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                                 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, 1997
                         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) 389-1182

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:

                                     None
-----------------------------------------------------------------------------
                               (Title of class)
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          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 20, 1998 was
$322,924,104.

          As of March 20, 1998, the number of outstanding shares of Common Stock
was 30,662,475.

          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 1998.

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) certain of the notes to the
Registrant's consolidated financial statements included on pages F-7, F-8, F-13,
F-14, F-17, F-19, F-21 and F-22 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
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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) 389-1182. 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.

(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/TM/, which are the Company's first proprietary drugs approved by the
U.S. Food and Drug Administration (the "FDA"). 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."

          During 1997, the Company continued the efforts commenced in 1995 and
1996 which were designed to concentrate the Company's business operations in its
core business of licensing, acquiring, developing and selling prescription
pharmaceuticals. The Company has since completed the sale of the core of its
nonprescription pharmaceuticals and has essentially completed the sale of its
home

                                      -2-
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care and medical products divisions ("Homecare"). See "Nonprescription
Pharmaceutical Products," "Prescription Pharmaceutical Products" and "Homecare."
Further, in March 1996, the Company announced its decision to discontinue and
divest the Company's clinical research business operations. The Company is in
the final stages of completing the sale of its contract clinical research
operations. See "Contract Clinical Research."

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 as 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

                                      -3-
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application in the United Kingdom for the approval to market PROAMATINE
under the name MIDON(R) for the treatment of orthostatic hypotension.

          AGRYLIN(TM).  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 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. In December 1997, the Company
filed an application with the FDA to expand the indications of AGRYLIN to
include polycythemia vera.

          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.

          AGRYLIN is currently in registration in Europe.  AGRYLIN has been
accepted by the European Community regulatory authorities as a "List B" product,
which includes those products considered to be major therapeutic advances. The
Company has filed a Product License Application with the European Medicines
Evaluation Agency ("EMEA") according to the EMEA harmonization procedures for
the approval of new drugs within the European Community. If approved by the
EMEA, AGRYLIN would receive simultaneous approval throughout the European
Community for sale in member countries. The Company also intends to pursue
filing in other geographic locations such as Japan, Australasia and Latin
America for the sale of AGRYLIN.

          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 Company has acquired marketed prescription
pharmaceutical products

                                      -4-
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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 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 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; ETHMOZINE(R), NORPACE(R), TRANDATE(R), SALUTENSIN(R), SALURON(R) and
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; and MEPTID(R) and LODINE(R), analgesic agents.

          As part of the Company's divestiture activities, the Company completed
the sale of NORETHIN, an oral contraceptive, to G.D. Searle in December,
1997.

          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 CHERACOL D(R) and CHERACOL
PLUS(R), cough/cold products; 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.

          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.

                                      -5-
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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.

          LATE-STAGE DEVELOPMENT PRODUCTS

          The Company has a portfolio of several late-stage development
products, including PROAMATINE which, in addition to the treatment of
orthostatic hypotension for which it has received FDA approval, is being
developed for the treatment of stress urinary incontinence. 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 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, 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.

                                      -6-
<PAGE>

          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-ulcer
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 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

                                      -7-
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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
separate diuretics.

          THERAPEUTIC CATEGORY - RESPIRATORY

          MAXIVENT(R).  In 1984, the Company obtained an exclusive license from
ABC Laboratories of Italy ("ABC") to develop and market MAXIVENT (doxofylline)
in the United States, Canada and Japan and, in 1989, obtained a nonexclusive
license to develop and market the drug in the United Kingdom and Ireland.
MAXIVENT is an oral bronchodilator intended for use in the treatment of asthma.

          Common asthma is a condition involving the periodic constriction of
the airways resulting in labored and often painful breathing. Treatment is
generally provided by means of bronchodilator drugs which relieve the
constriction of the airways and, in turn, the distress of an attack. The most
commonly used oral bronchodilator is theophylline, a drug with good efficacy but
which is capable of producing certain undesirable side effects such as
disturbances in heart rhythm, central nervous system irritability, convulsions,
gastro-intestinal distress and excess urination. Phase II clinical studies and
Phase III clinical trials indicate that MAXIVENT appears to be comparable in
efficacy to theophylline; however, unlike theophylline, MAXIVENT does not appear
to produce a high incidence of adverse side effects.

          The Company has completed Phase III trials and is reviewing various
alternatives for commercialization of this compound, including the outlicensing
thereof. MAXIVENT has been approved for commercial sale in Italy and is
currently being sold in that country under the tradename "ANSIMAR" by the
Company's unaffiliated licensor, ABC.

          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 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

                                      -8-
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"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
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(TM).  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 by the kidneys. 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 .

          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.


                                      -9-
<PAGE>

          THERAPEUTIC CATEGORY - ONCOLOGY

          RADINYL.  In 1985, the Company obtained from the United States
government rights to manufacture and sell the product RADINYL (etanidazole), a
radiosensitizer being developed to enhance the anticancer effects of radiation
therapy and a chemosensitizer being developed to increase the effectiveness of
other anticancer drugs.

          For use in conjunction with radiotherapy, RADINYL is currently in
Phase III clinical trials in patients with advanced head and neck cancer. The
patients enrolled in these trials in the United States and Europe were
randomized to receive either RADINYL in conjunction with radiotherapy or
radiotherapy alone. The results of these studies are currently under analysis.

          Phase I and Phase II clinical studies are being conducted with RADINYL
to determine its potential in increasing the effectiveness of other anticancer
drugs in the treatment of brain, lung, prostate and bladder cancer and its
potential for use with brachytherapy, a technique involving the direct implant
of a radioactive source into or adjacent to large tumors.

          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 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 plans to commence
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

                                      -10-
<PAGE>

product for this indication.  Use of SOMAGARD for the treatment of prostate
cancer in the United States is in Phase III clinical trials.

          LICENSE AGREEMENTS

          The Company has obtained rights to the late-stage drugs currently
being developed by it through license agreements with pharmaceutical companies,
government agencies and research-based institutions 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 paid and will 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, Australia and New Zealand. AGRYLIN is not yet approved
in 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-
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          MAXIVENT Agreements.  In 1984, the Company obtained an exclusive
          --------------------
license from ABC to develop and market MAXIVENT in the United States, Canada and
Japan and, in 1989, obtained a nonexclusive license to develop and market the
drug in the United Kingdom and Ireland. The exclusive license agreement requires
the Company to develop the product and obtain the requisite FDA and other
approvals. Each of the exclusive and nonexclusive license agreements requires
the Company to purchase its requirements of the bulk drug substance from ABC. If
the Company does not meet certain sales levels to be agreed upon, ABC may
terminate the exclusive license agreement, appoint additional licensees in the
United States, Canada and Japan or market the product directly or through third
parties in the United Kingdom and Ireland.

          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.

          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.

          RADINYL Agreements.  In 1985, the United States government and the
          -------------------
Company entered into a license agreement pursuant to which the Company obtained
certain rights to develop and market the product RADINYL. The license granted to
the Company is exclusive for seven years from the date of the first commercial
sale of the product and nonexclusive thereafter. The agreement pursuant to which
the license has been granted requires the Company to pay certain patent
maintenance fees and royalties to the United States government.

          In 1985, the Company and the predecessor in interest of Nycomed Pharma
formed a joint venture company known as Linz-Roberts, Inc. ("Linz-Roberts") to
develop RADINYL. The Company and Nycomed Pharma each owns 50% of the common
stock of Linz-Roberts. The Company contributed its license to RADINYL to Linz-
Roberts and the Company has been granted an exclusive license by the joint
venture to manufacture and distribute RADINYL dosage forms in the United States,
Canada, the United Kingdom and Ireland. Nycomed Pharma has been licensed on an
exclusive basis to manufacture and distribute RADINYL dosage forms in Europe
(except the United Kingdom and Ireland), the Middle East and Africa. Both
parties have the right to grant sublicenses. Nycomed Pharma has been designated
the supplier of bulk RADINYL substance, and the joint venture has contracted to
purchase its entire requirements of

                                      -12-
<PAGE>

bulk RADINYL substance from Nycomed Pharma, provided that Nycomed Pharma can
meet certain price requirements and supply all required quantities. Linz-Roberts
has retained the right to distribute RADINYL in the territories not licensed to
the Company or Nycomed Pharma.

          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.

          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 sales force and through a network of brokers and
distributors. The Company has positioned its sales operation to impact selected
physician specialties and major buying and decision making entities, such as
managed care

                                      -13-
<PAGE>

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 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,

                                      -14-
<PAGE>

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 anticipates that it will begin distributing its products
from this facility in the second quarter, 1998. The Company anticipates that its
distribution costs will decrease as a result of the acquisition of its own
distribution facility.

          HOMECARE

          In August 1995, the Company announced its decision to discontinue and
divest certain non-core, nonpharmaceutical business activities, including the
operations of Homecare, which were no longer compatible with the Company's
objective of growing and developing a pharmaceutical company with a primary
focus on the sale of prescription drugs. Through Homecare, the Company
distributed high value prescription injectable and biotechnology pharmaceutical
products for physician office use and provided medical and other health oriented
therapies in home and outpatient settings. While Homecare's businesses had a
role in the initial stages of the Company's growth and development, those
businesses never represented a significant portion of the Company's consolidated
revenue or earnings. The Company has completely divested the Homecare operations
located in New Jersey, North Carolina and South Carolina. The entity which
purchased the New Jersey operations has also executed an agreement with the
Company to purchase Homecare's New York operations. The final consummation of
such agreement is pending as the purchasers seek state regulatory approval to
finalize the transaction. See "Notes to Consolidated Financial Statements - Note
14."

          CONTRACT CLINICAL RESEARCH

          Since its inception, the Company, through its subsidiary VRG
International, Inc. ("VRG"), has derived a portion of its revenues from contract
clinical research. Under these arrangements, the Company is paid a fee to
conduct clinical research for pharmaceutical companies that wish to test the
safety and efficacy of their products. The Company has primarily conducted
studies of investigational new drugs for major multinational pharmaceutical
company clients and to a lesser degree performed safety and efficacy tests on a
variety of over-the-counter products. The

                                      -15-
<PAGE>

Company has also provided clinical investigation services to pharmaceutical
companies to assist them in reducing the time required to introduce new drugs to
the market.

          The Company's integrated clinical research operations have been
conducted through twelve research-dedicated outpatient clinics located
throughout the U.S.; an in-house patient recruiting system; a custom designed
multi-purpose computerized study tracking system; on-site study coordinators;
qualified contract investigators; sophisticated data management and multi-level
quality control.

          Consistent with the Company's decision in 1995 to discontinue and
divest certain of its non-core, nonpharmaceutical businesses, the Company
announced, in March 1996, its intentions to discontinue and divest the business
operations of VRG. Contract clinical research generally has proven to have lower
profit margins than the sale of prescription pharmaceuticals, and the Company
believes that, in the future, contract clinical research has lower growth
prospects for it than the sale of prescription pharmaceuticals. In January,
1998, the Company signed a Letter of Intent to sell VRG's operations subject to
the execution of a definitive acquisition agreement and the successful
completion of due diligence by the purchaser. To date, the Company and the
purchaser are negotiating the terms of said definitive acquisition agreement and
the transaction is expected to close within the month of April, 1998. See "Item
7 Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Notes to Consolidated Financial Statements - Note 14."

          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; RADINYL - patent issued
1983; 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 Compound
designated LY246736. In addition, there are other domestic or foreign patent
applications pending for all of 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."


                                      -16-
<PAGE>

          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 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 idiopathic orthostatic hypotension and AGRYLIN
for thrombocythemia 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


                                      -17-
<PAGE>

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 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 20, 1998, the Company had 498 employees, including 5
officers, 81 persons engaged in research and development activities and 215
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 13 to the Company's financial statements. See "Notes to
Consolidated Financial Statements - Note 13."

                                      -18-
<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.

          The Company has purchased a 100,000 square foot manufacturing facility
located in Oakville, Ontario, Canada. The Company has purchased an approximately
70,000 square foot distribution center located in Buffalo Grove, Illinois, a
suburb of Chicago. See "Item 1 Business - Manufacturing; Distribution."

          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.

          The Company also leases office space in several other locations in the
United States.

                                      -19-
<PAGE>

ITEM 3.  LEGAL PROCEEDINGS

          On April 10, 1995, a shareholders' class action suit was instituted in
the United States District Court for the District of New Jersey against the
Company and certain of its officers and a former officer by Grace Cowitt
("Cowitt") on behalf of all persons who purchased shares of the Company's Common
stock between November 7, 1994 and March 22, 1995. The complaint asserted claims
against the Company and certain of its officers and a former officer for
violations of Sections 10(b) and 20(a) of the Securities and Exchange Act of
1934, as amended, and Rule 10b-5 promulgated thereunder with respect to press
releases and filings with the Securities and Exchange Commission and certain
public statements allegedly made by the Company and certain of its officers and
a former officer relating to the Company's business. The plaintiff sought to
recover damages in an unspecified amount. On June 26, 1995, a similar
shareholders' class action suit was instituted in the United States District
Court for the District of New Jersey against the Company and certain of its
officers and a former officer by Dieter Zander ("Zander") on behalf of all
persons who purchased shares of the Company's Common Stock between November 7,
1994 and May 31, 1995. This suit was voluntarily dismissed by Zander in October
1995. In August 1995, a consolidated complaint was filed in which the plaintiff,
Cowitt, extended the proposed class period from March 22, 1995 through May 31,
1995. The Company fully and finally settled this matter in January of 1998. See
"Notes to Consolidated Fiancial Statements - Note 11."

          There are no additional 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.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          During the fourth quarter ended December 31, 1997, no matter was
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 20, 1998 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:

<TABLE>
<CAPTION>

NAME                                            AGE               POSITION
------------------------------------------------------------------------------------------
<S>                                           <C>               <C>
ROBERT A. VUKOVICH, Ph.D.                       54               Chairman of the Board

JOHN T. SPITZNAGEL                              56               President and
                                                                    Chief Executive Officer

ROBERT W. LOY                                   60               Executive Vice President

PETER M. ROGALIN                                55               Vice President, Treasurer
                                                                    and Chief Financial
                                                                    Officer

ANTHONY A. RASCIO, ESQ.                         55               Vice President, Secretary
                                                                    and General Counsel
</TABLE>



          Robert A. Vukovich, Ph.D. served as Chairman of the Board and
President of the Company from its inception in 1983 until September of 1997 when
he announced that he would forego his day-to-day activities as President to
concentrate on the Company's long-term strategic business and product
development programs. Dr. Vukovich continues to serve as Chairman of the Board.
From 1979 to 1983, he served as Director of the Division of Developmental
Therapeutics for Revlon Health Care Group. From 1970 to 1974, Dr. Vukovich was
employed in various capacities by the Squibb Institute and served as Director of
Clinical Pharmacology for that organization from 1974 to 1979. Prior to 1970,
Dr. Vukovich was a clinical research scientist for The Warner Lambert Research
Institute. Dr. Vukovich is a graduate of Jefferson Medical College,
Philadelphia, Pennsylvania, with training in pharmacology and pathology.

          John T. Spitznagel has served as President and Chief Executive Officer
since September, 1997 when the Board of Directors elected him to such office in
connection with Dr. Vukovich's decision to forego his duties as President of the
Company. Mr. Spitznagel served as 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-

                                      -21-
<PAGE>

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.

          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 a Director of the Company since June 1987. In addition, he served as
Assistant Secretary of the Company from 1987 to 1992, at which time he assumed
the position of Secretary of the Company. 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 900 shareholders of record as of March 20,
1998.

          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 in 1996 and from January 1, 1997 through May 21,
1997 and as reported by the American Stock Exchange from May 22, 1997 through
December 31, 1997.


                                     High      Low
                                     ----      ---

     YEAR ENDED DECEMBER 31, 1996

       First Quarter                 $24        $18 5/8
       Second Quarter                $21 7/8    $17 7/8
       Third Quarter                 $20 3/4    $15 5/16
       Fourth Quarter                $18 1/8    $11

     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

          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 for each of
the five fiscal years in the period ended December 31, 1997 are derived from
financial statements that have been audited and reported upon by Coopers &
Lybrand L.L.P., independent accountants for the Company. This data 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.

                                      -24-
<PAGE>

Operating Statement Data:


                                              Years Ended December 31,
--------------------------------------------------------------------------------
                            1993       1994        1995       1996       1997
                            ----       ----        ----       ----       ----
                                (in thousands, except per share data)

Total Revenue            $57,561     $89,020    $113,427    $98,111   $122,508

Operating Income (Loss)
 from Continuing
 Operations                7,850      25,802       6,873     (50,195)/1/  (762)


Net (Loss) Income from
 Continuing Operations     6,415      20,618       2,703     (34,275)    2,517

Net Income (Loss) from
 Discontinued Operations     813      (1,206)    (27,045)        556       ---

Net Income (Loss)          7,228      19,412     (24,342)    (33,719)    2,517

Earnings (Loss) Per
 Share of Common Stock
 from Continuing
 Operations - Diluted        .41        1.10         .15       (2.47)/2/   .06

Earnings (Loss) Per Share
 of Common Stock
 from Discontinued
 Operations - Diluted        .05        (.06)      (1.45)        .03       ---

Earnings (Loss) Per Share
 of Common Stock - Diluted   .46        1.04       (1.30)      (2.44)      .06

Average Number of
 Common Shares - Diluted
 Outstanding              15,590      18,708      18,623      19,133    29,497

/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

                                      -25-
<PAGE>

     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 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)
                                                                     =======


<TABLE>
<CAPTION>


Balance Sheet Data:
                                        As of December 31
-------------------------------------------------------------------------
                           1993      1994      1995      1996      1997
                         --------  --------  --------  --------  --------
                                          (in thousands)
<S>                      <C>       <C>       <C>       <C>       <C>

Total Assets             $343,103  $336,192  $340,290  $372,225  $367,855

Long-Term Debt and
 Redeemable Preferred
 Stock                     45,668    22,411    16,183    10,639    10,327

Shareholders' Equity      238,999   259,129   235,467   309,759   317,303
</TABLE>


                                      -26-
<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

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 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. Approximately
$1.6 million of this increase is due to the purchase of development-stage
products where the cost of acquisition is charged immediately to research and
development expense. Other reasons for the increase include a post-launch study
for PROAMATINE, the continued development of DIRAME, STANATE and the purchased
compounds, and increases in registration and user fees. The Company anticipates
research and development expenses will continue to increase in 1998 due to
potential purchases of development-stage drugs and the development of current
compounds.

          Marketing and Administrative Expenses.  Marketing and administrative
          --------------------------------------
expenses increased $1.5 million from $57.2 million

                                      -27-
<PAGE>

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 AGRLYIN, 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 legal and accounting fees related to the shareholders'
class action lawsuit which was fully and finally settled in January 1998 and the
annual audit.

          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 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 14" for a discussion of discontinued operations.

YEARS ENDED DECEMBER 31, 1995 AND 1996

          Corporate Revenues.  For the year ended December 31, 1996, total
          -------------------
revenue decreased $15.3 million from $113.4 to $98.1 million. This decrease was
the result of a decrease in product sales.

          Product Sales.  For the year ended December 31, 1996, product sales
          --------------
decreased $15.3 million from $113.4 to $98.1 million. This decrease is the
result of the divestiture of certain products during the year, a decline in the
sale of certain products due in part to a shift in promotional activity and a
change in the timing of special discounts and special

                                      -28-
<PAGE>

offers to the trade, increased generic competition and certain back order
situations, offset by fourth quarter sales of PROAMATINE.

          For the year ended December 31, 1996, sales of the Company's United
Kingdom subsidiary, Monmouth Pharmaceuticals, Ltd., decreased slightly from
$12.1 million to $12.0 million. Sales of the Company's Canadian subsidiary,
Roberts Pharmaceutical Canada, Inc., increased $0.6 million from $11.1 million
to $11.7 million. This increase is primarily the result of an increase in the
demand for products acquired during 1995 along with the launch of Advantage 24,
a contraceptive product.

          Cost of Sales.  For the year ended December 31, 1996, cost of sales
          --------------
amounted to 51% of product sales as compared to 47% in 1995. This increase in
cost of sales percentage and corresponding decrease in gross profit percentage
is primarily the result of an increase in inventory obsolescence resulting from
the decrease in demand for certain products for which inventory production
schedules had been previously agreed with third party suppliers. Cost of sales
continues to be impacted by sales of NOROXIN, a lower gross profit margin
product, in the Company's product mix.

          Research and Development.  Research and development expenses increased
          -------------------------
from $6.1 million in 1995 to $7.4 million in 1996, an increase of 21.3%. (See
"Notes to Consolidated Financial Statements - Note 1"). This increase results
from expenditures in the development of the Company's two recently approved
products, AGRYLIN and PROAMATINE and purchases of certain development products.

          Marketing and Administrative Expenses.  Marketing and administrative
          --------------------------------------
expenses increased $9.6 million from $47.6 million in 1995 to $57.2 million in
1996. Marketing expenses increased $8.6 million primarily as a result of
increased promotional activities for some of the Company's new products
including PROAMATINE which was launched during the fourth quarter of 1996 and
increased compensation for the sales forces in the United States, United
Kingdom, and Canada. Administrative expenses increased $1.0 million during 1996
as compared to 1995 in large part due to expenses related to the shareholders'
lawsuit and increased insurance costs.

          Interest Income and Expense.  For the year ended December 31, 1996,
          ----------------------------
interest income increased $.9 million to $2.9 million as the result of an
increased cash balance due to the private placements that were completed during
1996. Interest expense decreased from $3.5 million in 1995 to $1.8 million in
1996 as a result of a decrease in long-term debt related to product
acquisitions.

                                      -29-
<PAGE>

          Income Taxes.  For the year ended December 31, 1996, income taxes from
          -------------
continuing operations decreased $17.4 million from a provision of $2.8 million
to a benefit of $14.6 million, primarily as a result of a decline in net income
including the write off and disposition of certain intangible assets. The
Company's effective tax benefit of 30% was lower than the normal statutory rate
primarily as a result of the Company's inability to recognize the benefit of the
Canadian net operating loss carryforwards.

          Intangible Dispositions and Write-Offs.  During the fourth quarter of
          ---------------------------------------
1996, the Company completed the sale of the majority of its nonprescription
products along with the NUCOFED and QUIBRON brands in two independent
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. If
the estimate of undiscounted cash flows to be generated by the remaining
intangible assets decreases in the future, an additional write-down of those
assets may be required.

     LIQUIDITY AND CAPITAL RESOURCES
     -------------------------------

          For the year ended December 31, 1997, operating cash inflows amounted
to $3.6 million as a result of the Company's net income enhanced by reductions
in accounts receivable and non-cash charges, primarily depreciation and
amortization, and offset by changes in accounts payable, other current
liabilities and inventory. As of December 31, 1997, the Company had cash, cash
equivalents and marketable securities of $82.8 million. These balances are
primarily attributable to the Common Stock Private Placement completed in July
1996 which resulted in net proceeds of approximately $9.9 million and the
Preferred Stock Private Placement completed in August 1996 which provided
approximately $98.8 million in net proceeds. For the year ended December 31,
1996, operating cash inflows amounted to $0.2 million as a result of the
Company's net loss offset by non-cash charges, including intangible asset
dispositions and write-offs. Cash inflows from operations amounted to $22.8
million in 1995.

          The Company's funding requirements will 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,
especially relating to the Company's two approved pipeline products, PROAMATINE
and AGRYLIN, 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

                                      -30-
<PAGE>

with parties to collaborative agreements, the success of acquisition activities
and the continuing revenues generated from sales of PROAMATINE and AGRYLIN.

          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,
capital improvements for the manufacturing facility and development of the
existing pipeline compounds. Cash equivalents and marketable securities
currently consist of immediately available money market fund balances and
investment grade securities.

          Capital Expenditures.  Capital Expenditures in 1997 of approximately
          ---------------------
$12 million relate primarily to the purchase of the pharmaceutical manufacturing
facility in Canada and the purchase of the distribution facility in the United
States. The Company anticipates additional capital expenditures in 1998 of
approximately $10 million for the purchase of certain manufacturing and computer
equipment associated with manufacturing, distribution and marketing activities.

          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. Such fluctuations were not material in 1997,
1996 and 1995.

          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 Stated 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.


                                      -31-
<PAGE>

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. This Statement is effective for fiscal years
beginning after December 15, 1997. Reclassification of financial statements for
earlier periods provided for comparative purposes is required.

          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 information about major
customers. This Statement is effective for financial statements for periods
beginning after December 15, 1997. In the initial year of application,
comparative information for earlier years is to be restated.

          The adoption of these Statements will not have an impact on the
Company's consolidated results of operation, financial position or cash
flow.

YEAR 2000 CONVERSION
--------------------

          The Company has evaluated the impact of changes necessary to achieve a
year 2000 date conversion. Software failures due to processing errors arising
from calculations using the year 2000 date are a known risk. Major areas of
potential impact have been identified and it is management's opinion that the
software currently in use, or that which will be in use at the time, is year
2000 compliant. Therefore, the Company does not expect a material impact on
future results due to conversion.


                                      -32-
<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

     Not applicable.

                                      -33-
<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 1998. 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 1998.

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 1998.

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 1998.

                                      -34-
<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, 1997, 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 5, 1997 with respect to the appointment by the Company
                of Mr. Louis Berardi as Senior Vice President, New Business
                Development and Strategic Planning.

                Form 8-K (Item 5. Other Events), date of earliest event reported
                November 10, 1997 with respect to the completion by the Company
                of a Phase Ia clinical study with the compound, LY315535.

                Form 8-K (Item 5. Other Events), date of earliest event reported
                November 24, 1997 with respect to the approval by the Canadian
                regulatory authorities of the Company's application to market
                AGRYLIN in Canada.

                Form 8-K (Item 5. Other Events), date of earliest event reported
                December 17, 1997 with respect to the Company's acquisition of
                exclusive distribution rights to the product SLOW MAG(R).

                                      -35-
<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 31, 1998         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 31, 1998
-------------------------
ROBERT A. VUKOVICH


/s/ John T. Spitznagel           President and Director       March 31, 1998
-------------------------        (Principal Executive Officer)
JOHN T. SPITZNAGEL


/s/ Peter M. Rogalin             Vice President, Treasurer    March 31, 1998
-------------------------        & Director (Principal
PETER M. ROGALIN                 Financial and Accounting
                                 Officer)

/s/ Robert W. Loy                Director                     March 31, 1998
-------------------------

ROBERT W. LOY


/s/ Anthony A. Rascio            Director                     March 31, 1998
-------------------------
ANTHONY A. RASCIO


/s/ Digby W. Barrios             Director                     March 31, 1998
-------------------------
DIGBY W. BARRIOS


/s/ Zola P. Horovitz             Director                     March 31, 1998
-------------------------
ZOLA P. HOROVITZ


/s/ Joseph Noonburg              Director
-------------------------                                     March 31, 1998
JOSEPH NOONBURG


/s/ Marilyn Lloyd                Director                     March 31, 1998
-------------------------
MARILYN LLOYD

                                     -36-
<PAGE>

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                       ROBERTS PHARMACEUTICAL CORPORATION



                                                           Page
                                                           ----

     Report of Independent Accountants                     F-2


     Consolidated Balance Sheets as of                     F-3
       December 31, 1995, 1996 and 1997


     Consolidated Statements of Operations for             F-4
       the years ended December 31, 1995, 1996 and 1997


     Consolidated Statements of Cash Flows for             F-5
       the years ended December 31, 1995, 1996 and 1997


     Consolidated Statements of Changes in Shareholders'   F-6
       Equity for the years ended December 31, 1995,
       1996 and 1997


     Notes to Consolidated Financial Statements            F-7


     Schedules*


     Schedule II, Valuation and Qualifying Accounts        F-25

     ________________

     *    Schedule I under Article 12 of Regulation S-X has 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>

Coopers                                     Coopers & Lybrand L.L.P.
&Lybrand                                    a professional services firm



                       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, 1996 and
1995, and the related consolidated statements of operations, cash flows, changes
in shareholders' equity for each of the three years in the period ended December
31, 1997 and the financial statement schedules on pages F-25 to F-27 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, 1996 and
1995, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 1997 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.



                                                        COOPERS & LYBRAND L.L.P.


Princeton, New Jersey
February 5, 1998


                                      F-2


Coopers & Lybrand L.L.P., a registered limited liability partnership, is a
member firm of Coopers & Lybrand (International)
<PAGE>

                      ROBERTS PHARMACEUTICAL CORPORATION
                          CONSOLIDATED BALANCE SHEETS
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                       December 31,      December 31,       December 31,
 ASSETS                                                                        1995              1996               1997
                                                                     ---------------   ---------------    ---------------
<S>                                                                  <C>               <C>                <C>
 Current assets:
      Cash and cash equivalents                                            $ 16,357          $ 87,125           $ 42,950
      Marketable securities                                                  13,649             7,793             39,887
 Accounts and Notes Receivable:
      Trade, net                                                             26,318            30,791             24,730
      Shareholder                                                               600             - - -              - - -
      Other                                                                   - - -             2,889                225
 Inventory                                                                   20,785            16,665             19,826
 Deferred tax assets                                                         10,419             9,040              4,962
 Net assets held for sale                                                     4,300               500              3,760
 Other current assets                                                         1,342             2,124              1,647
                                                                     ---------------   ---------------    ---------------
                 Total current assets                                        93,770           156,927            137,987
 Fixed assets, net                                                           15,681            14,945             25,913
 Intangible assets                                                          230,681           183,579            190,724
 Notes receivable                                                             - - -             5,304                729
 Deferred tax asset                                                           - - -            11,216             12,332
 Other assets                                                                   158               254                170
                                                                     ---------------   ---------------    ---------------
                 Total assets                                             $ 340,290         $ 372,225          $ 367,855
                                                                     ===============   ===============    ===============

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Current liabilities:
      Current installments of long-term debt                               $ 34,809           $ 6,376            $ 8,037
      Accounts payable                                                       14,737            15,848             13,188
      Other current liabilities                                              32,236            29,258             18,756
                                                                     ---------------   ---------------    ---------------
                 Total current liabilities                                   81,782            51,482             39,981
 Long-term debt, excluding current installments                              16,183            10,639             10,327
 Deferred tax liabilities                                                     6,311             - - -              - - -
 Other liabilities                                                              547               345                244
 Committments and contingent liabilities (Note 9)                             - - -             - - -              - - -
 Shareholders' equity:
      Class B 5% Convertible Preferred stock, $.10 par
          value 10,000,000 shares authorized, 4,440,225
          issued, 2,721,030 and 475,654 outstanding                           - - -               272                 48
      Common stock, $.01 par value,
          100,000,000 shares authorized,
          18,536,590, 22,961,707 and
          29,536,647 outstanding                                                189               233                299
 Additional paid-in capital                                                 256,296           365,150            372,384
 Cumulative translation adjustments                                            (297)             (301)            (1,250)
 Retained earnings (deficit)                                                (20,484)          (55,358)           (53,941)
 Treasury stock, 387,594 shares of
     common stock, at cost                                                     (237)             (237)              (237)
                                                                     ---------------   ---------------    ---------------
                 Total shareholders' equity                                 235,467           309,759            317,303
                                                                     ---------------   ---------------    ---------------
                 Total liabilities and
                     shareholders' equity                                 $ 340,290         $ 372,225          $ 367,855
                                                                     ===============   ===============    ===============
</TABLE>


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

                                      F-3
<PAGE>

                      ROBERTS PHARMACEUTICAL CORPORATION
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)
<TABLE>
<CAPTION>


 Years ended December 31,                                                        1995             1996                1997
                                                                        --------------   --------------       -------------
<S>                                                                          <C>               <C>                <C>
 Sales and revenue:
      Sales                                                                 $ 113,380         $ 98,075           $ 121,612
      Other revenue                                                                47               36                 896
                                                                        --------------   --------------       -------------
 Total sales and revenue                                                      113,427           98,111             122,508

 Operating costs and expenses:
      Cost of sales                                                            52,870           49,753              51,386
      Research & development                                                    6,108            7,408  (2)         13,146
      Marketing & administration                                               47,576           57,239              58,738
      Intangible write-offs and dispositions                                    - - -           33,906  (2)              -
                                                                        --------------   --------------       -------------
 Total operating costs & expenses                                             106,554          148,306             123,270
                                                                        --------------   --------------       -------------
 Operating income (loss)                                                        6,873          (50,195)               (762)
                                                                        --------------   --------------       -------------
 Other income (expense):
      Interest income                                                           2,050            2,907               5,212
      Interest expense                                                         (3,453)          (1,750)               (755)
      Other income (expense), net                                                  49              188              (2,279)
                                                                        --------------   --------------       -------------
 Total other income (expense)                                                  (1,354)           1,345               2,178
                                                                        --------------   --------------       -------------
 Income (loss) from continuing operations
     before income taxes                                                        5,519          (48,850)              1,416
 Benefit (Provision) for income taxes                                          (2,816)          14,575               1,101
                                                                        --------------   --------------       -------------
 Income (loss) from continuing operations                                       2,703          (34,275)              2,517
                                                                        --------------   --------------       -------------

 Discontinued operations:
      (Loss) from operations of
      discontinued divisions,
      net of tax benefits
      of $2,474, $0,  and $0, respectively                                     (4,547)           - - -               - - -
      Estimated (loss) income on disposal of divisions,
      net of tax benefits (provision)
      of $2,555, ($1,581), and $0 respectively                                (22,498)             556               - - -
                                                                        --------------   --------------
                                                                                                              -------------

 (Loss) income from discontinued operations                                   (27,045)             556                   -
                                                                        --------------   --------------       -------------

 Net (loss) income                                                          $ (24,342)       $ (33,719)            $ 2,517
                                                                        ==============   ==============       =============

 Per share of common stock, basic:
      Net income (loss) from continuing operations                          $    0.15        $   (2.47)(1)(2)       $ 0.06
      Net (loss) income from discontinued operations                            (1.46)            0.03                   -
                                                                        --------------   --------------       -------------
      Net (loss) income                                                     $   (1.31)       $   (2.44)(1)(2)       $ 0.06

 Per share of common stock, fully diluted:
      Net income (loss) from continuing operations                          $    0.15        $   (2.47)(1)(2)       $ 0.06
      Net (loss) income from discontinued operations                            (1.45)            0.03                   -
                                                                        --------------   --------------       -------------
      Net (loss) income                                                     $   (1.30)       $   (2.44)(1)(2)       $ 0.06

 Weighted average number of common shares outstanding:
      Basic                                                                18,536,590       19,132,863          29,414,440
     Diluted                                                               18,622,744       19,132,863          29,496,767
</TABLE>
________________________

(1)  Includes a $.61 per share charge pursuant to a 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 and purchased research and development. See Note 4.





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

                                       F-4
<PAGE>

                      ROBERTS PHARMACEUTICAL CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
<TABLE>
<CAPTION>


                                                                                Years Ended December 31,
----------------------------------------------------------------------------------------------------------------------
                                                                                1995             1996            1997
----------------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>               <C>           <C>
 Cash flows from operating activities:
     Net income (loss)                                                     $ (24,342)       $ (33,719)        $ 2,517
     Adjustments to reconcile net income (loss)
         to net cash flows from operating activities:
         Depreciation and amortization                                         7,164            7,531           6,940
         Provision for losses on receivables                                     130            - - -             143
         Provision for product sales returns                                   7,669            6,041           5,994
         Provision for inventory obsolescence                                  - - -            4,611           1,941
         Write down of intangible assets                                       - - -           14,364           - - -
         Loss on sale of intangible assets                                     - - -            7,621           - - -
         Loss on abandonment of leasehold improvements                         - - -               71           - - -
         Loss on (income from) discontinued operations                        22,498             (556)          - - -
         Foreign currency (losses) gains                                         (31)             387           - - -
         Change in accounts receivable                                         1,187           (2,544)          6,572
         Change in other assets                                                1,144             (483)            (60)
         Change in inventory                                                  (1,819)            (627)         (5,436)
         Change in accounts payable and
             other liabilities                                                12,460           (3,337)        (14,430)
         Impact of discontinued operations                                    (3,298)          (2,582)           (629)
----------------------------------------------------------------------------------------------------------------------
             Total adjustments                                                47,104           30,497           1,035
----------------------------------------------------------------------------------------------------------------------
     Net cash provided by (used in)
         operating activities                                                 22,762           (3,222)          3,552
----------------------------------------------------------------------------------------------------------------------
 Cash flows from investing activities:
     (Investment in) redemption of marketable securities                      13,013            5,856         (32,094)
     Purchases of intangible assets                                           (1,552)          (4,762)         (9,058)
     Proceeds from sale of intangible assets                                   - - -            1,600           - - -
     Purchases of fixed assets                                                  (226)            (168)        (11,986)
     Collection on notes receivable                                            - - -            - - -           6,738
     Impact of discontinued operations                                          (243)           - - -           - - -
----------------------------------------------------------------------------------------------------------------------
     Net cash (used in) provided by
         investing activities                                                 10,992            2,526         (46,400)
----------------------------------------------------------------------------------------------------------------------
 Cash flows from financing activities:
     Payments on notes payable and long
         term debt                                                           (28,061)         (36,773)         (6,588)
     Net proceeds from issuance of common stock                                  803            9,923           1,075
     Net proceeds from issuance of preferred stock                             - - -           99,247           6,000
     Cash dividends paid                                                       - - -             (476)         (1,629)
     Impact of discontinued operations                                            (7)            (397)          - - -
----------------------------------------------------------------------------------------------------------------------
     Net cash (used in) provided by financing
         activities                                                          (27,265)          71,524          (1,142)
----------------------------------------------------------------------------------------------------------------------
     Effect of exchange rate changes on cash
         and cash equivalents                                                     49              (60)           (185)
----------------------------------------------------------------------------------------------------------------------
 Change in cash and cash equivalents                                           6,538           70,768         (44,175)
 Beginning cash and cash equivalents                                           9,819           16,357          87,125
----------------------------------------------------------------------------------------------------------------------
 Ending cash and cash equivalents                                           $ 16,357         $ 87,125        $ 42,950
----------------------------------------------------------------------------------------------------------------------

 Supplemental cash flow information:
     Interest paid                                                           $ 2,979          $ 2,396           $ 823
     Income taxes paid                                                           268              233              29
 Non cash activities:
     Present value of notes issued in
     connection with product acquisitions                                   $ 18,279            - - -         $ 7,250
     Notes received for sale of Pronetics
     subsidiaries and product rights                                           - - -          $ 8,193           - - -
</TABLE>



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

                                       F-5
<PAGE>

                      ROBERTS PHARMACEUTICAL CORPORATION
                      CONSOLIDATED STATEMENTS OF CHANGES
                            IN SHAREHOLDERS' EQUITY
                                (In thousands)
<TABLE>
<CAPTION>

                                                                                    Additional   Retained
                                  5% Preferred Stock          Common Stock          Paid-In      Earnings
                                  Shares       Amount      Shares       Amount      Capital      (Deficit)
                                ----------   ----------  -----------   ---------   ----------   ---------

<S>                             <C>              <C>     <C>           <C>         <C>          <C>
 Balance,
   December 31, 1994                                     18,807,794       $ 188    $ 255,994     $ 3,858

 Issuance of common stock                                   116,390           1          302       - - -
 Cumulative translation
   adjustment                                                 - - -       - - -        - - -       - - -
 Year ended December 31, 1995
   net loss                                                   - - -       - - -        - - -     (24,342)
                                                         -----------   ---------   ----------   ---------

 Balance,
   December 31, 1995                                     18,924,184         189      256,296     (20,484)

 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                         - - -        - - -        - - -       - - -        - - -     (33,719)
 5% Preferred dividends             - - -        - - -        - - -       - - -        - - -      (1,155)
 5% Preferred stock converted
   to common stock              (1,478,970)       (148)   3,774,059          37          111       - - -
                                ----------   ----------  -----------   ---------   ----------   ---------

 Balance,
   December 31, 1996            2,721,030          272   23,349,301         233      365,150     (55,358)

 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                       - - -        - - -        - - -       - - -        - - -       2,517
 5% Preferred dividends             - - -        - - -        - - -       - - -        - - -      (1,100)
 5% Preferred stock converted
   to common stock              (2,485,601)       (249)   6,477,695          65          184       - - -
                                ----------   ----------  -----------   ---------   ----------   ---------

 Balance,
   December 31, 1997              475,654         $ 48   29,924,241       $ 299    $ 372,384    $ (53,941)
                                ==========   ==========  ===========   =========   ==========   =========
<CAPTION>

                                  Cumulative                Total
                                  Translation Treasury   Shareholders'
                                  Adjustment   Stock        Equity
                                 ---------   ----------   ----------

<S>                              <C>         <C>          <C>
 Balance,
   December 31, 1994               $ (674)      $ (237)   $ 259,129

 Issuance of common stock           - - -        - - -          303
 Cumulative translation
   adjustment                         377        - - -          377
 Year ended December 31, 1995
   net loss                         - - -        - - -      (24,342)
                                 ---------   ----------   ----------

 Balance,
   December 31, 1995                 (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)
 5% Preferred dividends             - - -        - - -       (1,155)
 5% Preferred stock converted
   to common stock                  - - -        - - -            -
                                 ---------   ----------   ----------

 Balance,
   December 31, 1996                 (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
 5% Preferred dividends             - - -        - - -       (1,100)
 5% Preferred stock converted
   to common stock                  - - -        - - -        - - -
                                 ---------   ----------   ----------

 Balance,
   December 31, 1997             $ (1,250)      $ (237)   $ 317,303
                                 =========   ==========   ==========
</TABLE>



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

                                       F-6
<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
          majority-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 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

                                      F-7
<PAGE>

                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     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 allowance
     for doubtful accounts, inventory obsolescence, future product returns,
     depreciation and amortization, value of intangibles, employee benefit
     plans, taxes, discontinued operations 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 ten 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 totalling $25.4 million.

     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 for 1997 are accumulated as a
     separate component of Shareholders' Equity.  In 1996 and 1995, Monmouth's
     accounts were remeasured in dollars and translation gains and losses were
     included in income in those years.

          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.


                                      F-8
<PAGE>

                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

               Included in the balance sheet at December 31, 1995, 1996 and 1997
     is debt of $1,849, $832 and $0, respectively, denominated in British
     pounds.

     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,
     1995, 1996 and 1997, the reserve for uncollectible accounts amounted to
     $1,754, $1,440 and $440, respectively.

               At December 31, 1997, 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 $40,086 at December 31, 1997.  These investment
     securities mature within one year.

     Earnings (loss) per share
     -------------------------

               As of December 15, 1997, the Company has adopted the provisions
     of SFAS 128.  Basic income (loss) per share was computed based on the
     weighted average number of shares of Common Stock actually outstanding.
     Diluted earnings per share were calculated based on the Common Shares
     outstanding plus the dilutive effect of potentially dilutive common stock.



                                      F-9
<PAGE>

                       ROBERTS PHARMACEUTICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  Net income (loss) from operations used in the calculation of earnings per
share was calculated as follows:

<TABLE>
<CAPTION>

                                                                                      December 31,
                                                                         ---------------------------------------
                                                                            1995          1996          1997
                                                                         -----------  ------------  ------------
<S>                                                                      <C>          <C>           <C>

Net (loss) income from
 operations                                                              $     2,703  $   (34,275)  $     2,517
Preferred dividends                                                              ---       (1,155)         (859)
Discount on 5%
 Preferred Stock                                                                 ---      (11,670)          ---
                                                                         -----------  -----------   -----------
Net (loss) income for
 computation of earnings
 per share                                                               $     2,703  $   (47,100)  $     1,658
                                                                         ===========  ===========   ===========

  Total common stock and potentially dilutive common stock for the
calculation of diluted earnings per share were calculated as follows:

                                                                                      December 31,
                                                                         ---------------------------------------
                                                                            1995          1996          1997
                                                                         -----------  ------------  ------------

<S>                                                                      <C>          <C>           <C>
Weighted average common
 shares outstanding                                                       18,536,590   19,132,863    29,414,440
Dilutive effect of:
 Preferred Stock Warrants                                                        ---          ---        82,246
 Stock Options                                                                86,154          ---            81
                                                                         -----------  -----------   -----------
Total shares for computation
 of EPS                                                                   18,622,744   19,132,863    29,496,767
                                                                         ===========  ===========   ===========
</TABLE>

          The effect of conversion of the original shares of Preferred Stock for
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.  Other common stock equivalents which could result in dilution of
earnings in future periods, depending on the market price of the Company's
Common Stock, are stock options held by employees and Common Stock Warrants
granted to the Placement Agent of the 5% Preferred Stock.  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-10
<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. This Statement is effective for fiscal years
beginning after December 15, 1997.  Reclassification of financial statements for
earlier periods provided for comparative purposes is required.

          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 information about major
customers.

                                      F-11
<PAGE>

                       ROBERTS PHARMACEUTICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          This Statement is effective for financial statements for periods
beginning after December 15, 1997.  In the initial year of application,
comparative information for earlier years is to be restated.

          The adoption of these Statements will not have an impact on the
Company's consolidated results of operation, financial position or cash flow.

Reclassification
----------------

          Certain items have been reclassified to conform to the current year
presentation.


2. INVENTORY
   ---------

   Inventory consists of:
                                        December 31,
                                -------------------------
                                   1995     1996     1997
                                   ----     ----     ----
                                $ 3,539  $ 2,393  $ 2,487
   Raw materials
   Work-in-process                  ---      ---      451
   Finished goods                17,246   14,272   16,888
                                -------  -------  -------
                                $20,785  $16,665  $19,826
                                =======  =======  =======

3. FIXED ASSETS, NET

   Fixed assets consist of:
                                        December 31,
                                -------------------------
                                   1995     1996     1997
                                -------  -------  -------

    Land and buildings          $14,823  $14,925  $23,440
    Office furniture and
         equipment                2,588    2,616    5,466
    Leasehold improvements          109      ---      ---
                                -------  -------  -------
                                 17,520   17,541   28,906
    Less: Accumulated
     depreciation and
     amortization                 1,839    2,596    2,993
                                -------  -------  -------
                                $15,681  $14,945  $25,913
                                =======  =======  =======



                                      F-12
<PAGE>

                       ROBERTS PHARMACEUTICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

    Intangible assets consist of:
                                        December 31,
                                  ----------------------------
                                      1995      1996      1997
                                  --------  --------  --------

    Product rights acquired       $245,287  $204,611  $217,919
    Goodwill                         3,812       ---       ---
                                  --------  --------  --------
                                   249,099   204,611   217,919
    Less: Accumulated
           amortization             18,418    21,032    27,195
                                  --------  --------  --------
                                  $230,681  $183,579  $190,724
                                  ========  ========  ========

     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).  If the estimate of
     undiscounted cash flows to be generated by the remaining intangible assets
     decreases in the future, an additional write-down of those assets may be
     required.

               Operating income and net loss for 1996 were negatively affected
     by the purchase of development products, 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 CURRENT LIABILITIES
      -------------------------

      Other current liabilities consist of:

                                    December 31,
                              -------------------------
                                1995    1996  1997
                                ----    ----  ----

Accrued estimated loss on
 discontinuation of VRG
 and Homecare                 $ 8,848  $   448  $   ---
Accrued estimated future
 product returns               15,444   15,570    9,364
Accrued estimated Medicaid
 rebates                        1,734    1,169    1,150
Income taxes payable            3,707    7,019    3,022
Other accrued liabilities       2,503    5,052    5,220
                              -------  -------  -------
                              $32,236  $29,258  $18,756
                              =======  =======  =======

                                      F-13
<PAGE>

                       ROBERTS PHARMACEUTICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

          Product return reserves of $2,336, $728, and $728 have been offset
against accounts receivable for 1995, 1996, and 1997, respectively.


6.  LONG-TERM DEBT
    --------------

    Long-term debt consists of:
                                                December 31,
                                       ---------------------------
                                          1995      1996      1997
                                       -------   -------   -------
    Notes payable on product
     acquisitions at an imputed
     weighted average interest
     rate of 5.75%, 6.0%
     and 6.0%                          $50,846   $16,960   $18,364
    Other notes payable                    146        55       ---
                                       -------   -------  --------
                                        50,992    17,015    18,364
  Less: Current installments            34,809     6,376     8,037
                                       -------   -------  --------
                                       $16,183   $10,639   $10,327
                                       =======   =======  ========

Principal payments in each of the next five years on long-term debt outstanding
at December 31, 1997 amount to:

     1998........................................... $ 8,037
     1999...........................................   7,025
     2000...........................................   3,302
     2001...........................................     ---
     2002...........................................     ---
                                                     -------
                                                     $18,364
                                                     =======

Notes payable are collateralized by acquired product rights.

7.  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 1995, 1996 and 1997, consistent
with the provisions of SFAS No. 123, the Company's net loss and per share data
would have been changed to the pro forma amounts indicated below:

                                                  Years Ended December 31,
                                                  ------------------------
                                               1995         1996         1997
                                               ----         ----         ----

Net Income (Loss)    As reported           $(24,342)    $(33,719)     $  2,517
                     Pro forma             $(24,361)    $(36,925)     $( 4,620)
                     ---------

Income (Loss)        As reported-Basic     $(  1.31)    $(  2.44)     $   0.06
  per share          As reported-Diluted   $(  1.30)    $(  2.44)     $   0.06
                     Pro forma - Both      $(  1.30)    $(  2.61)     $(  0.19)
                     ----------------

  The fair value of stock options used to compute pro forma net loss and per
share disclosures is the estimated present value at grant date using


                                      F-14
<PAGE>

                       ROBERTS PHARMACEUTICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     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 and 1997 was $7.17 and $8.48, 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.
     These warrants expire in July of 1999.

       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. These
     warrants expire in August 1998.  In 1997, 240,225 of these warrants were
     exercised, resulting in gross proceeds of $6 million.  The 5% Preferred
     Stock is convertible into a number of shares of Common Stock which depends,
     in part, upon the conversion price in effect at the time of the conversion.
     The 5% Preferred Stock is convertible into Common Stock at a 10% discount
     to market.  Of the total 4,440,225 5% Preferred Stock shares issued,
     3,964,571 shares have been converted into shares of Common Stock, of which
     2,485,601 shares were converted in 1997.  On August 29, 1998, all remaining
     outstanding shares of the 5% Preferred Stock will be automatically
     converted into Common Stock at the conversion price then in effect.

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

       In prior years, executives and key employees of the Company were granted
     stock option awards under the Incentive Stock Option 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

                                      F-15
<PAGE>

                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     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 1,500,000.

               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.

               Performance awards, restricted stock awards and other stock unit
     awards may also be granted.  Presented below is the total number of the
     Company's shares of Common Stock represented by awards granted to the
     Company's employees for the years ended December 31, 1996 and December 31,
     1997.

<TABLE>
<CAPTION>
                             Weighted    Weighted
                             Average     Average
                           Market Value    1996    Market Value  1997
                           ------------  --------  ------------  ----
<S>                        <C>           <C>       <C>           <C>

     Stock Awards                $11.25    16,500           ---   ---

     Stock appreciation
     rights granted              $11.50   255,000           ---   ---
</TABLE>

               On December 3, 1996, out-of-the-money options were cancelled and
     reissued with a revalued exercise price of $11.375.  All other terms and
     conditions remained in effect.

               The following table summarizes the status of the Company's stock
     options, outstanding and exercisable at January, 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>
$10.06 to $11.375  1,371,763  2 yrs,11 mos   $11.02   663,463       $11.37

$11.50 to $11.75    857,060  4 yrs,11 mos    $11.51   511,910       $11.50

$12.375 to $13.25    58,500  5 yrs,3 mos     $12.73    22,500       $12.86
</TABLE>

                                     F-16
<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 and December 31, 1997.

<TABLE>
<CAPTION>

                                         Year Ended             Year Ended
                                        December 31,           December 31,
                                            1996                   1997
                                -------------------------------------------
                                 Weighted               Weighted
                                  Average                Average

                                 Exercise               Exercise
        Stock Options             Price        Shares     Price     Shares
-------------------------------------------------------------------------------
<S>                            <C>           <C>         <C>      <C>
Options outstanding                 $19.060  1,175,710   $11.803  2,108,415
 January 1

Granted                             $11.480  1,113,250   $ 10.78    549,848

Exercised                           $11.910    (51,058)  $11.375    (76,825)

Forfeited/Expired                   $18.553   (129,487)  $ 11.42   (294,125)

Options outstanding                 $11.803  2,108,415   $ 11.45  2,287,313
 December 31

Options available for grant
 - Equity Incentive Plan             23,502
</TABLE>

8.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.

          The (provision) benefit for income taxes
consists of:

<TABLE>
<CAPTION>
                         Year Ended December 31,
                         1995      1996      1997
                       ---------  -------  --------
<S>                    <C>        <C>      <C>
Current
  Federal               $(3,641)  $   ---  $ 4,055
  State and foreign         (57)      ---      ---
                        -------   -------  -------
Total current           $(3,698)  $   ---  $ 4,055
                        =======   =======  =======

Deferred
  Federal                   728    14,487   (3,148)
  State and foreign         154        88      194
                        -------   -------  -------
Total deferred          $   882   $14,575  $(2,954)
                        =======   =======  =======
</TABLE>

                                     F-17
<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,
                                                1995      1996       1997
                                              --------  ---------  --------
<S>                                           <C>       <C>        <C>

(Provision) benefit at
  federal statutory rates                     $(1,876)   $16,609    $ (478)
Non-deductible expense                           (404)      (530)     (262)
State taxes net of federal effect                  (3)       ---       ---
Research and development credits                  ---       (266)      ---
Foreign items                                    (405)      (809)     (523)
Other                                            (128)      (429)     (337)
Adjustment to prior year
  liabilities                                     ---        ---     2,701
                                              -------    -------    ------
(Provision) benefit for
  income taxes                                $(2,816)   $14,575    $1,101
                                              =======    =======    ======
</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, 1996 and
December 31, 1997 are presented below:
<TABLE>
<CAPTION>
                                        December 31, 1996         December 31, 1997
Federal                                 Debits           Credits  Debits   Credits
-------                                 ---------------  -------  -------  -------
<S>                                     <C>                <C>      <C>      <C>

Inventory                                       $   718  $   ---  $   340  $   ---
Allowance for bad debts                             855      ---      181      ---
Accrued liabilities                               7,139      ---    5,144      ---
Depreciation                                        ---      409      ---      412
Foreign items                                     2,533      ---    3,159      ---
Amortizable intangibles                             ---      314      ---    1,657
Loss on Discontinuance                              152      ---      ---      558
AMT credit                                          ---      ---      449      ---
Other                                               158      ---      138      ---
Net Operating Losses                             10,104      ---   12,054      ---
State taxes                                       4,799      290    3,994      ---
                                                -------  -------  -------  -------
Total                                            26,458    1,013   25,459    2,627
  Valuation allowance -
   state and foreign                             (5,197)     ---   (5,538)     ---
                                                $21,261  $ 1,013  $19,921   $2,627
                                                =======  =======  =======  =======
</TABLE>

          At December 31, 1997, the Company has federal net operating loss
carryforwards of approximately $35.5 million which expire in the year 2011 and
2012, foreign net operating loss carryforwards of approximately $9.8 million and
net operating loss carryforwards for state tax purposes of approximately $64,635
which expire at various dates through 2004.

                                     F-18
<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
     $17.3 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.

     9.  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, 1997
                                                  -----------------

     1998.......................................        $1,524
     1999.......................................           960
     2000.......................................           445
     2001.......................................           277
     2002.......................................            82

               Rent expense for the years ended December 31, 1995, 1996, and
     1997 was $1,321, $177, and $257 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 totalling $46.3 million and
     purchase PROAMATINE inventory in the amount of $50.1 million through 2002.

     10.EMPLOYEE BENEFITS
        -----------------

               The Company has employment agreements with certain of its
     employees which provide them with continued compensation for a period of
     two to five years in the event of their termination by the Company and
     provide certain of them with additional payments on termination by the
     Company equal to three to five times a portion of their average bonus and
     incentive compensation from July 1, 1988 to their termination date.

                                     F-19
<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. In the years ended
     December 31, 1995, 1996 and 1997, the Company contributions amounted to
     $231, $197, and $258 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, and the Company can choose to terminate the
     plan at any time.  In 1995, 1996 and 1997, the Company recorded
     contributions amounting to $217, $206, and $248 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 to the plan based on employee contributions and makes
     discretionary contributions to the plan based on employee compensation.

     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 year ended December 31, 1997 was
     4,045 with a total value of $39,388.

     11.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 has been 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.

                                     F-20
<PAGE>

                      ROBERTS PHARMACEUTICAL CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     12.ACQUISITIONS
        ------------

               In 1995, 1996, and 1997, the Company acquired inventory,
     trademarks and other rights to several products from various pharmaceutical
     companies.  The aggregate price of these acquisitions was $22.3 million,
     $5.1 million, and $15.3 million respectively, consisting of cash and notes
     payable.  The intangibles related to acquisitions are being amortized on
     the straight-line basis over periods ranging from twenty-five to forty
     years.

     13.SEGMENT REPORTING
        -----------------

               Selected financial information of the Company's geographic
     segments for the years ended December 31, 1995, 1996, and 1997 are as
     follows:


                                      Years Ended December 31,
                                  ---------------------------------

       Geographic segments           1995        1996       1997
                                   ---------  ----------  ---------

     Revenues - nonaffiliates
          Domestic                 $ 90,177    $ 74,422   $ 91,613
          Foreign                    23,250      23,689     30,895
                                   --------    --------   --------
                                   $113,427    $ 98,111   $122,508
                                   ========    ========   ========

     Revenues - affiliates
          Domestic                 $    483    $    174   $    178
                                   ========    ========   ========

     Operating income (loss)
          Domestic                 $ 10,795    $(46,501)  $  4,471
          Foreign                    (1,424)    ( 1,513)   ( 2,179)
          Adjustments and
           eliminations            $ (2,498)   $( 2,181)  $( 3,054)
                                   --------    --------   --------
                                   $  6,873    $(50,195)  $(   762)
                                   ========    ========   ========
     Identifiable assets at end
      of period
          Domestic                 $294,247    $321,809   $304,038
          Foreign                    48,541      52,597     66,494
          Adjustments and
           eliminations              (2,498)     (2,181)   ( 2,975)
                                   --------    --------   --------
                                   $340,290    $372,225   $367,557
                                   ========    ========   ========

               Intercompany revenues are based on market conditions at the time
     of sale.  Foreign operations primarily include the results of operations in
     the United Kingdom, Canada and the Organization for Economic Cooperation
     and Development countries which include the Republic of Ireland, certain
     other Western European countries and Japan.

                                     F-21
<PAGE>

                       ROBERTS PHARMACEUTICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     14.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 Homecare of $9.7 million, including a
     provision of $1.9 million for operating losses until disposal of which $1.3
     million was used in the third and fourth quarters of 1995.

               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.  An additional loss of $2.5 million on disposal of the Hauck
     division was recognized in 1996.  This expense was due to impairment of the
     division's product intangibles.

               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 discontinuing
     VRG of $12.8 million, including a provision of $5.0 million for operating
     losses until disposal. At December 31, 1995, net assets expected to be
     realized, consisting primarily of receivables and plant and equipment,
     totaled $0.5 million.  In 1996, the Company reassessed the estimated
     operating loss which resulted in an income statement impact of a $3.1
     million gain.  In January, 1998, the Company signed a Letter of Intent to
     sell VRG's operations subject to the execution of a definitive acquisition
     agreement and the successful completion of due diligence by the purchaser.
     To date, the Company and the purchaser are negotiating the terms of said
     definitive acquisition agreement and the transaction is expected to close
     within the month of April, 1998.

                                     F-22
<PAGE>

                       ROBERTS PHARMACEUTICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     15.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.

                                                    December 31, 1997
                                        ------------------------------------
                                        Carrying Amount           Fair Value
                                        ---------------           ----------

Cash and cash equivalents                $  42,950                $42,950
Marketable securities                       39,887                 40,086
Long-term debt                              18,364                 18,033

The carrying amounts in the table are included in the
 consolidated balance sheet under the indicated captions.

16.QUARTERLY RESULTS OF OPERATIONS

   The following table presents summarized quarterly results
   for 1997 (in thousands, except per share data).

                                          (Unaudited)

                          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/(1)/    1,288   (2,995)/(2)/    3,315/(3)/

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


                                     F-23
<PAGE>

                       ROBERTS PHARMACEUTICAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

         The following table presents summarized quarterly results for 1996 (in
     thousands, except per share data).

                                           (Unaudited)

                        First     Second        Third           Fourth
                        -----     ------        -----           ------

    Revenues            $17,228   $26,803       $21,688        $32,392
    Gross profit          8,288    13,325        11,331         15,378
    Net earnings         (4,212)    2,215/(4)/   (3,133)/(5)/  (28,589)/(5)/

    Diluted net earnings
      per share         $  (.23)  $   .12       $  (.40)/(6)/   $(1.94)/(6)/





     (1)  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.

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

     (3)  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.

     (4)  Includes a $4.0 million credit for the reassessment of the reserve for
          discontinued operations, established in 1995.

     (5)  Includes a $25.4 million charge for the purchase of certain
          development products and the write-off and sale of certain intangible
          assets.  (See Note 4.)

     (6)  Includes $.21 and $.40 per share charge for the third and fourth
          quarter, respectively, pursuant to the 10% discount to market upon
          conversion of the 5% Preferred Stock into Common Stock.  Such amount
          was not included in the Company's third quarter 1996 10-Q.  The amount
          is included based on the SEC position effective March 13, 1997 on such
          discounts.  In addition, includes $.02 and $.04 per share charge for
          the third and fourth quarter, respectively, pursuant to dividends paid
          and accrued on 5% Preferred Stock.

                                     F-24
<PAGE>

                                                                     SCHEDULE II

                       ROBERTS PHARMACEUTICAL CORPORATION
                       VALUATION AND QUALIFYING ACCOUNTS
                      FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
                                                           Additions
                                Balance         ----------------------------------                     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)         $   440

Allowance for return goods        $16,298            $ 5,667          $(3,000)/(1)/   $(9,130)/(2)/    $ 9,835
</TABLE>

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

(2)  $1,671 of the decrease in the allowance for returned goods is related to a
     change in the estimation of goods actually returned. Items returned due to
     billing and shipping errors are no longer included in the estimation as
     these items are restocked and salable.

                                     F-25
<PAGE>

                       ROBERTS PHARMACEUTICAL CORPORATION
                       VALUATION AND QUALIFYING ACCOUNTS
                      FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
                                                           Additions
                                Balance         ----------------------------------                     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      $ 1,754            $   ---          $  ---          $   314          $ 1,440

Allowance for return goods        $17,780            $ 6,041          $  ---          $ 7,523          $16,298
</TABLE>

                                     F-26
<PAGE>

                       ROBERTS PHARMACEUTICAL CORPORATION
                       VALUATION AND QUALIFYING ACCOUNTS
                      FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
                                                           Additions
                                Balance         ----------------------------------                     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    $2,195                $  130               ---         $  (571)        $ 1,754

Allowance for return goods      $8,951                $7,669            $6,154(1)      $(4,994)        $17,780
</TABLE>

(1)  Allowance established in connection with product acquisitions.

                                     F-27
<PAGE>

                                 Exhibit Index

Exhibit No.
-----------


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.

                                      E-1
<PAGE>

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 Istituto Biologico Chemioterapico (ABC)
               S.p.A.

+   10.2       License Agreement (United Kingdom), dated November 6, 1989,
               between Roberts and Istituto 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

               (b)   License and Distribution Agreement, dated December 1, 1985,
                     between Roberts and Hafslund Nycomed Pharma AG.

                                      E-2
<PAGE>

         o    10.17      License Agreement, dated October 31, 1988, between the
                         Salk Institute for Biological Studies and Roberts.

   (*)  zz    10.20.1    Employment Agreement, dated as of November 19, 1996,
                         between Roberts and John T. Spitznagel.

   (*)  zz    10.20.2    Employment Agreement, dated as of November 19, 1996,
                         between Roberts and Peter M. Rogalin.

   (*)  bb    10.21      Employment Agreement, dated as of December 20, 1994,
                         between Roberts and Robert A. Vukovich.

   (*)  bb    10.23      Employment Agreement, dated as of December 20, 1994,
                         between Roberts and Robert W. Loy.

   (*)  bb    10.24      Employment Agreement, dated as of December 20, 1994,
                         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.

                                      E-3
<PAGE>

               (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, 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 Inc., a
                    wholly owned subsidiary of Roberts.

                                      E-4
<PAGE>

               (h)  Assignment, dated December 24, 1991, between John Wyeth &
                    Brother Limited and Roberts Laboratories Inc., 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.

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.

                                      E-5
<PAGE>

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 the Company. 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(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; 5.19 - Packaging
               Charges.

#     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.

                                      E-6
<PAGE>

           (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 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.

                                      E-7
<PAGE>

          (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).

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.

   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.

                                      E-8
<PAGE>

     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).

     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.

     21.       Subsidiaries of the Registrant.

     23.       Consent of Coopers & Lybrand L.L.P.

cc   27.       Financial Data Schedules.

                                      E-9
<PAGE>

(*)       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).

+         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 pursuant 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).

@         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.

                                      E-10
<PAGE>

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.

cc        Financial Data Schedules are submitted in electronic format only.

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 on 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.

                                      E-11