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 30, 1998      
      
                                      OR      
      
          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)      
                  OF THE SECURITIES EXCHANGE ACT OF 1934      
      
          For the Transition Period From           to                
      
         _______________________________________________________      
      
      
                      Commission File Number 1-4147      
      
      
      
                         PHARMACIA & UPJOHN, INC.                   
          (Exact name of registrant as specified in its charter)      
      
      
                    Delaware                  98-0155411        
            (State of incorporation)      (I. R. S. Employer      
                                          Identification No.)      
      
      
Pharmacia & Upjohn Company, 95 Corporate Drive, Bridgewater, NJ  08807      
        (Address of principal executive offices)  (Zip Code)      
      
      
            Registrant's telephone number     888/768-5501      
      
      
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 twelve months, and (2) has been subject      
to such filing requirements for the past 90 days.  YES   X      NO            
      
      
The number of shares of Common Stock, $1 Par Value, outstanding as of      
July 31, 1998              was 508,045,682.      
      
                          Page 1 of 20 pages      
             The exhibit index is set forth on page 19.      
      
<PAGE>      
                     QUARTERLY REPORT ON FORM 10-Q      
      
                        PHARMACIA & UPJOHN, INC.      
      
                      QUARTER ENDED JUNE 30, 1998      
      
      
                INDEX OF INFORMATION INCLUDED IN REPORT      
      
                                                                        Page
                                                                        ----
      
PART I - FINANCIAL INFORMATION      
      
  Item 1.     Financial Statements (Unaudited)      
      
              Consolidated Statements of Earnings                          3
      
              Condensed Consolidated Statements of Cash Flows              4
      
              Condensed Consolidated Balance Sheets                        5
      
              Notes to Consolidated Financial Statements                   6
      
  Item 2.     Management's Discussion and Analysis of Financial      
                Condition and Results of Operations                       10
      
  Item 3.     Quantitative and Qualitative Disclosures About      
                Market Risk                                               18
      
      
Part II - OTHER INFORMATION      
      
  Item 6.     Exhibits and Reports on Form 8-K                            19
      
      


<PAGE>      
PART I - FINANCIAL INFORMATION      
Item 1.  Financial Statements      
<TABLE>      
PHARMACIA & UPJOHN, INC. AND SUBSIDIARIES      
CONSOLIDATED STATEMENTS OF EARNINGS      
                                                                  
For the Six Months Ended June 30      
(in millions of U.S. dollars, except per-share data)      
<CAPTION>      
                                                            Unaudited                         
                                      --------------------------------------------------      
                                           For Three Months           For Six Months      
                                           Ended June 30,             Ended June 30,          
                                      -----------------------     -----------------------      
                                          1998         1997          1998         1997       
                                       ----------   ----------    ----------   ----------      
<S>                                     <C>          <C>           <C>          <C>     
Net sales                               $1,654       $1,703        $3,240       $3,338      
Other revenue                               37           35            63           62      
                                       ----------   ----------    ----------   ----------      
      
     Operating revenue                   1,691        1,738         3,303        3,400      
      
Cost of products sold                      493          550           978        1,053      
Research and development                   292          281           566          564      
Marketing, administrative and other        717          652         1,318        1,254      
Biotech                                     (9)           -           (18)           -      
                                       ----------   ----------    ----------   ----------      
      
     Operating income                      198          255           459          529      
      
Interest income                             21           25            45           54      
Interest expense                            (5)         (11)          (11)         (18)      
All other, net                               2            1             -           (1)      
                                       ----------   ----------    ----------   ----------      
      
Earnings before income taxes               216          270           493          564      
Provision for income taxes                  70           92           158          192      
                                       ----------   ----------    ----------   ----------      
      
Net earnings                            $  146       $  178        $  335       $  372      
                                       ==========   ==========    ==========   ==========      
      
Earnings per common share:      
      
  Basic                                      $.28         $.34          $.65         $.72      
      
  Diluted                                    $.28         $.34          $.64         $.71      
      
      
     
                                  See accompanying notes.       
</TABLE>      


<PAGE>      
<TABLE>     
PHARMACIA & UPJOHN, INC. AND SUBSIDIARIES      
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS      
      
For the Six Months Ended June 30      
(in millions of U.S. dollars)      
      
<CAPTION>      
                                                              Unaudited      
                                                        --------------------      
                                                          1998        1997      
                                                        --------    --------      
<S>                                                      <C>         <C>     
Net cash provided by operations                          $ 234       $ 533      
                                                        --------    --------      
Cash flows (required) provided by investment activities:      
  Acquisition of subsidiaries                               -          (34)      
  Additions of properties                                 (221)       (224)      
  Proceeds from sales of properties                          5          36      
  Purchases of intangibles                                  (6)          -      
  Purchases of investments                                (336)       (363)      
  Proceeds from sales of investments                       582         647      
  Other                                                      -         (10)      
                                                        --------    --------      
Net cash provided by investment activities                  24          52      
                                                        --------    --------      
Cash flows provided (required) by financing activities:      
  Proceeds from issuance of debt                            14          30      
  Repayment of debt                                       (147)        (16)      
  Payments of ESOP debt                                    (16)        (12)      
  Net increase (decrease) in debt with initial maturity      
    of 90 days or less                                     377         123      
  Dividend payments                                       (283)       (284)      
  Purchases of treasury stock                              (31)        (63)      
  Proceeds from exercise of stock options                   25          10      
  Other                                                      -         (20)      
                                                        --------    --------      
Net cash (required) by financing activities                (61)       (232)      
                                                        --------    --------      
Effect of exchange rate changes on cash                     (3)        (13)      
                                                        --------    --------      
Net change in cash and cash equivalents                    194         340      
      
Cash and cash equivalents, beginning of year               775         641      
                                                        --------    --------      
Cash and cash equivalents, end of period                $  969      $  981      
                                                        ========    ========      
      
     
                            See accompanying notes.      
</TABLE>     
<PAGE>     
<TABLE>      
      
PHARMACIA & UPJOHN, INC. AND SUBSIDIARIES      
CONDENSED CONSOLIDATED BALANCE SHEETS      
<CAPTION>      
(in millions of U.S. dollars)      
                                                    June 30,      December 31,      
                                                      1998            1997      
                                                   -----------    -----------      
                                                   (unaudited)      
                    ASSETS      
<S>                                                 <C>           <C>     
Current assets:      
  Cash and cash equivalents                         $   969        $   775      
  Short-term investments                                317            539      
  Trade accounts receivable, less allowance      
    of $89 (1997: $89)                                1,329          1,303      
  Inventories                                         1,000            958      
  Other current assets                                  841            752      
                                                   -----------    -----------      
     Total current assets                             4,456          4,327      
                                                   -----------    -----------      
Long-term investments                                   581            534      
                                                   -----------    -----------      
Goodwill and other intangible assets, net             1,273          1,287      
                                                   -----------    -----------      
Properties, net                                       3,268          3,306      
                                                   -----------    -----------      
Other noncurrent assets                                 785            926      
                                                   -----------    -----------      
Total assets                                        $10,363        $10,380      
                                                   ===========    ===========      
      
      LIABILITIES AND SHAREHOLDERS' EQUITY      
      
Current liabilities:      
  Short-term debt, including current       
    maturities of long-term debt                    $   644        $   401      
  Other current liabilities                           2,211          2,287      
                                                   -----------    -----------      
     Total current liabilities                        2,855          2,688      
                                                   -----------    -----------      
Long-term debt and guarantee of ESOP debt               601            634      
                                                   -----------    -----------      
Other noncurrent liabilities                          1,431          1,520      
                                                   -----------    -----------      
      
Shareholders' equity:      
  Preferred stock, one cent par value;       
    authorized 100,000,000 shares; issued       
    Series A convertible 6,919 shares       
    (1997: 6,996 shares) at stated value                279            282      
  Common stock, one cent par value;       
    authorized 1,500,000,000 shares, issued      
    508,647,507 shares                                    5              5      
  Capital in excess of par value                      1,410          1,440      
  Retained earnings                                   5,418          5,364      
  ESOP-related accounts                                (246)          (260)      
  Treasury stock                                        (34)           (48)      
  Accumulated other comprehensive income             (1,356)        (1,245)      
                                                   -----------    -----------      
     Total shareholders' equity                       5,476          5,538      
                                                   -----------    -----------      
Total liabilities and shareholders' equity          $10,363        $10,380      
                                                   ===========    ===========      
      
                         See accompanying notes.      
</TABLE>      
<PAGE>     
      
 
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED      
(All U.S. dollar amounts in millions, except per-share data)      
      
      
A - INTERIM CONSOLIDATED FINANCIAL STATEMENTS  
  
  
  
The consolidated financial information presented herein is unaudited, other 
than the condensed consolidated balance sheet at December 31, 1997, which is 
derived from audited financial statements.  The interim financial statements 
and notes thereto do not include all disclosures required by generally 
accepted accounting principles and should be read in conjunction with the 
financial statements and notes thereto included in the company's latest annual 
report on Form 10-K.  
  
In the opinion of management, the interim financial statements reflect all 
adjustments of a normal recurring nature necessary for a fair statement of the 
results for interim periods.  The current period's results of operations are 
not necessarily indicative of results that ultimately may be achieved for the 
year.  
  
Certain 1997 amounts, as presented herein, differ from amounts presented in 
the 1997 annual report.  The changes result from the reclassification of $72 
from noncurrent assets to goodwill and other intangibles to better reflect the 
nature of the related assets.  
    
<TABLE>     
<CAPTION>      
B - INVENTORIES      
                                                      June 30,    December 31, 
                                                        1998          1997   
                                                     ----------   ----------- 
    Estimated replacement cost (FIFO basis):      
<S>                                                   <C>            <C>     
    Pharmaceutical and other finished products        $   538        $  500 
    Raw materials, supplies and work-in-process           616           618 
                                                     ----------    ---------  
                                                        1,154         1,118 
    Less reduction to LIFO cost                          (154)         (160) 
                                                     ----------    ---------- 
                                                      $ 1,000        $  958 
                                                     ==========    ========== 
      
Inventories valued on the LIFO method had an estimated replacement cost (FIFO
basis) of $535 at June 30, 1998, and $416 at December 31, 1997. 
  
</TABLE>  
C - CONTINGENT LIABILITIES  
  
The consolidated balance sheets include accruals for estimated product, 
litigation, and environmental liabilities.  The latter includes exposures
related to discontinued operations, including the industrial chemical facility 
and several sites which, under the Comprehensive Environmental Response, 
Compensation, and Liability Act, are commonly known as Superfund sites (see 
Note D).  The company's ultimate liability in connection with those sites 
depends on many factors, including the number of other responsible parties and 
their financial viability and the remediation methods and technology to be 
used.  Actual costs to be incurred may vary from the estimates given inherent 
uncertainties in evaluating environmental exposures. 
  
With regard to the company's discontinued industrial chemical facility in 
North Haven, Connecticut, the company may soon be required to submit a 
corrective measures study report to the U.S. Environmental Protection Agency. 
As the corrective action process progresses, it may become appropriate to 
reevaluate the existing reserves designated for remediation in light of 
changing circumstances.  It is reasonably possible that a material increase in 
accrued liabilities will be required but it is not possible to determine what, 
if any, exposure exists at this time. 
 
 
D - LITIGATION  
  
The company is involved in a number of legal and environmental proceedings. 
These include a substantial number of product liability suits claiming damages 
as a result of the use of the company's products, including a number of cases 
involving Halcion, and administrative and judicial proceedings at 
approximately 50 "Superfund" sites.  
  
While it is not possible to predict or determine the outcome of legal actions 
brought against the company, or the ultimate cost of environmental matters, 
the company continues to believe that any potentially unaccrued costs and 
liabilities associated with such matters will not have a material adverse 
effect on the company's consolidated financial position, and unless there is a 
significant deviation from the historical pattern of resolution of these 
issues, there should not be a material adverse effect on the company's results  
of operations or liquidity.  
  
The company has been a party along with a number of other defendants (both 
manufacturers and wholesalers) in several federal civil antitrust lawsuits, 
some of which were consolidated and transferred to the Federal District Court 
for the Northern District of Illinois.  These suits, brought by independent 
pharmacies and chains, generally allege unlawful conspiracy, price 
discrimination and price fixing and, in some cases, unfair competition, and 
specifically allege that the company and the other named defendants violated 
the following: (1) the Robinson-Patman Act by giving substantial discounts to 
hospitals, nursing homes, mail-order pharmacies and health maintenance 
organizations ("HMOs") without offering the same discounts to retail 
drugstores, and (2) Section I of the Sherman Antitrust Act by entering into 
illegal vertical combination with other manufacturers and wholesalers to
restrict certain discounts and rebates so they benefited only favored 
customers.  The Federal District Court for the Northern District of Illinois 
certified a national class of retail pharmacies in November 1994.  Similar 
actions by proposed retailer classes have been filed in the state courts of
Alabama, California, Minnesota, Mississippi, and Wisconsin.  Eighteen class 
action lawsuits seeking damages based on the same alleged conduct have been 
filed in 14 states and the District of Columbia.  The plaintiffs claim to 
represent consumers who purchased prescription drugs in those jurisdictions  
and four other states.  Two of the lawsuits have been dismissed. 
  
The company announced in July that it has reached a settlement with the 
plaintiffs in the federal class action cases.  The company believes that any 
potential remaining liability above amounts accrued will not have a material 
adverse effect on the company's consolidated financial position, its results 
of operations, or liquidity.  
  
  
E - RESTRUCTURING  
  
In 1997, the company recorded restructuring accruals which included estimated  
costs of $316 associated with the global turnaround program.  The accruals 
reflected employee separation and facility closure costs that will be incurred 
as part of the global plan to simplify infrastructure and eliminate 
duplication of resources in manufacturing, administration, and research and 
development.  At June 30, 1998, the remaining accrual amounted to $207. 
Additional restructuring charges are expected to be recognized in 1998 when 
all remaining elements of the turnaround program are finalized and announced. 
Expenditures related to the restructuring charges are expected to be 
substantially completed by the end of 2000.  
  
  
F - BIOTECH  
  
In August 1997, the company merged its biotechnology supply business, 
Pharmacia Biotech, with Amersham Life Science, a division of Amersham  
International plc, in a noncash transaction that did not result in the
recognition of a gain or loss.  The merger created a new company, Amersham 
Pharmacia Biotech Ltd.  Pharmacia & Upjohn owns 45 percent of the new company 
which is accounted for using the equity method.  The related caption on the 
consolidated statement of earnings primarily represents the company's share of 
Amersham Pharmacia Biotech's pretax earnings.  
  
  
G - CHANGES IN ACCOUNTING PRINCIPLES  
  
Effective January 1, 1998, the company adopted the American Institute of 
Certified Public Accountants' (AICPA) Statement of Position (SOP) 98-1, 
"Accounting for the Costs of Computer Software Developed or Obtained for 
Internal Use".  The statement requires capitalization of certain costs 
incurred in the development of internal-use software, including external 
direct material and service costs, employee payroll and payroll-related costs, 
and capitalized interest.  Prior to adoption of SOP 98-1, the company expensed 
these costs as incurred.  The effect of this change in accounting principle on 
consolidated earnings during the current period is immaterial.  
      
In June 1998, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards (SFAS) No.133, "Accounting for Derivative 
Instruments and Hedging Activities".  This statement requires companies to 
record derivatives on the balance sheet as assets and liabilities measured at 
fair value.  The accounting treatment of gains and losses resulting from 
changes in the value of derivatives depends on the use of the derivative and 
whether it qualifies for hedge accounting.  The company will adopt SFAS No. 
133 as required no later than January 1, 2000, and is currently assessing the 
impact of adoption on its financial position, results of operations, and 
liquidity.      
      
      
H - COMPREHENSIVE INCOME  
  
Effective January 1, 1998, the company adopted SFAS No. 130, "Reporting 
Comprehensive Income".  The statement establishes standards for reporting 
comprehensive income and its components.  Comprehensive income is defined as 
all nonowner changes in equity and equals net earnings plus other 
comprehensive income.  Accumulated other comprehensive income for the company 
is shown on the consolidated balance sheets and represents the accumulated  
balance of currency translation adjustments and unrealized gains and losses on  
available-for-sale securities as of June 30, 1998, and December 31, 1997. 
Total comprehensive income for the three months ended June 30, 1998, and June  
30, 1997, was $159 and $161, respectively.  Total comprehensive income for the 
six months ended June 30, 1998, and June 30, 1997, was $224 and $47, 
respectively.  
  
  
I - EARNINGS PER SHARE  
  
Basic earnings per share is computed by dividing net earnings available to 
holders of common stock by the weighted average number of shares of common
stock outstanding.  Diluted earnings per share is computed assuming the  
exercise of all stock options that are beneficial to the recipients, 
conversion of all preferred stock, and the issuance of stock as incentive  
compensation to certain employees.  Under these assumptions, the weighted- 
average number of common shares outstanding is increased accordingly, and net  
earnings is reduced by an incremental contribution to the Employee Stock 
Ownership Plan (ESOP).  This contribution is the after-tax difference between 
the income the ESOP would have received from the preferred stock and the  
assumed dividend yield to be earned on the common shares.  
   
The following table reconciles the numerators and denominators of the basic 
and diluted earnings per share computations:  
<TABLE>   
<CAPTION>  
For the second quarter ended June 30,      1998      1998      1997      1997  
                                          Basic    Diluted    Basic    Diluted   
                                         -------   -------   -------   -------      
<S>                                      <C>       <C>       <C>       <C>     
EPS numerator:      
Net earnings                              $ 146     $ 146     $ 178     $ 178      
Less: Preferred stock dividends,      
  net of tax                                 (3)        -        (3)        -      
Less: ESOP contribution, net of tax           -        (1)        -        (1)      
                                         -------   -------   -------   -------      
Income available to common shareholders   $ 143     $ 145     $ 175     $ 177      
                                         =======   =======   =======   =======       
      
EPS denominator:      
Average common shares outstanding           508       508       508       508      
Effect of dilutive securities:      
       Stock options                          -         4         -         2      
       Convertible preferred stock and       
         incentive compensation               -        10         -        11      
                                         -------   -------   -------   -------      
Total shares                                508       522       508       521      
                                         =======   =======   =======   =======       
      
Earnings per share                         $.28      $.28      $.34      $.34      
                                         =======   =======   =======   =======       
      
      
For six months ended June 30,              1998      1998      1997      1997      
                                          Basic    Diluted    Basic    Diluted      
                                         -------   -------   -------   -------      
EPS numerator:      
Net earnings                              $ 335     $ 335     $ 372     $ 372      
Less: Preferred stock dividends,      
  net of tax                                 (6)        -        (6)        -      
Less: ESOP contribution, net of tax           -        (2)        -        (2)      
                                         -------   -------   -------   -------      
Income available to common shareholders   $ 329     $ 333     $ 366     $ 370      
                                         =======   =======   =======   =======       
      
EPS denominator:      
Average common shares outstanding           508       508       508       508      
Effect of dilutive securities:      
       Stock options                          -         3         -         3      
       Convertible preferred stock and       
         incentive compensation               -        11         -        11      
                                         -------   -------   -------   -------      
Total shares                                508       522       508       522      
                                         =======   =======   =======   =======       
      
Earnings per share                         $.65      $.64      $.72      $.71      
                                         =======   =======   =======   =======      
</TABLE>      
      
      
<PAGE>      
Item 2.  Management's Discussion and Analysis of Financial Condition and      
Results of Operations      
      
FINANCIAL REVIEW      
      
OVERVIEW OF CONSOLIDATED RESULTS      
      
The table below provides an overview of consolidated results in millions of  
U.S. dollars, except per-share data.      
<TABLE>     
<CAPTION>      
                                   Second Quarter            Six Months      
                              -----------------------  -----------------------      
                                      Percent                  Percent      
                                1998  Change     1997    1998  Change     1997      
                              ------  -------  ------  ------  -------  ------      
<S>                           <C>     <C>      <C>     <C>     <C>      <C>     
Sales                         $1,654   (2.9)%  $1,703  $3,240   (2.9)%  $3,338      
Operating Income                 198  (22.3)      255     459  (13.1)      529      
Earnings before income taxes     216  (20.2)      270     493  (12.6)      564      
Net Earnings                     146  (17.8)      178     335  (10.0)      372      
Net earnings per common share:      
  Basic                        $0.28  (17.6)    $0.34   $0.65   (9.7)    $0.72      
  Diluted                      $0.28  (17.6)    $0.34   $0.64   (9.9)    $0.71      
</TABLE>      
When comparing operating performance for the second quarter and first half of  
1998 to the same periods in 1997, three events should be considered: the 
settlement of the retail pharmacy lawsuit; the partial divestiture of the 
company's biotechnology supply business; and the negative impact of currency 
exchange rate fluctuations.  In July, the company reached a settlement of $103 
million in a federal class-action lawsuit filed in 1993 on behalf of retail
pharmacies.  As a result of the settlement, the company increased its
litigation reserves by $61 million, resulting in an after-tax charge of $41
million or $0.08 per share in the second quarter of 1998.  In addition, the
change in ownership structure of Pharmacia Biotech from a wholly-owned
subsidiary to an equity affiliate in August 1997 affected the period-to-period
comparison of operating performance as did the comparative strength of the
U.S. dollar against most major Asian and European currencies.      
      
Excluding negative exchange effects, Biotech, and the litigation charge,
consolidated sales increased 7 percent in the second quarter and 8 percent
year-to-date largely due to increased demand for new products, particularly in
the U.S.  On the same basis, operating expenses increased 12 percent in the
quarter and 11 percent in the first half primarily attributable to investments
in new product launches and sales force expansions.  Net earnings on this more
comparable basis increased 13 percent in the second quarter and 7 percent in
the first six months.      
      
NET SALES      
      
Excluding Biotech, consolidated sales growth of 3 percent in the second
quarter represented a 7 percent volume increase and a 4 percent negative
exchange impact over the second quarter of 1998.  On the same basis, the 3
percent year-to-date sales growth represented an 8 percent volume increase and
a 5 percent negative exchange effect.  Sales growth was led by the U.S. market
with an 18 percent increase in the second quarter and a 20 percent increase in
the first six months.  Consistent with the company's accelerated U.S. growth
strategy, sales in the U.S. represented an increasingly larger percentage of
worldwide sales at 35 percent in the second quarter and first half compared to
30 percent in the same periods in 1997, excluding Biotech.  Outside the U.S., 
most major markets recorded growth in local currency as quantified in the 
table below.  Lower diagnostics and nutrition sales in Sweden depressed 
overall second quarter performance in this country.  Japan sales fell for 
several reasons as further discussed in the "Product Sales" section below.  
Excluding Japan, sales outside the U.S. grew 5 percent in local currency in 
the second quarter and 6 percent year-to-date.  Sales performance by country 
in the following table is based on location of customer and is in millions of 
U.S. dollars:  


<TABLE> 
<CAPTION>  
                             Second Quarter                    Six Months      
                     -------------------------------  ------------------------------      
                               Net    % Chg                    Net    % Chg      
                             Percent  Excl.                  Percent  Excl.      
                      1998   Change   Curr.*   1997    1998  Change   Curr.*   1997      
Non-U.S.:            ------  -------  ------- ------  ------ -------  ------- ------      
<S>                  <C>     <C>      <C>     <C>     <C>    <C>      <C>     <C>     
  Japan              $  138  (20.1)%  (12.3)% $  172  $  264 (21.0)%  (14.7)% $  334      
  Italy                 118   (5.3)     1.6      125     227  (6.4)     1.3      242      
  Germany               101   (5.3)     1.1      107     198  (4.3)     3.6      207      
  United Kingdom         88   12.4     11.7       78     173  14.5     14.0      151      
  Sweden                 73  (10.7)    (6.0)      81     143  (6.9)    (0.4)     154      
  France                 69   10.4     17.4       62     136   4.1     12.0      130      
  Spain                  43   (8.8)    (1.7)      47      82 (13.1)    (5.5)      94      
  Rest of World         444    0.3      5.9      444     873   0.0      7.3      873      
United States           577   18.5     18.5      487   1,139  19.9     19.9      951      
                     ------  -------  ------- ------  ------ -------  ------- ------      
Subtotal              1,651    3.0      7.0    1,603   3,235   3.1      7.8    3,136      
Biotech                   3  (97.5)   (97.5)     100       5 (97.3)   (97.3)     202      
                     ------  -------  ------- ------  ------ -------  ------- ------      
Consolidated sales   $1,654   (2.9)%    0.9%  $1,703  $3,240  (2.9)%    1.5%  $3,338      
                     ======  =======  ======= ======  ====== =======  ======= ======      
      
*Underlying growth equals percent change excluding currency exchange effects.      
</TABLE>      


PRODUCT SALES      
      
New primary-care products, Detrol (Detrusitol outside the U.S.) and Edronax, 
achieved key milestone dates in 1998 with U.S. FDA approval of Detrol in March 
and the filing of a New Drug Application with the FDA for Edronax in May.  
Detrol, a therapy for overactive bladder and its symptoms of urge, frequency 
and urge incontinence, was launched in Sweden in October 1997; in Germany and 
the U.K. in the first quarter of 1998; in the U.S. in April; and in other 
European markets in the second quarter for a total of 10 countries worldwide. 
The product has performed well, especially in the U.S., with sales of $21 
million in the second quarter and $24 million year-to-date.  Patent protection 
for Detrol extends through 2012 for the U.S. and 2009 for Europe and Japan.   
The anti-depressant Edronax, the first and only selective norepinephrine 
reuptake inhibitor, was launched in the U.K. in July 1997 and in selected 
European countries in the first half of 1998.  
  
A period-to-period consolidated net sales comparison of the company's top 
twenty human pharmaceutical products (including generic equivalents where 
applicable) and five associated businesses is provided in the table below.  
Underlying growth is represented by the percent change excluding currency 
exchange effects.  
  


<TABLE>     
<CAPTION>      
                                 Second Quarter                 Six Months      
                     -------------------------------  ------------------------------      
                               Net    % Chg                    Net    % Chg      
                             Percent  Excl.                  Percent  Excl.      
                      1998   Change   Curr.*   1997    1998  Change   Curr.*   1997      
                     ------  -------  ------- ------  ------ -------  ------- ------      
<S>                  <C>     <C>      <C>     <C>     <C>    <C>      <C>     <C>     
Genotropin           $   95   (1.7)%     1.9% $   97  $  172  (7.8)%   (3.1)% $  186      
Xanax                    77    7.5      13.4      72     153  14.2     19.8      134      
Cleocin/Dalacin          75    2.8       7.0      73     146   3.7      8.4      141      
Xalatan                  68   88.5      91.9      36     137 113.0    116.0       64      
Medrol                   63    4.1      10.0      61     128   6.8     13.0      120      
Depo-Provera             60   29.3      31.6      46     111  27.5     29.9       87      
Nicorette                47   33.5      37.3      36     100  31.8     38.9       76      
Fragmin                  48   14.1      21.1      42      92  13.3     21.0       81      
Pharmorubicin            41  (12.3)     (7.3)     47      87  (9.1)    (2.9)      96      
Camptosar                44   15.9      15.8      38      85   8.1      8.4       79      
Healon                   36  (14.3)     (8.3)     42      70  (5.6)     0.2       74      
Rogaine                  29  (16.5)    (15.4)     35      60  (6.1)    (4.7)      64      
Micronase/Glynase        23   42.4      43.4      16      53  42.0     42.1       38      
Provera                  25   14.4      19.4      22      50   8.9     13.9       46      
Azulfidine/      
  Salazopyrin            23   (8.5)     (4.9)     25      44  (6.8)    (1.8)      47      
Halcion                  23   (4.2)      4.4      24      43  (5.3)     2.0       45      
Caverject                19  (13.6)     (9.4)     21      41   2.8      8.2       40      
Sermion                  20   (5.1)      1.9      21      38  (7.1)    (0.1)      41      
Adriamycin               17  (24.6)    (22.5)     22      35 (16.5)   (13.2)      42      
Vantin                    6  (15.9)    (15.3)      7      27 (25.3)   (25.2)      36      
Other human pharma-      
  ceutical products     466   (2.9)      0.6     480     894  (4.3)     0.9      934      
                     ------  -------  ------- ------  ------ -------  ------- ------      
Total human pharma-      
  ceutical products   1,305    3.3       9.8   1,263   2,566   3.8      8.7    2,471      
Animal health            99    5.4       7.5      94     187   3.7      6.3      180      
Chemical & contract      
  manufacturing          81   22.2      23.2      66     159  16.9     18.0      136      
Diagnostics              54   (5.9)      0.3      57     106  (4.3)     2.4      111      
Nutrition                91  (12.9)    (10.2)    104     180 (13.0)    (8.4)     207      
Plasma                   21   12.0      16.2      19      37  18.6     25.7       31      
                     ------  -------  ------- ------  ------ -------  ------- ------      
Total sales       
  excluding Biotech   1,651    3.0       7.0   1,603   3,235   3.1      3.1    3,136      
Biotech                   3  (97.5)    (97.5)    100       5 (97.3)   (97.3)     202      
                     ------  -------  ------- ------  ------ -------  ------- ------      
Consolidated sales   $1,654   (2.9)%     0.9% $1,703  $3,240  (2.9)%    1.5%  $3,338      
                     ======  =======  ======= ======  ====== =======  ======= ======      
      
*Underlying growth equals percent change excluding currency exchange effects.      
</TABLE>    


 
Xalatan led new product sales growth in the second quarter and first half of 
1998 both in the U.S. and Europe.  Since 1996, Xalatan has been launched in 40 
markets worldwide.  Demand for this novel glaucoma treatment has resulted in 
its market leadership position in the U.S. where year-to-date sales increased 
$42 million over the prior year.  Sales increased $24 million across Europe 
where the product was launched throughout 1997.  Patent protection for Xalatan 
extends through 2011 in the U.S. and 2009 in Europe and Japan.  
  
Other human pharmaceutical products registering strong sales performances in 
1998 included Mirapex, Nicorette, and Depo-Provera.  Mirapex (Mirapexin 
outside the U.S.), a dopamine agonist used in the treatment of Parkinson's 
disease, was launched in the U.S. in July 1997 and achieved 1998 sales of $13 
million in the second quarter and $23 million in the first half.  The product 
was approved in Europe in the first quarter of 1998 and is expected to be 
launched in major European markets in September.  Nicorette, a line of 
nicotine replacement therapy products, achieved a 39 percent increase in year-  
to-date sales excluding exchange.  This growth, representing a 32 percent 
increase in volume and a 7 percent rise in prices, was led by Nicorette Gum 
and the Nicorette Inhaler in the U.S. and the U.K.  Depo-Provera, the long-  
acting injectable contraceptive, attained a 30 percent increase in local 
currency year-to-date sales.  The growth, driven by the U.S. and Bangladesh, 
was comprised of a 24 percent volume increase and a 6 percent price increase. 
Depo-Provera sales were higher in the U.S. due to weak demand in the first 
half of 1997.  Strong promotional efforts initiated later in that year and in 
the first quarter of 1998 fueled subsequent growth.  U.S. sales of Depo-  
Provera in the second half of 1998 are expected to grow at a lesser rate than 
in the first six months of the year.  
  
Fragmin, an antithrombotic agent, and Camptosar, a treatment for advanced 
colorectal cancer, achieved solid growth in the quarter and first half.  Year-  
to-date, Fragmin attained worldwide volume growth of 27 percent as prices fell 
6 percent.  Increasing demand for Fragmin led to higher U.S. sales, while a 
new indication for unstable coronary artery disease (UCAD) drove growth in the 
U.K.  The company submitted a supplemental New Drug Application in May for the 
UCAD indication in the U.S.  Despite volume growth of 7 percent in Japan, the 
largest market for Fragmin, sales fell 7 percent due to a mandatory price 
decrease and the weak yen.  Camptosar sales rose 8 percent in the first six 
months representing a 6 percent price and 2 percent volume increase.  June 
sales were notably strong following presentation of survival data at a recent 
meeting of the American Society of Clinical Oncology. 
  
Worldwide sales of Genotropin, a human growth hormone, were up slightly in the 
second quarter in local currency.  In Europe, a 9 percent year-to-date 
increase in volume was partially offset by a 5 percent negative exchange 
effect and a 1 percent price decrease.  In the U.S., Genotropin achieved 
growth of 128 percent where the product currently captures over 40 percent of 
new patient prescriptions.  In Japan, sales in the first half of the year were 
$26 million below the prior year due to the weak yen and the April 1 mandatory 
price decrease as further discussed below.  In addition, at the end of 1997, 
the company reacquired sales and marketing rights to Genotropin in Japan.  
Related to this agreement, the company repurchased a one-month supply of 
inventory from the Japan distributor in the first quarter of 1998 which 
accounted for a portion of the comparative sales decrease.  As a result of 
reacquiring the import license effective June 24, 1998, the company will be 
able to sell finished product through its distributors which will result in 
higher sales and profitability.  
  
A mandatory price decrease in Japan effective April 1, 1998, and government 
restrictions in health care reimbursements have severely depressed the 
pharmaceutical market in this country.  These factors in combination with the 
weak yen negatively impacted sales of several products for which Japan is a 
major market.  In addition to Genotropin and Fragmin, products particularly 
affected in the period-to-period comparison included Sermion, Azulfidine/ 
Salazopyrin, Healon, and Pharmorubicin.  Sermion is a treatment for senile 
dementia.  Azulfidine is a treatment for inflammatory bowel disease and 
rheumatoid arthritis.  Healon is a viscoelastic used in ophthalmic surgery.  
Pharmorubicin, an oncology product, also registered lower sales in Germany 
largely due to price competition and in Latin America due to loss of a 
contract in that region.  
  
Vantin, Rogaine, and Caverject experienced declines in the second quarter.  
Sales of Vantin, a broad spectrum oral antibiotic, declined 25 percent year-  
to-date due to intense competition, a relatively mild 1998 flu season, and a 
change in sales detailing focus.  In addition, Vantin sales in the prior year 
were especially strong due to both sales incentives offered and a more potent 
flu season.  Rogaine (Regaine outside the U.S.), the hereditary hair loss 
treatment, also declined in the first six months.  Strong growth in France and 
Sweden was more than offset by a decline in the U.S. where Rogaine Extra 
Strength for Men was launched late in 1997.  Lower than expected demand 
resulted in excess trade inventories which may further depress sales recorded 
in the third quarter.  Caverject sales declined in the second quarter but rose 
year-to-date compared to the same prior year periods.  Intense U.S. 
competition caused sales there to decline; however, the success of competitors 
in expanding the market is ultimately anticipated to benefit Caverject, a 
treatment for erectile dysfunction with a particularly high efficacy rate.  
Caverject recorded double-digit percentage growth in all regions outside the 
U.S.  
  
Several products which have faced vigorous generic competition during prior 
years reported increases in the first half of 1998.  The increases were due in 
part to weak performances in the first half of 1997 caused by year-end 1996 
trade inventory accumulations in the U.S.  In addition, an expanded and 
revitalized sales force has fueled demand for these products which include 
Xanax, an anxiolytic; Glynase and Micronase, oral anti-diabetes agents; 
Provera, a progestational product; and Medrol steroid products.  
  
The other businesses represented 21 percent of consolidated sales (exclusive 
of Biotech) and include Animal Health, Chemical & Contract Manufacturing, 
Diagnostics, Plasma, and Nutrition.  Combined second quarter sales of these 
businesses totaled $346 million, up 2 percent from the second quarter of 1997. 
Excluding the negative impact of exchange, sales increased 5 percent.  Sales 
in the first six months grew 4 percent in local currency.  Diagnostics sales 
suffered from restrictions in government reimbursements and the weak yen in 
Japan, its largest market.  Growth recorded by Chemical and Contract 
Manufacturing resulted primarily from increases in inhalation steroids for use 
in the asthma/allergy market.  ReFacto, a treatment for hemophilia A, drove 
Plasma sales higher in the first half.  As previously mentioned, sales of 
Biotech subsequent to August 1997 are not reported in consolidated sales 
leading to a comparative sales decrease of approximately $197 million in the 
first six months.  Biotech is further discussed in Note F to the consolidated 
financial statements.  
  
In accordance with its strategy to focus on higher-margin prescription 
pharmaceuticals, the company announced in June that it reached an agreement to 
sell its Nutrition business to Germany's Fresenius AG, a global supplier of 
dialysis products and services, hospital products, and home care products.  To 
comply with local antitrust regulations, the company will retain its Nutrition 
activities in Germany.  
  
COSTS AND EXPENSES  
  
Consolidated operating expenses, stated as a percentage of net sales, are 
provided in the table below.  The 1997 percentages are also shown as if 
Biotech, formerly a consolidated subsidiary, were accounted for under the 
equity method in 1997 consistent with its accounting treatment in 1998.  The 
following discussions are based on the comparison of 1998 percentages with the 
adjusted 1997 percentages.  


<TABLE>     
<CAPTION>      
                                   Second quarter                 Six Months      
                              1998    1997 adj.  1997      1998    1997 adj.  1997      
                               as       for       as        as       for       as      
                            reported  Biotech  reported  reported  Biotech  reported      
                            --------  -------- --------  --------  -------- --------      
<S>                         <C>        <C>       <C>       <C>       <C>      <C>     
Cost of products sold        29.8%     32.0%     32.3%     30.2%     31.1%    31.5%      
Research and development     17.7      16.9      16.5      17.5      17.4     16.9      
Marketing, administrative      
  and other                  43.3      37.8      38.3      40.7      37.0     37.6      
Operating income             12.0      15.9      15.0      14.2      16.9     15.8      
</TABLE>    


 
A favorable period-to-period comparison in product mix and selling price 
combined to drive cost of products sold lower as a percentage of sales.  New 
products, representing an increasing percentage of sales, contributed a higher 
gross profit than older products in price competition with generics.  
Improvements in production efficiencies, increased production volumes, and the 
favorable effect of currency exchange on costs more than offset the negative 
currency impact on sales further reducing cost of products sold as a 
percentage of sales. 
  
Research and development (R&D) spending increased as a percentage of sales in 
the second quarter and first half of 1998 as compared to the same periods in 
1997.  Excluding Biotech, R&D increased 8 percent in the second quarter and 4 
percent in the first six months.  The increase in both periods was primarily 
due to the increased level of Phase IV studies in support of product launches. 
R&D infrastructure costs were lower in 1998 due to efficiencies generated by 
the prior year restructuring.  These savings were reinvested into strategic 
licensing agreements, other R&D collaborations to supplement the company's 
internal research base, and increased clinical spending on products in 
development.  In the first quarter of 1998, the company acquired the rights to 
almotriptan, an anti-migraine compound, and entered into a collaboration to 
identify small molecule inhibitors of the Hepatitis C virus.  In the second 
quarter, the company acquired the rights to new compounds for the treatment of 
diabetes and anxiety.  Spending during the first quarter also supported the 
product filing of exemestane with the European Union for advanced breast 
cancer and the development activities related to filing a New Drug Application 
for Edronax with the U.S. FDA.  
  
Marketing, administrative, and other (MA&O) expense increased as a percentage 
of sales primarily due to the previously mentioned $61 million increase in 
litigation reserves.  Sales force expansions and increased product promotion 
in the U.S. and Europe, particularly for Detrol, Rogaine, and Edronax, also 
increased MA&O spending.  The comparative spending increase was partially 
offset by the favorable effects of exchange and a decrease in general and 
administrative expense, a consequence of the 1997 restructuring.  
  
The company recorded $18 million in the first half of 1998 representing its 
share of Amersham Pharmacia Biotech's pretax earnings.  In August 1997, the 
company merged Pharmacia Biotech with Amersham Life Science.  The merger 
created a new company, Amersham Pharmacia Biotech Ltd.  Pharmacia & Upjohn 
owns 45 percent of the new company which is accounted for using the equity 
method.  In August 1998, Amersham Pharmacia Biotech Ltd. announced it had 
entered into an agreement to acquire Molecular Dynamics, a leading provider of 
systems that accelerate genetic discovery and analysis.  
  
In 1997, the company recognized charges of $316 million for the restructuring 
portion of its global turnaround program.  In the latter half of 1998, the 
company expects to record less than $100 million in additional charges for 
this program.  Cash spending during 1998 is anticipated to approximate $100 
million.  In addition, the company incurred $12 million in restructuring-  
related charges in 1998.  These charges, while not included in restructuring, 
relate to similar activities such as the establishment of a new global 
headquarters in New Jersey and registration and validation costs associated 
with the company's manufacturing rationalization program.  Management expects 
to record additional restructuring-related expenses during the latter half of 
1998.  
  
The estimated annual effective tax rate for 1998 is 32 percent.  The effective 
tax rate for 1997 was 34 percent excluding the tax benefits related to 
nonrecurring items (31 percent inclusive of nonrecurring items).  The lower 
1998 estimated rate is the result of increased earnings in jurisdictions with 
lower tax rates.  
  
COMPREHENSIVE INCOME  
  
Effective January 1, 1998, the company adopted Statement of Financial 
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income".  The 
statement establishes standards for reporting comprehensive income and its 
components.  Comprehensive income is defined as all nonowner changes in equity 
and equals net earnings plus other comprehensive income.  For the company, 
other comprehensive income consists of currency translation adjustments and 
unrealized gains and losses on available-for-sale securities.  Total 
comprehensive income for the three months ended June 30, 1998, and June 30, 
1997, was $159 million and $161 million, respectively.  For the first six 
months, total comprehensive income was $224 million in 1998 and $47 million in 
1997.  The difference between net earnings and other comprehensive income was 
largely related to unfavorable currency translation adjustments recorded in 
equity.  
  
FINANCIAL CONDITION  
                                                   June 30,      December 31,  
                                                     1998            1997      
                                                 ------------    ------------  
Working capital (U.S. dollars in millions)          $1,601          $1,639      
Current ratio                                         1.56            1.61      
Debt to total capitalization                         18.5%           15.7%      
      
The company's working capital and current ratio decreased slightly as of the 
end of the second quarter as compared to the prior year-end due primarily to 
an increase in short-term debt.  The increase in the percentage of debt to 
total capitalization reflects the higher short-term debt levels as well as a 
decline in shareholders' equity.  The increase in negative currency 
translation adjustments recorded in equity caused essentially all of this 
decline.  As indicated below, net financial assets have decreased since year-  
end mainly due to the increase in short-term debt.  
  
                                                   June 30,      December 31,
                                                     1998            1997
                                                 ------------    ------------
Cash, equivalents and investments                   $1,867          $1,848
Short-term and long-term debt                        1,245           1,035
                                                    -------         -------
Net financial assets                                $  622          $  813
                                                    =======         =======
      
Net cash provided by operations for the first six months of 1998 decreased to 
$234 million from $533 million for the same period in 1997.  The decrease was 
attributable to changes in current assets and liabilities being predominantly 
uses of cash in 1998 as compared to a mix of uses and sources in the first six 
months of 1997.  Increases in trade accounts receivable and inventories in 
1998, coupled with reductions in accounts payable and income taxes, 
represented a combined use of cash of $233 million.  The same operating items 
in 1997 constituted a net source of cash of $108 million.  Other significant 
uses of cash were expenditures for property, plant, and equipment (capital) 
and the company's quarterly dividend.  Capital expenditures of $221 million 
largely represented spending on manufacturing facilities in the U.S., Belgium, 
Puerto Rico, and Sweden.  Major sources of cash in the quarter included short-  
term debt and the net proceeds from the sale of investments.  The company's 
future cash provided by operations and borrowing capacity are expected to 
cover normal operating cash flow needs, planned capital acquisitions, and 
dividend payments that may be approved by the board of directors for the 
foreseeable future.  
  
LITIGATION  
  
Various suits and claims arising in the ordinary course of business, primarily 
for personal injury alleged to have been caused by the use of the company's 
products, are pending against the company and its subsidiaries.  The company 
also is involved in several administrative and judicial proceedings relating 
to environmental concerns, including actions brought by the U.S. Environmental 
Protection Agency (EPA) and state environmental agencies for remedial cleanup 
at approximately 50 sites.  
  
Based on information currently available and the company's experience with 
lawsuits of the nature of those currently filed or anticipated to be filed 
which have resulted from business activities to date, the amounts accrued for 
product and environmental liabilities are considered adequate.  Although the 
company cannot predict and cannot make assurances with respect to the outcome 
of individual lawsuits, the ultimate liability should not have a material 
effect on its consolidated financial position; and unless there is a 
significant deviation from the historical pattern of resolution of such 
issues, the ultimate liability should not have a material adverse effect on 
the company's results of operations or liquidity.  
  
The company has been a party, along with many other U.S. drug manufacturers 
and wholesalers, in numerous related federal and state civil antitrust 
lawsuits brought by U.S. independent and chain retail pharmacies and 
consumers.  These suits claim violations of antitrust and pricing laws as a 
result of the defendants providing discounts and rebates to allegedly favored 
managed care customers that were not offered to the plaintiffs.  Several of 
the suits are class actions.  The company announced in July that it has 
reached a settlement with plaintiffs in the federal class action cases that 
had been consolidated in federal court in Chicago, Illinois.  The company 
believes that any potential remaining liability above amounts accrued will not 
have a material adverse effect on the company's consolidated financial 
position, its results of operations, or liquidity.  Further discussion of 
current litigation matters is provided in Note D to the consolidated financial 
statements.  
  
CONTINGENT LIABILITIES  
  
The company's estimate of the ultimate cost to be incurred in connection with 
environmental situations could change due to uncertainties at many sites with 
respect to potential cleanup remedies, the estimated cost of cleanup, and the 
company's share of a site's cost.  With regard to the company's discontinued 
industrial chemical facility in North Haven, Connecticut, the company may soon 
be required to submit a corrective measures study report to the EPA.  As the 
corrective action process progresses, it may become appropriate to reevaluate 
the existing reserves designated for remediation in light of changing 
circumstances.  It is reasonably possible that a material increase in accrued 
liabilities will be required but it is not possible to determine what, if any, 
exposure exists at this time.  
  
OTHER ITEMS  
  
The company's global program to address the year 2000 (Y2K) date recognition 
problem continued to make progress toward its ultimate goal to ensure the 
millennium event does not have a material adverse effect on its business 
operations.  While the company is taking steps to remediate and replace 
internal information technology (IT) and embedded systems, and is actively 
working with critical external partners, there are many factors outside the 
company's control that could allow the Y2K problem to seriously disrupt its 
operations.  For example, a widespread failure in the utilities industry could 
severely interrupt or halt the company's operations.  
  
In the second quarter, management initiated a Y2K corporate risk management 
effort to develop a comprehensive risk and contingency management plan that 
will identify major risks and detail contingency plans for critical business 
processes across the company.  Management anticipates completion of these 
plans by the end of 1998.  Repair and replacement projects to ensure IT and 
embedded systems are Y2K-compliant are currently underway and are expected to 
be completed by the end of 1998 for many business-critical systems and by mid-  
1999 for remaining business-critical systems.  Barring critical third-party 
failures, management believes that by meeting the objectives of its Y2K 
Program, the date recognition problem will not have a material adverse effect 
on the company's consolidated financial position, its results of operations, 
or liquidity.  
  
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, 
"Accounting for Derivative Instruments and Hedging Activities".  This 
statement requires companies to record derivatives on the balance sheet as 
assets and liabilities measured at fair value.  The accounting treatment of 
gains and losses resulting from changes in the value of derivatives depends on 
the use of the derivative and whether it qualifies for hedge accounting.  The 
company will adopt SFAS No.133 as required no later than January 1, 2000, and 
is currently assessing the impact of adoption on its financial position, 
results of operations, and liquidity.  
  
The American Institute of Certified Public Accountants (AICPA) issued 
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up 
Activities" in April 1998.  The SOP requires start-up costs and organization 
costs to be expensed as incurred.  The SOP is effective beginning in 1999 and 
will be adopted by the company at that time.  Currently, the company is 
evaluating adoption of the statement but does not anticipate its impact to be 
material to the consolidated financial statements. 
  
In March 1998, the company adopted the AICPA's SOP 98-1, "Accounting for the 
Costs of Computer Software Developed or Obtained for Internal Use".  The 
statement requires capitalization of certain costs incurred in the development 
of internal-use software, including external direct material and service 
costs, employee payroll and payroll-related costs, and capitalized interest.  
Prior to adoption of SOP 98-1, the company expensed these costs as incurred.  
The effect of initially applying the provisions of SOP 98-1 was not material 
to the consolidated financial statements.  
  
The company currently reports its operations as a single industry segment: 
pharmaceutical products.  This industry designation includes human 
pharmaceutical (prescription and over-the-counter) products and five 
associated businesses.  In 1997, the Financial Accounting Standards Board 
issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related 
Information".  SFAS No. 131 establishes standards for reporting information 
about operating segments and will be adopted by the company in the fourth 
quarter of 1998.  Assessment of the new standard is not yet concluded.  
  
FORWARD-LOOKING INFORMATION  
  
Certain statements contained in this report, such as statements concerning the 
company's anticipated financial or product performance, its ability to pay 
dividends, and other non-historical facts, are "forward-looking statements" 
(as such term is defined in the Private Securities Litigation Reform Act of 
1995).  Since these statements are based on factors that involve risks and 
uncertainties, actual results may differ materially from those expressed or 
implied by such forward-looking statements.  Such factors include, among 
others:  sales and earnings projections; the effectiveness of and expense 
estimates related to future projects including restructuring plans and the 
Year 2000 date recognition problem; management's ability to make further 
progress under the company's global turnaround program; the company's ability 
to successfully market new and existing products in new and existing domestic 
and international markets; the success of the company's research and 
development activities and the speed with which regulatory authorizations and 
product rollouts may be achieved; fluctuations in currency exchange rates; the 
effects of the company's accounting policies and general changes in generally 
accepted accounting practices; the company's exposure to product liability 
lawsuits and contingencies related to actual or alleged environmental 
contamination; the company's exposure to antitrust lawsuits; social, legal and 
political developments, especially those relating to health care reform and 
product liabilities; general economic and business conditions; the company's 
ability to attract and retain current management and other employees of the 
company; and other risks and factors detailed in the company's other 
Securities and Exchange Commission filings, including its Proxy Statement and 
Annual Report on Form 10-K for the year ended December 31, 1997.  
  
  
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk  
  
There are no material changes from the disclosures in Form 10-K filed with the 
Securities and Exchange Commission on March 31, 1998.  
  
<PAGE>  
PART II - OTHER INFORMATION  
  
Item 6.  Exhibits and Reports on Form 8-K.  
  
         (a)(i)   Exhibit A - Report of Independent Accountants (page 21).      
      
         (a)(ii)  Exhibit 12 - Ratio of Earnings to Fixed Charges (page 22). 
      
         (a)(iii) Exhibit 15 - Awareness of PricewaterhouseCoopers (page 23). 
      
         (a)(iv)  Exhibit 27 - Financial Data Schedule (EDGAR filing only). 
      
         (b)      Form 8-K - No reports on Form 8-K were filed during       
                  the quarter ended June 30, 1998.      
  
  
  
<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.  
  
  
  
                                        PHARMACIA & UPJOHN, INC.      
                                        (Registrant)      


DATE:  August 13, 1998                  /S/C.J. Coughlin      
                                        C. J. Coughlin      
                                        Executive Vice President      
                                        and Chief Financial Officer      



DATE:  August 13, 1998                  /S/R.T. Collier      
                                        R. T. Collier      
                                        Senior Vice President      
                                        and General Counsel