FORM 10-Q

                     SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

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

               For the Quarterly Period Ended March 31, 1997

                                    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, 7000 Portage Road, Kalamazoo, MI 49001
        (Address of principal executive offices)  (Zip Code)


            Registrant's telephone number     616/833-4000


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
May 1, 1997                was 507,538,271.

                          Page 1 of 19 pages
             The exhibit index is set forth on page 14.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1.  Financial Statements

PHARMACIA & UPJOHN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
                                                            
For the Three Months Ended March 31
(All U.S. dollar amounts in millions, except per-share data)

                                                           Unaudited
                                                     ----------------------
                                                        1997         1996     
                                                     ----------   ----------
Net sales                                            $ 1,635      $ 1,740
Other revenue                                             27           17
                                                     ----------   ----------
       Operating revenue                               1,662        1,757

Cost of products sold                                    503          503
Research and development                                 283          300
Marketing, administrative and other                      602          629
Restructuring charges                                      -          257
Merger costs                                               -           22
                                                     ----------   ----------
       Operating income                                  274           46

Interest income                                           29           49
Interest expense                                          (7)         (20)
All other, net                                            (2)          (1)
                                                     ----------   ----------
Earnings before income taxes                             294           74
Provision for income taxes                               100           24
                                                     ----------   ----------
Net earnings                                             194           50
Dividends on preferred stock (net of tax)                  3            3
                                                     ----------   ----------
Net earnings on common stock                         $   191      $    47
                                                     ==========   ==========
Net earnings per common share:
  Primary                                                  $.37         $.09  
                                                           ====         ====
  Fully diluted                                            $.37         $.09
                                                           ====         ====

                            See accompanying notes.
<PAGE>
PHARMACIA & UPJOHN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31
(All U.S. dollar amounts in millions)


                                                              Unaudited
                                                        ----------------------
                                                         1997        1996
                                                        -------     -------
Net cash provided by operations                          $206        $ 91
                                                        --------    --------
Cash provided (required) by investment activities:
  Additions of properties                                (105)       (113)
  Proceeds from sales of investments                      339         733
  Purchase of investments                                (242)       (507)
  Other                                                   (13)         (1)
                                                        --------    --------
Net cash (required) provided by investment activities     (21)        112
                                                        --------    --------
Cash provided (required) by financing activities:
  Repayment of debt                                        (6)        (18)
  Payments of ESOP debt                                   (12)         (8)
  Debt maturing in three months or less (net)             273         (11)
  Dividends paid to shareholders                         (142)       (141)
  Purchase of treasury stock                              (20)        (33)
  Proceeds from issuance of stock                           7          53
  Other                                                     7           3
                                                        --------    --------
Net cash provided (required) by financing activities      107        (155)
                                                        --------    --------
Effect of exchange rate changes on cash                   (40)          2
                                                        --------    --------
Net change in cash and cash equivalents                   252          50

Cash and cash equivalents, beginning of year              641         841
                                                        --------    --------
Cash and cash equivalents, end of period                 $893        $891
                                                        ========    ========


                            See accompanying notes.
<PAGE>
PHARMACIA & UPJOHN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(All U.S. dollar amounts in millions)
                                                    March 31,     December 31,
                                                      1997            1996
                                                   -----------    ------------
                                                   (unaudited)
                    ASSETS
Current assets:
  Cash and cash equivalents                         $   893        $   641
  Short-term investments                                565            696
  Trade accounts receivable, less allowance
    of $96 (1996: $95)                                1,577          1,705
  Inventories                                         1,005          1,012
  Other current assets                                  842            841
                                                   -----------    ---------
       Total current assets                           4,882          4,895
                                                   -----------    ---------
Long-term investments                                   480            512
                                                   -----------    ---------
Goodwill and other intangible assets, net             1,380          1,522
                                                   -----------    ---------
Properties, net                                       3,463          3,602
                                                   -----------    ---------
Other noncurrent assets                                 675            642
                                                   -----------    ---------
Total assets                                        $10,880        $11,173
                                                   ===========    =========

      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Short-term debt, including current 
    maturities of long-term debt                    $   501        $   235
  Other current liabilities                           2,034          2,268
                                                   -----------    -----------
       Total current liabilities                      2,535          2,503
                                                   -----------    -----------
Long-term debt and guarantee of ESOP debt               808            823
                                                   -----------    -----------
Other noncurrent liabilities                          1,559          1,606
                                                   -----------    ----------- 

Shareholders' equity:
  Preferred stock, one cent par value; 
    authorized 100,000,000 shares; issued 
    Series A convertible 7,091 shares 
    (1996: 7,125 shares) at stated value                286            287
  Common stock, one cent par value; 
    authorized 1,500,000,000 shares, issued
    508,420,497 shares (1996: 508,500,633 shares)         5              5
  Capital in excess of par value                      1,465          1,457
  Retained earnings                                   5,656          5,603
  Currency translation adjustments                   (1,155)          (855)
  Other shareholders' equity                           (279)          (256)
                                                   -----------    -----------
       Total shareholders' equity                     5,978          6,241
                                                   -----------    -----------
Total liabilities and shareholders' equity          $10,880        $11,173
                                                   ===========    ===========

                            See accompanying notes.
<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, 1996, 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.

B - INVENTORIES:
                                                      March 31,   December 31,
                                                        1997          1996
                                                      ---------   ------------
    Estimated Replacement Cost
      (FIFO Basis):
    Pharmaceutical and Other Finished Products         $  473       $  437
    Raw Materials, Supplies and Work-in-Process           693          726   
                                                      ----------   ----------
                                                        1,166        1,163
    Less Reduction to LIFO Cost                          (161)        (151)  
                                                      ----------   ----------
                                                       $1,005       $1,012    
                                                      ==========   ==========

Inventories valued on the LIFO method had an estimated replacement cost (FIFO
basis) of $445 at March 31, 1997, and $410 at December 31, 1996.

C - 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; administrative and judicial proceedings at approximately 50
"Superfund" sites; and site cleanup at the company's discontinued industrial
chemical operations.

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 the 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 is a party along with a number of other defendants (both
manufacturers and wholesalers) in several federal civil antitrust lawsuits,
some of which have been or are in the process of being consolidated and
transferred to the Federal District Court for the Northern District of
Illinois for purposes of discovery.  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
has certified a class consisting of retail pharmacies, and the same court has 
pending before it a suit with approximately 2,500 named retail pharmacies as
plaintiffs.  The suits seek treble damages and an injunction prohibiting the
alleged illegal practices.  Thirteen of the twenty-seven pharmaceutical
company defendants (not including the company) have reached settlement
agreements with the plaintiffs in the class action pending in the Northern
District of Illinois for amounts ranging from $10 to $60. These settlements
were approved by the court in 1996.  The company, together with the remaining 
settling and nonsettling defendants, are appealing to the United States Court 
of Appeals for the Seventh Circuit from certain of the trial judge's orders.
Actions raising claims similar to the federal lawsuits have been brought on
behalf of retail drugstores and/or consumers in a number of state courts,
including those in Alabama, Arizona, California, Colorado, District of
Columbia, Florida, Kansas, Maine, Michigan, Minnesota, Mississippi, New
Mexico, New York, Tennessee, Washington and Wisconsin.  The California State
court has certified a class of consumers seeking damages resulting from the
same alleged conspiracy by the defendant pharmaceutical companies.  In
February 1997, the District of Columbia judge granted the plaintiffs' motion
for class certification in part, and the parties have submitted briefs with
regard to class definition and notice issues.

The U.S. Federal Trade Commission has instituted an inquiry into whether
pharmaceutical companies, including the company, may have violated federal
antitrust laws in connection with establishing prices and rebates.  The
company believes that any potential liability above amounts accrued will not
have a material adverse effect on the company's consolidated financial
position or the company's results of operations or liquidity.

D - RESTRUCTURING CHARGES AND MERGER COSTS:

Since the fourth quarter of 1995, the company has recorded restructuring
accruals that included estimated costs of $610 associated with the November
1995 merger of the former Pharmacia AB and the former Upjohn Company.  The
accruals reflected the planned reduction of approximately 4,350 positions, the
elimination of duplicate facilities, and other exit costs related to the
merger.  Expenditures associated with these accruals are expected to be
substantially completed by the end of 1997.  Of the amount originally accrued,
approximately $150 remains as current and noncurrent liabilities.  There have 
been no adjustments to previously recorded accruals.
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial Condition and
Results of Operations:

FINANCIAL REVIEW

Overview of Consolidated Results
U.S. dollars in millions, except per-share data that are presented on a fully 
diluted, after-tax basis:
                                                          Percent
                                               1997       Change       1996
                                             --------     -------    --------
Total Revenue                                $1,662        (5.4)%    $1,757
Operating Income                                274          *           46**
Net Earnings                                    194          *           50**
Fully Diluted Earnings per Common Share       $0.37          *        $0.09**

                               *Not a meaningful comparison
                              **Inclusive of restructuring and merger costs

When comparing operating performance for the first quarter of 1997 to that of 
1996, merger-related expenses should be considered.  First quarter 1996
operating performance was significantly diminished by restructuring and merger
related costs of $279 million ($0.35 per share).  Restructuring charges of
$257 million ($0.31 per share) recorded in the first quarter of 1996 resulted 
primarily from work force reductions associated with the merger.  Additional
costs totaling $22 million ($.04 per share) were incurred to effect the
merger.  Excluding these 1996 charges from the analysis, both operating income
and earnings per share fell 16 percent in the first quarter of 1997.  A 6
percent decline in sales coupled with a relatively smaller decrease in
operating expenses limited overall performance in the first three months of
1997.

NET SALES

Worldwide sales fell 6 percent to $1.6 billion in the first quarter of 1997
compared to $1.7 billion in the same period in 1996.  Sales declined as a
result of combined volume and price (activity) by 1 percent while currency
exchange rate fluctuations reduced sales by 5 percent.  Sales performance by
region, based on the markets in which sales were made to customers, is
provided in the table below (in millions of U.S. dollars):

                                                           Percent          
Three months ended March 31,                   1997        Change      1996
                                             --------      -------   --------
European Markets                             $  734        ( 9.9)%   $  814
United States Market                            504         (6.3)       538
Asia Pacific Markets                            298          7.5        277
Other Markets                                    99        (10.3)       111
                                             --------                --------
Consolidated Sales                           $1,635         (6.1)%   $1,740
                                             --------                --------

U.S. sales of $504 million declined 6 percent in the quarter-to-quarter
comparison largely due to declines in over-the-counter (OTC) product sales,
down because of significant prelaunch activities in 1996.  In addition, strong
sales growth in new prescription pharmaceutical products in the U.S. was
offset by weak performance in existing product lines due to both generic
competition and fourth quarter 1996 sales incentives.  Total sales outside the
U.S. were $1.1 billion, down 6 percent from $1.2 billion in 1996. Sales in
Japan and Europe were particularly adversely affected in the first three
months of 1997 during which time the U.S. dollar continued to strengthen
against the yen and all major European currencies except the British pound.

The company's top eight markets based on percentage of total 1997 sales were
the U.S. (31%), Japan (11%), Italy (7%), Germany (7%), the U.K. (5%), France
(4%), Sweden (4%), and Spain (3%).  Sales in Japan increased overall with
relatively large activity gains partially offset by the negative effect of
currency exchange rate changes.  Activity gains in Japan in 1997 were
partially attributable to reduced volumes in the prior year quarter in
anticipation of mandatory price decreases effective in the second quarter of
1996.  Sales in the top six European markets mentioned above declined due to
significant unfavorable exchange rate fluctuations; 45 percent of the total
negative exchange impact on consolidated sales occurred in these markets.  In 
addition, health care cost containment measures including increased patient
insurance copayments, budgetary pressure on physicians' prescribing behavior, 
and price reductions further reduced sales in Europe, most notably in Germany 
and Sweden.

PRODUCT SALES

The table below provides a first quarter comparison of consolidated net sales 
by major product group:

U.S. dollars in millions                          Net       Percent
                                                Percent      Change         
Three months ended March 31,         1997       Change      Excl.Fx*     1996
                                    ------      -------     -------     ------
Infectious Disease                  $ 152       ( 6.9)%      (4.1)%     $  163
Metabolic Disease                     165        (7.1)        0.2          178
Inflammatory                          133       ( 1.9)        3.4          135
Central Nervous System                107       (18.4)      (12.8)         131
Oncology                              169        28.5        35.0          132
Women's Health/Urology                136       (16.9)      (15.3)         163
Ophthalmology                          78        25.3        32.3           62
Other Prescription Pharmaceuticals    134       (13.0)       (7.6)         154
Nutrition                              97       (11.4)       (6.0)         110
Consumer Health Care                  153       (17.8)      (14.7)         186
Animal Health                          86         0.2         2.6           86
Chemical and Contract Manufacturing    70        (5.7)       (3.9)          74
                                    ------                              ------
Total Pharmaceuticals               1,480       ( 6.0)      (1.5)        1,574

Diagnostics                            53       ( 9.7)        0.3           59
Biotech**                             102       ( 4.8)        3.4          107
                                   ------                               ------
Consolidated Net Sales             $1,635       ( 6.1)%      (1.2)%     $1,740
                                   ======                               ======

      *Represents percent change from the prior year excluding the effects of 
      foreign currency exchange rate changes.
      **1996 Biotech sales include Biacore sales of $6 million.  Biacore was a
      wholly-owned subsidiary until December 1996 when the company sold 59
      percent of its holding.

New products achieved strong sales growth led by Camptosar with $41 million of
sales recorded in the first three months of 1997.  Reported in Oncology,
Camptosar, a treatment for refractory colorectal cancer, was launched in the
U.S. in the third quarter of 1996.  Xalatan, also launched in the third
quarter of 1996 in Sweden, Switzerland, and the U.S., achieved substantial
sales growth in 1997 with $29 million for the quarter.  An intraocular
pressure-lowering medication for the treatment of glaucoma, Xalatan is
reported in Ophthalmology.  In addition, the following three new products were
launched in the first quarter of 1997: Cabaser, for Parkinson's disease,
launched in Europe; Dostinex, a treatment for hyperprolactinemic disorders,
launched in the U.S.; and Estring, an estrogen replacement therapy for
postmenopausal women, launched in the United States.

Established products Genotropin, Cleocin, Xanax, and Medrol continued to
contribute significantly to consolidated sales providing 17 percent of 1997
first quarter sales.  These products are reported in the Metabolic Disease,
Infectious Disease, Central Nervous System, and Inflammatory product groups,
respectively.

Genotropin, a growth hormone, achieved sales of $90 million, up 1 percent over
the first quarter of 1996.  Excluding the adverse effects of foreign currency 
exchange fluctuations, sales increased by 10 percent.  An unfavorable exchange
effect reduced solid activity gains for Genotropin in the Asia/Pacific
markets, while both a negative exchange effect and lower activity decreased
sales in Europe.  In Japan, anticipation of mandatory price decreases
depressed sales in the first quarter of 1996 and contributed to the
comparative activity gains for Genotropin in Asia/Pacific markets in 1997.

The antibiotic Cleocin (Dalacin outside the U.S.) and Xanax, the anti-anxiety 
agent, each contributed $65 million to worldwide sales although sales of both 
fell below same period prior year levels.  Cleocin sales fell 2 percent
overall despite an 18 percent increase in U.S. sales.  Non-U.S. sales of
Cleocin were down $4 million, a drop attributable to a decline in Europe where
an unfavorable exchange rate effect coupled with an activity decrease due
largely to increasing generic competition reduced sales by 15 percent.
Worldwide, Xanax sales were down $10 million.  Although Xanax demonstrated
strong growth in several European countries, total activity gains of 5 percent
in Europe were more than offset by an adverse exchange effect of 8 percent. 
Increasing generic competition in the U.S. in combination with strong fourth
quarter 1996 sales incentives kept U.S. sales of Xanax well below first
quarter 1996 levels.

Sales of Solu-Medrol, the injectable steroid, and other Medrol products were
$62 million in the first quarter, down 2 percent from the same period last
year.  Excluding the unfavorable effect of exchange rate changes, sales grew
by 2 percent.  U.S. sales rose 23 percent while non-U.S. sales fell by $4
million, or 7 percent.  In both Asia/Pacific and European markets, solid
activity gains were offset by the negative effect of exchange fluctuations.

Strong performers in the quarter-to-quarter comparison of sales included
Fragmin, Caverject, and Vantin, reported in Metabolic Disease, Women's
Health/Urology, and Infectious Disease, respectively.  Fragmin, a treatment
for the prevention of blood clots in connection with surgery, achieved sales
of $39 million in the first quarter, an increase of 35 percent over the prior 
year.  Sales of Caverject, the treatment for male impotence, were $18 million 
for the first quarter, up 37 percent over the same period in 1996.  Caverject 
experienced double-digit growth in the U.S. and throughout top markets in
Europe.  A strong flu season in the U.S. coupled with first quarter sales
incentives drove up sales of Vantin, a broad-spectrum oral antibiotic, by 29
percent with $29 million recorded in the first quarter of 1997.

In addition to intense generic competition, factors previously discussed
exerting downward pressure on sales in Asia/Pacific and European markets
lowered sales of Pharmorubicin, Adriamycin, and Healon, all products sold
primarily in these markets.  Sales of Pharmorubicin and Adriamycin, both
cytostatic agents for the treatment of solid tumors and leukemias, fell by 5
percent and 31 percent, respectively, in the first quarter of 1997 compared to
the same period in 1996.  Disregarding the impact of currency exchange
fluctuations, sales of Pharmorubicin advanced by 4 percent over first quarter 
1996.  Healon sales declined by 22 percent to $32 million; 7 percent of this
drop was due to an unfavorable exchange effect.  Healon, reported in
Ophthalmology, is a viscoelastic used for cataract surgery.  Both
Pharmorubicin and Adriamycin are reported in Oncology.

In the U.S., generic competition and fourth quarter 1996 sales incentives
reduced sales of Micronase and Glynase.  In the quarter-to-quarter comparison,
total sales of Micronase and Glynase, both oral anti-diabetes agents reported 
in Metabolic Disease, fell by 51 percent to $22 million.  U.S. fourth quarter 
sales incentives also lowered 1997 sales of Depo-Provera which were $41
million, a drop of 16 percent.  Depo-Provera, the injectable contraceptive, is
reported in Women's Health/Urology.

Sales of Consumer Health Care products were down 18 percent from the first
quarter of 1996.  The 1996 first quarter sales reflected significant
prestocking in preparation for two second quarter U.S. OTC product launches.  
Rogaine 2% solution for hair loss and Nicorette Gum, the treatment for smoking
cessation, were both introduced in the second quarter of 1996.  U.S. sales of 
Rogaine also have declined since the 1996 launch as a result of increased
competition from generics and private labels.  Rogaine was sold as a
prescription product through the first quarter of 1996 and the prescription
sales amounts were included with the OTC amounts for purposes of these
comparisons.  During the first quarter of 1997, Nicorette Gum, marketed by
SmithKline Beecham, was granted a three-year period of exclusivity in the
United States.

Other associated businesses continued to provide a solid base of sales to the 
company.  The 10 percent decline in Diagnostics sales was attributable to the 
negative effects of foreign exchange and discontinued products which more than
offset activity gains.  Sales of Diagnostics products were particularly
affected by the weakened yen as 37 percent of total sales in the first quarter
of 1997 were earned in Japan.

OTHER OPERATING REVENUE

The increase in other operating revenue over the first quarter of 1996 was due
to greater revenue earned from the company's agreement with Solvay & Cie to
jointly market Luvox, a treatment for obsessive-compulsive disorder.

COSTS AND EXPENSES

Consolidated operating expenses, stated as a percent of net sales, were as
follows:

First quarter ended March 31,                           1997        1996  
                                                        -----       -----
Cost of Products Sold                                   30.8%       28.9%
Research and Development                                17.3        17.2
Marketing, Administrative and Other                     36.9        36.2
Restructuring Charges                                      -        14.8
Merger Costs                                               -         1.3
Operating Income                                        16.7         2.6

Cost of goods sold increased as a percentage of sales primarily due to higher 
production start-up expenses for new products, project expenses incurred to
achieve long-term production efficiencies, timing of project spending, and
unfavorable manufacturing variances.  The increase was partially offset by
favorable effects of foreign currency fluctuations.

Research and development (R&D) spending in the first quarter of 1997 remained 
relatively constant as a percentage of net sales but decreased 6 percent due
largely to favorable foreign exchange effects in Sweden and Italy.  Spending
for the first quarter of 1997 supported the product filing for Detrusitol
(tolterodine tablets), a treatment for urinary incontinence, in the United
States.

The small increase in marketing, administrative and other (MA&O) expense as a 
percent of sales was due primarily to promotion of new prescription
pharmaceutical products in the U.S., launch and prelaunch activities in
Europe, additional promotion and distribution costs for Fragmin in Japan, and 
increased advertising and promotion of OTC pharmaceutical products.  This
increased spending was offset by the favorable effects of foreign currency
fluctuations resulting in an overall decrease in MA&O expense of $27 million
from the first quarter of 1996.

The company did not incur additional merger-related restructuring charges in
the first three months of 1997.  Merger-related restructuring charges recorded
in the first quarter of 1996 totaled $257 million, reflecting the planned
reduction of approximately 1,750 positions.  Total restructuring charges
associated with the merger were $610 million, recorded in 1995 and 1996. 
These charges reflected the planned reduction of approximately 4,350
positions.  As of March 31, 1997, approximately 4,280 employees had left the
company under this program.  Cash spending in the first quarter of 1997 for
this program totaled $50 million, a decrease from the first quarter of 1996
spending of $75 million.  Approximately $150 million remained accrued as of
March 31, 1997, as current and noncurrent liabilities of the company.  These
remaining reserves include certain accruals for pensions and other employee
benefits that will be expended over the next several years.

Merger expenses of $22 million also recorded in the first quarter of 1996
consisted largely of costs related to certain nonrecurring organizational
activities, establishing the corporate identity for the new company, and
various other costs of combining the two companies.

NONOPERATING INCOME AND EXPENSE

The favorable interest income to interest expense relationship continued to
contribute to first quarter 1997 earnings.  Declines in both interest income
and interest expense for the quarter were primarily due to the termination of 
certain borrowing arrangements in Europe in the third quarter of 1996 and
lower interest rates, primarily in Europe.  An increase in short-term debt
occurred late in the first quarter resulting in minimal effect on interest
expense for the period.  Continued reductions of short-term investments also
contributed to lower interest income for the period.

INCOME TAXES

The estimated annual effective tax rate for 1997 is 34 percent.  The effective
tax rate for 1996 was 35 percent excluding the tax benefits related to
nonrecurring charges (33 percent with nonrecurring charges).  The lower
recurring rate is the result of increased earnings in jurisdictions with lower
tax rates.

FINANCIAL CONDITION
                                                   March 31,     December 31, 
                                                     1997            1996     
                                                   ---------     ------------
Working Capital (U.S. dollars in millions)          $2,347          $2,392
Current Ratio                                         1.93            1.96
Debt to Total Capitalization                         17.9%           14.5%

Working capital fell slightly with the corresponding decrease in the current
ratio due to reductions in short-term investments and accounts receivable. 
The increase in the ratio of debt to capitalization was the result of an
increase in short-term debt late in the first quarter of 1997.

The company's net financial asset position, presented below, declined from the
prior year end due to net reductions in both short and long-term investments. 
Net increases in short-term debt were offset by increases in cash and cash
equivalents.

                                                   March 31,     December 31,
                                                     1997            1996    
                                                   ---------     ------------
Cash, Equivalents and Investments                   $1,938         $1,849
Short-Term and Long-Term Debt                        1,309          1,058
                                                   ---------       ------
Net Financial Assets                                $  629         $  791
                                                   ========        ======

Net cash provided by first quarter 1997 operations increased to $206 million
from $91 million for the first quarter of 1996.  The increase was due to the
decrease in spending on restructuring, as noted above; an increase in income
taxes payable; and a decrease in accounts receivable.

Additions of property, plant and equipment totaling $105 million in the first 
three months of 1997 primarily represented expansion of bulk chemical
production facilities in Ireland and continued development of manufacturing
centers of excellence in the U.S., Belgium, and Sweden.  Reductions in both
short-term and long-term investments as well as increases in short-term debt
late in the quarter represented major cash inflows during the quarter, while
capital spending and payment of dividends represented major cash outflows. 
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.

The company utilizes forward exchange contracts to mitigate the effect of
currency exchange rate fluctuations on certain intercompany and third party
transactions.  The company hedges net recorded currency transaction exposures 
on certain existing assets and liabilities as well as net anticipated currency
transactions.  The anticipated transaction hedging activities seek to protect 
operating margins and cash flows from the potential adverse effects of
currency exchange rate fluctuations by offsetting the gains and losses on the 
instruments with the losses and gains of the underlying anticipated cash
flows.  Because forward contracts used to hedge anticipated transaction
exposures are marked-to-market each period, but the anticipated transactions
have not been recorded, the timing of recognition of the related gains and
losses will not match.

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
is also involved in several administrative and judicial proceedings relating
to environmental concerns, including actions brought by the U.S. Environmental
Protection Agency and state environmental agencies for remedial cleanup at
approximately 50 sites and site cleanup at the company's discontinued
industrial chemical operations.  The company's estimate of the ultimate cost
to be incurred in connection with these 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 ultimate share of a site's
cost.

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 to be 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 is 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 federal cases have been consolidated in federal court in
Chicago, Illinois.  The company believes it has meritorious defenses, and
although potential liability cannot be presently estimated, a majority of the 
defendants in this class action (not including the company) have agreed to $10
million to $60 million settlement of claims per defendant in this action.  The
company believes that any potential liability above amounts accrued will not
have a material adverse effect on the company's consolidated financial
position or the company's results of operations or liquidity.

OTHER ITEMS

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No.128, Earnings per Share, effective
for fiscal periods ending after December 15, 1997.  Earlier application is not
permitted.  The statement simplifies the calculation of earnings per share and
requires presentation of basic and diluted earnings per share in lieu of
primary and fully diluted earnings per share.  The company anticipates the
adoption of SFAS No.128 will not have a material impact on its earnings per
share calculations.

The company is currently in the process of developing its manufacturing
facility rationalization program intended to consolidate and reduce
manufacturing facilities by 40 percent worldwide.  The plan is expected to be 
finalized in the second quarter of 1997.

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:  management's ability to make further progress under the company's
merger integration plan; 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 foreign 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; domestic and foreign social, legal
and political developments, especially those relating to healthcare 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, 1996.

<PAGE>
PART II - OTHER INFORMATION

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

         (a)(i)   Exhibit A - Report of Independent Accountants (page 16).

         (a)(ii)  Exhibit 10 - J.L. Zabriskie Separation Agreement (EDGAR
                  filing only).

         (a)(iii) Exhibit 11 - Statement regarding computation of earnings per
                  share (page 17).

         (a)(iv)  Exhibit 12 - Ratio of Earnings to Fixed Charges (page 18).
 
         (a)(v)   Exhibit 15 - Awareness of Coopers & Lybrand L.L.P. (page
                  19).

         (a)(vi)  Exhibit 27 - Financial Data Schedule (EDGAR filing only).

         (b)      Form 8-K - On February 25, 1997, the company filed Form 8-K 
                  announcing the action of the Board of Directors that day to 
                  declare a dividend of one right for each outstanding share
                  of common stock of the company held of record at the close
                  of business on March 7, 1997, or issued thereafter.  The
                  rights are issued pursuant to the Stockholder Protection
                  Rights Agreement, dated March 4, 1997 included in the Form
                  8-K filing, between the company and Harris Trust & Savings
                  Bank, as Rights Agent.
<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:  May 9, 1997                     /S/R. C. SALISBURY
                                        R. C. Salisbury
                                        Executive Vice President,
                                        Finance and Administration
                                        and Chief Financial Officer



DATE:  May 9, 1997                     /S/K. M. CYRUS
                                        K. M. Cyrus
                                        Senior Vice President,
                                        General Counsel and Secretary