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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

         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
                  For the transition period from____________to__________

                         Commission file number 1-11557

                            PHARMACIA & UPJOHN, INC.
             (Exact name of Registrant as specified in its charter)

                   Delaware                                    98-0155411
        -------------------------------                     -------------------
        (State or other jurisdiction of                     (I.R.S. Employer
        incorporation or organization)                      Identification No.)

            95 Corporate Drive, Bridgewater, New Jersey 08807 U.S.A.
            --------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number,
              including area code                              888/768-5501

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

       Common Stock (par value $.01)                   New York Stock Exchange
     Rights to Purchase Preferred Stock                New York Stock Exchange
               (Title of class)               (Name of each exchange on which
                                                            registered)

           Securities registered pursuant to Section 12(g) of the Act:
                                      None.

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 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. [X]

The registrant estimates the aggregate market value of the voting stock held by
non-affiliates of the registrant (based upon the NYSE--Composite Transactions
closing price on January 31, 1998 as reported in The Wall Street Journal and
treating all executive officers and directors of the Company and all beneficial
owners of 5% or more of the Registrant's voting stock as affiliates) was
approximately $19,494,311,322.

The number of shares of Common Stock, $.01 par value, outstanding as of January
31, 1998 is 507,245,672 shares.



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                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the 1998 Proxy Statement are incorporated into Parts III and IV of
this report. Portions of the 1997 Annual Report to Shareholders are incorporated
into Parts II and IV of this report.

Certain statements contained in this report, such as statements concerning the
Company's anticipated financial or product performance and other non-historical
facts, are "forward-looking statements" (as such term is defined in the Private
Securities Litigation Reform Act of 1995). Since these statements are based on
factors that involve risks and uncertainties, actual results may differ
materially from those expressed or implied by such forward-looking statements.
Such factors include, among others: management's ability to make further
progress under the Company's turnaround plan; the Company's ability to
successfully market new and existing products in new and existing domestic and
international markets; the success of the Company's research and development
activities and the speed with which regulatory authorizations and product
rollouts may be achieved; fluctuations in foreign currency exchange rates; the
effects of the Company's accounting policies and general changes in generally
accepted accounting practices; the Company's exposure to product liability
lawsuits and contingencies related to actual or alleged environmental
contamination; domestic and foreign social, legal and political developments,
especially those relating to healthcare reform and product liabilities; general
economic and business conditions; the Company's ability to attract and retain
current management and other employees of the Company; and other risks and
factors detailed in the Company's other Securities and Exchange Commission
filings.

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                                     PART I

ITEM 1.  BUSINESS

OVERVIEW

                  Pharmacia & Upjohn, Inc. ("the Company") is a global
pharmaceutical group engaged in the research, development, manufacture and sale
of pharmaceutical and healthcare products. The Company was formed in November
1995 through the combination (the "Combination") of Pharmacia Aktiebolag
("Pharmacia") and The Upjohn Company ("Upjohn"). The Company is engaged in
discovery research, product development, manufacturing, sales and marketing of
various prescription human pharmaceutical products.

                  In addition to prescription human pharmaceuticals, the Company
manufactures and sells certain nonprescription drugs; manufactures
pharmaceutical chemicals and intermediates for use in its own products and for
sale to others; researches, develops, manufactures and markets pharmaceutical
products for both food and companion animals; and markets specialty products in
hospital care, diagnostics and nutritional supplements.

INDUSTRY BACKGROUND

                  The world market for advanced human pharmaceuticals is
concentrated in the U.S., Western Europe and Japan. Regulatory pressures and
pricing constraints have intensified as governmental and private healthcare
providers strive to control the rapid growth in healthcare expenditures.
Pharmaceuticals are increasingly chosen according to the therapeutic benefit in
relation to cost, such that pharmaceuticals that minimize hospital stays and
reduce treatment costs are increasingly preferred. It is therefore essential for
pharmaceutical companies to develop new improved and more efficient products
that increase the total value both for buyers and patients. The Company believes
that these developments have also led to more intense competition in the
pharmaceutical industry worldwide. Innovation, high-quality research and
development focused on unmet medical needs, rapid product introduction, wide
geographical distribution and cost efficiency are likely to be key competitive
factors in the pharmaceutical industry.

PRESCRIPTION PHARMACEUTICAL PRODUCTS

                  The Company researches, develops, manufactures and markets
human pharmaceutical products to healthcare providers worldwide. The following
summary discusses the Company's principal human pharmaceutical products.

                  DETROL(R)/DETRUSITOL(R) Tablets (tolterodine tartrate tablets)
has been approved for marketing in the U.S. under the trademark DETROL and in
Europe under the trademark DETRUSITOL. This product offers a treatment for
overactivity in the bladder, thus reducing symptoms such as increased frequency
and urge to urinate, as well as urge incontinence episodes. The U.S. patent
covering DETROL Tablets expires in 2012, and in 2009 in Europe and Japan,
although patent term extensions may be possible.

                  GENOTROPIN(TM), a recombinant human growth hormone identical
to the body's own hormone, is marketed in Europe, Japan and the U.S. The Company
recently reacquired exclusive sales and marketing rights to GENOTROPIN in Japan
from Sumitomo Pharmaceuticals. GENOTROPIN products are not covered by product
patents, but patents covering processes to manufacture the product and delivery
systems for the products offer some level of exclusivity for the specific
presentations sold by the Company. GENOTROPIN, which promotes longitudinal

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bone growth, is used for the treatment of growth hormone deficiency in children
and adults and for patients with renal insufficiency.

                  The Company produces several drugs for CNS disorders,
including XANAX(R), HALCION(R) and SERMION(R), none of which have significant
patent protection and are subject to intense generic competition. XANAX Tablets,
containing alprazolam, are used for symptomatic relief of anxiety with and
without depressive symptoms and for the treatment of panic disorder. The use
patent for the panic disorder indication for XANAX expires in 2002. HALCION
Tablets, containing triazolam, are a hypnotic agent used for the treatment of
insomnia. SERMION Tablets are used primarily to treat cognitive and behavioral
disorders related to senile dementia.

                  EDRONAX (reboxetine), for the treatment of major depression,
has been approved for marketing in several European countries and will be
submitted for U.S. approval. European patents provide protection until 2001 and
U.S. patents provide protection until 1999, although patent term extensions may
be possible.

                  XALATAN(R) (latanoporost ophthalmic solution) is used in the
U.S. for the treatment of open-angle glaucoma and ocular hypertension in
patients who are either intolerant of, or insufficiently responsive to, other
intraocular pressure-lowering medications. Approval for marketing in Europe is
pending. XALATAN is covered by a patent in the U.S. expiring in 2011 and in
Europe and Japan in 2009, although patent term extensions in Europe and Japan
may be possible.

                  HEALON(R) Solution for Intraocular Use is a viscoelastic
product which includes sodium hyaluronate and is used primarily in cataract
surgery to facilitate the implantation of plastic intraocular lenses ("IOLs")
without injuring the sensitive cells lining the cornea and functions as a soft
surgical instrument. The Company markets HEALON and HEALON GV(R), a more viscous
fluid form, directly to ophthalmologists in Europe, the U.S. and Japan and
through independent distributors in certain other countries.

                  The Company is one of the world's leading producers of
anticancer drugs. Its most important products in the oncology area are
FARMORUBICIN(R) (or PHARMORUBICIN(R)) and ADRIAMYCIN(R) for use in chemotherapy.
Each of these products is used in the treatment of breast cancer as well as
other solid tumors. Both are among the world's most frequently prescribed
anticancer drugs. ADRIAMYCIN was the Company's first anthracycline preparation
and is no longer subject to patent protection. Subsequent research efforts to
reduce the toxicity and increase the efficacy of ADRIAMYCIN led to the
development of FARMORUBICIN, a second generation anthracycline product used
primarily to treat solid tumors (primarily breast and bladder cancer) and
lymphomas. Although the product patents on FARMORUBICIN have generally expired,
patents on the best selling formulation of FARMORUBICIN do not expire until
2006.

                  CAMPTOSAR(R)  (irinotecan   hydrochloride   injection),  an
injectable DNA topoisomerase-I inhibitor pro-drug licensed from Yakult Honsha
for the U.S. and certain other territories, is marketed in the U.S. for
refractory colorectal cancer. CAMPTOSAR Injection is protected by a patent in
the U.S. until 2004, with a patent term extension until 2007 currently pending.

                  The Company also produces ZAVEDOS(TM)/IDAMYCIN(R) (idarubicin
hydrochloride), an anthracycline used to treat acute leukemia that can be
administered both intravenously and orally, as well as ESTRACYT(R), which is
used for the treatment of advanced prostate cancer. Based on clinical tests to
date, ZAVEDOS is superior to standard therapy in

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extending  the  survival  of  certain  patients  who  suffer  from acute
myeloblastic leukemia. Although the last product patents on ZAVEDOS expire in
1999-2002, patents on a new formulation do not expire until 2006. ESTRACYT/EMCYT
has no patent protection and is subject to competition from other products and
therapies. ZINECARD(R) (dexrazoxane for injection) sold in the U.S. and Canada,
is a preparation for reducing cardiac side effects in women with metastatic
breast cancer who are undergoing treatment with ADRIAMYCIN.

                  FRAGMIN(R) Injection is a low molecular weight heparin product
for the prevention of thrombosis in connection with surgery, during
hemodialysis, in the treatment of acute deep vein thrombosis and (in the U.K.)
in the treatment of unstable angina. FRAGMIN is protected by patents in the
U.S., Europe and Japan, with patent expiration dates ranging from the year 2000
in some European countries to 2005 in the U.S.

                  The Company provides a broad line of antibiotic products
including CLEOCIN(R) (or DALACIN(R)) and LINCOCIN(R) products. CLEOCIN
PHOSPHATE(R) is an injectable form of clindamycin that is used in the treatment
of certain life-threatening anaerobic infections. CLEOCIN T(R) is a topical
formulation for treatment of acne. CLEOCIN(R) Vaginal Cream is used to treat
bacterial vaginosis. LINCOCIN is used in the treatment of serious infections
caused by many strains of gram-positive bacteria. The Company has semi-exclusive
U.S. marketing rights to VANTIN(R) Tablets and Oral Suspension, an advanced
cephalosporin antibiotic, under patents licensed from Sankyo Company, Ltd., the
last of which expires in the U.S. in late 2001.

                  The Company produces various forms of chemical modifications
of hormone products under the trademark MEDROL(R) or DEPO-MEDROL(R), which are
used to treat a number of inflammatory and allergic conditions. SOLU-CORTEF(R)
Sterile Powder and SOLU-MEDROL(R) Sterile Powder are injectable corticosteroid
products.

                  The Company markets several steroid hormone products having a
variety of uses, including the treatment of allergic reactions, inflammation,
asthma and certain hormone deficiencies. The Company's most important synthetic
hormone product is PROVERA(R) Tablets, which is a female sex hormone replacement
agent. The Company also markets DEPO-PROVERA(R) Contraceptive Injection and
OGEN(R) Tablets and Vaginal Cream, an estrogen replacement product licensed from
Abbott Laboratories. The Company intends to increase its marketing in this area
directed towards the patient or ultimate consumer, who is increasingly
participating in the choice of product.

                  CAVERJECT(R) (alprostadil injection), a treatment for erectile
dysfunction due, among other reasons, to diabetes, cardiovascular problems,
injuries and aging, is self-administered by intracavernosal injection. CAVERJECT
is no longer covered by patents.

                  DOSTINEX(R) Tablets, an oral medication for
hyperprolactinemia, a condition that can cause absence of menstruation
(amenorrhea) and excessive breast milk discharge (galactorrhea), is effective
and better tolerated than bromocriptine, the only other product indicated for
hyperprolactinemia. DOSTINEX is covered by a patent in the U.S. expiring in
2002, although an extension application which would extend the patent term until
late 2005 is currently pending. Patent expiration dates for the product in
European countries under Supplemental Protection Certificates generally expire
between 2002 and 2006.

                  MIRAPEX (pramipexole tablets) has been approved in the U.S.
and Europe (sold under the tradename MIRAPEXIN) for the treatment of the signs
and symptoms of Parkinson's disease. The product was licensed from
Boehringer-Ingelheim, which has co-promotion rights in the U.S. A centralized
European Commission application was filed in late 1996 under the mutual

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recognition procedure. The compound patent expires in 2005 in Europe and Japan
and in 2006 in the U.S. CABASER(R) (cabergoline) has also been approved in
several European countries for treatment of Parkinson's disease and is subject
to European patent protection until at least 2002.

                  The Company markets MYCOBUTIN Capsules(R), for the prevention
of Mycobacterium Avium Complex, a fatal bacterial infection that is a common
cause of death in HIV-positive individuals and people with AIDS. MYCOBUTIN is
marketed to specialists in infectious diseases and to internists. The relevant
patent rights in the U.S. have recently been extended until 1999 and Orphan Drug
Exclusivity expiration is in late 1999. Corresponding patent rights expire in
Europe generally during the period of 2000 to 2003 with the exception of Italy
which expire in the year 2012.

                  RESCRIPTOR(R) (delavirdine mesylate tablets), a non-nucleoside
reverse transcriptase inhibitor, has been approved in the U.S. for the treatment
of HIV-1 infection in combination with appropriate antiretroviral agents when
therapy is warranted. The product is protected by a U.S. patent until 2013.

                  The Company has worldwide marketing rights except in the U.S.
to VISTIDE(R) (cidofovir injection), indicated for the treatment of
cytomegalovirus (CMV) infection in the retina in AIDS patients unsuitable for
other therapy.

                  The Company's major oral antidiabetes agents are MICRONASE(R)
Tablets, containing glyburide, and GLYNASE(R) PresTab(R) Tablets, also
containing glyburide, for the treatment of non-insulin-dependent diabetes. The
Company is experiencing increased levels of competition from generic substitutes
in this area.

                  The Company also markets certain prostaglandin products,
including PROSTIN E2(R) Vaginal Suppository, which is generally used for
pregnancy disorders, and PROSTIN VR PEDIATRIC(R) Sterile Solution, for
cardiovascular use. PREPIDIL(R) Gel, used for cervical ripening, is protected by
U.S. patents until 2004.

                  ESTRING(R) Vaginal Ring, a local hormone replacement therapy
for post-menopausal women, is a soft intravaginal plastic ring that secretes a
low dose of natural estrogen over a period of three months.
The product is sold in the U.S. and in several European countries.

                  The Company markets several products for intravenous
nutrition, including products that meet the body's nutritional needs for fats,
amino acids, vitamins and trace elements. The Company's largest selling
nutritional product is the fat emulsion INTRALIPID(R), launched in 1962.
INTRALIPID has no patent protection and competes with other fat emulsions in all
its major markets. The Company also markets KABIMIX and VITRIMIX, pre-mixed
nutritional supplements, and GLAMIN and VAMIN(R), amino acid solutions.
Management believes that there are limited opportunities for growth in this area
except in developing countries such as China, where there are developing
healthcare systems and large patient populations.


CONSUMER HEALTH CARE PRODUCTS

                  The Company develops, manufactures and markets nonprescription
healthcare products to drug stores, food stores and mass merchandisers in the
U.S. and Europe.

                  The Company  developed  and  manufactures  NICORETTE(R)  and
NICOTROL(R) for smokers who seek a medical product to aid in smoking cessation.
NICORETTE Chewing Gum is

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sold over-the-counter in the U.S. by SmithKline Beecham Consumer
Pharmaceuticals. The Company's NICORETTE Chewing Gum and Transdermal Patch
administer nicotine to the body through slow-release formulations in order to
alleviate withdrawal symptoms. Although the Company's U.S. patent covering
nicotine polacrilex, the active ingredient in NICORETTE Chewing Gum, expired in
August 1992, the Company has market exclusivity for NICORETTE Chewing Gum in the
U.S. until 1999, during which time no abbreviated new drug applications (ANDAs)
for the product can be approved by the U.S. Food and Drug Administration. In
other countries, the Company has no patent protection for NICORETTE Chewing Gum;
however, the NICORETTE Transdermal Patch is patented in certain jurisdictions,
and is sold in the U.S. by McNeil Consumer Products Company.

                  In addition, the Company produces and sells ROGAINE(R) Extra
Strength for Men and ROGAINE(R) Regular Strength, a 5% and 2%, respectively,
solution of minoxidil applied topically to treat hair loss in men with male
pattern baldness and, in the Regular Strength formulation, in women with
androgenetic alopecia or hereditary hair loss. The product is also sold in
numerous foreign countries. Although the U.S. patents covering ROGAINE expired
in February 1996, ROGAINE Extra Strength for Men is covered by a three-year ANDA
moratorium. ROGAINE is sold over-the-counter in the U.S. and competes with
several generic 2% topical minoxidil products not produced by the Company.

                  During 1997, the Company acquired NASALCROM, a nasal spray for
allergic rhinitis, PEDIACARE, a line of children's cough and cold products, and
MICATIN, an antifungal to treat athlete's foot, from Johnson & Johnson in
exchange for MOTRIN IB, an analgesic, and MYCITRACIN, a topical antibiotic.

                  The Company also manufactures and distributes other
non-prescription products including KAOPECTATE(R) products, for diarrhea;
MICROLAX(R) Enema, for constipation; CORTAID(R) products, anti-inflammatory
topical products; the family of UNICAP(R) vitamin products; and DRAMAMINE(R),
anti-motion sickness products. The Company also holds a license from
Hoechst-Roussel Pharmaceuticals Inc. for exclusive U.S. rights to the
nonprescription laxative products DOXIDAN(R) and SURFAK(R).

RESEARCH AND DEVELOPMENT

                  The Company aims to direct its R&D efforts to develop new
innovative pharmaceuticals and other healthcare products offering high
therapeutic benefits in a number of therapeutic areas in which the Company
believes it has the ability to establish a leading global position. The Company
also seeks to expand the markets for its existing products by identifying new
indications and administrative forms as well as by expanding their international
market penetration and extending product life, including by converting suitable
patented products to over-the-counter products. The Company concentrates its R&D
resources on selected areas both where it has in-house expertise and where there
are identified substantial unmet medical needs. The Company's research
activities are being focused on four medically important therapeutic areas,
including infectious disease, metabolic disease, CNS and oncology, and are
conducted principally in the Company's three regional centers in Kalamazoo,
Michigan, Stockholm, Sweden and Milan, Italy.

                  The R&D process has historically taken from 10 to 15 years
from discovery to initial product launch and is conducted in various stages.
During each stage of development, there is a substantial risk that the desired
objectives will not be achievable and that the product will therefore have to be
abandoned or the objectives modified. During the "preclinical" stage, generally
the first two to four years, research is carried out in order to identify an
active substance

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in the laboratory and then perform pharmacology and toxicology studies of its
effects in various animals. Before testing in humans, an application for the
compound must be filed and processed by the requisite regulatory authorities.
Testing in humans is performed in different clinical phases to assure the safety
and efficacy of the new compound. In clinical Phase I, studies to establish the
tolerance, absorption, distribution, metabolism and excretion of the compound
are performed on healthy human subjects. Clinical Phase II studies are performed
on a limited number of patients to determine efficacy and to define an effective
dose. Clinical Phase III comparative studies are then performed on a larger
number of patients in order to further establish efficacy and safety. Together,
Phases I, II and III typically take from three to five years to complete.
Thereafter, an application containing all data for the proposed drug is sent to
regulatory authorities for approval, which may take an additional one to two
years. Further clinical trials, called Phase IV trials, are generally carried
out after product launch to continue to monitor the efficacy and safety of a new
drug.

                  In the area of infectious disease research, oxazolidinones are
a potentially important new class of antibiotics that have a novel mechanism of
action: inhibition of mRNA translation. A compound (linezolid) is in Phase III
clinical studies. In vitro studies show the oxazolidinones to be effective
against gram-positive bacteria including antibiotic-resistant strains of
staphylococci, streptococci and enterococci. Management believes that
oxazolidinones have the potential to meet a significant unmet need due to the
increasing incidence of resistant bacterial infections. Linezolid is claimed in
a U.S. patent currently set to expire in 2014, but which could be extended
depending on the date of NDA approval. Patents issuing on patent applications
filed in various other countries will similarly expire generally in 2014, but
may be subject to extension in certain countries.

                  The Company's primary research area in the field of metabolic
disease concerns growth disorders. In addition, research projects are currently
in process in the field of obesity, diabetes, arteriosclerosis and vascular
disease. Research and development in the area of growth and growth factors is
concentrated on a broader spectrum of indications for GENOTROPIN. In addition,
the Company is pursuing further development of convenience products to
administer GENOTROPIN.

                  Oncology is another major research focus for the Company with
discovery and development efforts directed and focused on finding effective
treatments for various forms of tumors, particularly those which respond poorly,
or are resistant, to currently available therapy. The research programs cover
chemotherapy, hormone therapy, immunotherapy of cancer as well as novel
approaches and mechanisms of antitumor action which are being pursued mainly in
discovery phase.

                  Development candidates licensed by the Company include
almotriptan, an anti-migraine compound for which the Company will have exclusive
U.S. marketing rights, and thrombopoietin (TPO), a compound being evaluated for
use in treating cancer patients suffering from chemotheraphy.

ANIMAL HEALTH

                  The Company researches, develops, manufactures and markets a
broad range of pharmaceutical products for both food and companion animals.
These products are sold worldwide to veterinarians, feed manufacturers,
distributors and growers who choose the Company's products primarily because of
their efficacy and suitability for particular uses, as well as price and
quality. Major products include NAXCEL(R) (or EXCENEL(R)) Sterile Powder, an
antibiotic for bovine and swine respiratory disease and early chick mortality;
LINCO-SPECTIN(R) Soluble Powder and

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Premix,  a combination  lincomycin/spectinomycin  antibiotic;
LINCOMIX(R) 20 and LINCOMIX 50 Feed Medication, which are feed-additive
antibiotics; MGA(R) Premix, which is a growth-promoting feed additive for
feedlot heifers; various products for the treatment of mastitis, LINCOCIN(R),
small-animal antibiotics; and LUTALYSE(R) (or DINOLYTIC(R)) Sterile Solution,
which is used to synchronize breeding performance in mares and cattle.

                  In 1997, the Company sold its animal health vaccine business
to Bayer Corporation.

CHEMICAL AND CONTRACT MANUFACTURING

                  The Company researches, develops, manufactures and markets
bulk pharmaceutical chemicals and selected high-technology specialty
(nonpharmaceutical) chemicals. In addition, the Company manufactures finished
dosage forms for sale to third parties.

BIOTECHNOLOGY

                  The Company owns 45% of Amersham Pharmacia Biotech, Ltd.
("APB"), one of the world's leading suppliers of biotechnology equipment,
systems, reagents and chemicals for pharmaceutical and biotechnology companies
and for life science research in the public and private sectors. APB was formed
in 1997 by the combination of the Company's biotechnology supply business with
the life sciences business of Amersham International plc. The business area's
traditional products are for use in laboratory-scale chromatography and
electrophoresis, two key separation technologies for biomolecules, and also
produces reagents, chemicals and systems used by researchers to perform
experiments in the areas of molecular and cell biology, and media and systems
devoted to large-scale purification of substances prepared by biotechnological
methods in the pharmaceutical industry. In recent years, the market for
biotechnology research instruments and other products has been adversely
affected by budgeting constraints in universities and publicly funded research
centers, resulting in increasing competition and downward price pressure.

DIAGNOSTICS

                  The Company is the world leader in the area of in vitro
allergy diagnostics. The Company's main allergy diagnostic product, the
Pharmacia CAP System(R), is a highly automated laboratory system that enables
testing from patient blood samples for allergenic sensitivity to nearly 500
substances. The Company believes that no competitor in the allergy diagnostic
business markets a product that can test allergenic sensitivity to as many
different substances. The Company markets the Pharmacia CAP System to diagnostic
laboratories worldwide. Patents on the Pharmacia CAP System expire in 2004.
During 1996, a new easy-to-use, low-volume test instrument, UniCAP 100(R), was
introduced for use by small to medium size laboratories and family physicians.

                  The Company's largest market for allergy diagnostics is Japan,
while sales in the U.S. are relatively low because of the relatively high
incidence of more traditional in vivo (skin prick) diagnostic testing by medical
professionals in the U.S.

PRODUCTION

                  The Company produces its products mainly in the U.S., Sweden,
Italy, Belgium, Ireland and Puerto Rico.

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                  The Company purchases a variety of raw materials for use in
its manufacturing processes. When available, the Company has a policy of
maintaining multiple sources of supply for materials. The Company obtains its
supplies of raw materials from several companies in a number of countries. The
Company has not experienced any difficulty in obtaining a sufficient supply of
raw materials in recent years and believes that it will be able to obtain them
in sufficient quantities in the future. However, the price of its raw materials
may vary from year to year.

MARKETING AND DISTRIBUTION

                  The Company's products are sold worldwide. The Company markets
its products through its own marketing companies or through local distributors
and licensees. As part of its ongoing commitment to its customers, the Company
periodically organizes educational programs to provide specialist doctors with
information on the most recent product innovations and scientific advances.

                  The Company's marketing companies are organized by
geographical markets to meet the requirements of the markets in which they
operate.

COMPETITION

                  The pharmaceutical industry is highly competitive. The
Company's principal competitors consist of major international corporations with
substantial resources. A drug may be subject to competition from alternative
therapies during the period of patent protection and thereafter it will be
subject to further competition from generic products. The manufacturers of
generic products typically do not bear the related research and development
costs and consequently are able to offer generic products at considerably lower
prices than the branded equivalents. A research-based pharmaceutical company
will therefore normally seek to achieve a sufficiently high profit margin and
sales volume during the period of patent protection to justify the original
investment and to fund research for the future. There are, however, a number of
factors which may enable products to remain profitable once patent protection
has ceased. These include the establishment of a strong brand image with the
prescriber or the consumer, supported by an active trademark registration and
enforcement policy, and the development of a broader range of alternative
formulations than the generic manufacturer typically supplies.

                  As is the case for the pharmaceutical industry in general, the
introduction of new products and processes by competitors may affect pricing
levels or result in product replacement for existing products, and there can be
no assurances that any of the Company's products may not become outmoded,
notwithstanding patent or trademark protection. In addition, increasing
governmental and other pressures towards the dispensing of generic products in
substitution for brand-name drugs may increase competition for products no
longer covered by patents.

                  Over the last few years, the pharmaceutical industry has
experienced increased vertical and horizontal consolidation, and the breadth of
products offered and distribution capabilities of a company may become a
competitive feature. The Company competes with other pharmaceutical companies in
discovering or licensing new chemical entities useful in treating medical
conditions. In addition, significant changes in marketing conditions are
occurring in the U.S., Swedish and other pharmaceutical markets, including
decreased pricing flexibility, restrictions on promotional and marketing
practices and the impact of managed care, particularly with respect to product
selections and pricing concessions.

                  The Company's competitive position depends in part upon its
ability to develop innovative, cost-effective new products, as well as new
indications for, and improvements in,

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existing products. Its competitive position also depends upon, among other
things, its ability to compete on the basis of price as well as to maintain a
reputation for quality, efficacy and cost-effectiveness with the specialist
doctors and hospital purchasing groups to which its products are targeted, as
well as with the wider group of customers which includes pharmacies,
wholesalers, hospitals and insurers.

                  In addition, the Company's ability to maintain long-standing
and interactive relationships with specialist doctors and its ability to attract
and retain qualified scientific and other personnel, develop and implement
production and marketing plans, obtain and maintain patent protection for
selected products in its significant markets and secure adequate capital
resources are also important competitive factors.

PRICING

                  In addition to the normal competitive forces that affect the
level of prices, a further constraint exists in the form of price controls in
most countries in which the Company sells its products. These controls arise
either by law or because the government or other healthcare providers in a
particular jurisdiction are the principal purchasers of the product or reimburse
purchasers for the cost of the product. Price control mechanisms operate
differently from jurisdiction to jurisdiction and can result in large price
differentials between markets, which may be aggravated by currency fluctuations.
These price differentials are exploited by traders (parallel importers) who
purchase branded products in lower-priced markets for resale in higher-priced
markets.

PRODUCT REGULATION

                  Like other pharmaceutical companies, the Company is subject to
strict controls on the manufacture, labeling, distribution and marketing of its
products. Further controls exist on the non-clinical and clinical development of
pharmaceutical products. Of particular importance is the requirement to obtain
and maintain regulatory approval for a pharmaceutical product from a country's
national regulatory authority before such product may be marketed in a
particular country.

                  The submission of an application to a regulatory authority
does not guarantee that a license to market the product will be granted.
Furthermore, each regulatory authority may impose its own requirements and may
delay or refuse to grant, or may require additional data before granting, an
approval, even though the relevant product has been approved in another country.
Regulatory authorities also have administrative powers that include product
recalls, seizure of products and other sanctions.

                  The U.S., Europe, Japan, Australia and Canada have very high
standards for technical appraisal and consequently, in most cases, a lengthy
approval process. The time taken to obtain approval varies by country, but
generally takes from six months to four years from the date of application,
depending upon the quality of the data produced, the degree of control exercised
by the regulatory authority, the efficiency of its review procedure and the
nature of the product. The trend in recent years has been toward greater
regulation and higher standards with higher levels of standardization among
jurisdictions.

                  In Europe, the European Agency for the Evaluation of Medicinal
Products (the "Medicinal Products Agency") was created in July 1993 and opened
on January 1, 1995. Based in London, the Medicinal Products Agency will give
opinions on medicinal products by using two

                                      -9-


<PAGE>   12



new procedures, a centralized community procedure and a decentralized procedure,
the latter being based on the principle of mutual recognition of assessments.

                  In the U.S., most human and animal pharmaceutical products
manufactured or sold by the Company are subject to regulation by the FDA as well
as by other federal and state agencies. The FDA regulates the introduction of
new drugs, advertising of prescription drug products, manufacturing, laboratory
and clinical practices, labeling, packaging and record-keeping with respect to
drug products. The FDA also reviews the safety and effectiveness of marketed
drugs and may require withdrawal of products from the market and modification of
labeling claims where necessary. In addition, the manufacturing, marketing and
use of Animal Health drug products are closely regulated by the FDA.

                  Government approval of new drugs under the federal Food, Drug
and Cosmetic Act requires substantial evidence of safety and efficacy. As a
result of this requirement, as interpreted by the FDA, the length of time and
the laboratory and clinical information required for approval of an NDA is
considerable.

                  The FDA has adopted streamlined procedures for the approval of
duplicate drugs (drugs containing the same active ingredient as the originator's
product), including abbreviated NDAs. Approval of abbreviated NDAs may not be
made effective prior to expiration of valid patents. The FDA has established a
similar expedited approval process for antibiotics. The availability of the
abbreviated NDA and expedited antibiotic approval processes has reduced the time
required to obtain FDA approval of some competing products and has facilitated
generic competition.

                  At the state level, so-called "generic substitution"
legislation permits the dispensing pharmacist to substitute a different
manufacturer's version of a drug for the one prescribed. In a number of states,
such substitution is mandatory unless precluded by the prescribing physician.

                  U.S. pharmaceutical manufacturers are required to provide
rebates to state governments for prescriptions covered by Medicaid. The issue of
further price controls on sales of prescription drugs continues to be considered
in Congress and various states, and additional federal or state legislation to
limit prices of prescription drugs is possible.

                  It is difficult to predict the ultimate effect of streamlined
approval of duplicate or generic drugs, "generic substitution," the Medicaid
reimbursement and rebate programs and possible price limitations. However, the
Company believes that its development of patented and exclusively licensed
products may moderate the impact of programs and legislation focusing mainly on
products available from multiple suppliers.

                  Financial information about industry segments and financial
information about foreign and domestic operations and export sales is contained
in the Company's financial statements.


                                    EMPLOYEES

                  The Company has approximately 30,000 employees worldwide,
although the number is changing based on realignment of operations and related
reductions in force.

                                      -10-


<PAGE>   13


                  The Company believes that it has good relations with its
employees. Employees at several non-U.S. locations are represented either by
freely elected unions or by legally mandated workers' councils or similar
organizations.


                              ENVIRONMENTAL MATTERS

                  The Company is subject to extensive environmental legislation
and regulation, requiring substantial environmental compliance costs, including
capital expenditures related to future production. Projects related to the
prevention, mitigation and elimination of environmental effects are implemented
worldwide.

                  Since several capital projects are undertaken for both
environmental control and other business purposes, such as production process
improvements, it is difficult to estimate the specific capital expenditures for
environmental control. However, it is estimated that capital expenditures for
environmental protection will exceed $25 million in both 1998 and 1999.
Operating expenses for compliance with environmental protection laws and
regulations in 1997 are estimated to have been in excess of $50 million. It is
estimated that such operating expenses for 1998 will also be in excess of $50
million. Cash payments charged to the environmental reserves in 1997 were
approximately $10 million and are estimated to be approximately $10 million in
1998.


ITEM 2.           PROPERTIES

                  The Company's various businesses operate through a number of
offices, research laboratories and production facilities throughout the world
with principal locations in Kalamazoo, Michigan; Stockholm, Uppsala and
Helsingborg, Sweden; Milan, Italy; and Puurs, Belgium. The Company also has
major facilities in Japan and Puerto Rico. The Company will establish its
headquarters in Bridgewater, New Jersey. The Company believes its properties to
be adequately maintained and suitable for their intended use and its production
facilities to have a capacity adequate for its current needs.


ITEM 3.           LEGAL PROCEEDINGS

                  Various suits and claims arising in the ordinary course of
business, primarily for personal injury alleged to have been caused by the use
of the Company's products, are pending against the Company and its subsidiaries.
Product liability is a significant commercial risk for the Company. Substantial
damage awards have been made in certain jurisdictions against pharmaceutical
companies based upon claims for injuries allegedly caused by the use of their
products.

                  The Company is involved in several administrative and judicial
proceedings relating to environmental concerns, including actions brought by the
U.S. EPA and state environmental agencies for remedial cleanup at approximately
50 sites, including site clean-up at the Company's discontinued industrial
chemical operations in North Haven, Connecticut. The Company's estimate of the
ultimate cost to be incurred in connection with these environmental situations
could change due to uncertainties at many sites, such as potential cleanup
remedies, the estimated cost of cleanup and the Company's ultimate share of a
site's cost.

                                      -11-


<PAGE>   14



                  Based on information currently available and the Company's
experience with lawsuits of the nature of those currently filed or anticipated
to be filed which have resulted from business activities to date, the amounts
accrued for product and environmental liabilities are considered to be adequate.

                  While it is not possible to predict or determine the outcome
of legal actions brought against the Company, or the ultimate cost of
environmental matters, the Company continues to believe that the unaccrued costs
and liabilities associated with such matters will not have a material adverse
effect on the Company's consolidated financial position, and unless there is a
significant deviation from the historical pattern of resolution of these issues,
there should not be a material adverse effect on the Company's results of
operations or liquidity.

                  The Company is a party along with a number of other defendants
(both manufacturers and wholesalers) in several federal civil antitrust
lawsuits, some of which have been consolidated and transferred to the Federal
District Court for the Northern District of Illinois. These suits, brought by
independent pharmacies and chains, generally allege unlawful conspiracy, price
discrimination and price fixing and, in some cases, unfair competition, and
specifically allege that the Company and the other named defendants violated the
following: (1) the Robinson-Patman Act by giving substantial discounts to
hospitals, nursing homes, mail-order pharmacies and health maintenance
organizations ("HMOs") without offering the same discounts to retail drugstores,
and (2) Section I of the Sherman Antitrust Act by entering into illegal vertical
combination with other manufacturers and wholesalers to restrict certain
discounts and rebates so they benefited only favored customers. The Federal
District Court for the Northern District of Illinois certified a national class
of retail pharmacies in November 1994. Similar actions by proposed retailer
classes have been filed in the state courts of Alabama, California, Minnesota,
Mississippi and Wisconsin. The California and Wisconsin courts have certified
retailer classes. Motions to certify are pending in Alabama and Minnesota. The
suits seek treble damages and an injunction prohibiting the alleged illegal
practices. Fourteen of the twenty-four pharmaceutical company defendants (not
including the Company) have reached settlement agreements with the plaintiffs in
the class action pending in the Northern District of Illinois for amounts
ranging from $10 to $60 million. These settlements were approved by the court in
1996.

                  Actions have been filed in 14 states and the District of
Columbia on behalf of proposed consumer classes seeking damages based on the
same alleged conduct. The Courts in California and the District of Columbia have
certified the proposed consumer classes. After removal, the Federal District
Court denied certification of a proposed Alabama consumer class, but a similar
action was later remanded to the state court where it is pending. The state
courts in Maine, Michigan and Minnesota denied certification of a consumer
class, and plaintiffs' appeals are pending. The state courts in Colorado, New
York and Washington dismissed complaints on behalf of proposed consumer classes.
Plaintiffs appealed the dismissal in Washington and New York, and those appeals
are pending. Similar actions by proposed consumer classes are pending in the
state courts of Arizona, Florida, Kansas, North Carolina, Tennessee and
Wisconsin. The U.S. Federal Trade Commission has instituted an inquiry into
whether pharmaceutical companies, including the Company, may have violated
federal antitrust laws in connection with establishing prices and rebates.

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

                  No matters were submitted to a vote of security holders during
the quarter ended December 31, 1997.

                                      -12-


<PAGE>   15



                                     PART II

ITEM 5.           MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS

                  The Company

                  The Common Stock is listed and traded on the New York Stock
Exchange (the "NYSE") under the symbol PNU. As of January 31, 1998, there were
36,914 holders of record of the Common Stock. Swedish Depositary Shares, each
representing one share of Common Stock, are traded on the Stockholm Stock
Exchange under the symbol PH&U.

                  Information regarding the market prices and dividends for the
Company's Common Stock and related stockholder matters appearing under the
caption "Quarterly Data" in the 1997 Annual Report to Shareholders (Exhibit 13)
is hereby incorporated by reference.

ITEM 6.           SELECTED FINANCIAL DATA

                  Incorporated herein by reference to the Registrant's Annual
                  Report to Shareholders filed as Exhibit 13 hereto.

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

                  Incorporated herein by reference to the Registrant's Annual
                  Report to Shareholders filed as Exhibit 13 hereto.

ITEM 8.           FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                  Incorporated herein by reference to the Registrant's Annual
                  Report to Shareholders filed as Exhibit 13 hereto.

ITEM 9.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE

                  None.

                                      -13-



<PAGE>   16



                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Background information for the Board of Directors, including Fred
         Hassan, the Company's President and Chief Executive Officer, is
         incorporated herein by reference from the Company's definitive proxy
         statement for the annual meeting of shareholders to be held on May 8,
         1998.

         In addition to Fred Hassan, the following are the Company's executive
         officers:

                  Goran A. Ando, M.D., age 48, Executive Vice President and
         President, Research & Development. He had been Executive Vice President
         and Deputy Chief Executive Officer of Pharmacia since February 1995,
         and before that had been at Glaxo Holdings p.l.c., where he was
         director of research and development activities.

                  Robert C. Salisbury, age 54, Executive Vice President, Finance
         and Administration, and Chief Financial Officer. He had been Executive
         Vice President and Chief Financial Officer for Upjohn since 1994, and
         before that had been Senior Vice President for Finance and Chief
         Financial Officer.

                  Richard T. Collier, age 44, Senior Vice President and General
         Counsel. He had been Senior Vice President, General Counsel and Member
         of the Executive Council of Rhone-Poulenc Rorer until December 1997. He
         joined Rhone-Poulenc Rorer in 1986 as Assistant Counsel and held
         various positions including Vice President and Assistant to the
         Chairman from 1991 to 1992.

                  Timothy G. Rothwell, age 46, Executive Vice President and
         President, Pharmaceutical Operations. He had been President of
         Rhone-Poulenc Rorer since 1996 and was a member of that Board of
         Directors since January 1997. He joined Rhone-Poulenc Rorer in 1995 as
         Executive Vice President and President, Pharmaceutical Operations.
         Prior to that he was CEO and President of the U.S.
         pharmaceutical business for Sandoz Pharmaceuticals.

                  Christopher J. Coughlin,  age 45, Executive Vice President
         and Chief Financial Officer. He had been President of Nabisco
         International until February 1998. He joined Nabisco International as
         Executive Vice President and Chief Financial Officer in 1996. Prior to
         that he was Chief Financial Officer at Sterling Winthrop, Inc.


                                      -14-



<PAGE>   17


ITEM 11.          EXECUTIVE COMPENSATION

                  Incorporated herein by reference from the Company's definitive
                  proxy statement for the annual meeting of stockholders to be
                  held on May 8, 1998.

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                  Incorporated herein by reference from the Company's definitive
                  proxy statement for the annual meeting of stockholders to be
                  held on May 8, 1998.

ITEM 13.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

                  Incorporated herein by reference from the Company's definitive
                  proxy statement for the annual meeting of stockholders to be
                  held on May 8, 1998.


                                     PART IV

ITEM 14.          EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
                  8-K

         (A)1.    FINANCIAL STATEMENTS

                  The following are included in the 1997 Annual Report to
                  Shareholders (Exhibit 13) and are incorporated by reference
                  into this Form 10-K pursuant to Item 8.

                  Report of Independent Accountants - Coopers & Lybrand, L.L.P.

                  Consolidated Statements of Earnings, Years ended December 31,
                  1997, 1996 and 1995.

                  Consolidated Balance Sheets, December 31, 1997 and 1996.

                  Consolidated Statements of Shareholders' Equity, Years ended
                  December 31, 1997, 1996 and 1995.

                  Consolidated Statements of Cash Flows, Years ended December
                  31, 1997, 1996 and 1995.

                  Note 7. Earnings Per Common Share, Years ended December 31,
                  1997, 1996 and 1995.

                  Note 22. Segment and Geographic Information, Years ended
                  December 31, 1997, 1996 and 1995.

                  Notes to Consolidated Financial Statements.


                                      -15-


<PAGE>   18



         (A)2.    FINANCIAL STATEMENT SCHEDULES

         NOTES:

         (1)      Schedules are omitted because they are either not required,
                  are not applicable or because equivalent information has been
                  included in the financial statements, the notes thereto or
                  elsewhere herein.

         (2)      Financial statements of 50 percent-or-less-owned affiliated
                  persons are omitted because such persons, in the aggregate, do
                  not constitute a significant subsidiary.

         (A)3.    EXHIBITS

<TABLE>
<S>                          <C>
                  (3)(i)     Restated  Certificate of Incorporation  of the Registrant
                             (filed as Exhibit 4.1 to the Registrant's Registration
                             Statement on Form S-8 (Reg. No. 333-03109), and incorporated
                             herein by reference).

                  (3)(ii)    By-laws of the Registrant (filed as Exhibit 4.2 to
                             the Registrant's  Registration Statement on Form  S-8
                             (Reg.  No.  333-03109),  and  incorporated  herein  by
                             reference).

                  (3)(iii)   Amendment to By-laws of the Registrant.

                  (4)(a)     Loan Agreement between Puerto Rico Industrial,
                             Medical and Environmental Pollution Control
                             Facilities Financing Authority and The Upjohn
                             Company, dated as of December 1, 1983, and Trust
                             Agreement between Puerto Rico Industrial, Medical
                             and Environmental Pollution Control Facilities
                             Financing Authority and The Chase Manhattan Bank
                             (National Association), Trustee, dated as of
                             December 1, 1983 (not filed pursuant to Regulation
                             S-K, Item 601 (b)(4)(iii)(A); the Registrant agrees
                             to furnish a copy of these documents to the
                             Securities and Exchange Commission upon request).

                  (4)(b)     Indenture dated as of February 1, 1990, with
                             respect to debt securities issued by the Upjohn
                             Employee Stock Ownership Trust and 9.79% Amortizing
                             Notes, Series A, Due February 1, 2004, issued by
                             the Upjohn Employee Stock Ownership Trust and
                             guaranteed by the Registrant (not filed pursuant to
                             Regulation S-K, Item 601 (b)(4)(iii)(A); the
                             Registrant agrees to furnish a copy of these
                             documents to the Securities and Exchange Commission
                             upon request).

                  (4)(c)     Indenture dated as of August 1, 1991 between the
                             Company and The Bank of New York, as trustee, with
                             respect to Debt Securities to be issued thereunder
                             from time to time (not filed pursuant to Regulation
                             S-K, Item 601(b)(4)(iii)(A); the Registrant agrees
                             to furnish a copy of these documents to the
                             Securities and Exchange Commission upon request.

                  (4)(d)     Rights Agreement, which includes as Exhibit A the forms
                             of Rights Certificate and Election to Exercise and as
                             Exhibit B the form of Certificate of Designation
                             and Terms of the Participating Preferred Stock (filed
                             as Exhibit 4 to the Registrant's Current Report on Form
                             8-K dated February 25, 1997 and incorporated herein by
                             reference).


</TABLE>

                                      -16-


<PAGE>   19


<TABLE>
<S>                          <C>
                  (10)(a)    Form of Indemnification Agreement entered into with
                             each Officer and Director (incorporated by
                             reference to Exhibit (10)(a) to the Registrant's
                             Form 10-K for the year ending December 31, 1995).

                  (10)(b)    Employment Agreement with J.L. Zabriskie dated
                             March 7, 1996 (incorporated by reference to Exhibit
                             (10)(b) to the Registrant's Form 10-K for the year
                             ending December 31, 1995).

                  (10)(c)    Employment Agreement with G.A. Ando dated January
                             4, 1996 (incorporated by reference to Exhibit
                             (10)(c) to the Registrant's Form 10-K for the year
                             ending December 31, 1995).

                  (10)(d)    Employment Agreement with R.C. Salisbury dated
                             January 4, 1996 (incorporated by reference to
                             Exhibit (10)(d) to the Registrant's Form 10-K for
                             the year ending December 31, 1995).

                  (10)(e)    Employment Agreement with Fred Hassan dated May 7,
                             1997 (incorporated by reference to Exhibit (10) to
                             the Registrant's Form 10-Q for the quarter ending
                             June 30, 1997).

                  (10)(f)    Employment Agreement with L.S. Smith dated February
                             25, 1997 (incorporated by reference to Exhibit
                             (10)(f) to the Registrant's Form 10-K for the year
                             ending December 31, 1996).

                  (10)(g)    Employment Agreement with K.M. Cyrus dated March 8,
                             1996 (incorporated by reference to Exhibit (10)(g)
                             to the Registrant's Form 10-K for the year ending
                             December 31, 1996).

                  (10)(h)    Employment Agreement with Richard T. Collier dated
                             November 17, 1997.

                  (10)(i)    Employment Agreement with Timothy G. Rothwell dated
                             December 16, 1997.

                  (10)(j)    Registration Rights Agreement dated as of August
                             20, 1995, among Pharmacia & Upjohn, Inc., The
                             Upjohn Company, Pharmacia Aktiebolag and AB Volvo
                             (filed as Exhibit 10(b) to the Registrant's
                             Registration Statement on Form S-4 (Reg. No.
                             33-61969), and incorporated herein by reference).

                  (10)(k)    Long-Term Incentive Plan (incorporated by reference
                             to Exhibit (10)(h) to the Registrant's Form 10-K
                             for the year ending December 31, 1995).

                  (10)(l)    Annual Incentive Plan (incorporated by reference to
                             Exhibit (10)(i) to the Registrant's Form 10-K for
                             the year ending December 31, 1995).

                  (12)       Computation of Ratio of Earnings to Fixed Charges.

                  (13)       Annual Report to Shareholders.

                  (21)       Subsidiaries of the Registrant.
</TABLE>

                                      -17-


<PAGE>   20


<TABLE>
<S>                          <C>
                  (23)       Consent of Independent Accountants.

                  (27)       Financial Data Schedule.
</TABLE>

         (B)      REPORTS ON FORM 8-K

                  None.




                                     -18-
<PAGE>   21


                                   SIGNATURES

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

                                   PHARMACIA & UPJOHN, INC.




                            By:             /s/ Fred Hassan
                                   -------------------------------------
                                   Fred Hassan
                                   President and Chief Executive
                                   Officer and Director


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

<TABLE>
<CAPTION>

              Signature                                 Title                              Date
              ---------                                 -----                              ----
<S>                                          <C>                                    <C>
    /s/ /Soren Gyll                          Chairman of the Board and Director      February 16, 1998
----------------------------------
            Soren Gyll

    /s/ Fred Hassan                          President and Chief Executive           February 16, 1998
----------------------------------           Officer and Director
            Fred Hassan

    /s/ Robert C. Salisbury                  Executive Vice President (Chief         February 16, 1998
----------------------------------           Financial Officer)
        Robert C. Salisbury

    /s/ Robert G. Thompson                   Senior Vice President (Chief            February 16, 1998
----------------------------------           Accounting Officer)
        Robert G. Thompson

    /s/ Frank C. Carlucci                    Director                                February 16, 1998
----------------------------------
         Frank C. Carlucci

----------------------------------           Director                                February 16, 1998
          Gustaf Douglas

    /s/ M. Kathryn Eickhoff                  Director                                February 16, 1998
----------------------------------
        M. Kathryn Eickhoff

    /s/ Daryl F. Grisham                     Director                                February 16, 1998
----------------------------------
         Daryl F. Grisham

    /s/ William E. La Mothe                  Director                                February 16, 1998
----------------------------------
        William E. La Mothe

    /s/ Berthold Lindquist                   Director                                February 16, 1998
----------------------------------
        Berthold Lindquist

    /s/ Olof Lund                            Director                                February 16, 1998
----------------------------------
             Olof Lund
</TABLE>

                                      -19-


<PAGE>   22
<TABLE>
<CAPTION>
              Signature                                 Title                              Date
              ---------                                 -----                              ----
<S>                                          <C>                                    <C>
    /s/ William D. Mulholland                Director                                February 16, 1998
----------------------------------
       William D. Mulholland

    /s/ William U. Parfet                    Director                                February 16, 1998
----------------------------------
         William U. Parfet

    /s/ Ulla Reinius                         Director                                February 16, 1998
----------------------------------
           Ulla Reinius

    /s/ Bengt Samuelsson                     Director                                February 16, 1998
----------------------------------
         Bengt Samuelsson
</TABLE>


                                      -20-

<PAGE>   23
                                  EXHIBIT INDEX

EXHIBIT NO.                               DESCRIPTION

(3)(iii)                    Amendment to By-laws of the Registrant

(10)(h)                     Employment Agreement with Richard T. Collier

(10)(i)                     Employment Agreement with Timothy G. Rothwell

(12)                        Computation of Ratio of Earnings to Fixed Charges

(13)                        Annual Report to Shareholders

(21)                        Subsidiaries of the Registrant

(23)                        Consent of Independent Accountants

(27)                        Financial Data Schedule