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

                                   FORM 10-K
(Mark One)

[x]  ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934
     For the fiscal year ended December 31, 1998
                         or
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

Commission file number 1-10432
------------------------------

                       ROBERTS PHARMACEUTICAL CORPORATION
                   -----------------------------------------------
             (Exact name of registrant as specified in its charter)

           New Jersey                                   22-2429994
--------------------------------                -------------------------------
 (State or other jurisdiction                       (I.R.S. Employer
of incorporation or organization)                   Identification No.)

      Meridian Center II
    4 Industrial Way West
       Eatontown, New Jersey                                  07724
--------------------------------                -------------------------------
      (Address of principal                                 (Zip Code)
      executive offices)
                         Registrant's telephone number,
                      including area code:  (732) 676-1200

Securities registered pursuant to Section 12(b) of the Act:

                                           Name of each exchange
Title of each class                         on which registered
-------------------                        ---------------------

Common Stock $.01 par value per share      American Stock Exchange

Rights                                     American Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:

                     Common Stock, $.01 par value per share

                                     None 
--------------------------------------------------------------------------------
                                (Title of class)
<PAGE>
 
     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes   X    No 
                                                ---      ---

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [ ]

     The aggregate market value of the common stock, $.01 par value per share
(the "Common Stock"), of the Registrant held by non-affiliates of the
Registrant, as determined by reference to the last sale price of the Common
Stock as reported by the American Stock Exchange as of March 9, 1999 was
$822,611,808.

     As of March 9, 1999, the number of outstanding shares of Common Stock was
31,563,043.

    Documents incorporated by      Part of Form 10-K into which
    reference into this report     document is incorporated
    --------------------------     ----------------------------

     Proxy Statement for the                   Part III
     Annual Meeting of Shareholders
     to be held in May 1999.

Forward Looking Statements

          Certain statements included in (i) Item 1(c) Description of Business
with respect to the Registrant's development of its proprietary pipeline
products and with respect to the Registrant's newly acquired manufacturing and
distribution facilities and with respect to certain discontinued operations of
the Registrant; (ii) Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations; and (iii) the notes to the Registrant's
consolidated financial statements herein, are intended to be, and are hereby
identified as, forward looking statements for purposes of the safe harbor
provided by Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended.  The Registrant cautions
readers that forward looking statements, including, without limitation, those
relating to the Registrant's future business prospects, revenues, cost of sales,
intangible dispositions and write-offs, continuing operations and discontinued
operations, and liquidity and capital resources, are subject to certain risks
and uncertainties, including, without limitation, the ability of the Registrant
to secure regulatory approval in the United States and in foreign jurisdictions
for the Registrant's developmental pipeline drugs, the efforts of the
Registrant's competitors and the introduction of rival pharmaceutical products
which may prove to be more effective than the Registrant's products, general
market conditions, the availability of capital, and the uncertainty over the
future direction of the healthcare industry, that could cause actual results to
differ materially from those indicated in the forward looking statements.
<PAGE>
 
                                     PART I
Item 1.  Business

(a)  General Development of Business

     Roberts Pharmaceutical Corporation (the "Company") is an international
pharmaceutical company which licenses, acquires, develops and commercializes
post-discovery drugs in selected therapeutic categories.  The Company was
incorporated under the laws of the State of New Jersey in 1982 and commenced
operations in 1983.  In 1988, its name was changed to Roberts Pharmaceutical
Corporation from VRG International, Inc.  The Company's executive offices are
located at Meridian Center II, 4 Industrial Way West, Eatontown, New Jersey
07724, and its telephone number is (732) 676-1200.  As used herein, the term the
"Company" refers to Roberts Pharmaceutical Corporation and its subsidiaries
unless the context indicates otherwise.

(b)  Financial Information about Industry Segments

     Substantially all revenues, operating profits or losses and assets of the
Company are attributable to one line of business, the acquisition, development
and sale of pharmaceutical products, primarily prescription pharmaceutical
products, in three segments, the United States, Canada and the United Kingdom.

(c)  Description of Business

     The Company was founded to take advantage of the large and growing
opportunity to license, acquire, develop and commercialize post-discovery drugs
in selected therapeutic categories.  The Company has organized its drug
development, acquisition and marketing activities to focus on late-stage
development drugs in Phase II or Phase III clinical trials and currently
marketed prescription pharmaceutical products which (i) do not meet the
strategic objectives or profit thresholds of larger pharmaceutical companies or
(ii) are made available by government agencies and research institutions.  The
therapeutic categories targeted by the Company are Cardiovascular,
Gynecology/Endocrinology, Urology, Oncology, Hematology and Gastroenterology.

     The Company has a broad product portfolio including PROAMATINE(R) and
AGRYLIN, which are the Company's first proprietary drugs approved by the U.S.
Food and Drug Administration (the "FDA") and PENTASA(R), a drug for the
treatment of ulcerative colitis.  See "Approved Pipeline Products."  In
addition, the Company has a number of other proprietary late-stage development
products in the Company's pipeline.  See "Late-Stage Development Products."

     With a view toward focusing on its core business of licensing, acquiring,
developing, marketing and selling prescription pharmaceuticals, the Company
completed in 1998 the divestiture of the last of its non-core businesses
including VRG International, Inc. and its homecare and medical products
divisions.  See Notes to Consolidated Financial Statements - Note 15.

                                      -2-
<PAGE>
 
     Approved Pipeline Products

     PROAMATINE(R).  In 1985, the Company acquired from the predecessor in
interest of Nycomed Pharma AG ("Nycomed Pharma") exclusive marketing rights in
the United States, Canada, the United Kingdom and Ireland to PROAMATINE
(midodrine), formerly AMATINE(R), a drug used for the treatment of orthostatic
hypotension and other blood pressure disorders.  Orthostatic hypotension is a
condition involving the sudden drop in blood pressure upon assuming an upright
posture, resulting in dizziness, weakness or unconsciousness.
 
     In September 1996, the FDA approved the Company's New Drug Application
("NDA") for PROAMATINE and cleared PROAMATINE for marketing in the United States
for the treatment of symptomatic orthostatic hypotension.  The Company commenced
marketing and sales activities in the U.S. with respect to PROAMATINE in the
fourth quarter of 1996.

     The FDA approved PROAMATINE pursuant to its accelerated approval process
for new drugs for serious or life threatening illnesses.  There are no other FDA
approved treatments available for orthostatic hypotension.  Other current
therapies used to treat the condition are associated with significant adverse
side effects such as potassium reduction, fluid retention and cardiac and
central nervous system disorders.  The Company is conducting post-approval and
post-launch (Phase IV) studies of PROAMATINE required as part of the FDA
approval.  PROAMATINE is in Phase II trials for stress urinary incontinence.
See "Late Stage Development Products - Therapeutic Category - Urology."

     PROAMATINE for orthostatic hypotension has been designated by the FDA as an
"Orphan Drug" under the Orphan Drug Act of 1983 (the "Orphan Drug Act"), which
provides the Company with a seven year period of market exclusivity in the
United States from the date of the FDA approval.  See "Government Regulation."

     In 1990, the Company was granted approval by the Irish National Drugs
Advisory Board to market PROAMATINE for use in the treatment of orthostatic
hypotension in Ireland, where the drug is sold under the name MIDON(R).  In
1991, the Company obtained regulatory approval for the sale in Canada of
PROAMATINE for use in the treatment of orthostatic hypotension, where the drug
is sold under the name AMATINE(R).  AMATINE is sold in Canada by the Company's
licensee, Knoll Pharma Inc. ("Knoll") (formerly Boots Pharmaceuticals Ltd.).  In
December, 1997 the Company filed an application in the United Kingdom for the
approval to market PROAMATINE under the name MIDON(R) for the treatment of
orthostatic hypotension.

     AGRYLIN.  In 1991, the Company obtained an exclusive worldwide license from
Bristol-Myers Squibb to develop, market and sell AGRYLIN (anagrelide), which has
been developed as an oral treatment for thrombocytosis, a blood disorder
characterized by

                                      -3-
<PAGE>
 
high blood platelet counts which could result in an abnormally high incidence of
adverse blood clotting events, including heart attack and stroke.  There is
evidence that some patients with increased platelet counts have thrombosis or
hemorrhage which can be treated successfully by lowering the platelet count.
AGRYLIN is intended to inhibit excessive platelet production and reduce the
morbidity and mortality of heart attack and stroke in thrombocytosis patients.

     In March 1997, the Company received notification from the FDA that the
Company's NDA for AGRYLIN was approved.  The Company commenced active marketing
and sales activities with respect to AGRYLIN in the second quarter of 1997.
There is no other FDA approved treatment available for thrombocytosis.  Other
current therapies used to reduce excessive platelet production have distinct
disadvantages, such as leukemogenesis, leukopenia and anemia.  Further, AGRYLIN
has been designated by the FDA as an Orphan Drug, a status which entitles the
Company to seven years of market exclusivity.  In December 1997, the Company
filed an application with the FDA a status which entitles the Company to seven
years of market exclusivity to expand the indications of AGRYLIN to include
polycythemia vera.  In December 1998, the Company received approval for the
expanded indication for AGRYLIN for thrombocytosis secondary to
myeloproliferative diseases, including Polycythemia Vera and Chronic Myelogenous
Leukemia.

     In June 1998, the U.S. Department of Commerce, Patent and Trademark Office
issued to the Company a patent covering a new and highly improved process for
manufacturing anagrelide Hcl, the active ingredient in AGRYLIN.  Currently,
anagrelide is commercially prepared utilizing a time consuming and difficult
synthesis involving a starting material possessing environmentally unfriendly
properties.  The new process, which eliminates this precursor material and
greatly simplifies the synthesis, represents both an environmentally sound and a
significantly more economical method of manufacture.  The patent for this new
process expires in 2017.

     The Company has received approval of its New Drug Submission ("NDS") from
the Health Protection Branch, Canada ("HPB") for the sale of AGRYLIN in the
Canadian market, and has begun marketing the drug in Canada.

     The Company has concluded distribution arrangements for AGRYLIN in
Scandinavia, Australia, Korea and Israel and intends to pursue such arrangements
in other geographic locations such as Japan, other Asian countries and Latin
America.

     Prescription Pharmaceutical Products

     In addition to developing its proprietary pipeline products, the Company's
principal objective is to concentrate its operations primarily on licensing,
acquiring, developing, marketing and selling prescription pharmaceutical
products.  To enhance the Company's presence in its targeted therapeutic
categories, the

                                      -4-
<PAGE>
 
Company has acquired marketed prescription pharmaceutical products from various
pharmaceutical companies.  These product lines generate cash flow, which
contributes partial financial support to the Company's drug development
activities, and provides enhanced product sales opportunities for the Company's
sales force.  Further, the sale of prescription pharmaceutical products has
enabled the Company to establish marketing channels in its targeted therapeutic
categories which the Company uses to market PENTASA, PROAMATINE and AGRYLIN and
expects to use to market its other late-stage development products if such
products are approved for sale.

     Over the last five years, the Company has acquired the United States and/or
foreign product rights for many prescription pharmaceutical products from
various pharmaceutical manufacturers such as Hoechst Marion Roussel ("HMR"),
Procter & Gamble Pharmaceuticals, Inc. ("Procter & Gamble"), Bristol-Myers
Squibb Company ("Bristol-Myers Squibb"), Glaxo Canada, Inc. ("Glaxo Canada"), Du
Pont Merck Pharmaceutical Company ("Du Pont Merck"), Merck and Co., Inc.
("Merck"), G.D. Searle & Co. ("G.D. Searle"), SmithKline Beecham plc
("SmithKline Beecham") and Wyeth Laboratories, U.K.  Certain of these products
are:  NOROXIN(R), an antibiotic used for the treatment of urinary tract
infections; TIGAN(R), a drug used to control nausea and vomiting; EMINASE(R), a
thrombolytic agent used in the treatment of acute myocardial infarction to
dissolve blood clots obstructing coronary arteries;  NORPACE(R) and TRANDATE(R)
in Canada, SALUTENSIN(R), SALURON(R), ETHMOZINE(R), NITRODISC, cardiovascular
products; FLORINEF(R), for adrenocortical insufficiency; MAXOLON(R), a gastro-
intestinal agent used for treatment of nausea and vomiting associated with
cancer chemotherapy; MINTEC(R), a gastro-intestinal drug used for symptomatic
relief of irritable bowel and spastic colon syndromes in adults; ESTRACE(R), a
line of estrogen replacement therapy products used for symptomatic relief of
menopausal symptoms and for the prevention of osteoporosis sold in Canada; and
MEPTID(R) and LODINE(R), analgesic agents.  In April 1998, the Company acquired
exclusive U.S. marketing rights to PENTASA(R), a patented gastrointestinal drug
for the treatment of ulcerative colitis from HMR, which has become the Company's
largest selling drug.

     As part of the Company's divestiture activities, in 1998 the Company
completed the sale of its ENTUSS(R), COMHIST(R) and CHERACOL(R) lines of
cough/cold products.

     Nonprescription Pharmaceutical Products

     In order to facilitate the growth of the Company's business, the Company
had always focused a part of its operations on the acquisition, marketing and
sale of nonprescription pharmaceutical products.  Some of the nonprescription
pharmaceutical products acquired from various pharmaceutical companies and which
are marketed by the Company are: COLACE(R), PERI-COLACE(R), SQUIBB(R) mineral
oil, SQUIBB(R) Glycerin Suppositories and SQUIBB(R) Cod Liver Oil, used in the
treatment of gastrointestinal disorders and SLOW-MAG(R), a magnesium supplement.

                                      -5-
<PAGE>
 
     In August 1995, the Company identified the sale of nonprescription
pharmaceuticals as a non-core business activity and made the decision to divest
most of the products it had acquired.  The Company divested a substantial
portion of its nonprescription products during 1996.  The Company has retained
and will continue to sell, and under the right circumstances may acquire, only
certain well known, high volume nonprescription pharmaceutical products, such as
COLACE, PERI-COLACE, and SLOW-MAG that do not require significant promotional
outlays to establish and maintain consumer brand recognition and the demand for
which is not susceptible to uncontrollable seasonal factors.

     In October 1998, the Company completed the divestiture of its CHERACOL(R)
line of cough/cold products.

     Late-Stage Development Products

     The Company has a portfolio of several late-stage development products
discussed below.  Rights to these late-stage development products were acquired
by the Company after substantial value had been added to the products through
research activities conducted by others.  The Company's objective is to continue
the development of these late-stage products and bring them to market as has
been accomplished with PROAMATINE and AGRYLIN.  There can be no assurance that
regulatory approval of the late-stage developmental products will be obtained in
the United States or abroad.  The Company intends to contract-out the
development of several of its late stage development products, utilizing
contract clinical research organizations.  Sales of products acquired from other
pharmaceutical companies, and sales of the Company's prescription and
nonprescription pharmaceutical products, have enabled the Company to develop a
marketing and sales infrastructure to facilitate sales of these late-stage
products, if approved.

     Therapeutic Category - Gastroenterology

     In July 1998, the Company entered into an arrangement with Ribogene, Inc.
whereby the Company has been granted an exclusive license to market, distribute
and sell the product EMITASOL(R) for the treatment of emesis.  EMITASOL(R) is an
intranasal form of metoclopramide and is currently in Phase III clinical trials.
The Company has been contracted by Ribogene, Inc. to develop this product and
Ribogene, Inc. will provide up to $7 million in funding for the development of
this product.

     In a separate transaction, the Company purchased $10 million of Ribogene
Convertible Preferred Stock in a private placement.  See Notes to Consolidated
Financial Statements - Note 5.

     In the latter part of 1996, the Company and Eli Lilly and Company ("Lilly")
entered into a series of License Agreements pursuant to which the Company
acquired from Lilly certain rights to four developmental compounds designated
LY246736, LY353433, LY213829 (also known as "Tazofelone") and LY315535
(collectively,

                                      -6-
<PAGE>
 
the "Compounds"), which could potentially address some of the unmet medical
needs with respect to certain gastrointestinal disorders such as inflammatory
bowel disease and irritable bowel syndrome.  Each of the License Agreements
grants the Company an exclusive license to develop, manufacture, market and sell
the Compounds anywhere in the world, except with respect to LY315535, for which
the Company is licensed only in the United States and its territories, Canada
and Mexico.  For a description of certain other terms of the Lilly License
Agreements, see "License Agreements."

     Tazofelone is being developed for the treatment of Inflammatory Bowel
Diseases ("IBD"), including ulcerative colitis and Crohn's disease.  A Phase II
efficacy trial has been completed for Tazofelone, and Tazofelone could offer
consumers an alternative to existing treatments for IBD which include
corticosteroids, 5ASA and azsulfidine.

     The other three Compounds are being developed to treat Functional Bowel
Disorders ("FBD"), including irritable bowel syndrome and non-ulcerative
dyspepsia.  These Compounds could provide an alternative to current FBD
therapies which include dietary changes, over-the-counter laxatives,
antidiarrheals, prescription antispasmodics, gastroprokinetics, proton pump
inhibitors, 5HT\3\ compounds and antacids.

     The Company has completed a Phase 1a study of LY315535.  The compound is
being developed for the treatment of irritable bowel syndrome and non-ulcerative
dyspepsia.  The Phase 1a single rising dose study was conducted in human
volunteers.  The objectives of the placebo-controlled study were to 1) show
safety across a range of doses and 2) establish a maximum tolerated dose.  The
study demonstrated a favorable safety profile, with LY315535 being well-
tolerated across a broad range of doses.  Given the positive outcome of this
study, the next stage of Phase I testing in humans is scheduled to commence in
the near term.

     Therapeutic Category - Cardiovascular

     In March, 1997, the Company and Pfizer Inc. ("Pfizer") entered into a
License Agreement pursuant to which the Company acquired from Pfizer worldwide
rights to a compound in development called Sampatrilat.  Sampatrilat, currently
in phase II clinical trials, is intended to treat essential hypertension and
congestive heart failure.  The License Agreement grants the Company exclusive
worldwide rights to develop, manufacture, market and sell Sampatrilat anywhere
in the world.



     Sampatrilat incorporates, in a single substance, two different but
complimentary modes of activity.  It is a potent inhibitor of angiotensin
converting enzyme ("ACE") and also inhibits neutral endopeptidase which, in
turn, results in an elevation of atrial natriuretic factor ("ANF"), the body's
own natural diuretic.  This

                                      -7-
<PAGE>
 
dual mode of activity may offer patients and managed care providers the
potential advantages of a treatment regime involving fewer drugs, reduced risks,
and lower costs in comparison to currently existing therapies.

     Today, treatment of uncomplicated essential hypertension follows a step
therapy paradigm with the initial treatment often being an ACE inhibitor.
However, normalization of blood pressure may require the addition of a second
drug, generally a diuretic, in combination with the ACE inhibitor.  This type of
step therapy, involving two and sometimes three drugs, may produce side effects
comprising the additive adverse reactions of the different products employed.

     Diuretics commonly employed with ACE inhibitors can produce side effects
that include potassium depletion, gout, elevated blood lipids, and abnormalities
in sugar metabolism.  Because ANF is a natural diuretic that does not possess
these properties, the use of Sampatrilat in hypertension or congestive heart
failure patients may confer, through the administration of a single drug, all
the advantages of a pure ACE inhibitor with the addition of greater natruresis
thus obviating the need for separate diuretics.

     Therapeutic Category - Gynecology/Endocrinology

     SOMAGARD(R).  In 1988, the Company acquired rights from the Salk Institute
to manufacture and market SOMAGARD (deslorelin) in the United States and in
certain foreign countries, including the United Kingdom and Canada.  SOMAGARD is
being developed for the treatment of central precocious puberty in children, an
endocrine disorder that results in premature release of hormones; and for
endometriosis in women.  Published reports of long-term studies conducted by the
National Institutes of Health have indicated that the administration of SOMAGARD
inhibits the release of hormones which cause the abnormal maturation process and
causes a return to normal growth rates.  The Company has completed Phase III
trials for SOMAGARD for use in the treatment of central precocious puberty and
is studying various alternatives for the commercialization of this product and
may elect to complete its development through a licensing arrangement with a
third party.

     The Company currently markets the product SUPPRELIN(R) (histrelin), an
Orphan Drug, for central precocious puberty.  See "Government Regulation."  The
Company believes that SOMAGARD will complement SUPPRELIN.  SOMAGARD, if approved
by the FDA, would be marketed to endocrinologists and managed healthcare
organizations.



     SOMAGARD also is being developed as a treatment for endometriosis.  A
number of Phase II clinical trials for this indication have been conducted.
Endometriosis is a gynecologic abnormality which may result in pain, infertility
and sexual and bowel dysfunction.  Published reports of studies conducted by the

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<PAGE>
 
National Institutes of Health indicate that SOMAGARD relieves pain and restores
normal sexual and bowel function in women with this condition.

     Therapeutic Category - Hematology

     STANATE.  In 1994, the Company acquired the exclusive worldwide rights from
The Rockefeller University to develop, manufacture, market and sell STANATE
(stannsoporfin), which is being developed for the treatment of
hyperbilirubinemia in neonates, a condition caused by an accumulation of
excessive levels of bilirubin produced by the liver.  Unless treated,
hyperbilirubinemia can result in jaundice, brain damage and death.

     Bilirubin is excreted by the liver pursuant to a metabolic step requiring
the presence of an enzyme which, studies have shown, is not fully functional in
many early term and full term neonates.  STANATE is intended to inhibit the
accumulation of excessive levels of bilirubin in neonates and to provide neonate
enzyme systems with an opportunity to mature and take over the normal
elimination of bilirubin.

     The most common treatment for hyperbilirubinemia in neonates involves
phototherapy which requires exposure to a light source in order to stimulate the
temporary excretion of bilirubin.   Phototherapy is often not fully effective
and requires many hours and sometimes several days of exposure to light with
resulting maternal separation, extensive nursing supervision and related time-
sensitive costs.  In contrast, STANATE is administered by injection and clinical
studies have shown that one dose is generally all that is necessary for
treatment purposes.  STANATE is currently in Phase II/III clinical trials and
the Company is reviewing various alternatives for the completion of the clinical
trials and commercialization of this product including outlicensing.

     Therapeutic Category - Urology

     PROAMATINE.  In addition to its use in the treatment of blood pressure
disorders, PROAMATINE is currently sold in several countries by unaffiliated
third parties to treat stress urinary incontinence, the involuntary loss of
urine from the bladder.  There is no approved therapy for stress urinary
incontinence in the United States.  PROAMATINE is an alpha agonist which
increases the tension of the urinary sphincter, thereby preventing the
involuntary loss of urine from the bladder.  The Company is conducting a Phase
II clinical program in the United States for the use of PROAMATINE in the
treatment of stress urinary incontinence.

     Therapeutic Category - Oncology

     DIRAME(R).  In 1992, the Company obtained exclusive worldwide rights from
Bayer AG ("Bayer") to develop and market DIRAME (propiram), a potent, centrally
acting analgesic with low addiction

                                      -9-
<PAGE>
 
potential intended for use in the control of moderate to severe acute or chronic
pain.  See "Government Regulation."

     DIRAME is in Phase III clinical trials which indicate that the compound
appears to be safe and effective in patients with various kinds of acute and
chronic pain.

     A joint venture from which Bayer obtained the rights to DIRAME had
initially filed an NDA for DIRAME.  Subsequent to such filing, the FDA required
additional studies regarding the drug.  The Company is now addressing the issues
raised by the FDA and, in 1993, commenced long-term carcinogenicity studies on
two species of laboratory animals and other clinical studies. The in-life phase
of these studies has been completed and the results are currently under
analysis.  In order to complete its NDA filing, the Company believes it must
complete an additional Phase III clinical trial.  The Company has commenced such
clinical trial during 1998.

     SOMAGARD.  In addition to the treatment of central precocious puberty and
endometriosis, SOMAGARD has been studied as adjunctive treatment for prostate
cancer.  Other treatments for prostate cancer such as surgery and/or
radiotherapy are often precluded because the cancer has spread to the bones.  As
a result, castration, hormonal therapy or chemotherapy are often the only
available treatments.  SOMAGARD is being evaluated by the Company as an
alternative to these procedures.  The Company has filed a Product License
Application (NDA equivalent) for SOMAGARD for treatment of prostate cancer in
the United Kingdom and has obtained approval from the Irish regulatory
authorities to market the product for this indication.  Use of SOMAGARD for the
treatment of prostate cancer in the United States is in Phase III clinical
trials.

     RL0903.  The Company is developing a compound to treat prostate cancer
designated RL0903.  This compound, in a patented delivery system has been
licensed exclusively to the Company for North America and Europe and is
currently in Phase III clinical trials.  Roberts acquired rights from Hydro Med
Sciences to a patented hydrogel implant delivery technology for use in the Phase
III development of RL0903 for the hormonal treatment of prostate cancer.  In
consideration of milestone payments and royalties on future sales, the Company
received exclusive rights to develop and market this Hydrogel Implant in the US,
Canada, and Europe.  RL0903 is a synthetic gonadotropic hormone releasing factor
agonist that, due to its long-term inhibition of pituitary release of
gonadotropins, can block both ovarian and testicular function.  The hydrogel
implant employs a proprietary technology that delivers therapeutic agents at a
controlled, constant release rate for up to a year.  It is a retrievable
subcutaneous implant that can be inserted in a physician's office using a local
anesthetic.

     The Hydrogel Implant offers potentially significant benefits over standard
drug therapies for prostate cancer that employ gonadotropin hormone releasing
agonists and involve administration

                                      -10-
<PAGE>
 
regimens ranging from low-dosage daily injections to high-dosage implants or
depot injections of three to four months duration.  The Hydrogel Implant should
have distinct advantages by providing a more potent, reliable administration of
smaller amounts of therapeutic agent over a longer time.

     License Agreements

     The Company has obtained rights to the late-stage drugs currently being
developed by it through license agreements and has sublicensed certain of these
rights to pharmaceutical companies through license and/or marketing agreements.
A discussion of these agreements is provided below.

     PROAMATINE Agreements.  In 1985, the Company entered into a license
     ----------------------                                             
agreement with the predecessor in interest of Nycomed Pharma pursuant to which
the Company obtained exclusive rights to develop and market the product
PROAMATINE in the United States, Canada, the United Kingdom, Ireland and certain
other countries.  The agreement was amended in January 1994 to, among other
things, provide for a reduction in the delivery price of the product to the
Company in any territory covered by the agreement for a five year period
commencing upon the Company's launch of the product in any such territory and
the addition of minimum sales requirements which must be achieved by the Company
in the territories covered by the agreement in order to maintain exclusivity.
The Company's agreement with Nycomed Pharma, as amended, obligates it to develop
PROAMATINE and obtain governmental approval to market the product in the
licensed territories.  The Company is obliged to pay a royalty to Nycomed Pharma
on sales of PROAMATINE by the Company and its distributors and must purchase its
requirements of PROAMATINE from Nycomed Pharma.

     In 1991, the Company entered into a marketing agreement with Knoll which
granted Knoll the exclusive right to market and sell PROAMATINE in Canada (under
the name AMATINE) for use in the treatment of orthostatic hypotension.

     AGRYLIN Agreements.  In 1991, the Company entered into a license agreement
     -------------------                                                       
with Bristol-Myers Squibb pursuant to which the Company obtained exclusive
worldwide rights to develop and market AGRYLIN.  The Company is obliged to fund
the continued development and registration of AGRYLIN; made a payment upon FDA
approval and has paid and is obligated to continue to pay royalties on sales of
the drug.

     The Company entered into various distribution agreements with third parties
for the distribution and sale of AGRYLIN in Norway, Sweden, Finland, Denmark,
Iceland, Israel, Korea, Australia and New Zealand.  AGRYLIN is not yet approved
in all of these countries and, as part of the distribution agreement, the
distributors are responsible for obtaining regulatory approval.  If regulatory
approval is obtained, the Company will supply finished goods to the distributors
which will provide physical distribution along with marketing and sales support.

                                      -11-
<PAGE>
 
     SOMAGARD License Agreement.  In 1988, the Company and the Salk Institute
     ---------------------------                                             
entered into a license agreement pursuant to which the Company obtained certain
rights to develop and market the product SOMAGARD in the United States and
certain foreign markets, including the United Kingdom and Canada.  Under the
terms of the license agreement, the Company is required to pay royalties on
sales of SOMAGARD in countries in which the Salk Institute has obtained patents.

     HYDROGEL License Agreement.  In 1998, the Company entered into a license
     ---------------------------                                             
agreement with Hydro Med Sciences pursuant to which the Company was granted an
exclusive license to market the hydrogel implant containing its RL0903 compound
in North America and Europe.  The Company is obligated to make milestone
payments, to purchase its requirements of the hydrogel implant from Hydro Med
Sciences and to pay royalties on sales of the product.

     DIRAME License Agreement.  In 1992, the Company entered into a license
     -------------------------                                             
agreement with Bayer with respect to the product DIRAME.  Pursuant to this
agreement, the Company acquired exclusive worldwide rights from Bayer to
develop, manufacture and market the product DIRAME.  The Company paid an up-
front royalty to Bayer for rights to develop and market DIRAME.  The Company
must also pay Bayer licensing fees and royalties on sales.

     STANATE License Agreement.  In 1994, the Company and The Rockefeller
     --------------------------                                          
University entered into a license agreement pursuant to which the Company
acquired the exclusive worldwide rights to develop, manufacture, market and sell
STANATE.  The Company paid an up-front license fee to Rockefeller University for
the rights to develop, manufacture, market and sell STANATE.  The Company must
also pay Rockefeller University annual licensing fees and royalties on sales.

     License Agreements for Tazofelone and other Lilly Compounds.  In 1996, the
     ------------------------------------------------------------              
Company entered into four License Agreements with Lilly pursuant to which the
Company acquired the exclusive rights to develop, manufacture, market and sell
Tazofelone and the Compounds LY246736 and LY353433 anywhere in the world and the
Compound LY315535 in the United States and its territories, Canada and Mexico.
The term of each of the License Agreements shall be the later of either (i) the
life of the last to expire of the patents covering a Compound or (ii) fifteen
years.  Under the terms of each of the License Agreements, the Company paid
Lilly a signing fee and is obligated to make certain milestone payments to Lilly
as well as pay Lilly certain royalties based on the sales of any products
resulting from the Compounds.

In June 1998, the Company granted to Adolor Corporation an option to license the
compound LY246736, previously acquired from Lilly.   The granting of this option
for LY246736 is consistent with the Company's strategy to maximize, within the
shortest time possible, returns on its research and development investments by
focusing these resources on the internal development of compounds that are

                                      -12-
<PAGE>
 
further advanced in its pipeline.  The Company received an up front
nonrefundable, cash payment for granting Adolor a thirteen (13) month exclusive
worldwide option on this compound.  During this option period, Adolor will
complete Phase I studies of LY246736.  If Adolor then exercises its option to
license the compound, the Company would receive a second cash payment, followed
by milestone fees, and a royalty on future sales.

     SAMPATRILAT License Agreement.  In March, 1997, the Company entered into a
     ------------------------------                                            
License Agreement with Pfizer pursuant to which the Company acquired the
exclusive rights to develop, manufacture, market and sell Sampatrilat anywhere
in the world.  The term of the License Agreement shall be the earlier of the
expiration of the last to expire of the patents covering Sampatrilat or fifteen
years from the date of first commercial sale of a product containing
Sampatrilat.  Under the terms of the License Agreement, the Company paid Pfizer
a signing fee and is obligated to make certain milestone payments as well as pay
Pfizer certain royalties based on the sale of products containing Sampatrilat.
Pfizer has retained the right under certain circumstances should the Company's
sales of Sampatrilat dosage forms equal or exceed a certain percentage of the
worldwide sales of pharmaceuticals sold for the treatment of hypertension in
humans, to convert the Company's license to a non-exclusive license upon the
making of certain payments to the Company.

     Marketing

     In the United States the Company markets and sells its products primarily
through its own nationwide sales force and through a network of brokers and
distributors.  The Company has focused its sales operation to impact selected
physician specialties and major buying and decision making entities, such as
managed care organizations and large retail and mass merchandise operations.
With the growing trend in the United States of providing health care through
some form of managed care program, the Company has stepped-up its selling
efforts of prescription products to such managed healthcare organizations.  In
an effort to increase its sales to managed healthcare organizations, the Company
has employed national account managers to focus efforts on this growing market.
Various marketing, promotion, sales and training programs have been initiated to
improve the Company's penetration of the managed healthcare market and increase
product sales to managed healthcare organizations.

     Manufacturing

     From its inception, the Company's initial strategy was to outsource its
manufacturing and packaging functions in order to enable the Company to grow
without requiring large capital outlays to produce and package its products.  In
that regard, the Company has engaged contractors, primarily large pharmaceutical
companies, to convert active ingredients into finished drug products.  In most
instances where the Company has acquired the rights to approved

                                      -13-
<PAGE>
 
products from other pharmaceutical companies, the seller or licensor has agreed
to manufacture the Company's requirements of the products for a specified period
of time.  The manufacturing activities conducted by third parties for the
Company have consisted of the receipt and storage of materials, purification,
production, packaging and labeling.  The Company maintains a manufacturing
department which is responsible for (i) monitoring the manufacturing operations
of its contractors, (ii) inventory control, and (iii) quality control.  The
Company's manufacturing department maintains a quality control and quality
assurance program, including a set of standard operating procedures, designed to
assure that the Company's products are manufactured in accordance with Good
Manufacturing Practices standards ("GMP") and other applicable domestic and
foreign regulations.

     The Company has determined that it will take control of a major portion of
its manufacturing activities and seek to achieve certain cost efficiencies.  In
July, 1997, the Company concluded the purchase from Monsanto Canada, Inc. of a
100,000 square foot pharmaceutical manufacturing facility previously operated by
Monsanto's Searle Division ("Searle") located in Oakville, Ontario, Canada.  The
facility is approved by both the FDA and HPB.  In addition to manufacturing and
processing capabilities, the facility includes laboratory, warehouse and
administrative space.  The Company has begun transferring certain product
packaging from third parties to this facility, and should realize certain
benefits, including, without limitation, lower production costs and more
flexibility in determining appropriate inventory levels for the Company's
products when it begins to transfer the manufacturing of certain products to
this facility upon appropriate regulatory approval.  In addition, the Company
utilized the available office space in Oakville by relocating the operations of
its subsidiary, Roberts Pharmaceutical Canada, Inc., to the Oakville facility.
The Company's ability to transfer the production of certain of its products to
the Oakville facility will be, in certain cases, dependent on the duration of
its current agreements with suppliers, and the ability to obtain regulatory
approvals to transfer the manufacture of these products to Oakville.

     The Company is currently in the process of refitting the Oakville plant in
order to accommodate the manufacture of as many of the Company's products as
possible.  In addition, the Company will explore the possibility of using the
Oakville facility to engage in contract manufacturing for other pharmaceutical
companies.



     Distribution

     In October, 1997, the Company completed the acquisition of an approximately
70,000 square foot distribution facility located in a suburb of Chicago.  The
Company began distributing its products from this facility in the second
quarter, 1998.  The Company anticipates that its distribution costs will
decrease as a result of operating its own distribution facility.

                                      -14-
<PAGE>
 
     Patents and Proprietary Rights

     The Company considers the protection of discoveries in connection with its
development activities important to its business.  To date, the Company has
acquired certain patents in connection with the acquisition of certain products
and has filed applications for patents covering new processes for manufacturing
anagrelide, the active ingredient in AGRYLIN.  Additionally, rights to patented
technology have been licensed to the Company.  The late-stage products being
developed by the Company which are afforded patent protection are: AGRYLIN -
patents issued 1982 and applications filed in 1996; STANATE - patents issued
1987, 1988, 1992 and 1993.  Also, regarding the Compounds acquired from Lilly,
certain patents have been issued in the United States and several other
countries with respect to Tazofelone and the other compounds.  In addition,
there are other domestic or foreign patent applications pending for the
Compounds.  Patents have been issued with respect to the compound Sampatrilat,
licensed from Pfizer.  Certain of the Company's products may be afforded
protection under laws which provide market exclusivity for Orphan Drugs and
drugs which include a new active ingredient.  See "Government Regulation."

     Competition

     Many companies, including large pharmaceutical, chemical and biotechnology
firms with financial and marketing resources and research and development staffs
and facilities substantially greater than those of the Company, are engaged in
researching, developing, marketing and selling products intended to treat the
same conditions and diseases as the products currently sold and under
development by the Company.  Further, other products now in use or under
development by others may be intended to treat the same conditions as the
Company's products.  The pharmaceutical industry is characterized by rapid
technological advances, and competitors may develop products more rapidly than
the Company.  In addition, competitors may be able to complete the regulatory
approval process sooner than the Company, and therefore market their products
earlier than the Company can market certain of its products.



     Government Regulation

     The marketing of pharmaceutical products requires the approval of the FDA
and comparable agencies in foreign countries.  The FDA has established
guidelines and safety standards which apply to the preclinical evaluation,
clinical testing, manufacture and marketing of pharmaceutical products.  The
process of obtaining FDA approval for a new drug can take many years and
involves the expenditure of substantial resources.  The steps required before
such a product

                                      -15-
<PAGE>
 
can be produced and marketed for human use include preclinical studies, the
filing of an IND, human clinical trials and the approval of an NDA.

     Drug marketing exclusivity protection is granted through the Orphan Drug
Act of 1983 (the "Orphan Drug Act") and the Drug Price Competition and Patent
Term Restoration Act of 1984 (commonly referred to as the "Waxman Hatch Act").
The Orphan Drug Act entitles a company to market exclusivity in the United
States for a period of seven years from the date of FDA approval for drugs
which, among other criteria, are intended to treat a patient population of less
than 200,000.  PROAMATINE for orthostatic hypotension and AGRYLIN for
thrombocytosis have been granted Orphan Drug status by the FDA.  Certain
provisions of the Waxman-Hatch Act grant market exclusivity in the United States
for a period of five years from the date of FDA approval for drugs containing a
new active ingredient.  Based upon its review of industry and government data,
the Company believes that DIRAME may qualify for this protection.

     The manufacturing processes of the Company and its contractors and
licensors are subject to regulation, including the need to comply with Good
Manufacturing Practices.  These same regulations will apply to the Company with
respect to the Oakville, Ontario manufacturing facility which it has purchased
from Searle.  See "Manufacturing."  The Company's business is also subject to
regulation under the Occupational Safety and Health Act, the Environmental
Protection Act, the Toxic Substances Control Act, the Drug Enforcement Act, the
Resource Conservation and Recovery Act, the Pharmaceutical Marketing Act of 1988
and other current and potential future federal, state or local regulations.

     The Company markets various products containing controlled substances that
are subject to the Department of Justice, Drug Enforcement Administration
regulations.  Distribution of prescription drugs classified as controlled
substances or, in some cases, other pharmaceutical products, is subject to
licensing or regulation in certain states.  Generally, the entity engaged in the
actual distribution is subject to such regulation.  In addition, state licensing
is generally required in the state in which such entity's principal place of
business is located.



     United States Federal and state governments continue to seek means to
reduce costs of Medicare and Medicaid programs, including placement of
restrictions on reimbursement for, or access to, certain drug products.  Major
changes were made in the Medicaid program under the Omnibus Budget
Reconciliation Act of 1990 (the "Act").  As a result, the Company entered into a
Medicaid Rebate Agreement ("Rebate Agreement") with the United States
Government, under Section 4401 of the Act.  Pursuant to the Rebate Agreement, in
order for federal reimbursement to be available for prescription

                                      -16-
<PAGE>
 
drugs under state Medicaid plans, the Company must pay certain statutorily
prescribed rebates on Medicaid purchases.  Effective July 1, 1991, the law also
denies federal Medicaid reimbursement for drug products of the original NDA-
holder if a less expensive generic version of such drug is available from
another manufacturer, unless the prescriber indicates on the prescription that
the branded product is medically necessary.

     In most other markets, governments exert controls over pharmaceutical
prices either directly or by controlling admission to, or levels for,
reimbursement by government health programs.  The nature of such controls and
their effect on the pharmaceutical industry vary greatly from country to
country.

     Employees

     As of March 12, 1999, the Company had 440 employees, including 4 officers,
62 persons engaged in research and development activities and 228 persons
engaged in marketing and sales activities.  In addition to its full-time staff,
the Company engages medical doctors and other professional personnel on a
consultancy basis and, from time to time, consultants and others on a per diem
or hourly basis.  The Company believes its relations with its employees are
satisfactory.

     Financial Information about Foreign and Domestic Operations

     Financial Information about Foreign and Domestic Operations is presented in
Note 14 to the Company's financial statements.  See "Notes to Consolidated
Financial Statements - Note 14."

                                      -17-
<PAGE>
 
Item 2.  Properties

     The Company's worldwide headquarters are located at Meridian Center II, 4
Industrial Way West, Eatontown, New Jersey.  The building housing the Company's
worldwide headquarters, which was purchased by the Company in 1992 and occupied
in 1993, consists of an aggregate of 80,000 square feet.

     The Company owns an office and warehouse building consisting of 30,300
square feet, which is located across the street from the Company's worldwide
headquarters.  The Company uses this building for the warehousing of Company
records, archives, certain offices and facilities.  A portion of this building
has been leased to the purchasers of VRG and the Company receives rental
payments from the purchasers.

     The Company also owns a manufacturing facility and a distribution facility.
The 100,000 square foot manufacturing facility is located in Oakville, Ontario,
Canada and also houses the office operations of Roberts Canada.  The 70,000
square foot distribution facility is located in Buffalo Grove, Illinois, a
suburb of Chicago.

     The Company's United Kingdom subsidiary, Monmouth Pharmaceuticals, Ltd.,
occupies 3,800 square feet of leased office space in the Surrey Research Park in
Guildford, Surrey, England, approximately 30 miles south of London.  The monthly
rental for these offices is approximately 6,500 British pounds.

                                      -18-
<PAGE>
 
Item 3.   Legal Proceedings

     There are no material legal, governmental, administrative or other
proceedings pending against the Company, any of its subsidiaries or any of their
properties, or to which the Company or any such subsidiary is a party, and to
the knowledge of management, no such material proceedings are threatened or
contemplated.

                                      -19-
<PAGE>
 
Item 4.   Submission of Matters to a Vote of Security Holders
 
     During the fourth quarter ended December 31, 1998, no matters were
submitted to a vote of the Company's security holders through the solicitation
of proxies or otherwise.

                                      -20-
<PAGE>
 
Item 4A.  Executive Officers of the Registrant

     The executive officers of the Company as of March 12, 1999 are listed
below, and brief summaries of their business experience and certain other
information with respect to each of them is set forth in the following table and
in the information which follows the table.

     The executive officers of the Company are as follows:
 
NAME                                 AGE           POSITION
-------------------------------------------------------------------------------
                                                
JOHN T. SPITZNAGEL                   57            President and
                                                     Chief Executive Officer
                                                
ROBERT W. LOY                        61            Executive Vice President
                                                
PETER M. ROGALIN                     56            Vice President, Treasurer
                                                     and Chief Financial
                                                     Officer
                                                
ANTHONY A. RASCIO, ESQ.              56            Vice President, Secretary
                                                     and General Counsel


     John T. Spitznagel has served as President and Chief Executive Officer
since September, 1997.  Mr. Spitznagel has been an officer of the Company since
July 1996, including Executive Vice President -Worldwide Sales and Marketing
from March 1996 to September 1997, and he has also been a Director of the
Company since July 1996.  Mr. Spitznagel served as President of Reed and
Carnrick Pharmaceuticals from September 1990 through July 1995.  In 1989 and
1990, Mr. Spitznagel served as Chief Executive Officer of BioCryst
Pharmaceuticals, Inc.  From 1979 through 1989, Mr. Spitznagel held various
positions with Wyeth-Ayerst Laboratories, advancing from Marketing Director to
Senior Vice President of Marketing and Sales.  Mr. Spitznagel was employed by
Roche Laboratories from 1971 through 1979 and by Warner-Chilcott Laboratories
from 1966 through 1971 in various sales, marketing and management positions.
Mr. Spitznagel received his undergraduate degree from Rider University and an
M.B.A. from Fairleigh Dickinson University.

     Robert W. Loy has served as Executive Vice President -Operations and New
Business Development since March 4, 1996.  Mr. Loy served as Chief Operating
Officer of the Company from August 1992 to March 1996 and as Vice President of
the Company from December 1992 to March 1996.  Mr. Loy has served as a Director
of the Company since October 1993.  From 1963 to 1990, he held various positions
at Squibb Corporation, including that of Vice President, Worldwide Operations
for the Squibb Derm Division.  From 1990 to 1992, Mr. Loy served as Vice
President, International Sales and Marketing, with Hollister, Inc.  Mr. Loy
received his undergraduate degree from Old Dominion University and attended
Villanova University Graduate School.

                                      -21-
<PAGE>
 
     Peter M. Rogalin has served as Vice President, Treasurer, Chief Financial
Officer and a Director of the Company since February 5, 1996.  From 1978 to
1992, Mr. Rogalin was employed in various executive capacities by Sterling
Winthrop, Inc. (formerly Sterling Drug, Inc.), including Assistant Treasurer
from 1987 through 1992.  From 1993 through July 1994, Mr. Rogalin was a
Principal in RK Associates, a consulting firm with specific expertise in
financial and business operations and systems for small and medium sized
companies.  From July 1994 through January 1996, Mr. Rogalin served as Vice
President - Finance and Chief Financial Officer of ImClone Systems, Inc., a
biopharmaceutical company engaged in research and development of therapeutic
products for the treatment of cancer and cancer related disorders.  Mr. Rogalin,
a Certified Public Accountant, received his undergraduate degree from St.
Lawrence University and an M.B.A. from the Graduate School of Business, New York
University.

          Anthony A. Rascio, Esq., has served as Vice President and General
Counsel and Secretary of the Company since June 1987.  In addition, he served as
a Director of the Company from 1987 to 1998.  From January 1987 to June 1987,
Mr. Rascio was Director, Legal Affairs for the Company.  During 1986, Mr. Rascio
was engaged in the private practice of law.  From 1984 through 1985, Mr. Rascio
was employed as Director, International Operations by Jeffrey Martin, Inc., a
marketer of cosmetics and proprietary medicines.  Mr. Rascio served as Legal
Director, International Pharmaceutical Products Division for Schering-Plough
Corporation from 1980 through 1984 and held various legal positions with that
company from 1971 to 1980.  Mr. Rascio received undergraduate and law degrees
from Fordham University.

                                      -22-
<PAGE>
 
                                    PART II

Item 5.   Market for the Registrant's Common Stock and Related Stockholder
          Matters

Common Stock

     The Company's Common Stock is traded on the American Stock Exchange and was
held by approximately 960 shareholders of record as of March 15, 1999.

     The following table sets forth, for the periods indicated, the high and low
last sale prices for the Company's Common Stock, as reported on the NASDAQ
National Market System from January 1, 1997 through May 21, 1997 and as reported
by the American Stock Exchange from May 22, 1997 through December 31, 1998.
 
                                               High                Low
                                             --------            --------
                                                  
Year Ended December 31, 1997                      
                                                  
  First Quarter                              $15                 $11
  Second Quarter                             $13                 $10 7/8
  Third Quarter                              $13                 $ 9 7/16
  Fourth Quarter                             $11 7/8             $ 9
                                                                
Year Ended December 31, 1998                                    
                                                                
  First Quarter                              $14 3/8             $ 9 9/16
  Second Quarter                             $23                 $13 1/8
  Third Quarter                              $24 5/16            $16 1/4
  Fourth Quarter                             $25 1/8             $16 1/2

     The Company has not paid any cash dividends on its Common Stock in the
past, and it is unlikely that the Company will pay any dividends on its Common
Stock in the foreseeable future.

                                      -23-
<PAGE>
 
Item 6.  Selected Financial Data

The selected consolidated financial data for the Company should be read in
conjunction with "Item 7 Management's Discussion and Analysis of Financial
Condition and Results of Operations" and with the Company's consolidated
financial statements and related notes appearing elsewhere in this report.

Operating Statement Data:

 
                                     
                                        Years Ended December 31,
--------------------------------------------------------------------------------
                            1994       1995        1996       1997       1998
                            ----       ----        ----       ----       ----
                                (in thousands, except per share data)

Total Revenue            $89,020    $113,427     $98,111   $122,508   $175,445

Operating Income (Loss)
 from Continuing
 Operations               25,802       6,873     (50,195)/(1)/ (762)    27,378

Net Income (Loss) from
 Continuing Operations    20,618       2,703     (34,275)     2,517     16,787

Net (Loss) Income from
 Discontinued Operations  (1,206)    (27,045)        556        ---        ---

Net Income (Loss)         19,412     (24,342)    (33,719)     2,517     16,787

Earnings (Loss) Per
 Share of Common Stock
 from Continuing
 Operations - Basic          1.12        .15       (2.47)/(2)/  .06        .54
(Loss) Earnings Per Share
 of Common Stock from
 Discontinued Operations
 - Basic                     (.06)     (1.46)        .03        ---        ---

Earnings (Loss) Per Share
 of Common Stock - Basic     1.06      (1.31)      (2.44)       .06        .54

Average Number of
 Common Shares - Basic
 Outstanding               18,400     18,536      19,133     29,414     31,049

Earnings (Loss) Per
Share of Common Stock
from Continuing
Operations - Diluted         1.10        .15       (2.47)/(2)/  .06        .53
(Loss) Earnings Per Share
of Common Stock from
Discontinued Operations
- Diluted                    (.06)     (1.45)        .03         ---        ---

Earnings (Loss) Per Share
of Common Stock - Diluted    1.04      (1.30)      (2.44)       .06        .53

Average Number of
Common Shares - Diluted
Outstanding                18,708     18,623      19,133     29,497     31,460

                                      -24-
<PAGE>
 
(1)  Intangible Dispositions and Write-Offs.  During the fourth quarter of 1996,
     ---------------------------------------                                    
     the Company completed the sale of the majority of its non-core
     nonprescription products along with the NUCOFED and QUIBRON brands in two
     independent sales transactions.  These sales, net of proceeds, resulted in
     a one time, non-cash write off of $11.9 million, which amounted to $7.6
     million net of taxes.  Also, during the fourth quarter of 1996, the Company
     expensed certain purchased development products and recorded an impairment
     loss of long-lived intangible assets totalling $25.4 million, which
     amounted to $17.8 million net of taxes.

     Operating income and net loss were negatively affected by the purchase of
     development products and the sale and write down of the intangible assets
     in the amounts of $37.3 million for operating income and $25.4 million for
     net loss.  In the event that these transactions had not occurred, the
     operating loss would have been $12.9 million and net loss would have been
     $8.3 million.

(2)  Pursuant to a position taken by the SEC staff (the "Staff"), effective
     March 13, 1997, on accounting for preferred stock which is convertible at a
     discount to market, the Company recorded a charge for Earnings Per Share
     purposes of $.61 per share.  This charge to Earnings Per Share is
     consistent with the Staff's position that the 10% discount available to
     holders of the Company's 5% Convertible Preferred Stock ("5% Preferred
     Stock") should be amortized between the issuance date and the first date
     that conversion could occur.

          To clarify the adjustments indicated above, a reconciliation of
     dilutive Earnings Per Share for the twelve months ended December 31, 1996
     is composed of the following elements:

     Net (loss) from continuing operations before the
       consideration of purchased research and development,
       write-off and the sale of intangible assets, the
       recognition of the discount upon the
       issuance of 5% Preferred Stock or preferred dividends            $ (.47)
     Purchased research and development and the write-off
       and sale of intangible assets                                     (1.33)
       5% Preferred Stock dividends                               (.06)
       Issuance of 5% Preferred Stock at a 10% discount to
          market                                                  (.61)   (.67)
                                                                ------- -------
     Net (loss) from continuing operations                               (2.47)
     Income from discontinued operations                                   .03
                                                                        ------- 
     (Loss) attributable to common stock                                $(2.44)
                                                                        =======


Balance Sheet Data:
                                               As of December 31
-----------------------------------------------------------------------------
                                 1994      1995      1996      1997      1998
                                 ----      ----      ----      ----      ----
                                                (in thousands)
                        
Total Assets                   $336,192  $340,290  $372,225  $367,855  $526,236
                        
Long-Term Debt and      
 Redeemable Preferred   
 Stock (excluding       
 current portion)                22,411    16,183    10,639    10,327   126,739
                        
Shareholders' Equity            259,129   235,467   309,759   317,303   341,810

                                      -25-
<PAGE>
 
Item 7.   Management's Discussion and Analysis of Financial Condition and
          Results of Operations

Results of Operations

Years Ended December 31, 1997 and 1998

     Corporate Revenues.  For the year ended December 31, 1998, total revenue
     -------------------                                                     
increased $52.9 million from $122.5 to $175.4 million.  This increase was
primarily the result of an increase in product sales.

     Product Sales.  For the year ended December 31, 1998, U.S.  product sales
     --------------                                                           
increased $47.7 million from $91.6 to $139.3 million.  The most significant
contributor to the increase was PENTASA with sales of $33.3 million, acquired by
the Company in the second quarter 1998.  Also, increasing sales of AGRYLIN and
PROAMATINE contributed $9.2 million and $9.0 million, respectively, of the
increase over 1997 sales levels.

     For the year ended December 31, 1998, sales of the Company's United Kingdom
subsidiary, Monmouth Pharmaceuticals, Ltd., increased $3.6 million from $17.5
million to $21.1 million.  The increased sales of MEPTID of $1.5 million were
the primary reason for the increase.  Product sales of the Company's Canadian
subsidiary, Roberts Pharmaceutical Canada, Inc., increased $0.8 million from
$12.5 million to $13.3 million.

     Cost of Sales.  For the year ended December 31, 1998, cost of sales
     --------------                                                     
amounted to 38% of product sales as compared to 42% in 1997.  This decrease in
cost of sales percentage and corresponding increase in gross profit percentage
is primarily the result of the addition of PENTASA and its higher gross margin
to the product mix.

     Research and Development.  Research and development expenses decreased $1.3
     -------------------------                                                  
million from $13.1 million in 1997 to $11.8 million in 1998.  Approximately $1.6
million of the 1997 expense was due to the purchase of development-stage
products.  The cost of acquisition of development-stage products is charged
immediately to research and development expense.  The decrease is primarily due
to increased new program spending in 1998 of $3.8 million offset by a decrease
in license fees of $4.7 million as 1997 expenses included the cost of the
purchase of development stage products.

     Marketing and Administrative Expenses.  Marketing and administrative
     --------------------------------------                              
expenses increased $11.3 million from $58.7 million in 1997 to $70.0 million in
1998.  Marketing expenses increased $0.1 million.  Administrative expenses
increased $11.2 million from $22.5 million in 1997 to $33.7 million in 1998.
The primary components of the change were a $3.3 million increase in product
intangible amortization expense due to the addition of PENTASA and a $6.8
million increase related to salaries and benefits, particularly the stock
appreciation rights (SARs) and

                                      -26-
<PAGE>
 
the Supplemental Executive Retirement Plan (SERP) which was established in the
second quarter 1998.  The 1998 SERP expense was $2.1 million.

In order to mitigate the potential future compensation expense to the Company
related to SARs, during 1998 the Company accelerated the vesting of all SARs not
yet vested, and the executive officers holding such SARs agreed to voluntarily
exercise the outstanding SARs, thereby terminating any potential benefit from
the SARs which such officers may have realized in the future.  The exercise of
all outstanding SARs during the current period resulted in a one time charge of
$3.3 million, of which $0.7 million relates to accelerated vesting.  In
connection with the acceleration of vesting and the exercise of all outstanding
SARs, the executive officers who exercised the SARs received options to purchase
one share of the Company's Common Stock for each two SARs exercised.

     Interest Income and Expense.  For the year ended December 31, 1998,
     ----------------------------                                       
interest income decreased $1.1 million from $5.2 million to $4.1 million as the
result of a decreased cash balance due to the use of funds for capital
improvement projects and the cash portion of the purchase of PENTASA.  Interest
expense increased from $0.8 million in 1997 to $6.2 million in 1998 as a result
of interest costs from the financing of the PENTASA acquisition.

     Income Taxes.  For the year ended December 31, 1998, income taxes from
     -------------                                                         
continuing operations increased $9.3 million from a benefit of $1.1 million to a
provision of $8.2 million, primarily as a result of improved 1998 operations
versus 1997.  The Company's effective tax rate was 32.9% for the year ended
December 31, 1998.

     The Company has recorded net deferred tax assets of approximately $8.6
million.  Realization is dependent upon generating sufficient taxable income to
utilize such assets.  Although realization on these tax assets is not assured, a
valuation allowance has not been provided because management believes it is more
likely than not that the deferred tax assets will be realized.

Years Ended December 31, 1996 and 1997

     Corporate Revenues.  For the year ended December 31, 1997, total revenue
     -------------------                                                     
increased $24.4 million from $98.1 to $122.5 million.  This increase was the
result of an increase in product sales.


     Product Sales.  For the year ended December 31, 1997, product sales
     --------------                                                     
increased $23.5 million from $98.1 to $121.6 million.  This increase is
primarily the result of sales in the United States of AGRYLIN and PROAMATINE.
AGRYLIN was launched in the first quarter of 1997 and PROAMATINE was launched in
the

                                      -27-
<PAGE>
 
fourth quarter of 1996.  The COLACE line also contributed significant increases.

     For the year ended December 31, 1997, sales of the Company's United Kingdom
subsidiary, Monmouth Pharmaceuticals, Ltd., increased $5.5 million from $12.0
million to $17.5 million.  Increased sales of LODINE, launched in the fourth
quarter of 1996, are the primary reason for this increase.  Product sales of the
Company's Canadian subsidiary, Roberts Pharmaceutical Canada, Inc., increased
$0.8 million from $11.7 million to $12.5 million.

     Cost of Sales.  For the year ended December 31, 1997, cost of sales
     --------------                                                     
amounted to 42% of product sales as compared to 51% in 1996.  This decrease in
cost of sales percentage and corresponding increase in gross profit percentage
is primarily the result of the addition of AGRYLIN to the product mix.  AGRYLIN
has a higher gross profit percentage as it is a product the development of which
was completed internally.

     Research and Development.  Research and development expenses increased $5.7
     -------------------------                                                  
million from $7.4 million in 1996 to $13.1 million in 1997.  The increase is due
to a post-launch study for PROAMATINE, the continued development of DIRAME,
STANATE and the purchased compounds, and increases in registration, and user and
license fees.

     Marketing and Administrative Expenses.  Marketing and administrative
     --------------------------------------                              
expenses increased $1.5 million from $57.2 million in 1996 to $58.7 million in
1997.  Marketing expenses increased $0.5 million primarily as a result of
increased sampling, market research, the introduction of AGRYLIN, and fleet
expenses offset by decreases in outside services and travel and meetings.
Administrative expenses increased $1.0 million during 1997 as compared to 1996
in large part due to increases in salaries and benefits offset by decreases in
audit and legal fees.  Legal fees in 1997 were substantially lower than in 1996
due to the proposed settlement of the shareholders' class action lawsuit reached
in third quarter 1997 and subsequently finalized in January 1998.

     Interest Income and Expense.  For the year ended December 31, 1997,
     ----------------------------                                       
interest income increased $2.3 million from $2.9 million to $5.2 million as the
result of an increased cash balance due to the private placements that were
completed during 1996.  Interest expense decreased from $1.8 million in 1996 to
$0.8 million in 1997 as a result of a decrease in long-term debt related to
product acquisitions.

     Income Taxes.  For the year ended December 31, 1997, income taxes from
     -------------                                                         
continuing operations increased $13.5 million from a benefit of $14.6 million to
a benefit of $1.1 million, primarily as a result of improved 1997 operations
versus 1996 and a 1996 write off and disposition of certain intangible assets.
The

                                      -28-
<PAGE>
 
Company's effective tax benefit of 77% was higher than the normal statutory rate
primarily as a result of the elimination of certain reserves for taxes due to
the closure of years 1991 through 1993 after an IRS audit.

     The Company has recorded net deferred tax assets of approximately $17.3
million.  Realization is dependent upon generating sufficient taxable income to
utilize such assets.  Although realization is not assured, management believes
it is more likely than not that the deferred tax assets for which a valuation
allowance has not been provided will be realized.

     Discontinued Operations.  See "Notes to Consolidated Financial Statements -
     ------------------------                                                   
Note 15" for a discussion of discontinued operations.

Liquidity and Capital Resources
-------------------------------

     For the year ended December 31, 1998, operating cash inflows amounted to
$32.4 million as a result of the Company's net income adjusted by an increase in
accounts payable, a decrease in accounts receivable, and an increase in non-cash
charges, primarily depreciation and amortization.  As of December 31, 1998, the
Company had cash, cash equivalents and marketable securities of $75.3 million.

     The Company's funding requirements depend on a number of factors, including
the Company's product development programs, product acquisitions, the level of
resources required for the expansion of marketing capabilities as the product
base expands, increased investment in accounts receivable and inventory which
may arise from increased sales levels, competitive and technological
developments, the timing and cost of obtaining required regulatory approvals for
new products, relationships with parties to collaborative agreements, the
success of acquisition activities and the continuing revenues generated from
sales of PROAMATINE, AGRYLIN and PENTASA.

     The Company financed the majority of its purchase of PENTASA with a note
for $125 million.  The remainder of the purchase price was paid in cash.  In
connection with the $125 million note, the Company is subject to certain
affirmative and negative covenants.  See Note 7 to the consolidated financial
statements.

     Existing cash and securities balances and cash generated from operations
are expected to be sufficient to fund operating activities for the foreseeable
future, as well as support near and long term debt obligations, completion of
the capital improvements to the manufacturing facility, development of the
existing pipeline compounds and to fund future acquisitions of products.  Cash
equivalents and marketable securities currently consist of immediately available
money market fund balances and investment grade securities.

                                      -29-
<PAGE>
 
     Capital Expenditures.  Capital Expenditures in 1998 of approximately $11
     ---------------------                                                   
million relate primarily to the upgrades to the manufacturing facility in Canada
and significant investments in new computer hardware and software.  As these
projects are nearing completion, the Company expects a lower level of cash
expenditures for capital improvements in 1999.

     Foreign Currency Fluctuations.  The Company has subsidiary operations
     ------------------------------                                       
outside the United States.  As a result, the Company is subject to fluctuations
in subsidiary revenues and costs reported in United States dollars as a
consequence of currency exchange rate fluctuations, especially rates for the
British pound and Canadian dollar.  Fluctuations were not material for the
British pound.  Due to the weakening of the Canadian dollar in 1998, the
cumulative foreign currency translation balance increased by $1.4 million in
1998.  These amounts are accumulated and reported separately in shareholder's
equity.

     Concentration of Credit Risk.  Financial instruments that potentially
     -----------------------------                                        
expose the Company to concentrations of credit risk consist primarily of short
term cash investments and trade accounts receivable.  The Company places its
temporary excess cash investments in short term money market instruments.  At
times, such investments may be in excess of the FDIC insurance limit.  The
Company markets its products primarily to wholesale drug distributors, retail
pharmacies and physicians in the United States and abroad.  The Company performs
certain credit evaluation procedures and does not require collateral.  Reserves
are maintained for estimated credit losses.

     Inflation.  Although at reduced levels in recent years, inflation continues
     ----------                                                                 
to apply upward pressure on the cost of goods and services used by the Company.
However, the Company believes that the net effect of inflation on its operations
has been minimal during the past three years.

New Accounting Pronouncements
-----------------------------

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  This Statement requires that all
derivatives be recorded in the balance sheet as either an asset or liability
measured at its fair value and that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met.  This statement is effective for fiscal years beginning after June 15,
1999.  The provisions of this statement shall not be applied retroactively to
financial statements of prior periods.  The Company is in the process of
evaluating this statement and has not yet determined the future impact on its
consolidated financial statements.

                                      -30-
<PAGE>
 
 Euro Conversion
 ---------------

     On January 1, 1999, a majority of the European Union member countries
converted to a common currency, the "Euro". The existing national currencies of
the participating countries will continue to be acceptable until January 1, 2002
after which the Euro will be the sole legal tender for the participating
countries. The Company is currently evaluating the economic and operational
impact, including competition, pricing, contracts, taxation and foreign currency
exchange rate risk, of the Euro conversion but does not expect it to have a
material effect on its financial condition or results of operations.

Year 2000 Conversion
--------------------

     The year 2000 conversion problem arises from the inability of some
information systems and other date-sensitive equipment with embedded chips or
processors to properly recognize and process information after January 1, 2000.
The Company's project to identify and remediate year 2000 issues is proceeding
on schedule.  The four main areas that have been or are being addressed are
financial systems, non-financial systems, customers and suppliers readiness and
other date-sensitive equipment.

     Over the past year, the Company has replaced or upgraded much of its
software and systems in the normal course of business.  The financial system was
replaced with an Enterprise Reporting System which the developer states is 2000
compliant.  The Company intends to obtain and review the developer's
certification documentation.  The system was implemented in the U.S. in April,
1998, due to the need for an integrated, more advanced system to link the
Finance and Sales departments located at headquarters with the new distribution
facility.  The Canadian and U.K. subsidiary implementations were completed as of
January 4, 1999.  These upgrades are also due to the new integrated reporting
system and not year 2000 compliance.  Due to the completion of the
implementation, the three financial locations are electronically linked,
enabling more timely completion of financial requirements.  Non-financial
software and hardware were also replaced in the normal course of business as the
previous systems were outdated.

     The manufacturing plant, located in Canada, which was purchased by the
Company in 1997, required various upgrades to its operating systems.  New
hardware and upgraded software was installed.  The hardware was installed to
replace outdated processing equipment.  The software was installed to ensure
year 2000 compliance.  The Company's investment in this software was
approximately $225,000 U.S. dollars.

                                      -31-
<PAGE>
 
     One of the Company's customers requires the Company to meet certain
electronic data interface (EDI) requirements related to year 2000 compliance in
order for the customer to continue its relationship with the Company.  The
Company completed the testing and implementation of the compliant version in
1998 and is now listed on a national database of Y2K compliant trading partners
in the healthcare pharmaceutical industry.  The cost of meeting these EDI
requirements was approximately $1,000.  Approximately 50 to 60 percent of the
Company's sales are currently made through EDI, through primarily one
clearinghouse.  This clearinghouse is year 2000 compliant and upgrades non-year
2000 compliant incoming transmissions to compliant transmissions.  In the event
that a non-compliant customer could not interface electronically, orders can be
transmitted via phone, fax or mail, and therefore no disruption of sales would
be expected.

     The Company is attempting to ascertain the compliance of other customers
and suppliers, including the Company's toll manufacturers, through the means of
a survey.  This program is ongoing and assessments regarding additional work
necessary will be made as responses are received.  To assist in the effort, the
Company is developing a tracking database to help monitor which business
partners have taken part in the Company's survey, surveyed the Company or
received a compliance letter from the Company.  In the event that any of the
Company's significant customers or suppliers do not achieve compliance on a
timely basis, the Company's business or operations could be adversely impacted
if new customers or alternate suppliers can not be found.

     Other date-sensitive equipment includes primarily telephones and building
systems such as heating and lighting systems.  The telephone system at the U.S.
headquarters was replaced in 1998 in the normal course of business as the lease
on the former system expired.  The new system is year 2000 compliant.  The phone
systems at the Canadian and U.K. locations have been replaced in order to be
year 2000 compliant.  The phone system at the distribution facility will be
replaced by the second quarter of 1999 as it is not currently year 2000
compliant.  The total cost of these new systems is approximately $70,000 U.S.
dollars.  The Company has received assurances that the building systems are
compliant and will be obtaining documentation to that effect over the next
several months.

     In accordance with the Company's fixed asset capitalization policy, the
hardware, software and phone systems purchased are added to fixed assets and
amortized over the appropriate useful life.  The Company has not retained any
consultants nor hired additional employees to assist in achieving compliance.
Other IT projects have not been delayed by the Company's year 2000 readiness
project.

                                      -32-
<PAGE>
 
     Based on the Company's progress to date and timeline to complete the work
on the Year 2000 compliance issue, the Company does not foresee significant
financial or operational risks associated with its compliance at this time.
However, these expectations are subject to uncertainties.  These include, but
are not limited to the ability to assess suppliers and customers readiness,
failure to identify all susceptible systems and the availability and cost of
personnel necessary to remediate any unforeseen problems.

                                      -33-
<PAGE>
 
Item 7A.  Qualitative and Quantitative Disclosures About Market Risk

The Company is subject to market risk exposure in the following areas:

Interest Rate Market Risk.  The Company has cash and cash equivalents on which
interest income is earned at variable rates.  The Company also has a syndicated
loan for $125 million.  The interest rate on this borrowing is variable and
therefore interest expense is affected by the general level of U.S. and foreign
interest rates.  Increases in interest expense resulting from an increase in
interest rates would be offset to some extent by a corresponding increase in
interest income from cash and cash equivalents.

Foreign Exchange Market Risk.  The Company has two foreign subsidiaries whose
financial statements are translated using the accounting policies described in
Note 1 of the Notes to the Consolidated Financial Statements.  The Company is
subject to exposure from the risk of currency fluctuations as the value of the
foreign currency fluctuates against the dollar.  The Company does not believe
that it is exposed to material foreign exchange market risk.

                                      -34-
<PAGE>
 
Item 8.   Financial Statements and Supplementary Data

     The consolidated financial statements and supplementary data of the Company
called for by this item are submitted as a separate section of this report.

Item 9.   Changes in and Disagreements With Accountants on Accounting and
          Financial Disclosure

     On December 2, 1998, the Company received notice that
PricewaterhouseCoopers LLP resigned as the independent accountants of Roberts
Pharmaceutical Corporation.  The reports of PricewaterhouseCoopers LLP on the
financial statements for the past two fiscal years contained no adverse opinion
or disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principle.

     In connection with its audits for the two most recent fiscal years and
through November 25, 1998, there were no disagreements with
PricewaterhouseCoopers LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of PricewaterhouseCoopers LLP
would have caused them to make reference thereto in their report on the
financial statements for such years.

     The Company engaged Ernst & Young LLP as its new independent accountants as
of December 9, 1998.  During the two most recent fiscal years and through
December 9, 1998, the Company has not consulted with Ernst & Young LLP regarding
either (i) the application of accounting principles to a specified transaction,
either completed or proposed; or the type of audit opinion that might be
rendered on the Company's financial statements, and either a written report was
provided to the Company or oral advice was provided that Ernst & Young LLP
concluded was an important factor considered by the Company in reaching a
decision as to the accounting, auditing or financial reporting issue; or (ii)
any matter that was either the subject of a disagreement, as that term is
defined in Item 304(a)(I)(iv) or Regulation S-K and the related instructions to
item 304 of Regulation S-K, or a reportable event, as that term is defined in
Item 304(a)(I)(v) of Regulation S-K.

                                      -35-
<PAGE>
 
                                 PART III

Item 10.  Directors and Executive Officers of the Registrant

     The information relating to directors of the Company required to be
furnished pursuant to this item is incorporated herein by reference to the
sections entitled "Election of Directors" and "Compliance with Section 16(a) of
the Securities Exchange Act" from the Company's definitive Proxy Statement for
its Annual Meeting of Shareholders to be held in May 1999.  Certain information
relating to executive officers of the Company is set forth in Item 4A of Part I
of this Form 10-K under the caption "Executive Officers of the Registrant."

Item 11.  Executive Compensation

     Information pertaining to executive compensation is incorporated herein by
reference to the section entitled "Election of Directors - Executive
Compensation" from the Company's definitive Proxy Statement for its Annual
Meeting of Shareholders to be held in May 1999.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

     Information pertaining to security ownership of certain beneficial owners
and management is incorporated herein by reference to the sections entitled
"Principal Shareholders" and "Security Ownership of Management" from the
Company's definitive Proxy Statement for its Annual Meeting of Shareholders to
be held in May 1999.

Item 13.  Certain Relationships and Related Transactions

     Any information relating to this item is incorporated herein by reference
from the Company's definitive Proxy Statement for its Annual Meeting of
Shareholders to be held in May 1999.

                                      -36-
<PAGE>
 
                                    PART IV

Item 14.       Exhibits, Financial Statement Schedules and 
               Reports on Form 8-K
 
(a)  1. and 2. Financial Statements and Financial Statement
               Schedules.
 
     Reference is made to the Index of Financial
     Statements and Financial Statement Schedules
     hereinafter contained........................................  F-1

     3. Exhibits
 
     Reference is made to the Index of Exhibits
     hereinafter contained........................................  E-1

(b)  Reports on Form 8-K

     During the fourth quarter ended December 31, 1998, the following reports on
     Form 8-K were filed by the Company with the Securities and Exchange
     Commission:

     Form 8-K (Item 5. Other Events), date of earliest event reported November
     2, 1998 with respect to changes and improvements to the Company's internet
     website.

     Form 8-K (Item 5. Other Events), date of earliest event reported December
     9, 1998 with respect to the resignation of PricewaterhouseCoopers LLP as
     independent accountants and the retention of Ernst & Young LLP as new audit
     firm.

     Form 8-K (Item 5. Other Events), date of earliest event reported December
     22, 1998 with respect to amended labeling for AGRYLIN, clearing the drug
     for treatment of other disorders.

                                      -37-
<PAGE>
 
                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                               ROBERTS PHARMACEUTICAL CORPORATION
                               ----------------------------------
                               (Registrant)


Date:  March 26, 1999       By:/s/ John T. Spitznagel
                               ----------------------------------
                               John T. Spitznagel, President

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.

Signature                        Title                         Date
---------                        -----                         ----

/s/ Robert A. Vukovich           Chairman                      March 26, 1999
-------------------------                                                    



/s/ John T. Spitznagel           President Chief Executive     March 26, 1999
-------------------------        Officer and Director                        
JOHN T. SPITZNAGEL                                   


/s/ Peter M. Rogalin             Vice President, Treasurer     March 26, 1999
-------------------------        & Director (Principal                       
PETER M. ROGALIN                 Financial and Accounting
                                 Officer)                
                                                         

/s/ Robert W. Loy                Director                      March 26, 1999
-------------------------                                                    
ROBERT W. LOY


/s/ Joseph Smith                 Director                      March 26, 1999
-------------------------                                                    
JOSEPH SMITH


/s/ Digby W. Barrios             Director                      March 26, 1999
-------------------------                                                    
DIGBY W. BARRIOS


/s/ Zola P. Horovitz             Director                      March 26, 1999
-------------------------                                                    
ZOLA P. HOROVITZ


/s/ Joseph Noonburg              Director                      March 26, 1999
-------------------------                                                    
JOSEPH NOONBURG


/s/ Marilyn Lloyd                Director                      March 26, 1999
-------------------------                                                    
MARILYN LLOYD

                                      -38-
<PAGE>
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                       ROBERTS PHARMACEUTICAL CORPORATION


                                                       Page
                                                       ----

Report of Ernst & Young LLP                            F-2


Report of PricewaterhouseCoopers LLP                   F-3



Consolidated Balance Sheets as of                      F-4
  December 31, 1997 and 1998


Consolidated Statements of Operations for              F-5
  the years ended December 31, 1996, 1997 and 1998


Consolidated Statements of Comprehensive               F-6
  Income for the years ended December 31, 1996,
  1997, and 1998


Consolidated Statements of Cash Flows for              F-7
  the years ended December 31, 1996, 1997 and 1998


Consolidated Statements of Changes in Shareholders'    F-8
  Equity for the years ended December 31, 1996,
  1997 and 1998


Notes to Consolidated Financial Statements             F-9


Schedules*


Schedule II, Valuation and Qualifying Accounts         F-27

________________

*    All other schedules under Article 12 of Regulation S-X have been omitted
     because of the absence of the conditions under which certain information is
     required and because certain information required is presented in the
     financial statements and the notes thereto.


                                      F-1
<PAGE>
 
                         Report of Independent Auditors



To the Board of Directors
Roberts Pharmaceutical Corporation


We have audited the accompanying consolidated balance sheet of Roberts
Pharmaceutical Corporation (the "Company") as of December 31, 1998, and the
related consolidated statement of operations, stockholders' equity and cash flow
for the year ended December 31, 1998.  Our audit also included the financial
statement schedule listed in the Index at Item 14(a).  These financial
statements and schedule are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial statement based on
our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company at December 31, 1998 and the consolidated results of their operations
and their cash flow for the year ended December 31, 1998 in conformity with
generally accepted accounting principles.  Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole present fairly in all material respects, the
information set forth therein for 1998.

                              ERNST & YOUNG LLP


MetroPark, New Jersey
February 16, 1999



                                      F-2
<PAGE>
 
                       Report of Independent Accountants



To the Board of Directors and Shareholders
Roberts Pharmaceutical Corporation:

We have audited the accompanying consolidated balance sheets of Roberts
Pharmaceutical Corporation and Subsidiaries as of December 31, 1997, and the
related consolidated statements of operations, cash flows and changes in
shareholders' equity for each of the two years in the periods ended December 31,
1997 and 1996 and the financial statement schedules on pages F-27 and F-28 of
this Form 10-K.  These financial statements and financial statement schedules
are the responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Roberts
Pharmaceutical Corporation and Subsidiaries as of December 31, 1997, and the
consolidated results of their operations and their cash flows for each of the
two years in the periods ended December 31, 1997 and 1996, in conformity with
generally accepted accounting principles.  In addition, in our opinion, the
financial statement schedules referred to above, when considered in relation to
the basic financial statements taken as a whole, present fairly, in all material
respects, the information required to be included therein.



Princeton, New Jersey                                PricewaterhouseCoopers LLP
February 5, 1998, except for the restated segment information in note 14, as to
which the date is March 23, 1999

                                      F-3
<PAGE>
 
                       ROBERTS PHARMACEUTICAL CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)
<TABLE> 
<CAPTION> 
                                                                                     December 31,      December 31,
 ASSETS                                                                                   1997                 1998
--------                                                                             ------------      -------------
<S>                                                                                  <C>               <C> 
 Current assets:
      Cash and cash equivalents                                                      $  42,950            $  39,280
      Marketable securities                                                             39,887               36,062
      Accounts and Notes Receivable:
          Trade, net                                                                    24,730               40,412
          Other                                                                            225                9,426
      Inventory                                                                         19,826               23,573
      Deferred tax assets                                                                4,962                5,222
      Net assets held for sale                                                           3,760                    -
      Other current assets                                                               1,647                3,259
                                                                                    ------------       -------------
                   Total current assets                                                137,987              157,234
 Fixed assets, net                                                                      25,913               34,911
 Intangible assets, net                                                                190,724              315,865
 Notes receivable                                                                          729                2,369
 Deferred tax asset                                                                     12,332                3,392
 Other assets                                                                              170               12,465
                                                                                    ------------       -------------
                   Total assets                                                      $ 367,855            $ 526,236
                                                                                    ============       =============

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

 Current liabilities:
      Current installments of long-term debt                                         $   8,037            $  11,178
      Accounts payable                                                                  13,188               21,897
      Other current liabilities                                                         18,756               24,612
                                                                                    ------------       -------------
                   Total current liabilities                                            39,981               57,687
 Long-term debt, excluding current installments                                         10,327              126,739
 Other liabilities                                                                         244                    -
 Commitments and contingent liabilities                                                  - - -                - - -
 Shareholders' equity:
      Class B 5% Convertible Preferred stock, $.10
          par value 10,000,000 shares authorized,
          4,440,225 issued, 475,654 outstanding                                             48                    -
      Common stock, $.01 par value,
          100,000,000 shares authorized,
          29,414,440 and 31,507,442 outstanding                                            299                  320
      Additional paid-in capital                                                       372,384              381,631
      Cumulative translation adjustments                                                (1,250)              (2,716)
      Deficit                                                                          (53,941)             (37,188)
      Treasury Stock, 387,594 shares of
          common stock, at cost                                                           (237)                (237)
                                                                                    ------------       -------------
                   Total shareholders' equity                                          317,303              341,810
                                                                                    ------------       -------------
                   Total liabilities and
                       shareholders' equity                                          $ 367,855            $ 526,236
                                                                                    ============       =============
</TABLE>

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

                                       F-4
<PAGE>
 
                       ROBERTS PHARMACEUTICAL CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except share and per share data)

<TABLE> 
<CAPTION> 
 Years Ended                                            December 31,                 December 31,                December 31,
                                                                1996                         1997                        1998
                                                      ----------------             ----------------            ----------------
<S>                                                   <C>                          <C>                         <C> 
 Sales and revenue:
        Sales                                           $     98,075                 $    121,612                $    173,764
        Other revenue                                             36                          896                       1,681
                                                      ----------------             ----------------            ----------------
 Total sales and revenue                                      98,111                      122,508                     175,445

 Operating costs and expenses:
        Cost of sales                                         49,753                       51,386                      66,530
        Research & development                                 7,408  (2)                  13,146                      11,751
        Marketing & administration                            57,239                       58,738                      70,006
        Intangible write-offs and loss
          (gain) on dispositions                              33,906  (2)                       -                        (220)
                                                      ----------------             ----------------            ----------------
 Total operating costs & expenses                            148,306                      123,270                     148,067
                                                      ----------------             ----------------            ----------------
 Operating (loss) income                                     (50,195)                        (762)                     27,378
                                                      ----------------             ----------------            ----------------
 Other income (expense):
        Interest income                                        2,907                        5,212                       4,108
        Interest expense                                      (1,750)                        (755)                     (6,157)
        Other, net                                               188                       (2,279)                       (318)
                                                      ----------------             ----------------            ----------------
 Total other income (expense)                                  1,345                        2,178                      (2,367)
                                                      ----------------             ----------------            ----------------
 (Loss) income from continuing operations
     before income taxes                                     (48,850)                       1,416                      25,011
 Benefit (provision) for income taxes                         14,575                        1,101                      (8,224)
                                                      ----------------             ----------------            ----------------
 (Loss) income from continuing operations                    (34,275)                       2,517                      16,787
                                                      ----------------             ----------------            ----------------

 Income from discontinued
        operations, net of tax                                   556                        - - -                       - - -
                                                      ----------------             ----------------            ----------------

 Net (loss) income                                      $    (33,719)                $      2,517                $     16,787
                                                      ================             ================            ================

 Per share of common stock, basic:
        Net (loss) income from continuing operations    $      (2.47) (1)            $       0.06                $       0.54
        Net income from discontinued operations                 0.03                            -                           -
                                                      ----------------             ----------------            ----------------
        Net (loss) income                               $      (2.44) (1)            $       0.06                $       0.54
                                                      ================             ================            ================
                                                                                                                       
 Per share of common stock, fully diluted:                                                                             
        Net (loss) income from continuing operations    $      (2.47) (1)            $       0.06                $       0.53
        Net income from discontinued operations                 0.03                            -                           -
                                                      ----------------             ----------------            ----------------
        Net (loss) income                               $      (2.44) (1)            $       0.06                $       0.53
                                                      ================             ================            ================

 Weighted average number of common shares outstanding:
        Basic                                             19,132,863                   29,414,440                  31,048,808
        Fully Diluted                                     19,132,863                   29,496,767                  31,460,129
</TABLE> 

--------------------------
 (1)    Includes a $.61 per share charge pursuant to a new position taken by the
        SEC staff, effective March 13, 1997, on accounting for preferred stock
        which is convertible at a discount to market. See Note 1.
 (2)    Includes a $1.33 per share charge for the sale and write-off of certain
        intangible assets. See Note 4.





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

                                       F-5
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                 (In thousands)

<TABLE> 
<CAPTION> 
Years Ended                                             December 31,             December 31,         December 31,
                                                               1996                     1997                 1998
                                                      ----------------         ----------------      ----------------
<S>                                                   <C>                      <C>                   <C> 
Net (loss) income                                          $ (33,719)                 $ 2,517               $ 16,787
                                                      ----------------         ----------------      ----------------
                                                                                                     
Foreign currency translation adjustment                           (4)                    (949)                (1,466)
                                                      ----------------         ----------------      ----------------
                                                                                                     
Comprehensive (loss) income                                $ (33,723)                 $ 1,568               $ 15,321
                                                      ================         ================      ================
</TABLE> 



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

                                       F-6
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
<TABLE> 
<CAPTION> 
 Years Ended                                                        December 31,             December 31,             December 31,
                                                                            1996                     1997                     1998
                                                                  ----------------         ----------------         ----------------
<S>                                                               <C>                      <C>                      <C> 
 Cash flows from operating activities:
      Net (loss) income                                                $ (33,719)                 $ 2,517                 $ 16,787
      Adjustments to reconcile net (loss) income
              to net cash flows from operating activities:
          Depreciation and amortization                                    7,531                    6,940                   11,080
          Provision for losses on receivables                              - - -                      120                      432
          Provision for product sales returns                              6,041                    5,994                    6,191
          Deferred tax provision (benefit)                                 8,680                  (14,575)                   2,954
          Write down of intangible assets                                 14,364                    - - -                    - - -
          Loss on sale of intangible assets                                7,621                    - - -                    - - -
          Loss on abandonment of leasehold improvements                       71                    - - -                    - - -
          Income from discontinued operations                               (556)                   - - -                    - - -
          Foreign currency gains                                             387                    - - -                    - - -
          Change in accounts receivable, unbilled
              revenue and advance billings                                (2,544)                   6,595                  (16,359)
          Change in other assets                                            (483)                     (60)                   5,902
          Change in inventory                                              3,984                   (3,495)                  (4,256)
          Change in accounts payable and
              other liabilities                                          (12,017)                     145                    9,695
          Impact of discontinued operations                               (2,582)                    (629)                   - - -
                                                                  ----------------         ----------------         ----------------
              Total adjustments                                           30,497                    1,035                   15,639
                                                                  ----------------         ----------------         ----------------
      Net cash (used in) provided by
              operating activities                                        (3,222)                   3,552                   32,426
                                                                  ----------------         ----------------         ----------------
 Cash flows from investing activities:
      Redemption of (investment in)  marketable securities                 5,856                  (32,094)                   3,825
      Purchase of long-term investment                                     - - -                    - - -                  (10,000)
      Purchases of intangible assets                                      (4,762)                  (9,058)                (141,156)
      Proceeds from sale of intangible assets                              1,600                    - - -                      600
      Purchases of fixed assets                                             (168)                 (11,986)                 (11,080)
      Collection on notes receivable                                       - - -                    6,738                    1,751
                                                                  ----------------         ----------------         ----------------
      Net cash provided by (used in) investing activities                  2,526                  (46,400)                (156,060)
                                                                  ----------------         ----------------         ----------------
 Cash flows from financing activities:
      Long-term debt issued in connection with
          product acquisition                                              - - -                    - - -                  125,000
      Payments on notes payable and long-
          term debt                                                      (36,773)                  (6,588)                 (11,586)
      Payment of debt issuance costs                                       - - -                    - - -                   (2,528)
      Net proceeds from issuance of common stock                           9,923                    1,075                    4,725
      Net proceeds from issuance of preferred stock                       99,247                    6,000                    4,494
      Cash dividends paid                                                   (476)                  (1,629)                    (150)
      Impact of discontinued operations                                     (397)                   - - -                    - - -
                                                                  ----------------         ----------------         ----------------
      Net cash provided by (used in) financing activities                 71,524                   (1,142)                 119,955
                                                                  ----------------         ----------------         ----------------
      Effect of exchange rate changes on cash
          and cash equivalents                                               (60)                    (185)                       9
                                                                  ----------------         ----------------         ----------------
 Change in cash and cash equivalents                                      70,768                  (44,175)                  (3,670)
 Beginning cash and cash equivalents                                      16,357                   87,125                   42,950
                                                                  ----------------         ----------------         ----------------
 Ending cash and cash equivalents                                       $ 87,125                 $ 42,950                 $ 39,280
                                                                  ================         ================         ================

 Supplemental cash flow information:
      Interest paid                                                     $  2,396                 $    823                 $  3,712
      Income taxes paid                                                      233                       29                       11
 Non cash activities:
      Notes issued in connection with
      product acquisitions                                                 - - -                 $  7,250                    - - -
      Notes received for sale of Pronetics
      subsidiaries and product rights                                   $  8,193                    - - -                 $    218
</TABLE> 

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

                                       F-7
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CHANGES
                            IN SHAREHOLDERS' EQUITY
                       (In thousands, except share data)
<TABLE> 
<CAPTION> 
                                                                                   
                                     5% Preferred Stock                   Common Stock             Additional    
                                     ------------------                   ------------              Paid-In       
                                   Shares          Amount            Shares         Amount          Capital       
                               --------------   ------------     --------------  ------------     ------------
<S>                            <C>              <C>              <C>             <C>              <C> 
 Balance,                                                                                                        
   December 31, 1995                                                18,801,977    $      189       $    256,296  
                                                                                                                 
 Issuance of preferred shares      4,200,000      $    420               - - -         - - -             98,827  
 Issuance of common stock              - - -         - - -             651,058             7              9,916  
 Cumulative translation                                                                                          
   adjustment                          - - -         - - -               - - -         - - -              - - -  
 Year ended December 31, 1996                                                                                    
   net loss                            - - -         - - -               - - -         - - -              - - -  
 5% Preferred dividends                - - -         - - -               - - -         - - -              - - -  
 5% Preferred stock converted                                                                                    
   to common stock                (1,478,970)         (148)          3,774,059            37                111  
                               ---------------  ------------     --------------  ------------     --------------
                                                                                                                 
 Balance,                                                                                                        
   December 31, 1996               2,721,030           272          23,227,094           233            365,150  
                                                                                                                 
 Issuance of preferred shares        240,225            25                             - - -              5,976  
 Issuance of common stock              - - -         - - -              97,245             1              1,074  
 Cumulative translation                                                                                          
   adjustment                          - - -         - - -               - - -         - - -              - - -  
 Year ended December 31, 1997                                                                                    
   net income                          - - -         - - -               - - -         - - -              - - -  
 5% Preferred dividends                - - -         - - -               - - -         - - -              - - -  
 5% Preferred stock converted                                                                                    
   to common stock                (2,485,601)         (249)          6,477,695            65                184  
                               ---------------  ------------     --------------  ------------     --------------
                                                                                                                 
 Balance,                                                                                                        
   December 31, 1997                 475,654            48          29,802,034           299            372,384  
                                                                                                                 
 Issuance of preferred shares        179,775            18               - - -         - - -              4,476  
 Issuance of common stock              - - -         - - -             419,630             4              4,722  
 Cumulative translation                                                                                          
   adjustment                          - - -         - - -               - - -         - - -              - - -  
 Year ended December 31, 1998                                                                                    
   net income                          - - -         - - -               - - -         - - -              - - -  
 5% Preferred dividends                - - -         - - -               - - -         - - -              - - -  
 5% Preferred stock converted                                                                                    
   to common stock                  (655,429)          (66)          1,673,372            17                 49  
                               ---------------  ------------     --------------  ------------     --------------
                                                                                                                 
 Balance,                                                                                                        
   December 31, 1998                   - - -       $ - - -          31,895,036    $      320       $    381,632  
                               ===============  ============     ==============  ============     ==============
<CAPTION> 
                                    Retained          Cumulative                               Total
                                    Earnings          Translation          Treasury         Shareholders'
                                    (Deficit)         Adjustment            Stock              Equity
                                   -----------       --------------       ----------       ---------------
<S>                                <C>               <C>                  <C>              <C> 
 Balance,                       
   December 31, 1995               $ (20,484)         $      (297)         $  (237)         $     235,467
                                
 Issuance of preferred shares          - - -                - - -            - - -                 99,247
 Issuance of common stock              - - -                - - -            - - -                  9,923
 Cumulative translation         
   adjustment                          - - -                   (4)           - - -                     (4)
 Year ended December 31, 1996   
   net loss                          (33,719)               - - -            - - -                (33,719)
 5% Preferred dividends               (1,155)               - - -            - - -                 (1,155)
 5% Preferred stock converted   
   to common stock                     - - -                - - -            - - -                      -
                                  ------------       --------------       ----------       ----------------
                                
 Balance,                       
   December 31, 1996                 (55,358)                (301)            (237)               309,759
                                
 Issuance of preferred shares          - - -                - - -            - - -                  6,001
 Issuance of common stock              - - -                - - -            - - -                  1,075
 Cumulative translation         
   adjustment                          - - -                 (949)           - - -                   (949)
 Year ended December 31, 1997   
   net income                          2,517                - - -            - - -                  2,517
 5% Preferred dividends               (1,100)               - - -            - - -                 (1,100)
 5% Preferred stock converted   
   to common stock                     - - -                - - -            - - -                  - - -
                                  ------------       --------------       ----------       ----------------
                                
 Balance,                       
   December 31, 1997                 (53,941)              (1,250)            (237)               317,303
                                
 Issuance of preferred shares          - - -                - - -            - - -                  4,494
 Issuance of common stock              - - -                - - -            - - -                  4,726
 Cumulative translation         
   adjustment                          - - -               (1,466)           - - -                 (1,466)
 Year ended December 31, 1998   
   net income                         16,787                - - -            - - -                 16,787
 5% Preferred dividends                  (34)               - - -            - - -                    (34)
 5% Preferred stock converted   
   to common stock                     - - -                - - -            - - -                      -
                                  ------------       --------------       ----------       ----------------
                                
 Balance,                       
   December 31, 1998               $ (37,188)        $     (2,716)        $   (237)        $      341,810
                                  ============       ==============       ==========       ================
</TABLE> 

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

                                       F-8
<PAGE>
 
                       ROBERTS PHARMACEUTICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------

Basis of Presentation
---------------------

     Roberts Pharmaceutical Corporation is an international pharmaceutical
company which licenses, acquires, develops and commercializes post-discovery
drugs in selected therapeutic categories.  The Company currently markets
approved pharmaceutical products in the United States, Canada, the United
Kingdom and several other European countries.  The consolidated financial
statements include the accounts of Roberts Pharmaceutical Corporation and its
wholly owned subsidiaries.  All significant intercompany transactions are
eliminated.  All dollar amounts are presented in thousands, except for earnings
per share.

Revenue Recognition
-------------------

     Product sales, net of estimated future returns, are recorded as the
products are shipped against customer orders.

     Licensing revenues are recorded as earned under the terms of each
underlying agreement and are included in other revenue.

Cash Equivalents and Marketable Securities
------------------------------------------

     Cash equivalents include all money market investments with original
maturities of three months or less.

     Marketable securities classified as available for sale consist primarily of
debt instruments with maturities of more than three months and are stated at
amortized cost plus accrued interest, which approximates fair value.

Inventories
-----------

     Inventories, consisting primarily of finished goods, are stated at the
lower of first-in, first-out cost or market.

Use of Estimates
----------------

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the period reported.  Actual results
could differ from those estimates.  Estimates include accounting for



                                      F-9
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

allowance for doubtful accounts, inventory obsolescence, future product returns,
depreciation and amortization, value of intangibles, employee benefit plans,
income taxes and contingencies.

Fixed Assets and Depreciation
-----------------------------

     Fixed assets are stated at cost less accumulated depreciation.
Depreciation is determined using the straight-line method over the estimated
useful lives of the related assets ranging from five to fifty years.  Gains and
losses on disposals are recognized in the year of the disposal.  Expenditures
for maintenance and repairs are expensed as incurred; significant renewals and
betterments are capitalized.

Intangible Assets
-----------------

     Intangible assets are stated at cost less accumulated amortization.
Amortization is determined using the straight-line method over the estimated
useful lives of the related assets which are estimated to range from five to
forty years.  It is the Company's policy to review periodically and evaluate
whether there has been an impairment in the value of intangibles.

     In the fourth quarter of 1996, the Company recorded a charge to earnings
for an impairment of intangible assets and to expense certain purchased
development products totaling $25.4 million.

Long-Lived Assets
-----------------

     Long-lived assets are recorded at the lower of amortized cost or fair
value.  As part of an ongoing review of the valuation of long-lived assets,
management assesses the carrying value of such assets if facts and circumstances
suggest they may be impaired.  If this review indicates that the carrying value
of these assets may not be recoverable, as determined by a nondiscounted cash
flow analysis over the remaining useful life, the carrying value would be
reduced to its estimated fair value.

Foreign Currency Translation
----------------------------

     Effective January 1, 1997, the functional currency of the United Kingdom
subsidiary, Monmouth Pharmaceutical, Ltd., was changed from the U.S. dollar to
the British pound as a result of a change in circumstance.  Monmouth's
translation gains and losses are accumulated as a separate component of
Shareholders' Equity and are included in the determination of comprehensive
income.  Prior to 1997, Monmouth's accounts were remeasured in dollars and
translation gains and losses were included in income.

                                      F-10
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The functional currency of the Company's Canadian subsidiary is the
Canadian dollar.  Translation gains and losses of the Company's Canadian
subsidiary are accumulated as a separate component of Shareholders' Equity and
are included in the determination of comprehensive income.

Advertising Expense
-------------------

     The Company expenses the cost of advertising as incurred.  Advertising
costs amounted to $8,806, $4,640 and $5,135 for the years ended December 31,
1996, 1997 and 1998, respectively.

Concentration of Credit Risk
----------------------------

     The Company markets prescription and nonprescription pharmaceuticals
primarily to wholesale drug distributors, retail pharmacies and physicians in
the United States and abroad.  The Company performs certain credit evaluation
procedures and does not require collateral.  The Company maintains reserves for
estimated credit losses; at  December 31, 1997 and 1998, the reserve for
uncollectible accounts amounted to $440 and $538, respectively.

     At December 31, 1998, cash equivalents and marketable securities consisted
of immediately available money market fund balances and investment grade debt
and preferred stock securities with maturities of less than one year.

     The fair value of investment securities classified as available for sale,
totaled $58,517 at December 31, 1998.  These investment securities mature within
one year.

     At December 31, 1998, the Company had an investment in the non-voting
convertible preferred stock of Ribogene Inc. (see Note 5.) carried under the
cost method at $10 million.  The Company routinely assesses the financial
strength of Ribogene, and does not expect that Ribogene will fail to meet its
obligations to the Company.  As such, the Company considers the risks associated
with this investment to be mitigated.  In the event of non-performance by
Ribogene under its obligations to Roberts, the Company would realize a material
loss.

Earnings (loss) Per Share
-------------------------

     In December 1997, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share", which
specifies the computation, presentation and disclosure requirements for earnings
per share for entities with publicly held common stock or potential common
stock. For all periods, per-share data has been restated to conform to the SFAS
No. 128 requirements.

                                      F-11
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



 Net (loss) income from operations used in the calculation of
 earnings per share was calculated as follows:
<TABLE>
<CAPTION>
 
                                                                  December 31,
                                                    ----------------------------------------
                                                        1996          1997          1998
                                                    ------------  ------------  ------------
<S>                                                 <C>           <C>           <C>
                            
Net (loss) income from      
 operations                                         $   (34,275)  $     2,517   $    16,787
Preferred dividends                                      (1,155)         (859)          (34)
Discount on 5%              
 Preferred Stock                                        (11,670)          ---           ---
                                                    -----------   -----------   -----------
Net (loss) income for       
 computation of earnings    
 per share                                          $   (47,100)  $     1,658   $    16,753
                                                    ===========   ===========   ===========
</TABLE>                    
 
  Total common stock and potentially dilutive common stock for the
calculation of diluted earnings per share were calculated as follows:
 
<TABLE> 
<CAPTION> 
                                                                  December 31,
                                                    ----------------------------------------
                                                        1996          1997          1998
                                                    ------------  ------------  ------------
<S>                                                 <C>           <C>           <C>
                            
Weighted average common     
 shares outstanding                                  19,132,863    29,414,440    31,048,808
Dilutive effect of:         
 Preferred Stock Warrants                                   ---        82,246           ---
 Common Stock Warrants                                      ---           ---            11
 Stock Options                                              ---            81       411,310
                                                    -----------   -----------   -----------
Total shares for computation
 of EPS                                              19,132,863    29,496,767    31,460,129
                                                    ===========   ===========   ===========
</TABLE>                    

     The effect of conversion of the original shares of Preferred Stock for the
year ended December 31, 1996 is not included in the calculation of earnings per
share because inclusion would be antidilutive.  The remaining original 5%
Preferred Stock shares were convertible into 1,332,322 shares of Common Stock at
December 31, 1997.  All 5% Preferred Stock was converted to Common in 1998.  See
Note 8., Shareholders' Equity, for further discussion of these securities.

     Pursuant to a position taken by the SEC staff (the "Staff"), effective
March 13, 1997, on accounting for preferred stock which is convertible at a
discount to market, the Company adjusted its calculation of 1996 Earnings Per
Share by $.61 per share.  This reflected the Staff's position that the 10%
discount available to holders of the Company's 5% Preferred Stock should be
incorporated in the calculation of Earnings Per Share.



                                      F-12
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     To clarify the adjustments indicated above, a reconciliation of Earnings
Per Share for the twelve months ended December 31, 1996 is composed of the
following elements:

     Net (Loss) from continuing operations before
      the consideration of purchased research and
      development and write-off and the sale of
      intangible assets, the recognition of the
      discount upon the issuance of 5% Preferred
      Stock or preferred dividends                           $  (.47)

     Purchased research and development and
      write-off and sale of intangible assets                  (1.33)
      5% Preferred Stock dividends                   (.06)
      Issuance of 5% Preferred Stock
      at a 10% discount to market                    (.61)      (.67)
                                                     -----   --------
    Net (Loss) from Continuing Operations                      (2.47)
      Income from Discontinued Operations                        .03
                                                             --------
      (Loss) attributable to Common Stock                    $ (2.44)
                                                             ========

New Accounting Pronouncements
-----------------------------

     Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS No. 130), establishes standards for reporting and
display of comprehensive income and its components (revenues, expenses, gains,
and losses) in a full set of general-purpose financial statements.  This
Statement requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements.  This Statement requires that a company (a) classify items
of other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of a
statement of financial position.   Reclassification of financial statements for
earlier periods provided for comparative purposes is required.  The Company has
adopted the provisions of SFAS No. 130, effective January 1, 1998.

     Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise Related Information" (SFAS No. 131), establishes
standards for the way that public business companies report information about
operating segments in annual financial statements and requires that those
companies report selected information about operating segments in annual
financial statements and requires that those companies report selected
information about operating segments in interim financial reports issued to
stockholders.  It also establishes standards for related disclosures about
products and services, geographic areas, and major customers.  This Statement
supersedes SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise," but retains the requirement to report

                                      F-13
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


information about major customers.  In the initial year of application,
comparative information for earlier years is to be restated.  The Company has
adopted the provisions of SFAS No. 131, effective January 1, 1998.     There was
no impact on the Company's consolidated results of operation, financial position
or cash flow as a result of the adoption of these statements.

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities".  This Statement requires that all
derivatives be recorded in the balance sheet as either an asset or liability
measured at its fair value and that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting criteria are
met.  This statement is effective for fiscal years beginning after June 15,
1999.  The provisions of this statement shall not be applied retroactively to
financial statements of prior periods. The Company is in the process of
evaluating this statement and has not yet determined the future impact on its
consolidated financial statements.
 
 
2.   INVENTORY
     ---------
 
      Inventory consists of:
                                      December 31,
                                    ----------------
                                      1997     1998
                                      ----     ----
      Raw materials                 $ 2,487  $ 6,249
      Work-in-process                   451    1,456
      Finished goods                 16,888   15,868
                                    -------  -------
                                    $19,826  $23,573
                                    =======  =======
 
 
3.    FIXED ASSETS, NET
      -----------------
      Fixed assets consist of:
                                      December 31,
                                    ----------------
                                      1997     1998
                                      ----     ----
      Land and buildings            $23,440  $28,997
      Office furniture and
        equipment                     4,305    5,682
      Machinery and equipment         1,161    3,659
                                    -------  -------
                                     28,906   38,338
      Less:  Accumulated
       depreciation                   2,993    3,427
                                    -------  -------
                                    $25,913  $34,911
                                    =======  =======


          Depreciation expense for the years ended December 31, 1996, 1997  and
     1998 was $449, $781, and $1,265, respectively.


                                      F-14
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4.    INTANGIBLE ASSETS
      -----------------

      Intangible assets consist of:
                                               December 31,
                                        ----------------------
                                          1997          1998
                                          ----          ----
      Product rights acquired           $217,919      $349,282

      Less: Accumulated
             amortization                 27,195        33,417
                                         -------       -------
                                        $190,724      $315,865
                                         =======       =======

     Amortization expense for the years ended December 31, 1996, 1997 and 1998
was $6,692, $6,159, and $9,815, respectively.

Intangible Dispositions and Write-Offs.
-----------------------------------------

     During the fourth quarter of 1996, the Company completed the sale of the
majority of its non-core nonprescription brands along with the NUCOFED and
QUIBRON brands in two independent sales agreements.  These sales, net of
proceeds, resulted in a one time, non-cash write off of $11.9 million, which
amounted to $7.6 million net of taxes.  Also, during the fourth quarter of 1996,
the Company expensed certain purchased development products and recorded an
impairment loss of long-lived intangible assets totalling $25.4 million, ($17.8
million net of taxes).

     Operating income and net loss for 1996 were negatively affected by the
purchase of development products, and the sale and write down of the intangible
assets in the amounts of $37.3 million for operating income and $25.4 million
for net loss.  The operating loss would have amounted to $12.9 million and net
loss would have been $8.3 million if such transactions had not occurred.

5.   OTHER ASSETS
     ------------

     Other assets consist primarily of the Company's $10 million investment in
the convertible preferred stock of RiboGene, Inc., a drug discovery company
targeting infectious diseases.  The shares have no voting rights.  The
investment is carried under the cost method, and the operating results of
RiboGene are not and will not be included in Roberts' operating results.  One-
third of the preferred stock is convertible at the option of the Company to
common stock of RiboGene at each of the first three anniversary dates of the
investment.  The investment is classified as held-to-maturity.



                                      F-15
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The Company also entered into an arrangement whereby the Company will
develop a new delivery formulation for RiboGenes' product, EMITASOL.  Under the
terms of the agreement, RiboGene will provide up to $7 million in funding from
the development of EMITASOL through completion of Phase III trials and the
submission of a New Drug Application ("NDA") with the balance, if any, provided
by Roberts.  Upon approval of the NDA, Roberts can exercise its option to market
EMITASOL in the United States, Canada and Mexico under the RiboGene patents by
making a milestone payment at that time plus subsequent royalties on product
sales.
 
6.    OTHER CURRENT LIABILITIES
      -------------------------

     Other current liabilities consist of:
 
                                     December 31,
                                   ----------------
                                    1997     1998
                                   -------  -------
     Accrued estimated future
      product returns              $ 9,364  $ 8,509
     Accrued estimated Medicaid
      rebates                        1,150    2,489
     Income taxes payable            3,022    3,025
     Other accrued liabilities       5,220   10,589
                                   -------  -------
                                   $18,756  $24,612
                                   =======  =======

     Product return reserves of $401 and $401 have been offset against accounts
receivable for 1997 and 1998, respectively.
 
7.   LONG-TERM DEBT
     --------------
 
Long-term debt consists of:
                                             December 31,
                                         --------------------
                                            1997      1998
                                            ----      ----
 
    Notes payable on product
     acquisitions at an imputed
     weighted average interest
     rate of 6.0% and 8.0%                $18,364  $137,917
 
    Less: Current installments              8,037    11,178
                                          -------  --------
                                          $10,327  $126,739
                                          =======  ========

     On June 24, 1998, the Company entered into a syndicated loan in the amount
of $125 million to finance the purchase of PENTASA.  The loan bears interest at
a variable, tiered margin rate.  Principal payments in the amount of 1% of the
balance are due annually for the first four years, with a balloon payment due
for the balance in year five.


                                      F-16
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Principal payments in each of the next five years on long-term debt
outstanding at December 31, 1998 amount to:

     1999...........................................  11,178
     2000...........................................   4,552
     2001...........................................   1,250
     2002...........................................   1,250
     2003........................................... 119,687
                                                     -------
                                                    $137,917
                                                     =======

Notes payable are collateralized by acquired product rights.

8.   SHAREHOLDERS' EQUITY
     --------------------

     The Company has adopted the disclosure-only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation," but applies Accounting Principles
Board Opinion No. 25 and related interpretations in accounting for its plans.
If the Company had elected to recognize compensation cost based on the fair
value at the grant dates for awards in 1996, 1997 and 1998, consistent with the
provisions of SFAS No. 123, the Company's net (loss) income and per share data
would have been changed to the pro forma amounts indicated below:

                                                 Years Ended December 31,
                                                --------------------------
                                                  1996      1997      1998
                                                  ----      ----      ----
 
Net (Loss) Income          As reported          $(33,719)  $ 2,517   $16,787
                           Pro forma             (36,925)   (4,620)   11,367
                           ---------             
 
(Loss) Income per share    As reported-Basic    $  (2.44)  $  0.06   $  0.54
                           As reported-Diluted     (2.44)     0.06      0.53
                           Pro forma - Basic       (2.61)    (0.19)     0.37
                           ---------             
                           Pro forma - Diluted     (2.61)    (0.19)     0.36
                           ---------             

     The fair value of stock options used to compute pro forma net (loss) income
and per share disclosures is the estimated present value at grant date using the
Black-Scholes option-pricing model with the following weighted average
assumptions:  dividend yield of 0%; expected volatility of 54%; a risk free
interest rate of 6%; and a general expectation that employees will exercise
options when they become vested.

     The weighted average fair value of stock options, calculated using the
Black-Scholes option-pricing model, granted during the years ended December 31,
1996, 1997 and 1998 was $7.17, $8.48 and $10.32, respectively.

     On July 17, 1996, the Company issued and sold in a private placement to
certain investment funds 600,000 shares of the Company's Common Stock at an
issue price of $16.65 per share resulting in gross proceeds to the Company of
$9.9 million.  In addition to receiving cash consideration equal to 5% of the
gross proceeds and the reimbursement of certain expenses, the Placement Agent
received Common Stock Warrants to acquire an aggregate of 15,000 shares of
Common Stock for a purchase price of $16.65 per share.  Substantially all of
these warrants were exercised in 1998.  The remaining 150 warrants expire in
July of 1999.

                                      F-17
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     On August 29, 1996, the Company issued and sold in a private placement to
approximately eighty accredited investors for $25 per share an aggregate of
4,200,000 shares of cumulative 5% Preferred Stock resulting in gross proceeds of
$105 million.  In addition to receiving cash consideration equal to 5% of the
gross proceeds and the reimbursement of certain expenses the Placement Agent
received Preferred Stock Warrants to acquire 420,000 shares of 5% Preferred
Stock for a purchase price of $25 per share.  In 1997, 240,225 of these warrants
were exercised, resulting in gross proceeds of $6 million.  The remaining
179,775 warrants were exercised in 1998, providing additional proceeds of $4.5
million.  A total of 4,620,000 shares of the 5% Preferred Stock were issued.
The 655,429 shares outstanding at December 31, 1997, or issued during 1998 were
converted in 1998.  No 5% Preferred Stock remained outstanding at December 31,
1998.

Stock Compensation Plans
------------------------

     During 1996 and in prior years, executives and key employees of the Company
were granted stock option awards under the Incentive Stock Option Plan.  At
December 31, 1998, 481,488 shares remain exercisable under the Incentive Plan.
In May of 1996, the Company's shareholders approved the Equity Incentive Plan
which became effective May 22, 1996.  The Company's Incentive Stock Option Plan
was discontinued on the same date.  The Equity Incentive Plan provides for the
grant of incentive and nonqualified stock options, stock appreciation rights,
deferred stock awards, restricted stock grants and other stock based awards to
executives and key employees.  The total number of shares of Common Stock
authorized for grant under the Equity Incentive Plan is 3,000,000.

     Options to purchase Common Stock may be granted either alone or in addition
to other awards.  The term of each option will be fixed by the Compensation
Committee (the "Committee") of the Company's Board of Directors, provided that
no incentive stock option, as defined in the Internal Revenue Code, will be
exercisable after the expiration of ten years from the date the option is
granted.  Options will be exercisable at such time or times as determined by the
Committee at or subsequent to grant.  Stock Appreciation Rights ("SARS") may be
granted to participants either alone or in addition to stock options and may,
but need not be, related to a specific option.  The provisions of SARs need not
be the same with respect to each recipient.

     The following table summarizes the status of the Company's stock options,
outstanding and exercisable at December 31, 1998.
 
<TABLE> 
<CAPTION> 
                                                          Stock Options
                         Stock Options Outstanding         Exercisable
                         -------------------------         -----------
                                  Weighted
                                  Average     Weighted           Weighted
Range of                         Remaining    Average            Average
Exercise                        Contractual   Exercise           Exercise
Prices                 Shares       Life       Price    Shares    Price
-------------------------------------------------------------------------
<S>                   <C>      <C>            <C>       <C>      <C>
 
$10.06 to $11.375     990,036  3 yrs, 2 mos     $10.59  495,511    $11.17
 
$11.50 to $13.69      944,690  4 yrs, 1 mos     $11.85  683,500    $11.83
 
$14.13 to $24.063   1,293,350  5 yrs, 6 mos     $17.39  373,250    $17.13
</TABLE>

                                      F-18
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Presented below is a summary of the status of the Company's stock options
held by employees, and the related transactions for the years ended December 31,
1996, 1997 and December 31, 1998.
<TABLE>
<CAPTION>
                                   Year Ended                Year Ended           Year Ended
                                December 31, 1996    December 31, 1997     December 31, 1998
                               -------------------  --------------------  -------------------
 
                               Weighted             Weighted              Weighted
                               Average              Average               Average
                               Exercise             Exercise              Exercise
Stock Options                  Price     Shares     Price    Shares       Price   Shares
-------------                  ------------------   -------------------   ------------------
<S>                            <C>       <C>        <C>      <C>          <C>     <C>
Outstanding
 January 1                      $19.060 1,175,710   $11.803   2,108,415   $11.45   2,287,313
 
Granted                         $11.480 1,113,250   $10.78      549,848   $16.77   1,479,450
 
Exercised                       $11.910   (51,058)  $11.375     (76,825)  $11.35    (421,072)
 
Forfeited/                      $18,553  (129,487)  $11.42     (294,125)  $11.90    (117,615)
 Expired
 
Outstanding
 December 31                    $11,803 2,108,415   $11.45    2,287,313   $13.77   3,228,076
 
Options available for grant
 - Equity Incentive Plan                                                             127,802
</TABLE>

9.   INCOME TAXES
     ------------

     The Company utilizes the asset and liability method for taxes, which
requires that deferred income taxes be provided for the cumulative temporary
differences between the financial and tax bases of the Company's assets and
liabilities, using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.

     The (provision) benefit for income taxes consists of:
<TABLE>
<CAPTION>
                                       Year Ended December 31,
                                       1996      1997      1998
                                     --------  --------  --------
<S>                                  <C>       <C>       <C>
Current                      
  Federal                            $   ---   $ 4,055   $   338
  State and foreign                       ---      ---       118
                                      -------  -------   -------
Total current                        $   ---   $ 4,055   $   456
                                               =======   =======
                             
Deferred                     
  Federal                              14,487   (3,148)   (9,138)
  State and foreign                        88      194       458
                                      -------  -------   -------
Total deferred                        $14,575  $(2,954)  $(8,680)
                                      =======  =======   =======
</TABLE>

                                      F-19
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     A comparison of the provision for income taxes as reported, to a provision
based on federal statutory rates and consolidated income before income taxes is
as follows:
<TABLE>
<CAPTION>
                                        Year Ended December 31,
                                       1996       1997      1998
                                     ---------  --------  ---------
<S>                                  <C>        <C>       <C>
 
(Provision) benefit at
  federal statutory rates             $16,609    $ (478)   $(9,115)
Non-deductible expense                   (530)     (262)      (611)
State taxes net of federal effect         ---       ---        ---
Research and development credits         (266)      ---        ---
Foreign items                            (809)     (523)       962
Other                                    (429)     (337)       540
Adjustment to prior year
  liabilities                             ---     2,701        ---
                                      -------    ------    -------
(Provision) benefit for
  income taxes                        $14,575    $1,101    $(8,224)
                                      =======    ======    =======
</TABLE>
     The adjustment to prior year liabilities was a result of the elimination of
certain reserves for taxes due to the closure of years 1991 through 1993 from an
IRS audit.

     The tax effect of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at December 31, 1997 and
December 31, 1998 are presented below:
<TABLE>
<CAPTION>
 
                             December 31, 1997  December 31, 1998
Federal                       Debits   Credits   Debits    Credits
-------                      --------  -------  ---------  -------
<S>                          <C>       <C>      <C>        <C>
 
Inventory                     $   340  $   ---   $   531   $   ---
Allowance for bad debts           181      ---       258       ---
Accrued liabilities             5,144      ---     4,966       ---
Depreciation                      ---      412       ---       590
Foreign items                   3,159      ---     3,637       ---
Amortizable intangibles           ---    1,657       ---     6,499
Loss on Discontinuance            ---      558       ---       ---
AMT credit                        449      ---       770       ---
Other                             138      ---       505       ---
Net Operating Losses           12,054      ---     6,600       ---
State taxes                     3,994      ---     4,096       ---
                              -------   ------   -------   -------
Total                          25,459    2,627    21,363     7,089
  Valuation allowance -
    state and foreign          (5,538)     ---    (5,660)      ---
                              -------   ------   -------   -------
                              $19,921   $2,627   $15,703    $7,089
                              =======   ======   =======   =======
</TABLE>

     At December 31, 1998, the Company has federal net operating loss
carryforwards of approximately $19.4 million which expire in the year 2011 and
2012, foreign net operating loss carryforwards of approximately $11.1 million
and net operating loss carryforwards for state tax purposes of approximately
$78.2 million which expire at various dates through 2005.

                                      F-20
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     A valuation allowance was provided for certain foreign net operating losses
and certain state deferred tax assets due to the uncertainty of realization of
these assets.

     The Company has recorded net deferred tax assets of approximately $8.6
million.  Realization is dependent upon generating sufficient taxable income to
utilize such items.  Although realization is not assured, management believes it
is more likely than not that the deferred tax assets for which a valuation
allowance has not been provided, will be realized.  The amount of the deferred
tax assets considered realizable, however, could be reduced at any time if
estimates of future taxable income are reduced.

10.  LEASES AND OTHER COMMITMENTS
     ----------------------------

     The Company leases office space and certain office equipment under
operating leases.  Minimum rental payments in each of the next five fiscal years
required under leases which have initial or remaining lease terms in excess of
one year are as follows:
 
                                                        December 31, 1998
                                                        -----------------
 
   1999    ........................................            1,691
   2000    ........................................            1,445
   2001    ........................................            1,025
   2002    ........................................               70
   2003    ........................................               16
 

     Facility rent expense for the years ended December 31, 1996, 1997, and 1998
was $177, $257, and $195 respectively.

     In accordance with several product acquisitions and licensing agreements
and subject to certain cancellation rights reserved by the Company, the Company
may be required to make minimum payments related to NOROXIN, SAMPATRILAT and the
Lilly Compounds totaling $39.3 million and purchase PROAMATINE inventory in the
amount of $75.1 million through 2003.  The NOROXIN payments may be triggered if
minimum sales levels are not met and the PROAMATINE payments may be triggered if
minimum sales purchases are not made.  The SAMPATRILAT and Lilly payments are
milestone payments due upon reaching certain stages in the development of the
compounds.

11.  EMPLOYEE BENEFITS
     -----------------

     The Company has employment agreements with certain of its employees which
provide them with continued salary for a period of three to four years in the
event of their termination by the Company and provide additional payments on
termination by the Company equal to three to four times their average incentive
compensation.


                                      F-21
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Through December 31, 1997 the Company maintained an employee savings plan
available to all employees who met certain age and service requirements and made
discretionary contributions to the plan based on employee compensation or
employee contributions.  The Company contributions for 1996 and 1997 were $258
and $255, respectively.

     Also through December 31, 1997, the Company had a money purchase pension
plan available to all employees who met certain age and service requirements.
The Company made discretionary contributions to the plan based on employee
compensation.  The Company contributions for 1996 and 1997 were $248 and $199,
respectively.

     As of January 1, 1998, the two plans were merged into one employee savings
plan.  This plan is available to all employees who meet certain age and service
requirements.  The plan requires mandatory contributions based on employee
contributions and makes discretionary contributions based on employee
compensation.  The mandatory contributions made to the plan in 1998 totalled
$285.  Estimated discretionary contributions of $226 were accrued in 1998 and
will be disbursed in 1999.

Employee Stock Purchase Plan
----------------------------

     The Company's Board of Directors approved the Employee Stock Purchase Plan
(the "Plan"), which gives employees of the Company the opportunity to purchase
shares of the Company's common stock through payroll deductions beginning on
April 1, 1997.  Employees can elect to participate in the Plan by designating
from 1% to 10% of eligible compensation to be deducted from pay.  On the date of
exercise, which is the Friday before the 15th of the month following each
quarter end, the per share purchase price will be 85% of the average high and
low per-share trading price of Roberts common stock on the American Stock
Exchange on that date.  500,000 shares of the Company's Common Stock have been
reserved for issuance under the Employee Stock Purchase Plan.  The total number
of shares purchased under the plan in the years ended December 31, 1997 and 1998
was 4,045 and 10,444 with a total value of $39 and $141 respectively.

Supplemental Executive Retirement Plan
--------------------------------------

     The Company established a Supplemental Executive Retirement Plan (SERP) in
1998, which is a funded defined benefit plan for key employees of the Company.
The projected benefit obligation was $5,315 and the 1998 expense for the plan
was $2,146.  Of this total, $65 was disbursed in 1998 and the remainder of the
year's contribution will be funded in 1999.  The service cost component was
$1,470 and the interest cost component was $676.  The discount rate utilized was
7.0%.



                                      F-22
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12.  CONTINGENCY
     -----------

     A shareholder class action suit was instituted in March, 1995, in the
United States District Court for the District of New Jersey against the Company
and certain of its officers and a former officer for alleged violations of
certain federal securities laws.  This suit was settled. The net expenses of
this settlement to the Company amounted to $2.3 million and were included in
other expense for the quarter ended September 30, 1997.

13.  ACQUISITIONS
     ------------

     In 1996, 1997, and 1998, the Company acquired trademarks and other rights
to several products from various pharmaceutical companies.  The aggregate price
of these acquisitions was $5.1 million, $15.3 million, and $135.1 million,
respectively, consisting of cash and notes payable.

14.  SEGMENT REPORTING
     -----------------

     The Company adopted SFAS No. 131, Disclosures About Segments of and
Enterprise and Related Information in 1998, which changes the way the Company
reports information about its operating segments.  Previous year's information
has been restated.

     The Company has three segments, determined geographically and are made up
of the operations of the U.S., Canada, and the U.K.  Each of the divisions sell
pharmaceutical products; the Canadian operations also includes a manufacturing
plant.  Manufacturing revenues were not material to the Canadian operations or
to the consolidated operations.  Each division has its own management team,
markets to different countries and the results of each division are evaluated
independently.

     The Company evaluates performance based on profit or loss from operations
before income taxes, with intercompany sales eliminated.  The accounting
policies of the reportable segments are the same as those described in the
summary of significant accounting policies except that the results of the
foreign operations are translated at the budgeted foreign exchange rate rather
than the actual rate with the differences accumulated and shown separately as an
adjustment to operating income.  The accounting for the assets of each segment
is the same as in consolidation with intercompany balances eliminated.
Amortization of product intangibles is allocated from the U.S. segment to the
foreign subsidiaries, however, the intangibles are maintained on the U.S. books.



                                      F-23
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
 
1998                                 U.S.    Canada    U.K.     Total
                                   -------   -------  -------  --------
<S>                                <C>       <C>      <C>      <C>
                          
Revenues                           139,583   15,969   20,274   175,826
Segment profit                      17,728    2,019    5,264    25,011
Amortization expense                 7,453      624    1,738     9,815
Interest revenue                     3,876      100      132     4,108
Interest expense                     6,156      ---        1     6,157
Total assets                       491,150   23,449   11,636   526,235
Long-lived assets                  336,379   14,265      132   350,776
 
Reconciliation of segment revenue to consolidated revenue
Segment revenues                   139,583   15,969   20,274   175,826
Effect of actual vs.      
 budget rates                          ---   (1,254)     873      (381)
                                   -------   ------   ------   -------
Consolidated revenues              139,583   14,715   21,147   175,445
                                   =======   ======   ======   =======
                          
                          
1997                                 U.S.    Canada    U.K.     Total
                                   -------   -------  -------  --------
                          
Revenues                            91,613   13,601   17,084   122,298
Segment profit                      (3,834)   2,401    2,849     1,416
Amortization expense                 3,797      624    1,738     6,159
Interest revenue                     5,104       61       48     5,213
Interest expense                      (755)     ---      ---      (755)
Total assets                       336,783   24,465    6,607   367,855
Long-lived assets                  209,805    6,758       74   216,637
                          
Reconciliation of segment revenue to consolidated revenue
Segment revenues                    91,613   13,601   17,084   122,298
Effect of actual vs.    
 budget rates                          ---     (204)     414       210
                                   -------   ------   ------   -------
Consolidated revenues               91,613   13,397   17,498   122,508
                                   =======   ======   ======   =======
                        
                        
1996                                 U.S.    Canada    U.K.     Total
                                   -------   -------  -------  --------
                        
Revenues                            74,422   11,665   12,086    98,173
Segment profit                     (51,176)   1,021    1,305   (48,850)
Amortization expense                 4,223      624    1,738     6,585
Interest revenue                     2,878        1       30     2,909
Interest expense                    (1,750)     ---      ---    (1,750)
Total assets                       357,646    8,821    5,758   372,225
Long-lived assets                  198,385       62       72   198,519
                        
Reconciliation of segment revenue to consolidated revenue
Segment revenues                    74,422   11,665   12,086    98,173
Effect of actual vs.
 budget rates                          ---      292     (354)      (62)
                                   -------   ------   ------   -------
Consolidated revenues               74,422   11,957   11,732    98,111
                                   =======   ======   ======   =======
</TABLE>

                                      F-24
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The management reporting format used for this disclosure was not in effect
prior to 1998.  In order to present three years of data in the format prescribed
by FAS 131, some estimates were made in calculating the 1996 and 1997 results as
the data was not available.  These estimates related to intercompany allocations
and eliminations and did not effect the consolidated results.  The 1996 U.S.
segment results include the effects of the intangible asset dispositions and
write-offs.  See Note 4.

15.  DISCONTINUED OPERATIONS
     -----------------------

     In August 1995, the Company decided to seek a buyer for the assets of its
Pronetics (Homecare) subsidiaries which were located in New York, New Jersey,
North Carolina, and South Carolina.  The sale of the Homecare division was
expected to result in a loss at closing.  Accordingly, the Company charged 1995
operations with the estimated loss on discontinuing the division.

     Sales of the Homecare subsidiaries were essentially completed in December
1996.  The total realized from the sales was $2.7 million.  The additional loss
on sale was offset by a decrease in the assets held for sale and lower than
expected losses from operations in 1996.  There was no income statement effect
from the final disposition of the Homecare division.

     In March 1996, the Company announced its plan to discontinue and divest
VRG, a contract clinical research organization.  The Company expected the sale
of VRG to result in a loss at closing.  Accordingly, the Company charged 1995
operations with the estimated loss on discontinuation of the subsidiary.

     In May 1998, the Company concluded a definitive acquisition agreement to
sell VRG.  The Company has received a promissory note from the purchaser calling
for periodic payments to be made to the Company.  With this sale, the Company
completed its plans to divest non-strategic, non-pharmaceutical businesses.  No
gain or loss was recognized with respect to this transaction.

16.  FAIR VALUE OF FINANCIAL INSTRUMENTS
     -----------------------------------

     The carrying amount of cash and cash equivalents approximates fair value
due to the short-term maturities of these instruments.  The fair value of
marketable securities was estimated based on quotes obtained from brokers.  The
fair value of long-term debt is estimated based on the discounted future cash
flows using currently available interest rates.



                                      F-25
<PAGE>
 
                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
                                          December 31, 1998
                                     ----------------------------
                                     Carrying Amount  Fair Value
                                     ---------------  -----------
                                  
Cash and cash equivalents                $    39,280  $    39,503
Marketable securities                         36,062       36,158
Long-term debt                               137,917      137,784
Held-to-maturity security                 10,000,000   10,000,000

The carrying amounts in the table are included in the consolidated balance sheet
under the indicated captions with the exception of the held-to-maturity security
which is included in other assets.

17.  QUARTERLY RESULTS OF OPERATIONS (Unaudited)
     -------------------------------------------

     The following table presents summarized quarterly results for 1998 (in
thousands, except per share data).
 
                         First    Second         Third  Fourth
                         -----    ------         -----  ------
                   
    Revenues            $32,588  $43,796       $42,336  $55,044
    Gross profit         20,244   28,706        27,615   32,350
    Net income            2,145    3,386/(1)/    4,677    6,579
                                  
    Basic and diluted             
      net income per              
      share             $  0.07  $  0.11       $  0.15  $  0.21





                                      F-26
<PAGE>
 
                       ROBERTS PHARMACEUTICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following table presents summarized quarterly results for 1997 (in
thousands, except per share data).
 
 
                        First    Second       Third        Fourth
                      ---------  -------  -------------  -----------
 
    Revenues          $  26,330       $30,286  $28,357        $36,639
    Gross profit         14,678        17,305   14,310         23,933
    Net earnings            910/(2)/    1,288   (2,995)/(3)/    3,315/(4)/

    Basic net earnings
      per share         $  0.03       $  0.04  $(0.11)        $  0.11

    Diluted net earnings
      per share         $  0.02       $  0.04  $(0.11)        $  0.11





(1)  Subsequent to the filing of the Company's quarterly report on Form 10-Q for
     the three months ended June 30, 1998, the Company reversed the gain
     recorded from the sale of the discontinued VRG division.  The net of tax
     charge to earnings was $1,314, or $0.04 per share.

(2)  Subsequent to the filing of the Company's quarterly report on Form 10-Q for
     the three months ended March 31, 1997, the Company reclassified costs that
     had been capitalized as an intangible asset to research and development
     expense.  The net of tax charge to earnings was $660,000, or $0.02 per
     share.

(3)  Includes a $2.3 million charge for the settlement of a lawsuit instituted
     against the Company for alleged violations of certain federal securities
     laws.

(4)  In fourth quarter 1997, management made several changes in the estimates of
     income tax reserves and allowances for returned goods.  The reduction in
     income tax reserves resulted from the elimination of certain reserves due
     to the closure of years 1991 through 1993 after an IRS audit.  The
     allowance for returned goods was revalued based upon a change in estimate
     of the economic benefit from the product returns.  The impact of these
     revaluations was $2.7 million and $1.0 million respectively.


                                      F-27
<PAGE>
 
                                                   SCHEDULE II

                       ROBERTS PHARMACEUTICAL CORPORATION
                       VALUATION AND QUALIFYING ACCOUNTS
                      FOR THE YEAR ENDED DECEMBER 31, 1998

 
<TABLE> 
<CAPTION> 
                                Balance                    Additions                                    Balance
                                                ----------------------------------
                                Beginning of    Charged to          Charged to                          End of
                                Period          Costs and Expenses  Other Accounts      Deductions      Period
                                ------------    ------------------  --------------      ----------      ------
<S>                             <C>             <C>                 <C>                 <C>             <C> 
Allowance for uncollectibles      $  440              432               ---                (334)/(1)/   $  538

Allowance for return goods        $9,765            6,191              (345)             (6,701)/(2)/   $8,910
</TABLE> 


                       ROBERTS PHARMACEUTICAL CORPORATION
                       VALUATION AND QUALIFYING ACCOUNTS
                      FOR THE YEAR ENDED DECEMBER 31, 1997
 
<TABLE> 
<CAPTION> 
                                Balance                    Additions                                    Balance
                                                ----------------------------------
                                Beginning of    Charged to          Charged to                          End of
                                Period          Costs and Expenses  Other Accounts      Deductions      Period
                                ------------    ------------------  --------------      ----------      ------
<S>                             <C>             <C>                 <C>                 <C>             <C> 

Allowance for uncollectibles         $ 1,440        $  120              $  ---           $(1,120)/(1)/   $  440
 
Allowance for return goods           $16,298        $5,667              $(3,000)/(3)/    $(9,200)/(2)/   $9,765
</TABLE>

(1)  Actual bad debts charged to the allowance.

(2)  Actual returns of goods charged to the allowance.

(3)  Reversal of allowance established in connection with product acquisition.



                                      F-28
<PAGE>
 
                                 EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S>    <C>    <C>
o      3.1.1  Amended and Restated Certificate of Incorporation of Registrant
              filed with the Secretary of State of the State of New Jersey on
              February 1, 1988 and Certificates of Amendment thereto dated
              February 2, 1988 and October 31, 1989, respectively.
     
zz     3.1.2  Certificate of Amendment, dated August 26, 1996, to the Amended
              and Restated Certificate of Incorporation of Roberts
              Pharmaceutical Corporation.
     
ee     3.1.3  Certificate of Amendment, dated August 29, 1996, to the Amended
              and Restated Certificate of Incorporation of Roberts
              Pharmaceutical Corporation.
     
zz     3.1.4  Certificate of Amendment, dated November 25, 1996, to the Amended
              and Restated Certificate of Incorporation of Roberts
              Pharmaceutical Corporation.
     
y        3.2  By-laws of the Registrant, as amended.
     
+        4.1  Form of Specimen Certificate, Roberts Pharmaceutical Corporation
              Common Stock.
     
dd       4.2  Form of Specimen Certificate, Roberts Pharmaceutical Corporation
              5% Convertible Preferred Stock.
     
dd       4.4  Form of Stock Purchase Agreement, dated July 17, 1996, executed by
              and between Roberts and the purchasers of the Common Stock in the
              Common Stock Private Placement.
     
dd       4.5  Form of Preferred Stock Investment Agreement, dated August 29,
              1996, executed by and between Roberts and the purchasers of the 5%
              Convertible Preferred Stock in the Preferred Stock Private
              Placement.
     
dd       4.6  Form of Stock Purchase Warrant used in connection with the Common
              Stock Private Placement.
     
dd       4.7  Form of Stock Purchase Warrant used in connection with the
              Preferred Stock Private Placement.
     
ff       4.8  Rights Agreement, dated as of December 16, 1996, between Roberts
              and Continental Stock Transfer & Trust Company and the Summary of
              Rights to purchase Roberts Preferred Stock.
     
ff       4.9  Form of Specimen Rights Certificate to be used upon the occurrence
              of a "Distribution Date" as defined in the Rights Agreement.
     
+       10.1  License Agreement (United States), dated November 6, 1989, between
              Roberts and Instituto Biologico Chemioterapico (ABC) S.p.A.
</TABLE> 

                                     E - 1
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S>     <C>   <C>
+       10.2  License Agreement (United Kingdom), dated November 6, 1989,
              between Roberts and Instituto Biologico Chemioterapico (ABC)
              S.p.A.
   
o       10.3  License Agreement, dated January 1, 1985, between the National
              Technical Information service and Roberts.
   
o       10.4  Agreement, dated October 1, 1985, between Hafslund Nycomed Pharma
              AG (formerly CL Pharma AG) and Roberts Laboratories, Inc., a
              wholly owned subsidiary of Roberts.
   
aa    10.4.1  Amendment, dated January 19, 1994, to Agreement, dated October 1,
              1985, between Hafslund Nycomed Pharma AG and Roberts Laboratories,
              Inc., a wholly owned subsidiary of Roberts.
   
o      10.16  Agreements and other documents of Roberts, Hafslund Nycomed AG and
              Linz-Roberts, Inc. including the following exhibits thereto:

              (a)  Subscription and Shareholders Agreement, dated December 1,
                   1985, between Roberts, Hafslund Nycomed Pharma AG and Linz-
                   Roberts, Inc., including the following exhibits thereto:

                  (i)    Certificate of Incorporation of Linz-Roberts, Inc.

                  (ii)   By-Laws of Linz-Roberts, Inc.

                  (iii)  License Agreement, dated January 1, 1985, between the
                         National Technical Information Service and Roberts (See
                         Exhibit 10.3)

                  (iv)   Agreement of Assignment, dated December 1, 1985,
                         between Roberts and Linz-Roberts, Inc.

                  (v)    Research and Development Agreement, dated as of
                         December 1, 1985, between Vukovich Research Group, Inc.
                         and Roberts Pharmaceutical Corporation

              (b)  License and Distribution Agreement, dated December 1, 1985,
                   between Roberts and Hafslund Nycomed Pharma AG.
   
o      10.17  License Agreement, dated October 31, 1988, between the Salk
              Institute for Biological Studies and Roberts.
   
(*)  10.20.1  Employment Agreement, dated as of August 24, 1998, between Roberts
              and John T. Spitznagel.
   
(*)  10.20.2  Employment Agreement, dated as of August 24, 1998, between Roberts
              and Peter M. Rogalin.
</TABLE> 

                                     E - 2
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S>    <C>    <C>
(*)    10.23  Employment Agreement, dated as of August 24, 1998, between Roberts
              and Robert W. Loy.

(*)    10.24  Employment Agreement, dated as of August 24, 1998, between Roberts
              and Anthony A. Rascio.

o      10.26  Rental Deposit Deed, dated September 28, 1988, between the
              University of Surrey and Roberts relating to the leased office
              space in Guildford, England.

o      10.27  Underlease, dated September 28, 1988, between the University of
              Surrey and Roberts relating to the leased office space in
              Guildford, England.

xx     10.42  Distribution Agreement, dated February 15, 1991, between Roberts
              and Flint Laboratories (Canada) Ltd.

++     10.43  Agreement for Products and Sale of Assets, dated March 6, 1991,
              between Norwich Eaton Pharmaceuticals, Inc. and Roberts
              Laboratories Inc., a wholly owned subsidiary of Roberts.

y      10.48  License Agreement, dated as of August 1, 1991, between Bristol-
              Myers Squibb Co. and Roberts Laboratories Inc., a wholly owned
              subsidiary of Roberts.

y      10.51  Agreements of Roberts Laboratories Inc., a wholly owned subsidiary
              of Roberts, Boehringer Ingelheim Limited, Windsor Healthcare
              Limited and Altam Pharmaceuticals Limited:

              (a)  Agreement, dated December 5, 1991, by and among Roberts
                   Laboratories Inc., a wholly owned subsidiary of Roberts,
                   Boehringer Ingelheim Limited and Windsor Healthcare Limited.

              (b)  Supplemental Agreement, dated December 5, 1991, by and among
                   Roberts Laboratories Inc., a wholly owned subsidiary of
                   Roberts, Boehringer Ingelheim Limited and Windsor Healthcare
                   Limited.

y      10.52  Dopar Agreement for Purchase and Sale of Assets, dated December 6,
              1991, between Norwich Eaton Pharmaceuticals, Inc. and Roberts
              Laboratories Inc., a wholly owned subsidiary of Roberts.

k      10.53  Agreements of Roberts, Roberts Laboratories Inc. and Monmouth
              Pharmaceuticals Ltd., wholly owned subsidiaries of Roberts,
              American Home Products Corporation, John Wyeth & Brother limited
              and Ayerst, McKenna & Harrison Inc.

              (a)  Agreement, dated December 20, 1991, by and among Roberts,
                   Roberts Laboratories Inc., a wholly owned subsidiary of
                   Roberts, American Home Products Corporation, John Wyeth &
                   Brother Limited and Ayerst,
</TABLE> 

                                     E - 3
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S>       <C>      <C>
                   McKenna & Harrison, Inc.

              (b)  Manufacturing Agreement, dated December 24, 1991, between
                   John Wyeth & Brother Limited and Monmouth Pharmaceuticals
                   Ltd., a wholly owned subsidiary of Roberts.

              (c)  AHPC License Agreement, dated December 24, 1991, between
                   American Home Products Corporation and Roberts Laboratories
                   Inc., a wholly owned subsidiary of Roberts.

              (d)  The Ayerst License Agreement, dated December 24, 1991,
                   between Ayerst, McKenna & Harrison Inc. and Roberts
                   Laboratories Inc., a wholly owned subsidiary of Roberts.

              (e)  The Wyeth License Agreement, dated December 24, 1991, between
                   John Wyeth & Brother Limited and Roberts Laboratories Inc., a
                   wholly owned subsidiary of Roberts.

              (f)  Distribution Agreement, dated December 24, 1991, between John
                   Wyeth & Brother Limited and Monmouth Pharmaceuticals Ltd., a
                   wholly owned subsidiary of Roberts.

              (g)  Assignments, each dated December 24, 1991, between American
                   Home Products Corporation and Roberts Laboratories In., a
                   wholly owned subsidiary of Roberts.

              (h)  Assignment, dated December 24, 1991, between John Wyeth &
                   Brother Limited and Roberts Laboratories In., a wholly owned
                   subsidiary of Roberts.

k      10.55  Stock Purchase Agreement, dated as of January 22, 1992, between
              Roberts and Yamanouchi Pharmaceutical Co., Ltd., including
              Shareholder Agreement dated as of January 22, 1992 between Dr.
              Robert A. Vukovich and Yamanouchi Pharmaceutical Co., Ltd. which
              comprises Annex A to such agreement.

j      10.56  Distribution Agreement, dated March 31, 1992, between Research
              Industries Corporation and Roberts Pharmaceutical of Canada Inc.,
              a wholly owned subsidiary of Roberts.

j      10.57  License Agreement, dated April 2, 1992, between Bayer AG and
              Roberts Laboratories Inc., a wholly owned subsidiary of Roberts.

j      10.58  License Agreement, dated April 10, 1992, between Ortho
              Pharmaceutical Corporation and Roberts Laboratories Inc., a wholly
              owned subsidiary of Roberts.
</TABLE> 

                                     E - 4
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S>    <C>    <C>
j      10.59  Purchase Agreement, dated July 6, 1992, between Galen Limited and
              Roberts Laboratories Inc., a wholly owned subsidiary of Roberts.

kk     10.60  Asset Purchase Agreement, dated September 29, 1992, between Smith-
              Kline Beecham Pharmaceuticals, an unincorporated division of 
              Smith-Kline Beecham Corporation, and Roberts Laboratories Inc, a
              wholly owned subsidiary of Roberts.

j      10.61  Agreement for Purchase and Sale of COMHIST Assets, dated November
              24, 1992, between Procter & Gamble Pharmaceuticals, Inc. and
              Roberts Laboratories Inc, a wholly owned subsidiary of Roberts.
              Upon the request of the Securities and Exchange Commission,
              Roberts agrees to furnish a copy of Schedules 1.1(a) through 6.11
              and Exhibits A through C to the Agreement for Purchase and Sale of
              COMHIST Assets as follows: 1.1(a) Schedule of Trademarks; 1.1(b)
              Schedule of Know-How; 1.1(d) Tooling Schedule; 1.4 Allocation of
              Purchase Price Schedule; 6.6(4) Intellectual Property Claims
              Schedule; 6.10 Schedule of Customers; 6.11 Financial Information
              Schedule; A Form of Trademark Assignment; B Form of Bill of Sale;
              C Contract Manufacturing Agreement.

j      10.63  Purchase and Sale Agreement, dated December 21, 1992, between the
              Du Pont Merck Pharmaceutical Company and Roberts Laboratories
              Inc., a wholly owned subsidiary of Roberts.

j      10.64  Asset Purchase Agreement, dated December 28, 1992, between G.D.
              Searle & Co. and Roberts Laboratories Inc., a wholly owned
              subsidiary of Roberts. Upon the request of the Securities and
              Exchange Commission, Roberts agrees to furnish a copy of Exhibits
              A and B, Schedules 1.12 through 4.2(d), and various miscellaneous
              assignments of copyrights and trademarks to the Asset Purchase
              Agreement as follows: A Security Agreement; B Supply Agreement;
              1.12 Product Registrations, 2.3 Purchase Price Allocations; 4.1(c)
              Contracts Requiring Consents; 4.1(f) Pending Suits and Claims;
              4.1(g) Compliance; 4.1(h) Material Contracts; 4.1(i) Exceptions to
              Ownership of Intellectual Property; 4.1(j) Financial Information;
              4.1(l) Customer List; 4.1(m) Material Adverse Changes; 4.2(d)
              Buyer's Financial Statements; assignments of copyrights;
              assignments of trademarks.

j      10.65  Asset Purchase Agreement, dated March 23, 1993, by and between
              Searle Canada, Inc. and Roberts Laboratories Inc., a wholly owned
              subsidiary of Roberts. Upon the request of the Securities and
              Exchange Commission, Roberts agrees to furnish a copy of Exhibit A
              and Schedules 1.5(a) through 5.19 to the Asset Purchase Agreement
              as follows: A Supply Agreement; 1.5(a) Sales Retained by Seller;
              1.5(b) Pricing Prior to Closing; 1.10 Product Registrations;
              4.1(g) Compliance; 4.1(h) Material Contracts; 4.1(i) Exceptions to
              Ownership of Intellectual Property; 4.1(j) Financial Information;
              4.1(l) Customer List; 4.1(m) Material Adverse Changes; 5.19
              Packaging Charges.
</TABLE> 

                                     E - 5
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S>    <C>    <C>
#      10.67  Copy of form of Option Agreement used in connection with options
              granted under the Roberts Pharmaceutical Corporation Restricted
              Stock Option Plan.

#      10.68  Copy of form of Option Agreement used in connection with options
              granted under the Roberts Pharmaceutical Corporation Incentive
              Stock Option Plan.

j      10.69  Rebate Agreement, dated November 11, 1992, between the Secretary
              of Health and Human Services and Roberts Laboratories Inc., a
              wholly owned subsidiary of Roberts.

a      10.70  License Agreement, dated as of March 27, 1993, by and among
              Roberts Laboratories Inc, a wholly owned subsidiary of Roberts,
              Sawai Pharmaceutical Co., Ltd., and Grelan Pharmaceutical Co.,
              Ltd.

a      10.71  Agreements, dated as of May 5, 1993, between Roberts Laboratories
              Inc., a wholly owned subsidiary of Roberts, and Glaxo Canada Inc.,
              dated as of May 5, 1993.

              (a)  First Asset Purchase Agreement.
              (b)  Promotion Agreement.
              (c)  Supply Agreement.
              (d)  Distribution Agreement.
              (e)  License Agreement.
              (f)  Registered User Agreement.
              (g)  Assignment of Trademarks.
              (h)  Second Asset Purchase Agreement.

a      10.72  Stock Purchase Agreement, dated August 30, 1993, by and among
              Roberts, Yamanouchi Pharmaceutical Co., Ltd. and Yamanouchi U.S.A.
              Inc.

aa     10.73  Amendment to Stock Purchase Agreement, dated August 30, 1993, by
              and among Roberts, Yamanouchi Pharmaceutical Co., Ltd. and
              Yamanouchi U.S.A. Inc.

aa     10.74  Agreements, dated as of September 14, 1993, among Bristol-Myers
              Squibb Company, Bristol-Myers Squibb Company Canada Inc. and
              Roberts Laboratories Inc., a wholly owned subsidiary of Roberts.

              (a)  COLACE Et Al. Sale Agreement.
              (b)  COLACE Et Al. Supply Agreement.
              (c)  Security Agreement.
              (d)  Notice of Security Interest in Trademark.
              (e)  Assignment of Collateral.
              (f)  Guaranty.

bb     10.75  License Agreement, dated as of July 6, 1994, between the
              Rockefeller University
</TABLE> 

                                     E - 6
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S>    <C>    <C>
              and Roberts Laboratories Inc., a wholly owned subsidiary of
              Roberts.

bb     10.76  Agreements between Roberts Laboratories Inc., a wholly owned
              subsidiary of Roberts, and SmithKline Beecham Pharmaceuticals, an
              unincorporated division of SmithKline Beecham Corporation:

              (a)  TIGAN Asset Purchase Agreement dated as of March 27, 1995.
                   Upon the request of the Securities and Exchange Commission,
                   Roberts agrees to furnish a copy of Exhibits A through D and
                   Schedules 5.4 through 5.11 and Appendix I as follows: A List
                   of Products; B- Assignment and Assumption Agreement; C
                   Promissory Note; D Transitional Services Agreement; 5.4
                   Financial Information; 5.5 Litigation; 5.6 Inventory; 5.7
                   Product Formulas; 5.8 Regulatory Issues; 5.9 FDA and Other
                   Administrative Approvals, Registrations and Permits; 5.11
                   Intellectual Property Rights; I Purchase Price Adjustments.

              (b)  EMINASE Asset Purchase Agreement dated as of March 27, 1995.
                   Upon the request of the Securities and Exchange Commission,
                   Roberts agrees to furnish a copy of Exhibits A through D,
                   Schedules 2.1(a)(1) through 5.11 and Appendices I and II as
                   follows: A List of Products; B Manufacturing Agreement; C
                   Promissory Note; D Transitional Services Agreement; 2.1(a)(1)
                   Transferable Product Rights; 2.1(a)(2) Non-Transferable
                   Product Rights; 2.1(b) Transferred Contracts; 5.4 Financial
                   Information; 5.5 Litigation; 5.6 Inventory; 5.7 Product
                   Formulas; 5.8 Regulatory Issues; 5.9 FDA and Other
                   Administrative Approvals, Registrations and Permits; 5.11
                   Intellectual Property Rights; I Territories; II Purchase
                   Price Adjustments.

gg     10.77  Distribution Agreement, dated February 23, 1995, between Roberts
              Laboratories Inc., a wholly owned subsidiary of the Company, and
              Merck and Co., Inc. with respect to NOROXIN.

zz     10.78  License Agreements between Roberts Laboratories Inc., a wholly
              owned subsidiary of Roberts, and Eli Lilly and Company.

              (a)  Tazofelone License Agreement dated November 5, 1996.
              (b)  Compound LY246736 License Agreement dated November 5, 1996.
              (c)  Compound LY353433 License Agreement dated November 5, 1996.
              (d)  Compound LY315535 License Agreement dated December 4, 1996.

zz     10.79  License Agreement between Roberts Laboratories Inc., a wholly
              owned subsidiary of the Company, and Pfizer Inc. with respect to
              Sampatrilat. Upon request of the Securities and Exchange
              Commission, Roberts agrees to furnish a copy of Exhibits 1.7(a)
              and 3.1(b).
</TABLE> 

                                     E - 7
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S>    <C>    <C>
zz     10.80  Agreement, dated December 3, 1996, by and between Roberts and
              Monsanto Canada, Inc. with respect to Oakville manufacturing
              facility.

zz     10.81  Divestiture Agreement, dated December 1, 1996, by and among
              Roberts, Pronetics Health Care Group, Inc. (New Jersey), Pronetics
              Health Care Group, Inc. (New York), PHCG, Inc. and MJGC Corp.
              pertaining to the divestiture of certain Homecare operations.

zz     10.82  Stock Purchase Agreement, dated January 31, 1997, by and among
              Roberts, Pronetics Health Care Group, Inc. (North Carolina) and
              American Homepatient, Inc. pertaining to the divestiture of
              certain Homecare operations.

ll     10.83  Agreement of sale, August 1997, by and between Roberts
              Pharmaceutical Corporation and Novartis Pharmaceutical Corporation
              pertaining to the acquisition of the distribution facility.

ll     10.84  Asset Purchase Agreement, December 1997, by and between Roberts
              Laboratories Inc., a wholly owned subsidiary of Roberts, and G.D.
              Searle & Co. pertaining to the divestiture of NORETHIN. Upon
              request of the Securities and Exchange Commission, Roberts agrees
              to furnish copies of Schedules 1.13, 2.3, 4.1(c), (f), (g), (h),
              (i), (j), (l) and (m).

ll     10.85  Distribution Agreement, December 1997, by and between Roberts
              Laboratories Inc., a wholly owned subsidiary of Roberts, and G.D.
              Searle & Co. pertaining to the distribution rights for SLOW-MAG.

       10.86  Supplemental Executive Retirement Plan of Roberts Pharmaceutical
              Corporation, effective January 1, 1998.

       10.87  Agreements between Hydro Med Sciences, a division of GP Strategies
              Corp., and Roberts Laboratories Inc.:

              (a)  License Agreement, dated March 24, 1998.
              (b)  Manufacturing Supply Agreement, dated March 24, 1998 and
                   First Amendment to Manufacturing Supply Agreement, dated
                   September 25, 1998.

       10.88  Agreements for the right to market Pentasa(R):

              (a)  Sublicense and Assignment Agreement, dated June 24, 1998,
                   between Hoechst Marion Roussel, Inc. and Roberts Laboratories
                   Inc.

              (b)  Amendment to Sublicense and Assignment Agreement, dated June
                   24, 1998, between Hoechst Marion Roussel, Inc., and Roberts
                   Laboratories Inc.
</TABLE> 

                                     E - 8
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S>    <C>         <C>
              (c)  Supply Agreement, dated April 1, 1998, between Hoechst Marion
                   Roussel, Inc. and Roberts Laboratories Inc.

              (d)  Stand-Still Agreement, dated June 17, 1998, between Ferring
                   A/S, Hoechst Marion Roussel, Inc., Roberts Pharmaceutical
                   Corporation and Roberts Laboratories Inc.

              (e)  Agreement, dated June 22, 1998, among Ferring A/S, Hoechst
                   Marion Roussel, Inc., Roberts Laboratories Inc. and Roberts
                   Pharmaceutical Corporation.

nn     10.89  Credit Agreement, dated as of June 24, 1998, among Roberts
              Pharmaceutical Corporation, First Union National Bank, Summit
              Bank, DLJ Capital Funding, Inc., and various other financial
              institutions.

       10.90  Agreements between RiboGene, Inc. and Roberts Pharmaceutical
              Corporation:

              (a)  Option and License Agreement, dated July 6, 1998.
              (b)  First Amendment to the Option and License Agreement, dated
                   July 6, 1998.
              (c)  Registration Rights Agreement, dated July 16, 1998.
              (d)  Stock Purchase Agreement, dated July 6, 1998.

       10.91  Consultant Agreement, made as of October 1, 1998, by and between
              Roberts Pharmaceutical Corporation and Robert A. Vukovich, Ph.D.

mm     16.01  Letter, dated December 9, 1998, from PricewaterhouseCoopers L.L.P.
              regarding their resignation as Roberts Pharmaceutical
              Corporation's principal accountant.

       21.    Subsidiaries of the Registrant.

       23.01  Consent of Ernst & Young L.L.P.

       23.02  Consent of PricewaterhouseCoopers L.L.P.

cc     27.    Financial Data Schedules.

(*)           Constitutes a management contract required to be filed as an
              exhibit pursuant to Item 14(c) of Form 10-K.

y             Incorporated by reference to the identically numbered exhibit to
              the Registrant's Registration Statement on Form S-4 (Registration
              No. 33-44441).

o             Incorporated by reference to the identically numbered exhibit to
              Registrant's Registration Statement on Form S-1 (Registration No.
              33-31876).
</TABLE>

                                     E - 9
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S>           <C>
+             Incorporated by reference to the identically numbered exhibit to
              Amendment No. 1 to Registrant's Registration Statement on Form S-1
              (Registration No. 33-31876).

x             Incorporated by reference to the identically numbered exhibit to
              Amendment No. 2 to Registrant's Registration Statement on Form S-1
              (Registration No. 33-31876).

z             Incorporated by reference to the identically numbered exhibit to
              Amendment No. 1 to Registrant's Registration Statement on Form S-1
              (Registration No. 33-40636).

k             Incorporated by reference to the identically numbered exhibit to
              Registrant's Registration Statement on Form S-1 (Registration No.
              33-45069).

#             Incorporated by reference to the identically numbered exhibit to
              Registrant's Registration Statement on form S-8 (Registration No.
              33-34767).

a             Incorporated by reference to the identically numbered exhibit to
              Registrant's Registration Statement on Form S-3 (Registration No.
              33-68080).

b             Incorporated by reference to Registrant's Registration Statement
              on Form S-8 (Registration No. 33-51198)

nn            Incorporated by reference to Registrant's Report on Form 10-Q/A
              for the quarter ended June 30, 1998.

@             Incorporated by reference to Registrant's Annual Report on 
              Form 10-K for the fiscal year ended June 30, 1990.

j             Incorporated by reference to Registrant's Annual Report on 
              Form 10-K for the fiscal year ended December 31, 1992.

aa            Incorporated by reference to Registrant's Annual Report on 
              Form 10-K for the fiscal year ended December 31, 1993.

bb            Incorporated by reference to Registrant's Annual Report on 
              Form 10-K for the fiscal year ended December 31, 1994.

gg            Incorporated by reference to Registrant's Annual Report on 
              Form 10-K for the fiscal year ended December 31, 1995.

zz            Incorporated by reference to Registrant's Annual Report on 
              Form 10-K for the fiscal year ended December 31, 1996.

ll            Incorporated by reference to Registrant's Annual Report on 
              Form 10-K for the fiscal year ended December 31, 1997.

cc            Financial Data Schedules are submitted in electronic format only.
</TABLE> 

                                     E - 10
<PAGE>
 
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S>           <C>
dd            Incorporated by reference to the identically numbered exhibit 
              to Registrant's Registration Statement on Form S-3 
              (Registration No.333-13729).

ee            Incorporated by reference to Exhibit No. 4.3 to Registrant's 
              Registration Statement on Form S-3 (Registration No. 333-13729).

ff            Incorporated by reference to Exhibit No. 1 to Registrant's 
              Registration Statement ton Form 8-A.

xx            Incorporated by reference to Registrant's Current Report on 
              Form 8-K, dated February 15, 1991.

++            Incorporated by reference to Registrant's Current Report on 
              Form 8-K, dated March 6, 1991.

vv            Incorporated by reference to Registrant's Current Report on 
              Form 8-K, dated November 5, 1991.

kk            Incorporated by reference to Registrant's Current Report on 
              Form 8-K, dated September 29, 1992.

mm            Incorporated by reference to Registrant's Current Report on 
              Form 8-K, dated December 9, 1998.
</TABLE>

                                     E - 11