<PAGE>

                                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 September 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
October 30, 1998           was 508,051,850.

                          Page 1 of 24 pages
               The exhibit index is set forth on page 23
<PAGE>

                       QUARTERLY REPORT ON FORM 10-Q

                         PHARMACIA & UPJOHN, INC.

                      QUARTER ENDED SEPTEMBER 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                       11

  Item 3.     Quantitative and Qualitative Disclosures About
                Market Risk                                               22


Part II - OTHER INFORMATION

  Item 6.     Exhibits and Reports on Form 8-K                            23



<PAGE>
PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements

<TABLE>
PHARMACIA & UPJOHN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(in millions of U.S. dollars, except per-share data)


<CAPTION>
                                                            Unaudited                   
                                      --------------------------------------------------
                                           For Three Months           For Nine Months
                                          Ended September 30,        Ended September 30,
                                      -----------------------     -----------------------
                                          1998         1997          1998         1997 
                                       ----------   ----------    ----------   ----------
<S>                                     <C>          <C>           <C>          <C>
Net sales                               $1,669       $1,551        $4,909       $4,889
Other revenue                               38           36           101           98
                                       ----------   ----------    ----------   ----------

     Operating revenue                   1,707        1,587         5,010        4,987

Cost of products sold                      515          476         1,493        1,529
Research and development                   272          268           838          832
Marketing, administrative and other        634          585         1,952        1,839
Biotech                                    (15)          31           (33)          31
Restructuring charges                        -          125             -          125
                                       ----------   ----------    ----------   ----------

     Operating income                      301          102           760          631

Interest income                             20           26            65           80
Interest expense                            (6)          (6)          (17)         (24)
All other, net                               7           (2)            7           (3)
                                       ----------   ----------    ----------   ----------

Earnings before income taxes               322          120           815          684
Provision for income taxes                 103           41           261          233
                                       ----------   ----------    ----------   ----------

Net earnings                            $  219       $   79        $  554       $  451
                                       ==========   ==========    ==========   ==========

Earnings per common share:

  Basic                                      $.42         $.15         $1.07         $.87

  Diluted                                    $.41         $.15         $1.05         $.86



                                  See accompanying notes
</TABLE>


<PAGE>
<TABLE>
PHARMACIA & UPJOHN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions of U.S. dollars)

For the Nine Months Ended September 30
<CAPTION>
                                                              Unaudited
                                                        --------------------
                                                          1998        1997
                                                        --------    --------
<S>                                                      <C>         <C>
Net cash provided by operations                          $ 641       $ 862
                                                        --------    --------
Cash flows (required) provided by investment activities:
  Acquisition of subsidiaries                                -         (34)
  Additions of properties                                 (373)       (354)
  Proceeds from sales of properties                         16          37
  Purchases of investments                                (409)       (584)
  Proceeds from sales of investments                       802         853
  Other                                                     (7)         18
                                                        --------    --------
Net cash provided (required) by investment activities       29         (64)
                                                        --------    --------
Cash flows provided (required) by financing activities:
  Proceeds from issuance of debt                            19          32
  Repayment of debt                                       (153)        (27)
  Payments of ESOP debt                                    (16)        (12)
  Net increase in debt with initial maturity
    of 90 days or less                                     155          18
  Dividend payments                                       (425)       (425)
  Purchases of treasury stock                              (57)        (84)
  Proceeds from exercise of stock options                   54          16
  Other                                                      -          10
                                                        --------    --------
Net cash (required) by financing activities               (423)       (472)
                                                        --------    --------
Effect of exchange rate changes on cash                    (17)        (41)
                                                        --------    --------
Net change in cash and cash equivalents                    230         285

Cash and cash equivalents, beginning of year               775         641
                                                        --------    --------
Cash and cash equivalents, end of period                $1,005      $  926
                                                        ========    ========


Noncash event:
In August 1997, the company exchanged the net assets of its biotechnology 
supply business, Biotech, having a carrying cost of approximately $194, for a 
45 percent ownership interest in the newly formed Amersham Pharmacia Biotech.


                            See accompanying notes
</TABLE>
<PAGE>
<TABLE>
PHARMACIA & UPJOHN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions of U.S. dollars)
<CAPTION>
                                                   September 30,  December 31,
                                                      1998            1997
                                                   -----------    -----------
                    ASSETS                         (unaudited)
<S>                                                 <C>            <C>
Current assets:
  Cash and cash equivalents                         $ 1,005        $   775
  Short-term investments                                182            539
  Trade accounts receivable, less allowance
    of $99 (1997: $89)                                1,312          1,303
  Inventories                                         1,005            958
  Other current assets                                  833            752
                                                   -----------    -----------
     Total current assets                             4,337          4,327
Long-term investments                                   459            534
Goodwill and other intangible assets, net             1,278          1,287
Properties, net                                       3,397          3,306
Other noncurrent assets                                 796            926
                                                   -----------    -----------
Total assets                                        $10,267        $10,380
                                                   ===========    ===========

      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Short-term debt, including current 
    maturities of long-term debt                    $   437        $   401
  Other current liabilities                           2,313          2,287
                                                   -----------    -----------
     Total current liabilities                        2,750          2,688
Long-term debt and guarantee of ESOP debt               558            634
Other noncurrent liabilities                          1,308          1,520
                                                   -----------    -----------
Shareholders' equity:
  Preferred stock, one cent par value; at 
    stated value; authorized 100,000,000 shares;
    issued 6,889 shares (1997: 6,996 shares)            278            282
  Common stock, one cent par value; 
    authorized 1,500,000,000 shares; issued
    508,648,707 shares (1997: 508,647,507 shares)         5              5
  Capital in excess of par value                      1,385          1,440
  Retained earnings                                   5,497          5,364
  ESOP-related accounts                                (246)          (260)
  Treasury stock                                        (17)           (48)
  Accumulated other comprehensive income             (1,251)        (1,245)
                                                   -----------    -----------
     Total shareholders' equity                       5,651          5,538
                                                   -----------    -----------
Total liabilities and shareholders' equity          $10,267        $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.


B - INVENTORIES
                                                    September 30, December 31,
                                                        1998          1997
                                                     ----------   -----------
    Estimated replacement cost (FIFO basis):
    Pharmaceutical and other finished products        $   526        $  500
    Raw materials, supplies and work-in-process           633           618
                                                     ----------    ----------
                                                        1,159         1,118
    Less reduction to LIFO cost                          (154)         (160)  
                                                     ----------    ----------
                                                      $ 1,005        $  958
                                                     ==========    ==========

Inventories valued on the LIFO method had an estimated replacement cost (FIFO
basis) of $414 at September 30, 1998, and $416 at December 31, 1997.


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 Superfund 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 the 
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 
(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.


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 reached a settlement with the plaintiffs 
in the federal class action cases for $103.  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 an accrual of $316 for estimated restructuring 
costs associated with the global turnaround program.  The restructuring costs 
included employee separation and facility closure costs to be incurred as part 
of the global plan to simplify infrastructure and eliminate duplication of 
resources in manufacturing, administration, and research and development.  At 
September 30, 1998, the remaining accrual balance was $150.  Additional 
restructuring charges are expected to be recognized in the fourth quarter of 
1998 when all remaining elements of the turnaround program are finalized and 
announced.  Expenditures related to the restructuring charges are anticipated 
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 September 30, 1998, and December 31, 1997. 
Total comprehensive income for the three months ended September 30, 1998, and 
September 30, 1997, was $324 and $121, respectively.  Total comprehensive 
income for the nine months ended September 30, 1998, and September 30, 1997, 
was $548 and $168, 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 third quarter ended September 30,  1998      1998      1997      1997
                                          Basic    Diluted    Basic    Diluted
                                         -------   -------   -------   -------
<S>                                       <C>       <C>       <C>       <C>
EPS numerator:
Net earnings                              $ 219     $ 219     $  79     $  79
Less: Preferred stock dividends,
  net of tax                                 (3)        -        (3)        -
Less: ESOP contribution, net of tax           -        (1)        -        (1)
                                         -------   -------   -------   -------
Income available to common shareholders   $ 216     $ 218     $  76     $  78
                                         =======   =======   =======   =======

EPS denominator:
Average common shares outstanding           508       508       508       508
Effect of dilutive securities:
       Stock options                          -         5         -         2
       Convertible preferred stock and 
         incentive compensation               -        10         -        11
                                         -------   -------   -------   -------
Total shares                                508       523       508       521
                                         =======   =======   =======   ======= 

Earnings per share                         $.42      $.41      $.15      $.15
                                         =======   =======   =======   ======= 


For nine months ended September 30,        1998      1998      1997      1997
                                          Basic    Diluted    Basic    Diluted
                                         -------   -------   -------   -------
EPS numerator:
Net earnings                              $ 554     $ 554     $ 451     $ 451
Less: Preferred stock dividends,
  net of tax                                (10)        -        (9)        -
Less: ESOP contribution, net of tax           -        (4)        -        (3)
                                         -------   -------   -------   -------
Income available to common shareholders   $ 544     $ 550     $ 442     $ 448
                                         =======   =======   =======   ======= 

EPS denominator:
Average common shares outstanding           508       508       508       508
Effect of dilutive securities:
       Stock options                          -         3         -         2
       Convertible preferred stock and 
         incentive compensation               -        11         -        11
                                         -------   -------   -------   -------
Total shares                                508       522       508       521
                                         =======   =======   =======   ======= 

Earnings per share                        $1.07     $1.05      $.87      $.86
                                         =======   =======   =======   =======
</TABLE>


<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and
Results of Operations

FINANCIAL REVIEW

OVERVIEW OF CONSOLIDATED RESULTS

In the following discussion of consolidated results, the three and nine month 
periods ended September 30, 1998 are compared to the corresponding periods in 
1997 unless otherwise noted.  The table below provides an overview of 
consolidated results in millions of U.S. dollars, except per-share data.

                                   Third Quarter            Nine Months
                              -----------------------  -----------------------
                                      Percent                  Percent
                                1998  Change     1997    1998  Change     1997
                              ------  -------  ------  ------  -------  ------
Sales                         $1,669    7.6%   $1,551  $4,909    0.4%   $4,889
Operating income                 301  195.4       102     760   20.6       631
Earnings before income taxes     322  168.3       120     815   19.1       684
Net earnings                     219  176.7        79     554   22.7       451
Net earnings per common share:
  Basic                        $0.42  180.0     $0.15   $1.07   23.0     $0.87
  Diluted                      $0.41  173.3     $0.15   $1.05   22.1     $0.86

Three nonrecurring items affect the comparison of 1998 and 1997 reported 
financial results: (1) the 1998 settlement of the retail pharmacy lawsuit; (2) 
the 1997 partial divestiture of the company's biotechnology business; and (3) 
the 1997 global turnaround restructuring.  In July 1998, 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 
the third quarter of 1997, the company merged its biotechnology business, 
Pharmacia Biotech, with Amersham Life Science and recorded $34 million ($30 
million after tax or $0.06 per share) for transaction costs and the write-off 
of acquired research and development.  The ownership structure of Biotech 
changed from a wholly-owned subsidiary to an equity affiliate further 
affecting comparability between periods.  Also in the third quarter of 1997, 
the company recorded restructuring charges for its manufacturing facility 
rationalization program of $125 million ($75 million after tax or $0.14 per 
share).

In addition to the nonrecurring items, the impact of currency exchange rate 
fluctuations affects the period-to-period comparison.  Although the dollar 
weakened against most major currencies near the end of the third quarter, the 
1998 third quarter and year-to-date average exchange rates still reflected a 
stronger dollar as compared to the 1997 averages resulting in unfavorable 
exchange effects in the current periods.

Excluding negative exchange effects and nonrecurring items, the company 
recorded a strong performance in 1998 relative to 1997.  Consolidated sales 
increased 12 percent in the third quarter and 9 percent year-to-date largely 
due to increased demand for recently launched products, particularly in the 
U.S.  On the same basis, net earnings increased 25 percent in the quarter and 
13 percent year-to-date. 

NET SALES

Excluding Biotech, consolidated sales growth of 10 percent in the third 
quarter represented a 14 percent volume increase, a 2 percent price decrease, 
and a 2 percent negative exchange impact.  On the same basis, the 5 percent 
year-to-date sales growth represented a 10 percent volume increase, a 1 
percent price decrease, and a 4 percent negative exchange effect.  Sales 
growth was led by U.S. pharmaceutical products with a 35 percent increase in 
the third quarter and a 28 percent increase in the first nine months.  Year-
to-date, this increase represented a 20 percent rise in volume primarily 
reflecting strong performance of new products and trade inventory 
accumulations in the third quarter in anticipation of price increases.  
Management does not expect U.S. pharmaceutical product sales growth to remain 
at third-quarter growth levels for the remainder of the year.  

Consistent with the company's accelerated U.S. growth strategy, total sales in 
the U.S. represented an increasingly larger percentage of worldwide sales at 
37 percent year-to-date compared to 32 percent in 1997, excluding Biotech.  
Outside the U.S., major markets recorded good growth in local currency with 
the exception of Japan, Sweden, and Spain.  Lower diagnostics and nutrition 
sales in Sweden depressed overall performance in this country while declining 
nutrition sales and product divestments reduced sales in Spain.  Sales in 
Japan fell for several reasons as further discussed in the "Product Sales" 
section below.  Excluding Japan, sales outside the U.S. grew 6 percent in 
local currency in the third quarter and 5 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>
                             Third Quarter                    Nine 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>
Non-U.S.:
  Japan              $  133  (16.7)%   (6.1)% $  159  $  397 (19.6)%   (9.4)% $  493
  Italy                 104    9.8     14.3       95     331  (1.8)     2.2      337
  Germany               101    6.2     10.2       95     299  (1.0)     2.8      302
  United Kingdom         83   12.4     10.9       74     256  13.9     12.3      225
  Sweden                 69   (7.1)    (3.3)      74     212  (7.0)    (3.2)     228
  France                 65   17.0     20.8       56     201   7.9     11.4      186
  Spain                  39   (6.1)    (1.9)      41     121 (11.0)    (7.1)     135
  Rest of World         417    0.1      2.1      417   1,290   0.6      7.7    1,282
United States           655   28.5     28.5      510   1,794  22.2     22.2    1,469
                     ------  -------  ------- ------  ------ -------  ------- ------
Subtotal              1,666    9.5     12.1    1,521   4,901   5.2      9.1    4,657
Biotech                   3  (90.2)   (90.2)      30       8 (96.4)   (96.4)     232
                     ------  -------  ------- ------  ------ -------  ------- ------
Consolidated sales   $1,669    7.6%    10.1%  $1,551  $4,909   0.4%    4.1%   $4,889
                     ======  =======  ======= ======  ====== =======  ======= ======

*Underlying growth equals percent change excluding currency exchange effects. 
</TABLE>




PRODUCT SALES

A period-to-period consolidated net sales comparison of the company's top 
twenty human pharmaceutical products (including generic equivalents where 
applicable) and five other businesses is provided in the table below.  
Underlying growth is represented by the percent change excluding currency 
exchange effects.


<TABLE>
<CAPTION>
                              Third Quarter                   Nine 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           $  103    7.9%     12.1% $   96  $  275  (2.5)%    2.1%  $  282
Xanax                    83   24.7      27.8      66     236  17.5     22.4      201
Cleocin/Dalacin          82    7.5      11.1      77     228   4.9      9.4      217
Xalatan                  90  102.7     103.9      45     228 109.0    111.0      109
Medrol                   62    6.1      11.0      59     190   6.4     12.5      179
Depo-Provera             62   22.7      26.4      51     174  25.6     28.3      138
Nicorette                48   13.0      15.0      42     147  25.0     30.3      118
Camptosar                50   44.7      45.4      35     136  19.3     19.6      114
Fragmin                  39    0.8       3.8      39     131   9.3     15.4      120
Pharmorubicin            43  (17.0)    (14.6)     52     130 (11.9)    (6.9)     148
Healon                   31  (19.2)    (15.0)     38     101 (10.2)    (4.8)     112
Rogaine                  32   47.0      48.1      22      92   7.4      8.7       85
Micronase/Glynase        26  (26.2)    (26.2)     35      79   9.1      9.2       73
Provera                  25   14.0      18.8      22      75  10.6     15.6       68
Azulfidine/Salazopyrin   25   20.6      25.1      21      69   1.6      6.5       68
Halcion                  21  (14.9)     (6.8)     25      64  (8.6)    (1.2)      70
Sermion                  20   12.1      18.1      18      59  (1.2)     5.4       59
Caverject                16  (28.3)    (26.2)     22      57  (8.3)    (3.5)      62
Detrol/Detrusitol        32    n/a       n/a       -      55   n/a      n/a        -
Adriamycin               16  (23.3)    (21.8)     22      51 (18.8)   (15.8)      63
Other                   441    6.0       8.1     416   1,337  (3.8)     0.2    1,389
                     ------  -------  ------- ------  ------ -------  ------- ------
Total human pharma-
  ceutical products   1,347   12.1      14.9   1,203   3,914   6.5     10.7    3,675
Animal health           102   (1.8)     (0.4)    104     288   1.8      3.9      283
Chemical & contract
  manufacturing          72    8.6       9.2      67     231  14.2     15.1      203
                     ------  -------  ------- ------  ------ -------  ------- ------
Total pharmaceuticals 1,521   10.8      13.5   1,374   4,433   6.5     10.4    4,161
Diagnostics              46    1.1       4.4      46     152  (2.8)     3.0      156
Nutrition                82   (8.9)     (9.0)     89     262 (11.8)    (8.5)     297
Plasma                   17   39.8      40.4      12      54  24.8     29.7       43
                     ------  -------  ------- ------  ------ -------  ------- ------
Sales excl. Biotech   1,666    9.5      12.1   1,521   4,901   5.2      9.1    4,657
Biotech                   3  (90.2)    (90.2)     30       8 (96.4)   (96.4)     232
                     ------  -------  ------- ------  ------ -------  ------- ------
Consolidated sales   $1,669    7.6%     10.1% $1,551  $4,909   0.4%     4.1%  $4,889
                     ======  =======  ======= ======  ====== =======  ======= ======

*Underlying growth equals percent change excluding currency exchange effects. 
</TABLE>




Detrol, a therapy for overactive bladder and its symptoms of urgency, 
frequency and urge incontinence, was launched in the U.S. in April and already 
captures more than 50 percent of new prescriptions.  While prescription 
refills continue to increase reflecting good patient acceptance of Detrol, the 
overactive bladder market is also expanding fueled by direct-to-consumer 
advertising.  Outside the U.S., Detrusitol sales were strong in the U.K., 
Germany, and Sweden.

Xalatan, a novel therapy for glaucoma, led product sales growth in the third 
quarter and first nine months of 1998 both in the U.S. and Europe.  In the 
U.S., Xalatan now captures a market-leading share of total glaucoma 
prescriptions where it is the most widely prescribed branded ophthalmology 
product.  In Europe, Xalatan recorded strong results in major markets led by 
Germany and France.

Sales of Genotropin, a human growth hormone, increased in the U.S. and Europe 
but fell in Japan following retrieval of marketing rights to the product at 
the end of the second quarter.  Several strategic measures have been taken to 
address the challenges of the transition.  In addition, sales levels are lower 
in Japan due to the weak yen and the April 1 mandatory price decrease as 
further discussed below.

Camptosar, a treatment for advanced colorectal cancer, achieved solid growth 
in the quarter and first nine months.  During the third quarter, Camptosar 
sales continued to react positively to new survival data released earlier this 
year.  The U.S. FDA granted Camptosar full second-line approval for colorectal 
cancer in October, two years after the product was introduced with an 
accelerated approval.

Other products posting strong sales performances in the third quarter included 
Mirapex, Nicorette, Rogaine, and Depo-Provera.  Since its U.S. launch in mid-
1997, Mirapex, a dopamine agonist for the treatment of Parkinson's disease, 
has become the leading dopamine agonist in both new and total prescriptions.  
Strong growth in the Nicorette line of smoking cessation products was led by 
Nicorette Gum and new line extensions, including the Nicotrol Inhaler which 
recently became available in the U.S.  Higher Rogaine sales were due to trade 
inventory purchasing associated with a new promotion launched in September.  
In addition, the prior year third-quarter levels were low due to trade 
inventory reductions in anticipation of the approval of Rogaine Extra 
Strength.  Sales growth in Depo-Provera, the long-acting injectable 
contraceptive, was led by the U.S.

Sales of Fragmin, a low molecular weight heparin for prevention of blood 
clots, were flat in the third quarter as growth in Europe, the U.S., and Latin 
America was offset by a decline in Japan.  Year-to-date, worldwide volume 
growth of 21 percent was moderated by a 6 percent price decline and a 6 
percent unfavorable exchange effect.  Sales fell 19 percent in Japan, the 
largest market for Fragmin, due to a mandatory price decrease and the weak 
yen.

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 comparisons included Azulfidine/Salazopyrin, 
Healon, and Pharmorubicin.  Azulfidine is a treatment for inflammatory bowel 
disease and rheumatoid arthritis.  Healon is a viscoelastic used in ophthalmic 
surgery.  Pharmorubicin, an oncology product, also experienced lower sales in 
Latin America due to loss of a contract in that region.

The other businesses represent approximately 20 percent of consolidated sales 
(exclusive of Biotech) and include Animal Health, Chemical & Contract 
Manufacturing, Diagnostics, Plasma, and Nutrition.  Combined third-quarter 
sales of these businesses totaled $318 million, flat compared to the third 
quarter of 1997.  Year-to-date, sales grew 3 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 growth.  As previously mentioned, sales of 
Biotech subsequent to August 1997 are not reported in consolidated sales 
leading to a comparative sales decrease of approximately $224 million in the 
first nine months.  Biotech is further discussed in Note F to the consolidated 
financial statements.

In accordance with its strategy to focus on 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>
                                   Third quarter                 Nine 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        30.9%     30.3%     30.7%     30.4%     30.9%    31.3%
Research and development     16.3      17.4      17.3      17.1      17.4     17.0
Marketing, administrative
  and other                  38.0      37.5      37.7      39.8      37.2     37.6
Operating income             18.0       6.7       6.6      15.5      13.5     12.9
</TABLE>



On a year-to-date basis, a favorable comparison in product mix and selling 
price continued to drive cost of products sold lower as a percentage of sales. 
Newer 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.  In the third quarter, the increase in the percentage was 
an aberration due partially to one-time plant and product start-up costs and 
is not indicative of a future negative trend in margins.

Research and development (R&D) decreased as a percentage of sales in the third 
quarter and first nine months of 1998 primarily due to higher 1998 sales 
levels.  Excluding Biotech, R&D spending levels are comparable to the prior 
year increasing only 3 percent in both the third quarter and year-to-date.  
R&D infrastructure costs are lower in the current year due to efficiencies 
generated by the 1997 restructuring.  These savings have been 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.  In the third quarter, the company entered into an 
important two-year pharmacogenomics collaboration.  Spending during the first 
quarter also supported the product filing of Aromasin (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 for 
depression.

Marketing, administrative, and other (MA&O) expense increased as a percentage 
of sales partially 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, Mirapex, 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 $33 million in the first nine months of 1998 primarily 
for its share of Amersham Pharmacia Biotech's pretax earnings.  Amersham 
Pharmacia Biotech (APB) was the result of a 1997 third quarter merger of 
Pharmacia Biotech with Amersham Life Science.  At that time, the company 
recorded merger costs of $34 million representing transaction costs to effect 
the merger and charges associated with the write-off of acquired R&D.

In 1997, the company recognized charges of $316 million for the restructuring 
portion of its global turnaround program.  Of this total, $125 million was 
recorded in the third quarter of 1997.  Cash spending for this program is 
anticipated to approximate $80 million in 1998.  In the fourth quarter of 
1998, the company expects to record between $100 million and $150 million in 
additional charges related to the turnaround program.  The company also 
incurred $30 million in restructuring-related charges in 1998.  These charges, 
while not included in restructuring, are one-time costs associated with the 
turnaround program and include 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 remainder 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.

Comprehensive income for the three months ended September 30, 1998, and 
September 30, 1997, was $324 million and $121 million, respectively.  For the 
first nine months, comprehensive income was $548 million in 1998 and $168 
million in 1997.  The difference between net earnings and comprehensive income 
in the third quarter of 1998 represented favorable currency translation 
adjustments of $147 million partially offset by unrealized losses on 
available-for-sale securities of $42 million.  Year-to-date, modestly 
favorable currency translation adjustments were offset by unrealized losses 
resulting in only a small difference between net income and comprehensive 
income.

FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES
        
                                                September 30,    December 31,
                                                     1998            1997
                                                -------------    ------------
Working capital (U.S. dollars in millions)          $1,587          $1,639
Current ratio                                         1.58            1.61
Debt to total capitalization                         14.9%           15.7%

The company's working capital and current ratio decreased slightly as of the 
end of the third quarter as compared to the prior year-end due primarily to a 
small increase in short-term debt.  The decrease in the percentage of debt to 
total capitalization reflects lower long-term debt levels which more than 
offset the increase in short-term debt.  As indicated below, net financial 
assets have decreased since year-end mainly due to a reduction in cash, cash 
equivalents, and investments.

                                                September 30,    December 31,
                                                     1998            1997
                                                -------------    ------------
Cash, cash equivalents and investments              $1,646          $1,848
Short-term and long-term debt                          995           1,035
                                                    -------         ------- 
Net financial assets                                $  651          $  813
                                                    =======         =======

The increase in cash and cash equivalents as of September 30, 1998 as compared 
to the December 31, 1997 balance and the corresponding decrease in short-term
investments for the same periods was the result of a shift from investments 
held for greater than 90 days (short-term investments) to investments with 
shorter holding periods (cash equivalents).  The net decline in cash, cash 
equivalents, and investments was due primarily to the sale of long-term 
investments, the unrealized devaluation of security holdings, the previously 
discussed debt repayment, and a reduction in cash from operations.

Net cash provided by operations for the first nine months of 1998 decreased to 
$641 million from $862 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 whereas a significant reduction in accounts receivable 
and an increase in current liabilities constituted sources of cash in 1997. 
Other significant uses of cash in 1998 were expenditures for the company's 
quarterly dividend and property, plant, and equipment (capital).  Capital 
expenditures of $373 million largely represented spending on manufacturing 
facilities in the U.S., Belgium, Puerto Rico, and Sweden.  In addition to net 
cash provided by operations, a major source of cash in the quarter was 
proceeds from the sale of investments net of purchases which increased $124 
million over the prior year. 

On November 2, 1998, the company announced a $1 billion stock repurchase 
program.  The program is expected to be completed over approximately a 
two-year period through both open market and privately negotiated 
transactions.

The company's future cash provided by operations and borrowing capacity are 
expected to cover normal operating cash flow needs, planned capital 
acquisitions, dividend payments, and stock repurchases as 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.

YEAR 2000

The company's global program to address the year 2000 (Y2K) date recognition 
problem was launched in early 1997.  The goal of the program is to ensure the 
millennium event does not have a material adverse effect on the company's 
business operations.  The program is comprised of three main efforts: 
assessment and remediation of information technology (IT) systems; assessment 
and remediation of embedded systems; and assessment of high-level business 
risks and development of contingency plans to address those risks.  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.  The latter half of 1999 is reserved for integration testing.  The 
high-level risk assessment is substantially completed and the corresponding 
contingency plans are expected to be finished by early 1999.  The company is 
currently working with critical external partners to assess their 
vulnerability and determine what risk mitigation and contingency actions will 
be necessary.

The company anticipates total spending of $150 million between 1997 and 2000 
largely on replacement of applications that, for reasons other than Y2K 
noncompliance, had been previously selected for replacement.  Many of the 
replacement projects are enterprise-wide in scope and offer improved 
functionality and commonality over current systems while at the same time 
resolve the Y2K problem.  To date, the company has spent approximately $100 
million of the total projected costs.

There are many factors outside the company's control that could cause the Y2K 
problem to seriously disrupt its operations.  For example, a widespread 
failure in the utilities industry could severely interrupt or even halt the 
company's operations.  There are risks, however, for which the company may 
prepare and, in so doing, reduce or eliminate its exposure.  The more critical 
of these risks are listed below.  The scope of the company's efforts regarding 
each risk is limited to the company's key products, key compounds, key 
clinical supplies, top subsidiaries, critical suppliers, and major customers.
  -  a disruption in the supply of product with particular emphasis
     on failures of raw material suppliers, third-party
     manufacturers, and external distribution channels
  -  internal infrastructure failures such as utilities, communications,
     internal IT services and integrated IT systems
  -  non-U.S. government failures, especially as they impact import
     and export activity
  -  interruption of the product regulatory filing process such as a
     delay in clinical trials or corruption of clinical trial data
  -  a major customer failure or interruption

Contingency plans to address these risks will be finalized in early 1999.  
Barring critical failures arising from factors beyond the company's direct 
control, management believes that by meeting the objectives of its Y2K 
program, the date recognition problem should not have a material adverse 
effect on the company's consolidated financial position, its results of 
operations, or liquidity.

OTHER ITEMS

Effective January 1, 1999, several European countries will begin operating 
with a new common currency, the euro.  The euro will completely replace these 
countries' national currencies by January 1, 2002.  The conversion to the euro 
will require changes in the company's operations as systems and commercial 
arrangements are modified to deal with the new currency.  Management created a 
project team to evaluate the impact of the euro conversion on the company's 
operations and to develop and execute action plans, as necessary, to 
successfully effect the change.  The cost of this effort is not expected to be 
material.  While information technology systems are planned to be fully euro-
compliant by the year 2000, a minimum of euro-compliance for strategic 
locations will be achieved in 1999.  The conversion to the euro may have 
competitive implications on pricing and marketing strategies; however, any 
such impact is not known at this time.  The euro conversion will also have a 
limited impact on outstanding derivatives and other financial instruments.  
Currently, the company has no outstanding contracts maturing after the 
conversion period.  The impact on currency risk is similarly limited.  The 
company will be involved in fewer hedging contracts in the future when it is 
able to treat all countries converting to the euro as one when hedging their 
exposure.

At this point in its overall assessment, management believes the impact of the 
euro conversion on the company will not be significant; however, uncertainty 
exists as to the effects the euro currency will have on the marketplace.  As a 
result, there is no guarantee that all problems will be foreseen and 
corrected, or that no material disruption of the company's business will 
occur.

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, the Year 
2000 date recognition problem, and conversion to the euro; 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 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 25).

         (a)(ii)  Exhibit 12 - Ratio of Earnings to Fixed Charges (page 26).

         (a)(iii) Exhibit 15 - Awareness of PricewaterhouseCoopers (page 27).

         (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 September 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:  November 13, 1998                /S/C.J. Coughlin
                                        C. J. Coughlin
                                        Executive Vice President
                                        and Chief Financial Officer



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