes in internal
    controls  or in other  factors  that  could  significantly  affect  internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective  actions  with regard to  significant  deficiencies  and material
    weaknesses.

Date: May 14, 2003
                                              /s/  KENNETH I. SAWYER
                                              ----------------------
                                                Kenneth I. Sawyer
                                              Chief Executive Officer

                                       22
<PAGE>



     CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


    I, Dennis J. O'Connor, Chief Financial Officer of Pharmaceutical  Resources,
    Inc., certify that:

1.  I have  reviewed  this  quarterly  report  on Form  10-Q  of  Pharmaceutical
    Resources, Inc.;

2.  Based on my  knowledge,  this  quarterly  report does not contain any untrue
    statement of a material fact or omit to state a material  fact  necessary to
    make the  statements  made, in light of the  circumstances  under which such
    statements  were made, not misleading  with respect to the period covered by
    this quarterly report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
    information  included  in  this  quarterly  report,  fairly  present  in all
    material  respects the financial  condition,  results of operations and cash
    flows of the  registrant  as of,  and for,  the  periods  presented  in this
    quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
    establishing and maintaining  disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

    a)  designed such disclosure controls and procedures to ensure that material
        information  relating  to the  registrant,  including  its  consolidated
        subsidiaries,  is made  known to us by  others  within  those  entities,
        particularly  during the period in which this quarterly  report is being
        prepared;

    b)  evaluated the effectiveness of the registrant's  disclosure controls and
        procedures  as of a date within 90 days prior to the filing date of this
        quarterly report (the "Evaluation Date"); and

    c)  presented  in  this   quarterly   report  our   conclusions   about  the
        effectiveness  of the disclosure  controls and  procedures  based on our
        evaluation as of the Evaluation Date;

5.  The registrant's other certifying officer and I have disclosed, based on our
    most recent evaluation, to the registrant's auditors and the audit committee
    of registrant's board of directors:

    a)  all  significant  deficiencies  in the design or  operation  of internal
        controls  which  could  adversely  affect  the  registrant's  ability to
        record, process, summarize and report financial data and have identified
        for the  registrant's  auditors  any  material  weaknesses  in  internal
        controls; and

    b)  any fraud,  whether or not material,  that involves  management or other
        employees  who  have a  significant  role in the  registrant's  internal
        controls; and

6.  The  registrant's  other  certifying  officer and I have  indicated  in this
    quarterly report whether or not there were  significant  changes in internal
    controls  or in other  factors  that  could  significantly  affect  internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective  actions  with regard to  significant  deficiencies  and material
    weaknesses.

Date: May 14, 2003
                                             /s/  DENNIS J. O'CONNOR
                                             -----------------------
                                                Dennis J. O'Connor
                                              Chief Financial Officer

                                       23
<PAGE>
                                  EXHIBIT INDEX


EXHIBIT NUMBER                  DESCRIPTION

      10.9.4            Employment Agreement,  dated as of December 18, 2002, by
                        and between Pharmaceutical Resources, Inc., and Dr. Arie
                        Gutman.

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

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

                                       24