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

                                    FORM 10-Q

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

                  For the quarterly period ended June 26, 1999

                         Commission file number 1-14019

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

             Delaware                                          11-2726505
-------------------------------------------          ---------------------------
   (State or other jurisdiction of                         (I.R.S. Employer
    incorporation or organization)                        Identification No.)

    100 Campus Drive, Florham Park, NJ                          07932
-------------------------------------------          ---------------------------
 (Address of principal executive offices)                     (Zip Code)

                                  973-593-5500
                           --------------------------
                             (Registrant's telephone
                                     number)

      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 |_|

      The number of shares outstanding of the registrant's common stock as of
July 30, 1999 was 32,646,258.

<PAGE>

                           SCHEIN PHARMACEUTICAL, INC.
                                      INDEX

Part I. FINANCIAL INFORMATION                                               PAGE

      Item  1. Condensed Consolidated Financial Statements

                   Condensed Consolidated Balance Sheets as of
                   June 26, 1999 and December 26, 1998                         3

                   Condensed Consolidated Statements of
                   Operations  for the three and six months ended
                   June 26, 1999 and June 27, 1998                             4

                   Condensed Consolidated Statements of Cash
                   Flows for the six months ended June 26, 1999
                   and June 27, 1998                                           5

                   Consolidated Statements of Comprehensive
                   Income for the three and six months ended June
                   26, 1999 and June 27, 1998                                  6

                   Notes to Condensed Consolidated Financial
                   Statements                                                  7

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

      Item  3. Quantitative and Qualitative Disclosures about Market Risk     18

Part II. OTHER INFORMATION

      Item  1. Legal Proceedings                                              19

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

SIGNATURES                                                                    20


                                       2
<PAGE>

PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS

                  SCHEIN PHARMACEUTICAL, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                 June 26,    December 26,
                                                                   1999          1998
                                                               ------------  ------------
                           Assets                              (unaudited)
<S>                                                             <C>          <C>
Current assets:
    Cash and cash equivalents ...............................   $   1,011    $     377
    Accounts  receivable,  less  allowance for possible
     losses of $2,382 and $2,486 ............................      77,682       82,498
    Inventories .............................................     115,477      106,351
    Income taxes receivable .................................          --       15,900
    Other current assets ....................................      14,828       14,884
                                                                ---------    ---------
       Total current assets .................................     208,998      220,010
Property, plant and equipment, net ..........................     111,727      112,224
Product rights, licenses and regulatory approvals, net ......     115,523      107,769
Other assets ................................................      19,842       12,993
                                                                ---------    ---------
                                                                $ 456,090    $ 452,996
                                                                =========    =========

         Liabilities and Stockholders' Equity
Current liabilities:
    Accounts payable and accrued expenses ...................   $  95,049    $  99,122
    Income taxes payable ....................................      10,540        8,626
    Revolving credit and current maturities of long-term debt     111,051      103,975
                                                                ---------    ---------
       Total current liabilities ............................     216,640      211,723
Long-term debt, less current maturities .....................     108,335      124,482
Other non-current liabilities ...............................      40,115       38,306
Commitments and contingencies
Stockholders' equity:
    Common stock, $.01 par value; 100,000 authorized shares;
     issued and outstanding 32,611 and 32,499 shares ........         326          325
    Additional paid-in capital ..............................      98,085       97,176
    Accumulated deficit .....................................     (11,492)     (18,543)
    Accumulated other comprehensive income (loss) ...........       4,081         (473)
                                                                ---------    ---------
       Total stockholders' equity ...........................      91,000       78,485
                                                                ---------    ---------
                                                                $ 456,090    $ 452,996
                                                                =========    =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       3
<PAGE>

                  SCHEIN PHARMACEUTICAL, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except earnings per share)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                        Three Months Ended        Six Months Ended
                                                      ---------------------    ---------------------
                                                       June 26,    June 27,     June 26,    June 27,
                                                         1999        1998         1999       1998
                                                      ---------   ---------    ---------   ---------
<S>                                                   <C>         <C>          <C>         <C>
Net revenues ......................................   $ 130,904   $ 137,974    $ 236,767   $ 284,652
Cost of sales .....................................      87,295      91,821      156,875     186,614
                                                      ---------   ---------    ---------   ---------
       Gross profit ...............................      43,609      46,153       79,892      98,038

Costs and expenses:
       Selling, general and administrative ........      23,254      22,247       44,159      43,819
       Research and development ...................       6,039       7,054       11,207      14,201
       Amortization of intangibles and goodwill ...       1,604       2,574        3,195       5,148
                                                      ---------   ---------    ---------   ---------
Operating income ..................................      12,712      14,278       21,331      34,870
Interest expense, net .............................       4,822       5,055        9,474      11,047
Other expenses (income), net ......................         344        (620)         665      (2,142)
                                                      ---------   ---------    ---------   ---------

Income before provision for income taxes and
       extraordinary item .........................       7,546       9,843       11,192      25,965
Provision for income taxes ........................       2,719       3,400        4,141      10,400
                                                      ---------   ---------    ---------   ---------
Income before extraordinary item ..................       4,827       6,443        7,051      15,565
Extraordinary item: loss on early extinguishment of
       debt, net of income tax ....................          --      (1,660)          --      (1,660)
                                                      ---------   ---------    ---------   ---------
Net income ........................................   $   4,827   $   4,783    $   7,051   $  13,905
                                                      =========   =========    =========   =========

Earnings per share, basic:
       Income before extraordinary item ...........   $    0.15   $    0.20    $    0.22   $    0.52
       Extraordinary item .........................          --       (0.05)          --       (0.06)
                                                      ---------   ---------    ---------   ---------
       Net income .................................   $    0.15   $    0.15    $    0.22   $    0.46
                                                      =========   =========    =========   =========

Earnings per share, diluted:
       Income before extraordinary item ...........   $    0.15   $    0.20    $    0.22   $    0.51
       Extraordinary item .........................          --       (0.05)          --       (0.06)
                                                      ---------   ---------    ---------   ---------
       Net income .................................   $    0.15   $    0.15    $    0.22   $    0.45
                                                      =========   =========    =========   =========

Weighted average common shares and equivalents:
       Basic ......................................      32,610      31,767       32,588      30,230
                                                      =========   =========    =========   =========
       Diluted ....................................      32,654      32,617       32,624      30,599
                                                      =========   =========    =========   =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       4
<PAGE>

                  SCHEIN PHARMACEUTICAL, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                             Six Months Ended
                                                                         ----------------------
                                                                          June 26,     June 27,
                                                                            1999         1998
                                                                         ---------    ---------
<S>                                                                      <C>          <C>
Cash flows from operating activities:
  Net income .........................................................   $   7,051    $  13,905
  Adjustments to reconcile net income to net
   cash flows from operating activities:
    Depreciation and amortization ....................................      11,393       13,092
    Deferred income tax benefit ......................................      (1,195)      (1,192)
    Gain on sale of marketable securities ............................        (356)      (3,196)
    Extraordinary item: loss on early extinguishment of debt, non-cash          --        1,160
    Other ............................................................       1,821        1,227
  Changes in assets and liabilities:
    Accounts receivable ..............................................       5,336       (5,908)
    Inventories ......................................................     (11,427)     (24,415)
    Other current assets .............................................      16,108       (3,557)
    Accounts payable, income taxes payable, accrued expenses
      and other liabilities ..........................................       3,830        6,927
                                                                         ---------    ---------
Net cash provided by (used in) operating activities ..................      32,561       (1,957)
                                                                         ---------    ---------

Cash flows from investing activities:
  Capital expenditures ...............................................      (3,405)     (13,585)
  Product rights and licenses ........................................     (17,000)      (8,811)
  International investments ..........................................      (2,456)      (6,464)
  Proceeds from the sale of marketable securities ....................         986        4,604
  Other, net .........................................................          --         (965)
                                                                         ---------    ---------
Net cash used in investing activities ................................     (21,875)     (25,221)
                                                                         ---------    ---------

Cash flows from financing activities:
  Principal payments on, or repayments of, debt ......................     (92,441)    (147,051)
  Proceeds from issuance of debt .....................................      81,479      119,686
  Net proceeds from initial public offering ..........................          --       52,450
  Proceeds from exercise of employee stock options ...................          11        2,048
  Proceeds from employee stock purchase plan .........................         899           --
  Increase in other non-current assets ...............................          --         (117)
                                                                         ---------    ---------
Net cash provided by (used in) financing activities ..................     (10,052)      27,016
                                                                         ---------    ---------

Net increase (decrease) in cash and cash equivalents .................         634         (162)
Cash and cash equivalents, beginning of period .......................         377          804
                                                                         ---------    ---------
Cash and cash equivalents, end of period .............................   $   1,011    $     642
                                                                         =========    =========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


                                       5
<PAGE>

                  SCHEIN PHARMACEUTICAL, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                             Three Months Ended       Six Months Ended
                                            --------------------    --------------------
                                            June 26,    June 27,    June 26,    June 27,
                                              1999        1998        1999        1998
                                            --------    --------    --------    --------
<S>                                         <C>         <C>         <C>         <C>
Net income ..............................   $  4,827    $  4,783    $  7,051    $ 13,905
                                            --------    --------    --------    --------

Other comprehensive income, net of tax:
   Foreign currency translation
   adjustment ...........................       (232)       (373)         49        (407)
   Unrealized holding gains (losses)
            arising during period .......        128      (1,188)      4,717         548
   Less: reclassification adjustment for
            gains included in net income          --        (238)       (212)     (1,902)
                                            --------    --------    --------    --------
Other comprehensive income (loss) .......       (104)     (1,799)      4,554      (1,761)
                                            --------    --------    --------    --------

Comprehensive income ....................   $  4,723    $  2,984    $ 11,605    $ 12,144
                                            ========    ========    ========    ========
</TABLE>

Components of accumulated other comprehensive income (loss), included in the
Company's balance sheets, are as follows:

<TABLE>
<CAPTION>
                                                       June 26,    December 26,
                                                         1999         1998
                                                     ------------  ------------
    <S>                                                <C>          <C>
    Unrealized gains on marketable securities ....     $ 4,695      $   190
    Cumulative foreign currency translation
          adjustment .............................        (614)        (663)
                                                       -------      -------
                                                       $ 4,081      $  (473)
                                                       =======      =======
</TABLE>


                                       6
<PAGE>

                  SCHEIN PHARMACEUTICAL, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

NOTE 1--SUMMARY OF ACCOUNTING POLICIES

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. The accompanying December 26, 1998 condensed consolidated
balance sheet was derived from the audited consolidated balance sheet which is
included in the Company's 1998 Annual Report on Form10-K. Accordingly, the
accompanying financial statements do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of only normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results and cash flows for the interim period
ended June 26, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 25, 1999. The interim financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Company's 1998 Annual Report on Form 10-K.

Basic earnings per share has been computed using the weighted average number of
shares of common stock outstanding during the period. Diluted earnings per share
includes the assumed exercise of stock options using the treasury stock method.
Stock options outstanding with an exercise price greater than the average market
price of the Company's common stock are excluded from the computation of diluted
earnings per share. The computation of diluted earnings per share using the
treasury stock method did not result in a change from the calculation of basic
earnings per share for the three and six month periods ended June 26, 1999. The
assumed exercise of stock options could potentially dilute basic earnings per
share amounts in the future.

NOTE 2--INVENTORIES

Inventories are summarized as follows:

                                                    June 26,     December 26,
                                                      1999           1998
                                                  ------------   ------------
                                                          (In thousands)

    Finished products ......................        $ 44,338        $ 29,207
    Work-in-process ........................          22,265          27,574
    Raw materials and supplies .............          48,874          49,570
                                                    --------        --------
                                                    $115,477        $106,351
                                                    ========        ========


                                       7
<PAGE>

                     SCHEIN PHARMACEUTICAL, INC. AND SUBSIDIARIES
                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

NOTE 3-- BORROWINGS

The Company's senior floating rate notes are fully and unconditionally
guaranteed jointly and severally by each of the Company's domestic subsidiaries,
each of which is wholly-owned by the Company. These subsidiaries sell all of
their products to Schein Pharmaceutical, Inc., the parent company. Summarized
financial information for these wholly-owned subsidiary guarantors (using the
push-down method of accounting) is as follows:

<TABLE>
<CAPTION>
                                                               June 26,  December 26,
                                                                 1999        1998
                                                            -----------  ------------
                                                                  (In thousands)
<S>                                                            <C>        <C>
Current assets:
      Inventories ..........................................   $105,877   $ 82,164
      Intercompany receivables .............................     55,154     63,385
      Other current assets .................................      6,908      3,960

Property, plant and equipment, net .........................    106,124    101,139
Product rights, licenses and regulatory approvals, goodwill,
       net and other assets ................................     72,091     69,459

Current liabilities ........................................    185,226    119,591
Deferred income taxes and other liabilities ................     35,808     38,271
Long-term debt (pushed down) ...............................    108,335    120,000
</TABLE>

<TABLE>
<CAPTION>
                                                                 Six Months Ended
                                                            -------------------------
                                                               June 26,  December 26,
                                                                 1999        1998
                                                            -----------  ------------
                                                                  (In thousands)
<S>                                                            <C>        <C>
Net revenues ...............................................   $190,173   $240,965
Gross profit ...............................................     60,625     75,877
Operating income ...........................................     15,066     24,507
Net income .................................................      3,966      9,584
</TABLE>

NOTE 4-- CONSENT AGREEMENT AND RESTRUCTURING CHARGE

In September 1998, the United States, on behalf of the United States Food and
Drug Administration (FDA), based on actions it filed in federal courts,
initiated seizures of drugs and drug related products manufactured by Steris
Laboratories, Inc. (Steris), a subsidiary of the Company. The actions alleged
certain instances in which the Steris facility was not operating in conformity
with current Good Manufacturing Practices (known as cGMP) regulations. The
actions resulted in the seizure of all drugs and drug related products in the
Company's possession manufactured at the Steris facility and halted the
manufacture and distribution of Steris products, including INFeD(R).


                                       8
<PAGE>

In October 1998, Steris and certain of its officers, without admitting any
allegations of the complaints and disclaiming any liability in connection
therewith, entered into a consent agreement. Under the terms of the consent
agreement, Steris is required, among other things, to demonstrate through
independent certification that Steris' processes, quality assurance and quality
control programs, and management controls comply with cGMP regulations. The
consent agreement also provides for independent certification of Steris'
management controls, quality assurance and quality control programs, and
employee cGMP training. It further requires that Steris develop a timeline and
Corrective Action Plan for implementing these actions and for expert
certification with respect to matters covered in previous FDA inspections of the
facility.

As a result of the actions taken by the FDA and the consent agreement, the
Company recorded a restructuring charge of $135.0 million, net of tax benefit,
in 1998. The Company had restructuring reserves totaling $32.4 million remaining
at December 26, 1998. The following is a summary of activity for the six months
ended June 26, 1999 (in thousands):

<TABLE>
<CAPTION>
                                      Balance at                            Balance at
                                      Beginning                                End
Restructuring Reserves                of Period    Additions   Deductions   of Period
----------------------                ---------    ---------   ----------   ---------
      <S>                            <C>              <C>        <C>       <C>
      Inventory and other.........   $   32,357       --         27,680    $   4,677
                                     ==========      ====        ======    =========
</TABLE>

Steris has submitted to the FDA the Corrective Action Plan provided for under
the consent agreement and has begun implementation of that plan. As the Company
previously announced in April 1999, the FDA has permitted the resumption of
INFeD manufacturing on a regular production basis, subject to an independent
third-party consultant's review and assessment of each lot. The Company has been
shipping newly manufactured INFeD and, since the end of the first quarter, has
eliminated its backlog of INFeD.

NOTE 5--REGULATORY MATTERS

On July 29, 1999 the FDA concluded an inspection of the Company's subsidiary,
Marsam Pharmaceuticals Inc. (Marsam). At the close of the inspection, Marsam
received a Form 483 detailing the FDA's inspectional observations and noting a
number of significant deficiencies in good manufacturing practices. Marsam is
reviewing the FDA's observations and accelerating its efforts to address the
noted deficiencies. As previously announced, Marsam had itself initiated actions
to address a number of the FDA's inspectional observations by voluntarily
recalling all Marsam products within expiry, suspending manufacturing and
testing activities and submitting to the FDA a list of principal points to be
included in a corrective action plan. Marsam intends to work with its outside
experts to modify its corrective action plan to ensure it addresses the
observations noted in the Form 483 before presenting the plan to the FDA for
approval. The proposed corrective action plan will include schedules for
resumption of manufacture at the site on a product-by-product basis. The Company
cannot predict when Marsam will resume manufacturing specific products.
Additional enforcement actions may be forthcoming. Marsam contributed
approximately seven percent of the Company's revenues and a smaller percentage
of its gross profits over the four quarters ended March, 1999.


                                       9
<PAGE>

NOTE 6--LEGAL PROCEEDINGS

In September and October 1998, following the commencement of a seizure action by
the FDA against Steris on September 10, 1998, a number of substantially similar
class action complaints asserting claims under the federal securities laws were
filed in federal court in the District of New Jersey against the Company and
certain of its officers and directors. On December 21, 1998, the court entered
an order consolidating the actions, appointing lead plaintiffs and approving
selection of lead and liaison counsel. On or about March 29, 1999, lead
plaintiffs filed a consolidated and amended class action complaint (the
Complaint), naming as defendants the Company, its directors at the time of the
Company's April 9, 1998 initial public offering (the Offering), and three of the
underwriters of the Offering. Plaintiffs purport to sue on behalf of a class of
persons who purchased shares of the Company's common stock pursuant or traceable
to the Offering during the period from April 9, 1998 through September 28, 1998.
They allege that defendants violated the Securities Act of 1933 and as to the
Company and three of the individual defendants, the Securities Exchange Act of
1934 and Rule 10b-5 by making misrepresentations and omissions of material facts
in connection with the Offering and in the registration statement and prospectus
issued pursuant to the Offering and in statements made immediately following the
FDA seizure action on September 10, 1998. Plaintiffs allege, among other things,
that defendants failed to disclose or misrepresented facts concerning the status
of the Company's internal controls and ability to comply with government
regulations relating to its manufacturing activities, including the status of
the Company's corrective actions at the Steris facility and the effect of the
FDA enforcement action on the Company's operations. Plaintiffs on behalf of the
purported class seek damages, recision and/or recisionary damages. In May 1999,
the Company and the other defendants in this action filed a motion to dismiss
the Complaint which is currently pending before the court. The Company intends
to defend itself vigorously against this action.

In one of the Company's patent challenge litigations filed in the U.S. District
Court for the Southern District of New York, the trial judge ruled against the
Company and upheld the validity of the patent at issue. On October 1, 1998, the
Court awarded attorney's fees to the patent holder and its licensee, and on June
22, 1999 the court fixed the fees at $2.0 million. On July 28, 1999, the Company
filed an appeal of this matter.

In March 1999, an action entitled Marvin Samson v. Schein Pharmaceutical, Inc.,
Martin Sperber and Marsam Pharmaceuticals Inc. was commenced in Superior Court
of New Jersey, Camden County, Law Division, alleging, among other things,
breaches of plaintiff's employment agreement with Marsam and misrepresentations
concerning responsibilities that would be given to plaintiff, and seeks, among
other things, damages which plaintiff believes exceed $6 million and a
declaration that the "non-competition restrictions" in his employment agreement
are no longer effective. The Company intends to defend itself vigorously against
this action.


                                       10
<PAGE>

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

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

Certain statements in this Form 10-Q 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
events or results. Such forward looking statements may be identified by such
forward looking terms as expect, believe, may, anticipate, will or similar terms
or variations thereof. These forward looking statements involve certain
significant risks and uncertainties, and actual results may differ materially
from the forward looking statements. Some important factors which may cause
results to differ include: the difficulty of predicting Food and Drug
Administration (FDA) approvals, uncertainties associated with implementation of
the terms and conditions of the consent agreement affecting the Company's Steris
Laboratories, Inc. (Steris) facility, the uncertainty of acceptance and demand
for the Company's new products, the impact of competitive products and pricing,
the availability of raw materials, uncertainties associated with litigation
(including, without limitation, patent challenges) and regulatory matters, Year
2000 matters and fluctuations in operating results. For further details and
discussion of these risks and uncertainties see the Company's SEC filings
including, but not limited to, its Annual Report on Form 10-K. The Company does
not undertake to publicly update or revise any of its forward looking statements
even if experience or future changes show that the indicated results or events
will not be realized.

Regulatory Matters

On July 29, 1999 the FDA concluded an inspection of the Company's subsidiary,
Marsam Pharmaceuticals Inc. (Marsam). At the close of the inspection, Marsam
received a Form 483 detailing the FDA's inspectional observations and noting a
number of significant deficiencies in good manufacturing practices. Marsam is
reviewing the FDA's observations and accelerating its efforts to address the
noted deficiencies. As previously announced, Marsam had itself initiated actions
to address a number of the FDA's inspectional observations by voluntarily
recalling all Marsam products within expiry, suspending manufacturing and
testing activities and submitting to the FDA a list of principal points to be
included in a corrective action plan. Marsam intends to work with its outside
experts to modify its corrective action plan to ensure it addresses the
observations noted in the Form 483 before presenting the plan to the FDA for
approval. The proposed corrective action plan will include schedules for
resumption of manufacture at the site on a product-by-product basis. The Company
cannot predict when Marsam will resume manufacturing specific products.
Additional enforcement actions may be forthcoming. Marsam contributed
approximately seven percent of the Company's revenues and a smaller percentage
of its gross profits over the four quarters ended March, 1999.

General

The following discussion provides information and analysis of the Company's
results of operations for the three month and six month periods ended June 26,
1999 and June 27, 1998, respectively, and its liquidity and capital resources.
The following discussion and analysis should be read in conjunction with the
Company's condensed consolidated financial statements included elsewhere herein.


                                       11
<PAGE>

Quarter Ended June 26, 1999 Compared to Quarter Ended June 27, 1998

<TABLE>
<CAPTION>
Net Revenues and Gross Profit   Three Months Ended                   % of Sales
(In millions)                  --------------------            --------------------
                               June 26,    June 27,     %      June 26,    June 27,
                                 1999        1998     Change     1999        1998
                               --------    --------   ------   --------    --------
<S>                           <C>         <C>         <C>        <C>         <C>
Net Revenues
Generic product revenues....  $   85.8    $  108.0    -20.6%      65.5%       78.3%
Branded product revenues....      45.1        30.0     50.3%      34.5%       21.7%
                              --------    --------               -----       -----
   Total net revenues.......  $  130.9    $  138.0     -5.1%     100.0%      100.0%
                              ========    ========               =====       =====

Gross Profit ...............  $   43.6    $   46.2     -5.5%      33.3%       33.5%
                              ========    ========               =====       =====
</TABLE>

Net revenues for the second quarter of 1999 decreased $7.1 million, or 5.1%,
from $138.0 million in 1998 to $130.9 million in 1999. This was primarily due to
lower revenues from Steris and Marsam manufactured products offset by higher
branded and solid dosage generic product revenues.

Revenues from generic products decreased $22.2 million or 20.6% from $108.0
million in 1998 to $85.8 million in 1999. This decrease was primarily due to
lower revenues from Steris manufactured products of $27.8 million and Marsam
manufactured products of $11.0 million, offset by $12.5 million of price
increases and unit growth from solid dosage products and $4.1 million of new
product introductions.

Net revenues from branded products increased $15.1 million or 50.3% from $30.0
million in 1998 to $45.1 million in 1999, reflecting the commencement of regular
shipments of newly manufactured INFeD(R) and elimination of backlog orders, and
$1.8 million from the June introduction of Ferrlecit(R), Schein's next
generation iron product. Ferrlecit is a drug indicated for use in hemodialysis
patients receiving erythropoetin. Pharmaceuticals for this patient population
are principally covered under a special federal program. Obtaining national
reimbursement coverage for pharmaceuticals under this program can be a lengthy
process. The Company expects that it could take up to eighteen months to
establish national reimbursement coverage for Ferrlecit, and is currently
working with the Health Care Financing Administration's (HCFA) regional
intermediaries to establish interim reimbursement coverage.

Gross profit decreased $2.6 million, or 5.5%, from $46.2 million in 1998 to
$43.6 million in 1999. The gross margin decreased 0.2% in 1999 to 33.3% compared
to 33.5% in 1998. The decrease in gross profit was principally due to lower
revenues from Steris manufactured products, approximately $10.0 million of
charges related to inventory and other costs associated with the Marsam product
recalls and the voluntary suspension of manufacturing activities at Marsam,
partially offset by higher branded products volume and higher selling prices of
solid dosage generics.

<TABLE>
<CAPTION>
Costs and Expenses             Three Months Ended                   % of Sales
(In millions)                  --------------------            --------------------
                               June 26,    June 27,      %     June 26,    June 27,
                                 1999        1998      Change    1999        1998
                               --------    --------    ------  --------    --------
<S>                           <C>         <C>            <C>     <C>         <C>
Selling, general and
 administrative ............  $   23.3    $   22.2      -4.5%    17.8%       16.1%
Research and development....       6.0         7.1      14.4%     4.6%        5.1%
Amortization of goodwill
 and other intangibles .....       1.6         2.6      37.7%     1.2%        1.9%
                              --------    --------               ----        ----
   Total costs and expenses.  $   30.9    $   31.9       3.1%    23.6%       23.1%
                              ========    ========               ====        ====
</TABLE>


                                       12
<PAGE>


Selling, general and administrative expenses increased in the second quarter
$1.1 million, or 4.5%, from $22.2 million in 1998 to $23.3 million in 1999. The
increase reflects sales and marketing activities in support of branded products
and $4.5 million of expenses attributable to the implementation of the
Corrective Action Plan at the Steris facility offset by cost reduction and cost
containment strategies undertaken last year.

Research and development expenses decreased in the second quarter $1.1 million
or 14.4% primarily due to timing of clinical studies and the efficiencies
achieved from the consolidation of research and development operations.

Amortization of intangibles and goodwill decreased $1.0 million in the second
quarter of 1999 compared to the second quarter in 1998 due to the write-off of
goodwill included in the third quarter 1998 restructuring charge.

<TABLE>
<CAPTION>
Interest Expense, Other Expenses
(Income), Provision  for Income
Taxes and Extraordinary Item      Three Months Ended                        % of Sales
(In millions)                     ------------------                   ------------------
                                   June 26,  June 27,        %         June 26,  June 27,
                                    1999       1998        Change        1999      1998
                                  --------   --------     --------     --------  --------
<S>                               <C>         <C>            <C>         <C>        <C>
Interest expense, net .........   $  4.8      $  5.1         4.6%        3.7%       3.7%
Total other expenses (income),.      0.3        (0.6)     -155.5%        0.3%      -0.4%
Provision for income taxes.....      2.7         3.4        20.0%        2.1%       2.5%
Extraordinary item, net........       --        (1.7)      100.0%         --        1.2%
</TABLE>

Other expenses (income), net, was $0.3 million expense in 1999 and $0.6 million
income in 1998. The change in other expenses (income), net, was primarily due to
the absence of a $0.8 million gain on the 1998 sale of a 50% interest in a joint
venture, partially offset by lower joint venture losses in 1999.

The Company's effective tax rate of 36.0% in 1999 was comparable to 35.0% in
1998.

The extraordinary item of $1.7 (net of income tax benefit) million in the second
quarter of 1998 was related to the write-off of deferred financing fees in
connection with the retirement of $50 million of the Company's senior floating
rate notes with proceeds the Company received from its April 1998 initial public
offering.


                                       13
<PAGE>

Six Months Ended June 26, 1999 Compared to Six Months Ended June 27, 1998

<TABLE>
<CAPTION>
Net Revenues and Gross Profit    Six Months Ended                   % of Sales
(In millions)                  --------------------            --------------------
                               June 26,    June 27,     %      June 26,    June 27,
                                 1999        1998     Change     1999        1998
                               --------    --------   ------   --------    --------
<S>                           <C>         <C>         <C>       <C>        <C>
Net Revenues
Generic product revenues....  $  174.4    $  202.3    -13.8%     73.6%      71.1%
Patent settlement revenues..      --          30.0   -100.0%       --       10.5%
                              --------    --------              -----      -----
   Total generic revenues...     174.4       232.3    -24.9%     73.6%      81.6%
Branded product revenues....      62.4        52.4     19.1%     26.4%      18.4%
                              --------    --------              -----      -----
   Total net revenues.......  $  236.8    $  284.7    -16.8%    100.0%     100.0%
                              ========    ========              =====      =====

Gross Profit ...............  $   79.9    $   98.0    -18.5%     33.7%      34.4%
                              ========    ========              =====      =====
</TABLE>

Net revenues for the six months of 1999 decreased $47.9 million, or 16.8%, from
$284.7 million in 1998 to $236.8 million in 1999. This was primarily due to the
absence of $30.0 million of settlement revenue that was recorded in the first
quarter of 1998 and lower revenues from Steris and Marsam manufactured products
offset by higher revenues of branded and solid dosage generic products.

Revenues from generic products decreased $27.9 million or 13.8% from $202.3
million in 1998 to $174.4 million in 1999. This decrease was due to lower
revenues from Steris manufactured products of $55.6 million and Marsam
manufactured products of $8.7 million, offset by $28.9 million of price
increases and unit growth from solid dosage products and $7.5 million of new
product introductions.

Net revenues from branded products increased $10.0 million or 19.1% from $52.4
million in 1998 to $62.4 million in 1999 largely due to increased unit volume of
INFeD and the June introduction of Ferrlecit, Schein's next generation iron
product. Ferrlecit is a drug indicated for use in hemodialysis patients
receiving erythropoetin. Pharmaceuticals for this patient population are
principally covered under a special federal program. Obtaining national
reimbursement coverage for pharmaceuticals under this program can be a lengthy
process. The Company expects that it could take up to eighteen months to
establish national reimbursement coverage for Ferrlecit, and is currently
working with the Health Care Financing Administration's (HCFA) regional
intermediaries to establish interim reimbursement coverage.

Gross profit decreased $18.1 million, or 18.5%, from $98.0 million in 1998 to
$79.9 million in 1999. The gross margin decreased 0.7% in 1999 to 33.7% compared
to 34.4% in 1998. The decrease in gross profit was principally due to the impact
of the $15.0 million of gross profit contribution associated with the $30
million settlement revenue received in the first quarter of 1998 and lower
revenues from Steris manufactured products, approximately $10.0 million of
charges related to inventory and other costs associated with the Marsam product
recalls and the voluntary suspension of manufacturing activities at Marsam,
partially offset by higher branded products volume and higher selling prices of
solid dosage generics.

<TABLE>
<CAPTION>
Costs and Expenses               Six Months Ended                   % of Sales
(In millions)                  --------------------            --------------------
                               June 26,    June 27,      %     June 26,    June 27,
                                 1999        1998      Change    1999        1998
                               --------    --------    ------  --------    --------

<S>                           <C>         <C>            <C>     <C>         <C>
Selling, general and
 administrative ........      $   44.2    $   43.8      -0.8%     18.7%      15.4%
Research and development          11.2        14.2      21.1%      4.7%       5.0%
Amortization of goodwill
 and other intangibles .....       3.2         5.1      37.9%      1.3%       1.8%
                              --------    --------                ----        ----
   Total costs and expenses   $   58.6    $   63.1       7.3%     24.7%       22.2%
                              ========    ========                ====        ====
</TABLE>


                                       14
<PAGE>

Selling, general and administrative expenses increased in the six months $0.4
million, or 0.8%, from $43.8 million in 1998 to $44.2 million in 1999. The
increase reflects sales and marketing activities in support of branded products
and $8.5 million of expenses attributable to the implementation of the
Corrective Action Plan at the Steris facility offset by cost reduction and cost
containment strategies undertaken.

Research and development expenses decreased in the six months $3.0 million or
21.1% primarily due to timing of clinical studies and the efficiencies achieved
from the consolidation of research and development operations.

Amortization of intangibles and goodwill decreased $1.9 million in the six
months of 1999 compared to the first six months in 1998 due to the write-off of
goodwill included in the third quarter 1998 restructuring charge.

<TABLE>
<CAPTION>
Interest Expense, Other Expenses
(Income), Provision  for Income
Taxes and Extraordinary Item       Six Months Ended                        % of Sales
(In millions)                     ------------------                   ------------------
                                   June 26,  June 27,        %         June 26,  June 27,
                                    1999       1998        Change        1999      1998
                                  --------   --------     --------     --------  --------
<S>                               <C>        <C>            <C>          <C>       <C>
Interest expense, net ..........  $    9.5   $   11.0       14.2%        4.0%      3.9%
Total other expenses (income),..       0.7       (2.1)    -131.0%        0.3%     -0.8%
Provision for income taxes......       4.1       10.4       60.2%        1.7%      3.7%
Extraordinary item, net ........        --       (1.7)     100.0%         --       0.6%
</TABLE>

Interest expense decreased $1.5 million, or 14.2%, from $11.0 million in 1998 to
$9.5 million in 1999. The decline in interest expense was principally due to
lower debt levels as the proceeds from the initial public offering in April 1998
were used to retire senior floating rate notes and lower interest rates under
the Company's revolving credit and term loan agreement.

Other expenses (income), net, was $0.7 million expense in 1999 and $2.1 million
income in 1998. The change in other expenses (income), net, was primarily due to
gains on the sale of marketable securities declining from $3.1 million in 1998
to $0.3 million in 1999.

The Company's effective tax rate was 37% in 1999 and 40% in 1998. The decline in
the effective tax rate was primarily due to the elimination of non-deductible
goodwill amortization following the Company's write-off of goodwill in
connection with the third quarter 1998 restructuring charge.

The extraordinary item of $1.7 (net of income tax benefit) million in the second
quarter of 1998 was related to the write-off of deferred financing fees in
connection with the retirement of $50 million of the Company's senior floating
rate notes with proceeds the Company received from its April 1998 initial public
offering.


                                       15
<PAGE>

Liquidity and Capital Resources

Net cash provided by operating activities was $32.6 million for the six months
ended June 1999. The net cash provided by operating activities was attributable
to net income of $7.1 million as adjusted for the effects of non-cash items of
$11.7 million and changes in assets and liabilities totaling $13.8 million. The
decrease in accounts receivable of $5.3 million was primarily the result of
declines in revenues from Steris and Marsam manufactured products. Inventories
increased $11.4 million primarily due to the resumption of the production of
INFeD and increased inventory levels in anticipation of higher demand by
customers with Year 2000 related supply concerns. Other current assets decreased
by $16.1 million primarily due to collection of the income taxes receivable of
$15.3 million, while accounts payable, income taxes payable, accrued expenses
and other liabilities increased by $3.8 million.

Net cash used in investing activities for the six months ended June, 1999 was
$21.9 million consisting of capital expenditures of $3.4 million and the
acquisition of product rights and licenses of $17.0 million. Product rights and
licenses consisted of $12.0 million paid in connection with a product
development agreement with Elan Corporation plc and $5.0 million under the
trademark and distribution agreement related to Ferrlecit. International
investments increased $2.5 million offset by proceeds received from the sale of
marketable securities of $1.0 million.

Net cash of $10.1 million used in financing activities for the six months ended
June 1999 was comprised of net repayments of debt of $11.0 million offset by
proceeds from the employee stock option plan and stock purchase plan of $0.9
million. In addition, in June 1999 the remaining 50% interest in a United
Kingdom joint venture was acquired for a $1.2 million note payable to the seller
and the assumption of current liabilities including $2.2 million of bank debt.

Year 2000 Compliance

The Company is devoting significant resources throughout its business operations
to minimize the risk of potential disruption from the Year 2000 (Y2K) problem.
In 1997, a Y2K Compliance Initiative was established within the Company to
address the following areas that are impacted by Y2K issues.

      o     Business Transaction Systems
      o     Plant Floor/Laboratory Applications & Devices
      o     Computer Network
      o     Supply-Chain Partner Compliance Readiness
      o     Contingency Planning

Business Transaction Systems - These applications process and handle the
Company's day-to-day business transactions and encompass customer order/billing,
finished goods inventory, distribution, manufacturing and laboratory support,
electronic data interchange (EDI), contract processing, forecasting and vendor
managed inventory. Thirteen of the nineteen applications were assessed as Y2K
non-compliant; nine of the non-compliant systems have been remediated and
deployed, one retired and the remaining three systems are expected to be
remediated and deployed by the end of the third quarter of 1999. In addition,
nine system services are provided by third parties (e.g., payroll, employee
savings and investment recordkeeping); three of these applications were assessed
as Y2K non-compliant and are expected to be updated by the end of the third
quarter of 1999.

Plant Floor/Laboratory Applications & Devices and Computer Network - Over 2,200
applications and devices are installed at the Company's manufacturing,
laboratory, distribution and office facilities that are date capable and/or
contain embedded systems. The Computer Network includes 1,400 PC hardware
devices, software, applications


                                       16
<PAGE>

and files installed on the Company's network devices and standalone PCs. The
inventory and assessment of the Plant Floor/Laboratory Applications & Devices
and the Computer Network has been completed; the remediation, testing and
deployment of 165 identified non-compliant applications/devices and replacement
of approximately 500 non-compliant PCs is expected to be completed by the end of
the fourth quarter of 1999.

Supply-Chain Partner Compliance Readiness - To continue business activities with
the Company's trading partners (i.e., customers, suppliers, payers, financial
institutions, etc.), all entities that comprise the Company's supply-chain must
be Y2K compliant. The Company has contacted its suppliers, customers and other
parties to determine their "state of readiness" for Y2K compliance. To date, the
Company has received compliance readiness statements from nineteen of the
Company's top twenty customers (representing approximately 75% of the Company's
net revenues) and an additional 445 customers indicating that they are or will
be Y2K compliant by year-end 1999. Also, 35 of the Company's 77 critical
suppliers of active pharmaceutical ingredients used to manufacture products
representing over 85% of the Company's gross profit, have likewise provided
compliance readiness statements that they are or will be Y2K compliant by the
year-end 1999. The Company will continue to contact its trading partners and
major public/private providers of infrastructure services to determine their
state of readiness for Y2K compliance.

Contingency Planning - The Company's plan includes the assessment of Y2K related
risks/threats and the preparation of alternative work procedures in the event of
possible Y2K disruptions. The sources of risk could include information
technology (IT) systems, embedded devices, EDI and external dependencies;
potential failures related to the occurrence of these risks can include
operational disruptions, financial losses, damage to assets, personal safety and
legal liabilities. The Company is completing the assessment of identifying
risks/threats covering individual business processes. The completion of the
assessment of Y2K risks and the preparation of contingency plans are expected to
be completed by the end of the third quarter of 1999.

The estimated $3.5 million of costs incurred inception to date associated with
Y2K compliance have been expensed as incurred and future costs are not expected
to have a material adverse effect on the Company's business, financial condition
and results of operations. Nevertheless, there is uncertainty concerning the
potential costs and effects associated with Y2K compliance. Thus, if the Company
is unsuccessful in identifying or remediating all Y2K problems in its critical
operations, or if it is affected by the inability of suppliers or major
customers to continue operations due to such a problem, its results of
operations or financial condition could be materially adversely impacted.

Based upon its efforts to date, the Company believes that all critical and
important systems will remain up and running after January 1, 2000. Accordingly,
the Company does not currently anticipate that internal systems failures will
result in any material adverse effect to its operations or financial condition.
At this time, the Company believes that the most likely "worst-case" scenario
involves potential disruptions in areas in which the Company's operations must
rely on such third parties whose systems may not work properly after January 1,
2000. While such failures could affect important operations of the Company,
either directly or indirectly, in a significant manner, the Company cannot at
present estimate either the likelihood or the potential cost of such failures.

The nature and focus of the Company's efforts to address the Y2K problem may be
revised periodically as interim goals are achieved or new issues are identified.
In addition, it is important to note that the description of the Company's
efforts necessarily involves estimates and projections with respect to
activities required in the future.

This Y2K Statement is designated a Year 2000 Readiness Disclosure under the Year
2000 Information and Readiness Disclosure Act and is subject to all protections
and exemptions of that Act.


                                       17
<PAGE>

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The carrying amounts of financial instruments, including cash and cash
equivalents, accounts receivable, accounts payable and accrued liabilities,
approximate fair value because of the current nature of these instruments. The
carrying amounts reported for revolving credit and long-term debt approximate
fair value because the interest rates on these instruments are subject to
changes with market interest rates.

In order to manage interest rate exposure, the Company has entered into interest
rate swap agreements to exchange variable rate debt into fixed rate debt without
the exchange of the underlying principal amounts. Net payments or receipts under
the agreements are recorded as adjustments to interest expense.

As of June 26, 1999, the Company had $150 million notional amount outstanding in
interest rate swaps. These swaps are used to convert floating rate debt to fixed
rate debt to reduce the Company's exposure to interest rate fluctuations. The
net result was to substitute a weighted average fixed interest rate of 5.43% for
the weighted average variable LIBOR rate of 5.13% on the Company's debt. The
swaps expire in September 1999 and February 2001.


                                       18
<PAGE>

PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

In September and October 1998, following the commencement of a seizure action by
the FDA against Steris on September 10, 1998, a number of substantially similar
class action complaints asserting claims under the federal securities laws were
filed in federal court in the District of New Jersey against the Company and
certain of its officers and directors. On December 21, 1998, the court entered
an order consolidating the actions, appointing lead plaintiffs and approving
selection of lead and liaison counsel. On or about March 29, 1999, lead
plaintiffs filed a consolidated and amended class action complaint (the
Complaint), naming as defendants the Company, its directors at the time of the
Company's April 9, 1998 initial public offering (the Offering), and three of the
underwriters of the Offering. Plaintiffs purport to sue on behalf of a class of
persons who purchased shares of the Company's common stock pursuant or traceable
to the Offering during the period from April 9, 1998 through September 28, 1998.
They allege that defendants violated the Securities Act of 1933 and as to the
Company and three of the individual defendants, the Securities Exchange Act of
1934 and Rule 10b-5 by making misrepresentations and omissions of material facts
in connection with the Offering and in the registration statement and prospectus
issued pursuant to the Offering and in statements made immediately following the
FDA seizure action on September 10, 1998. Plaintiffs allege, among other things,
that defendants failed to disclose or misrepresented facts concerning the status
of the Company's internal controls and ability to comply with government
regulations relating to its manufacturing activities, including the status of
the Company's corrective actions at the Steris facility and the effect of the
FDA enforcement action on the Company's operations. Plaintiffs on behalf of the
purported class seek damages, recision and/or recisionary damages. In May 1999,
the Company and the other defendants in this action filed a motion to dismiss
the Complaint which is currently pending before the court. The Company intends
to defend itself vigorously against this action.

In one of the Company's patent challenge litigations filed in the U.S. District
Court for the Southern District of New York, the trial judge ruled against the
Company and upheld the validity of the patent at issue. On October 1, 1998, the
Court awarded attorney's fees to the patent holder and its licensee, and on June
22, 1999 the court fixed the fees at $2.0 million. On July 28, 1999, the Company
filed an appeal of this matter.

In March 1999, an action entitled Marvin Samson v. Schein Pharmaceutical, Inc.,
Martin Sperber and Marsam Pharmaceuticals Inc. was commenced in Superior Court
of New Jersey, Camden County, Law Division, alleging, among other things,
breaches of plaintiff's employment agreement with Marsam and misrepresentations
concerning responsibilities that would be given to plaintiff, and seeks, among
other things, damages which plaintiff believes exceed $6 million and a
declaration that the "non-competition restrictions" in his employment agreement
are no longer effective. The Company intends to defend itself vigorously against
this action.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

      (a)   Exhibits

            27 - Financial Data Schedule

      (b)   Reports on Form 8-K

            None


                                       19
<PAGE>

                                   SIGNATURES

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


                                 Schein Pharmaceutical, Inc.
                                  (Registrant)


                                 By: /s/ Martin Sperber
                                    --------------------------------------------
                                    Martin Sperber
                                    Chairman of the Board,
                                    Chief Executive Officer
                                    and President
                                    (Principal Executive Officer)


                                 By: /s/ Dariush Ashrafi
                                    --------------------------------------------
                                    Dariush Ashrafi
                                    Executive Vice President and
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)

Dated: August 10, 1999


                                       20