SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549
                            ------------------------
                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended March 31, 2002

                          Commission File No. 000-30123
                            ------------------------

                    FIRST HORIZON PHARMACEUTICAL CORPORATION
             (Exact name of registrant as specified in its charter)


         DELAWARE                                      58-2004779
 (State of incorporation)                            (I.R.S. Employer
                                                  Identification Number)


                   6195 SHILOH ROAD, ALPHARETTA, GEORGIA 30005
    (Address of registrant's principal executive offices, including zip code)


             660 HEMBREE PARKWAY, SUITE 106, ROSWELL, GEORGIA 30076
            (Former principal executive offices, including zip code)


                        ---------------------------------

      (Registrant's telephone number, including area code): (770) 442-9707


     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 [ ]


     As of May 1, 2002, there were 35,243,172 shares of the Registrant's  Common
Stock outstanding.


--------------------------------------------------------------------------------

<PAGE>


                    FIRST HORIZON PHARMACEUTICAL CORPORATION
                                    FORM 10-Q
                                      INDEX



PART I. FINANCIAL INFORMATION (UNAUDITED)                                  PAGE

Item 1.     Balance Sheets at March 31, 2002 and                             1
              December 31, 2001

            Statements of Operations for the three months ended              2
               March 31, 2002 and March 31, 2001

            Statements of Cash Flows for the three months ended              3
               March 31, 2002 and March 31, 2001

            Notes to Condensed Financial Statements                          4

Item 2.     Management's Discussion and Analysis of Financial Condition and  6
               Results of Operations

Item 3.     Quantitative and Qualitative Disclosures about Market Risk       9

PART II. OTHER INFORMATION

Item 1.     Legal Proceedings                                               10

Item 2.     Changes in Securities and Use of Proceeds                       10

Item 3.     Defaults Upon Senior Securities                                 11

Item 4.     Submission of Matters to a Vote of Security Holders             11

Item 5.     Other Information                                               11

Item 6.     Exhibits and Reports on Form 8-K                                11

            Signatures                                                      12



<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                    First Horizon Pharmaceutical Corporation
                           Consolidated Balance Sheets
                  (unaudited, in thousands, except share data)
<TABLE>
<CAPTION>
<S>                                                              <C>                <C>

                                                                  March 31,          December
                                                                    2002             31, 2001
                                                                 ------------       ------------
ASSETS
Current Assets:
       Cash and cash equivalents                                 $    21,066        $    53,458

       Accounts receivable, net of allowance for
         doubtful accounts and discounts of
         $952 and $1,087 at March 31, 2002 and
         December 31, 2001 respectively                               14,468             12,244
       Inventories                                                    11,353              4,363
       Samples and other prepaid expenses                              2,926              1,243
       Taxes receivable                                                    -              1,674
       Deferred tax assets                                               847                323
                                                                 ------------       ------------
                  Total current assets                                50,660             73,305

Property and equipment, net                                              845                710
Other Assets:
       Intangibles, net                                              272,126             92,849
       Deferred tax assets                                             2,140              2,230
       Other                                                           2,873              1,056
                                                                 ------------       ------------
                  Total other assets                                 277,139             96,135

                  Total assets                                       328,644            170,150
                                                                 ============       ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
       Accounts payable                                          $     6,558        $     4,540
       Accrued expenses                                               26,592             22,102
       Deferred purchase price                                        10,000                  -
       Current portion of long-term debt                             137,000                  -
                  Total current liabilities                          180,150             26,642

Long-Term Liabilities:
       Other long term liabilities                                        90                144
                  Total liabilities                                  180,240             26,786

Stockholders' Equity:
       Preferred stock, 1,000,000 shares authorized
         and none outstanding                                             -                  -
       Common stock, $0.001 par value; 40,000,000 shares
           authorized; 27,760,092 and 27,626,002
           outstanding at March 31, 2002 and
           December 31, 2001 respectively                                 28                 28
       Additional paid in capital                                    133,476            131,560
       Deferred compensation                                           (470)              (557)
       Retained Earnings                                              15,370             12,333
                  Total stockholders' equity                         148,404            143,364

                  Total liabilities and stockholders' equity     $   328,644        $   170,150
                                                                 ============       ============

</TABLE>


<PAGE>



                    First Horizon Pharmaceutical Corporation
                      Consolidated Statements of Operations
                (unaudited, in thousands, except per share data)
<TABLE>
<CAPTION>
<S>                                                   <C>                   <C>

                                                            For The Quarter Ended
                                                      ----------------------------------
                                                       March 31,             March 31,
                                                          2002                 2001
                                                      -------------         ------------

Net Revenues                                          $     27,120          $    12,453
Operating costs and expenses
      Cost of revenues                                       4,296                1,771
      Selling, general and administrative expenses,         14,150                7,901
      Depreciation and amortization                          2,197                  396
      Research and development expense                         315                  618
                                                      -------------         ------------
      Total operating costs and expenses                    20,958               10,686
                                                      -------------         ------------

Operating income                                             6,162                1,767
                                                      -------------         ------------

Other (expense) income
      Interest expense                                     (1,414)                  (2)
      Interest income                                          190                  242
                                                      -------------         ------------
      Total other (expense) income                         (1,224)                  240
                                                      -------------         ------------

Income before provision for income taxes                     4,938                2,007
Provision for income taxes                                 (1,901)                (780)
                                                      -------------         ------------

Net income                                            $      3,037          $     1,227

                                                      =============         ============

Net income per common share:
      Basic                                           $       0.11          $      0.06
                                                      =============         ============
      Diluted                                         $       0.11          $      0.06
                                                      =============         ============

Weighted average common shares outstanding:
      Basic                                                 27,660               19,552
                                                      =============         ============
      Diluted                                               28,755               21,589
                                                      =============         ============

</TABLE>


<PAGE>



                    First Horizon Pharmaceutical Corporation
                      Consolidated Statements of Cash Flows
                            (unaudited, in thousands)

<TABLE>
<CAPTION>
<S>                                                                                      <C>                <C>
                                                                                              For The Quarter Ended
                                                                                         ---------------------------------
                                                                                         March 31, 2002       March 31,
                                                                                                                2001
                                                                                         ---------------    --------------
Cash flows from operating activities:
Net income                                                                               $        3,037     $       1,227
Adjustments to reconcile net income to net
  cash provided by operating activities:
          Depreciation and amortization                                                           2,197               396
          Non-cash interest expense                                                                 856                 -
          Deferred income tax benefit                                                              (434)             (119)
          Non-cash compensation expense                                                              87                82
          Reduction in taxes payable - stock option exercises                                       576               904

          Changes in assets and liabilities, net of acquired
             assets and liabilities:
              Accounts receivable                                                                (2,224)             (308)
              Inventories                                                                          (744)              487
              Samples and other prepaid expenses                                                 (1,274)             (189)
              Income taxes receivable                                                             1,674                 -
              Accounts payable                                                                    2,018               124
              Accrued expenses and other                                                          4,436              (633)

                                                                                         ---------------    --------------
                  Net cash provided by operating activities                                      10,205             1,971

Cash flows from investing activities:
       Purchase of products                                                                    (177,556)                -
       Purchase of property and equipment                                                          (299)              (72)

                                                                                         ---------------    --------------
                  Net cash used in investing activities                                        (177,855)              (72)

Cash flows from financing activities:
       Principal payments on long-term debt                                                           -              (221)
       Proceeds from long-term debt                                                             137,000                 -
       Capitalized financing costs incurred                                                      (3,082)                -
       Net proceeds from issuance of common stock                                                 1,340               251

                                                                                         ---------------    --------------
                  Net cash provided by financing activities                                     135,258                30

Net change in cash and cash equivalents                                                         (32,392)            1,929
Cash and cash equivalents, beginning of period                                                   53,458            14,228
                                                                                         ---------------    --------------
Cash and cash equivalents, end of period                                                 $       21,066     $      16,157
                                                                                         ===============    ==============


</TABLE>


<PAGE>


                    FIRST HORIZON PHARMACEUTICAL CORPORATION
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 March 31, 2002
                                   (unaudited)


1.   Basis of Presentation

     The  accompanying   unaudited  interim  financial  statements  reflect  all
adjustments (consisting solely of normal recurring adjustments) which management
considers necessary for fair presentation of the financial position,  results of
operations  and cash  flows of the  Company  for the  interim  periods.  Certain
footnote   disclosures   normally  included  in  financial  statements  prepared
according to generally  accepted  accounting  principles  have been condensed or
omitted  from the interim  financial  statements  as  permitted by the rules and
regulations of the Securities and Exchange  Commission.  Interim results are not
necessarily  indicative of results for the full year. The interim results should
be read in conjunction with the financial  statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended December 31, 2001
(File No. 000-30123) and the Company's  Registration Statement on Form S-1 (File
No. 333-83698).

2.   New Accounting Pronouncements

     In July 2001, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement  of  Financial   Accounting   Standard  ("SFAS")  No.  141,  "Business
Combinations."  SFAS No.  141  eliminates  the  pooling-of  interest  method  of
accounting for business combinations. SFAS No. 141 is effective for any business
combination  completed  after June 30,  2001.  The  Company  does not expect the
application  of SFAS No.  141  will  have a  material  impact  on its  financial
position or results of operations.

     In July 2001,  the FASB issued SFAS No. 142 "Goodwill and Other  Intangible
Assets." Under SFAS No. 142, goodwill and indefinite lived intangible assets are
no longer amortized.  Separate  intangible assets that are not deemed to have an
indefinite life will continue to be amortized over their useful lives.  SFAS No.
142 also  establishes  a new method of testing  goodwill  and other  unamortized
intangible assets for impairment on an annual basis or on an interim basis if an
event  occurs or  circumstances  change that would reduce the fair value of that
goodwill or other  intangible  asset below its carrying value.  The amortization
provisions  of SFAS No.  142  apply to  goodwill  and  other  intangible  assets
acquired  after June 30,  2001.  The adoption of SFAS No. 142 on January 1, 2002
did not have a material impact on the Company's  financial  condition or results
of operations.

     In  August  2001,  the  FASB  issued  SFAS  No.  144,  "Accounting  for the
Impairment  or  Disposal  of Long  Lived  Assets."  SFAS No. 144  addresses  the
financial  accounting and reporting for the impairment or disposal of long-lived
assets and is  effective  for  financial  periods  after  January  1, 2002.  The
adoption  of SFAS No. 144 on  January 1, 2002 did not have a material  impact on
the Company's financial condition or results of operations.

3.   Inventories

     Inventories consist of purchased  pharmaceutical products and are stated at
the lower cost or  market.  Cost is  determined  using the  first-in,  first-out
method, and market is considered to be net realizable value. Inventories consist
of finished  product and bulk product  awaiting  processing  and packaging  into
finished product.  Inventories at March 31, 2002 and December 31, 2001 consisted
of (in thousands):

                                             2002              2001
                                            -----             -----
        Bulk product .......................5,127               581
        Finished product ...................6,226             3,782
                                            -----             -----
                                           11,353             4,363
                                           ======             =====
                                       2
<PAGE>

     Samples  primarily  consist  of  product  samples  used  in the  sales  and
marketing  efforts  of  the  Company's  products.   Samples  are  expensed  upon
distribution.  Sample  inventories  at March 31, 2002 and December 31, 2001 were
$1.5 million and $1.1 million respectively.

4.   Earnings Per Share

     Below is the  calculation  of basic and  diluted  net  income per share (in
thousands, except per share data):




                                                   Quarter Ended   Quarter Ended
                                                     March 31,       March 31,
                                                       2002            2001


         Net income............................     $  3,037        $  1,227

         Weighted average common shares
            outstanding - basic.................      27,660          19,552

         Dilutive effect of stock  options......       1,095           2,037
                                                      ------           -----
         Weighted average common shares
            outstanding - diluted ..............      28,755          21,589

         Basic net income per share ............    $    .11         $   .06
                                                    ========         =======
         Diluted net income per share ..........    $    .11         $   .06
                                                    ========         =======

5.   Sular Acquisition

     On March 6, 2002, the Company  acquired from  AstraZenca UK Limited certain
U.S.  rights relating to the  antihypertensive  prescription  medication  Sular,
which it believes will complement its existing cardiology product,  Nitrolingual
Pumpspray. The Company also entered into a long-term manufacturing,  supply, and
distribution agreement with Sular's current manufacturer, Bayer AG. The purchase
price paid was $175.6 million in cash,  including $623,000 in acquisition costs,
plus the  assumption  of  liabilities  of  $1,895,000  related  to the return of
product  shipped  prior to the  acquisition  date.  There is a final $10 million
payment due to be paid to Bayer within 30 days of the closing  date,  making the
total purchase price $185.6 million. In addition, the Company must pay up to $30
million in additional purchase price after closing,  based on the achievement of
certain performance milestones during a specified period of time. The agreements
include the purchase of the Sular license rights, certain tradenames and managed
care  contracts and a distribution  agreement.  The purchase price also includes
$6,246,000 of product inventory. The purchase price was allocated among the fair
values of the  intangible  and  tangible  assets  acquired  and the  liabilities
assumed  and is being  amortized  over a period  of five to  twenty  years.  The
managed care  contracts are being  amortized over a period of five years and the
distribution  agreement is being amortized over a period of ten years. All other
intangibles  are  being  amortized  over  twenty  years.  The  weighted  average
amortization  period is  seventeen  years.  The  results  of the Sular  line are
included in the  consolidated  statements  of  operations  from March 6, 2002 to
March 31, 2002.  The  preliminary  purchase  price  allocation is as follows (in
thousands):

                                       3
<PAGE>

     The preliminary purchase price allocation is as follows (in thousands):

     License rights.................................................$  161,492
     Distribution agreement.........................................$   10,350
     Managed care contracts.........................................$    6,870
     Trade name.....................................................$    2,560
                                                                    ----------
     Total intangibles..............................................$  181,272
     Inventory .....................................................     6,246
                                                                    ----------
     Total assets ..................................................$  187,518
     Liabilities assumed ...........................................$   (1,895)
                                                                    ----------
     Total acquisition .............................................$  185,623
                                                                    ==========

     For the  quarter  ended  March 31,  2002,  aggregate  amortization  expense
related to the Sular  acquisition  was $692,000  related to the 25 days from the
purchase date to quarter end.

     The  unaudited  pro  forma  summary  below   presents   certain   financial
information  as if the Sular  acquisition  had  occurred  as of January 1, 2001.
These pro forma results have been prepared for  comparitive  purposes and do not
purport to be indicative of what would have  occurred had the  acquisition  been
made  on  January  1,  2001.  Additionally,  these  pro  forma  results  are not
indicative of future results (in thousands, except per share data):

                                                                For the
                                                        Quarter ended March 31,
                                                          2002            2001
                                                        -------         -------
         Net revenues...................................$33,644         $24,890
                                                        =======         =======
         Net income.....................................$ 5,627         $ 5,200
                                                        =======         =======
         Diluted net income per share...................$  0.16         $  0.18
                                                        =======         =======


     The  purchase  price  allocation  of Sular is  preliminary  and  subject to
revision to be finalized  upon the ultimate  resolution  of the value of certain
assets  acquired  and  liabilities  assumed,  yet no  later  than  the one  year
anniversary of the purchase date. The Company does not expect any such revisions
will have a material  impact on the Company's  financial  position or results of
operations.

6.   Credit Facility

     In order to finance  the Sular  acquisition,  the  Company  entered  into a
senior secured credit facility  arranged  through  Deutsche Bank Securities Inc.
The  facility  was entered  into on March 5, 2002 and consists of a $127 million
term loan and a $25  million  revolving  loan.  For the Sular  acquisition,  the
Company  borrowed  $127  million  under the term loan and $10 million  under the
revolving  loan.  The term loan bore  interest at the  Eurodollar  rate,  plus a
margin of 3.75% and matures in September  2002.  Borrowings  under the revolving
loan bear interest at the  Eurodollar  rate plus a margin of 3.25% and mature in
March 2005.  Interest  expense  associated with this facility for the 26 days it
was  outstanding  during  the  quarter  ended  March 31,  2002 was $1.4  million
comprised of $558,000 of interest on the  outstanding  balance and  amortization
expense  of  $856,000  associated  with  the  deferred  financing  costs of $3.1
million.

7.   Subsequent Events

     On April 5, 2002, the remaining $10 million of deferred  purchase price for
Sular was paid to Bayer.  This was the final $10 million recorded as part of the
original purchase price.

     On April  19,  2002,  the  Company  completed  its  follow on  offering  of
6,500,000  shares of  common  stock.  The  underwriters  exercised  an option to


                                       4
<PAGE>

purchase an additional  975,000 shares of common stock from the Company to cover
any  over-allotments  bringing total shares sold to 7,475,000.  The net proceeds
from the  offering  were $152.6  million  after  exercise of the  over-allotment
option and after deducting offering expenses.  Proceeds from the offering, which
closed  on April  24,  2002,  were  used to repay  the debt  incurred  under the
Company's senior secured credit facility and the balance of the proceeds will be
used for other general corporate needs.



                                       5
<PAGE>

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
     OF OPERATIONS

     The  following  should be read with the  financial  statements  and related
footnotes and Management's  Discussion and Analysis of Results of Operations and
Financial Condition included in the Company's Annual Report on Form 10-K for the
year  ended  December  31,  2001  (File No.  000-30123)  as well as  information
included in the registration  statement on Form S-1, as amended, dated April 19,
2002. The results discussed below are not necessarily  indicative of the results
to be  expected  in  any  future  periods.  The  following  discussion  contains
forward-looking  statements that are subject to risks and  uncertainties,  which
could cause actual results to differ from the statements made.

OVERVIEW

     The Company is a specialty  pharmaceutical  company that currently  markets
and sells 17 brand name  prescription  products through its nationwide sales and
marketing force of approximately 210  professionals.  The Company focuses on the
treatment  of  cardiovascular,  obstetrical  and  gynecological,  pediatric  and
gastroenterological  conditions and disorders.  The Company seeks to acquire and
obtain licenses for pharmaceutical products that other companies do not actively
market  that have high  sales  growth  potential,  are  promotion-sensitive  and
complement the Company's  existing products.  In addition,  the Company seeks to
increase the value of existing  products by developing new  formulations,  using
new delivery  methods and seeking  regulatory  approval for new  indications for
existing  products.  The Company may also acquire  companies with  complementary
products or development pipelines consistent with its therapeutic focus.

RESULTS OF OPERATIONS

     NET  REVENUES.  Net  revenues  increased  $14.7  million or 118%,  over the
quarter  ended March 31, 2001,  to $27.1 million for the quarter ended March 31,
2002. Sales of continuing  products  (including Tanafed DM which we added to our
Tanafed line in January 2002) for the quarter ended March 31, 2002 increased 45%
compared  to the  quarter  ended  March  31,  2001.  The  increase  in  sales of
continuing products for the quarter ended March 31, 2002 compared to the quarter
ended  March 31,  2001 was  primarily  due to  prescription  growth in  Robinul,
Tanafed and Ponstel in 2002.  According  to IMS Health's  National  Prescription
Audit Plus data,  total  prescriptions  of our Ponstel  product  increased  46%,
Robinul and  Robinul  Forte  products  increased  28% and our  Tanafed  products
increased  4%.  The  increase  in sales  was also a result  of the  three  newly
acquired and licensed products added since the first quarter of 2001: Prenate in
August 2001, Furadantin in December 2001, and Sular in March 2002.

     COST OF REVENUES.  Cost of revenues increased $2.5 million or 143%, to $4.3
million for the quarter  ended March 31, 2002  compared to $1.8  million for the
quarter ended March 31, 2001.

     GROSS  MARGIN.  Gross  margin for the quarter  ended March 31, 2002 was 84%
compared to 86% for the quarter  ended March 31, 2001.  This  decrease  resulted
primarily  from the change in product  sales mix.  Gross margins are expected to
decrease as Sular has a lower gross margin than our other products.

     SELLING,  GENERAL  AND  ADMINISTRATIVE   EXPENSES.   Selling,  general  and
administrative  expenses increased $6.2 million or 79%, to $14.1 million for the
quarter ended March 31, 2002. As a percentage of net revenues,  selling, general
and  administrative  expenses  were 52% for the quarter ended March 31, 2002, as
compared to 63% for the quarter ended March 31, 2001.  Selling related  expenses
increased due to the outside commission and co-promotion expenses paid to Otsuka
America Pharmaceutical,  Inc. for our Nitrolingual Pumpspray co-promotion and to
PDI for our Prenate  co-promotion.  The  Company  also had  increased  marketing
expenses  related to the launch of three new products.  Selling expenses for the
quarter ended March 31, 2002 also  increased due to recruiting  costs for 50 new
sales  professionals  and costs  associated with the aligning of the sales force
into three  specialties.  The Company  expects  higher  selling  expenses in the
second  quarter  of 2002  associated  with  the  launch  of Sular  and  expenses
associated with the Company's annual sales meeting.

                                       6
<PAGE>

     General and administrative expenses increased due to personnel additions to
the  Company's  management  team and support  personnel.  There were also higher
insurance costs due to increased insurance  coverage.  The Company also incurred
increased  professional  fees in the first  quarter of 2002 as compared to 2001.
These fees relate to increased costs for audit, legal, and consulting  services.
General and  administrative  expenses will  increase in second  quarter 2002 and
beyond due to relocation  expenses and additional  rental costs  associated with
our April 2002 relocation to a larger office and warehouse facility.

     DEPRECIATION  AND  AMORTIZATION  EXPENSE.   Depreciation  and  amortization
expense  increased  $1.8 million or 455% to $2.2  million for the quarter  ended
March 31, 2002. This increase resulted from higher amortization  expense related
to the  acquisition of Prenate in August 2001,  Furadantin in December 2001, and
Sular in March 2002 as well as  increased  depreciation  expense for  furniture,
computer  equipment  and  leasehold  improvements  at  the  Company's  corporate
headquarters.   In  the  first  quarter  of  2002,  all  leasehold  improvements
associated with the existing  location were fully depreciated in anticipation of
our move to our new location in early April. Amortization expenses will increase
in second quarter 2002 and beyond due to the  amortization of intangible  assets
acquired in connection  with the Company's  acquisition  of Sular.  Amortization
expense  could  further  increase  if the  Company  concludes  any more  product
acquisitions.

     RESEARCH  AND  DEVELOPMENT   EXPENSE.   Research  and  development  expense
decreased $303,000 or 49%, to $315,000 for the quarter ended March 31, 2002. The
decrease was primarily due to the Company ceasing to amortize a future milestone
payment since the Company did not achieve one of the  milestones on its migraine
development  product for which it is currently  negotiating  an amendment to its
development  agreement.  For the first quarter of 2002, research and development
expenses were primarily related to the Robinul line extension.

     INTEREST  EXPENSE.  Interest expense increased $1.4 million for the quarter
ended March 31, 2002  compared to $2,000 for the quarter  ended March 31,  2001.
This increase is a result of amortization  expense related to deferred financing
costs and other interest  expenses  associated with the credit facility obtained
on March 5, 2002.  Amortization  expense was $856,000 and other interest expense
was $558,000. In addition to the interest on outstanding borrowings, the Company
will  incur  interest  expense in the  second  quarter of 2002 of  approximately
$800,000 for the amortization of debt fees. In addition,  the Company expects to
record an extraordinary  write off of $1.4 million of remaining debt fees in the
second  quarter of 2002 related to the Company's  retirement of its term loan on
April 24, 2002.

     INTEREST  INCOME.  Interest income was $190,000 for the quarter ended March
31, 2002 compared to $242,000 for the quarter ended March 31, 2001. The decrease
in interest  income was the result of the reduced amount of cash invested as the
Company  used  the  cash  proceeds  from  the  2001  offering  for the  Prenate,
Furadantin, and Sular acquisitions.

     PROVISION  FOR INCOME  TAXES.  Income taxes were  provided for at a rate of
38.5% in 2002 compared to 38.9% in 2001.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  liquidity  requirements  arise from debt  service,  working
capital   requirements,   product   development   activities   and   funding  of
acquisitions.  The Company  has met these cash  requirements  through  cash from
operations,   proceeds  from  its  line  of  credit,   borrowings   for  product
acquisitions and the issuance of common stock.

     The  Company's  cash and cash  equivalents  were $21.1 million at March 31,
2002. Net cash provided by operating activities for the three months ended March
31, 2002 was $10.2 million.  This source of cash was primarily the result of net
income plus non-cash depreciation,  amortization, compensation expense, non-cash
interest expense,  increased  accounts payable and accrued  expenses,  offset by
increased accounts receivables, inventories, samples and prepaid expenses.

                                       7
<PAGE>

     Net cash used in investing  activities for the three months ended March 31,
2002 was  $177.9  million.  The use of this  cash was  primarily  for the  Sular
acquisition.

     Net cash provided by financing  activities was $135.3 million for the three
months  ended  March 31,  2002.  This  source of cash was the  result of the new
credit  facility  described  below,  as well as  options  exercised  during  the
quarter.

     On March 5, 2002 we entered into a Credit  Agreement  for a senior  secured
credit facility arranged by Deutsche Bank Securities for $152 million consisting
of a $127  million  term  loan  and a $25  million  revolving  loan to fund  the
purchase of Sular and the Company's  working capital  requirements.  The Company
borrowed  $127 million  under the term loan  facility and $10 million  under the
revolving loan facility in connection with its acquisition of Sular. The Company
completed a follow-on  offering of its common  stock on April 24,  2002.  In the
offering,  the Company sold 7,475,000 shares of common stock for net proceeds of
$152.6  million.  Proceeds  from the offering were used to repay all of the debt
incurred  under its senior  secured credit  facility.  The Company  continues in
effect its revolving credit  facility.  Borrowings under the revolving loan bear
interests at the  Company's  option at the base rate in effect from time to time
plus an applicable margin or the Eurodollar rate plus an applicable  margin. The
revolving  loan  matures in March 2005.  The credit  facility  contains  various
restrictive  covenants,  including  covenants relative to maintaining  financial
ratios and  earnings,  limitations  on  acquisitions,  dispositions  and capital
expenditures,  limitations on incurring additional  indebtedness and prohibition
on payment of dividends and other payments on our common stock.

     The Company  believes that its cash and cash  equivalents,  cash  generated
from  operations  plus  borrowings  available  under its senior  secured  credit
facility will be adequate to fund its current working capital  requirements  for
at least the next 12  months.  However,  in the  event  that the  Company  makes
significant  acquisitions in the future,  it may be required to raise additional
funds  through  additional   borrowings  or  the  issuance  of  debt  or  equity
securities.

INFLATION

     The  Company  has  experienced  only  moderate  price  increases  under our
agreements with third-party  manufacturers as a result of raw material and labor
price increases. The Company has generally passed these price increases along to
its customers.

SEASONALITY

     Although the Company's business is generally non-seasonal, sales of certain
products, such as cough and cold products, increase slightly between October and
March  due to the cold  and flu  season.  The  Company  expects  the  impact  of
seasonality  to decrease as it acquires or obtain  licenses  for  products  that
treat chronic conditions.  However, the Company anticipates that the seasonality
may continue to affect sales for the foreseeable future.

CRITICAL ACCOUNTING POLICIES

     The Company  views its critical  accounting  policies to be those  policies
which are very important to the portrayal of its financial condition and results
of operations,  and require  management's most difficult,  complex or subjective
judgments.  The  circumstances  that make these  judgments  difficult or complex
relate to the need for management to make estimates  about the effect of matters
that are  inherently  uncertain.  The Company  believes its critical  accounting
policies to be as follows:

     o    Allowance for doubtful  accounts.  The Company is required to estimate
          the level of accounts  receivable  recorded in its balance sheet which
          will  ultimately  not be paid.  Among other  things,  this  assessment
          requires  analysis of the financial  strength of its customers,  which
          can be highly subjective, particularly in the recent difficult general
          economic  environment.  The  Company's  policy is to estimate bad debt
          expense based on prior experience  supplemented by a periodic customer
          specific review when needed.

                                       8
<PAGE>

     o    Sales  deductions.  The Company  provides volume rebates,  contractual
          price  reductions with drug wholesalers and insurance  companies,  and
          certain other sales related  deductions on a regular basis.  The exact
          level of these deductions is not always immediately known and thus the
          Company  must record an estimate  at the time of sale.  The  Company's
          estimates are based on historical  experience  with similar  programs,
          and since it has a relatively small customer base,  customer  specific
          historical  experience  is often useful in  determining  the estimated
          level of deductions expected to be refunded to the Company's customers
          when sales incentives are offered.

     o    Product  returns.  In  the  pharmaceutical  industry,   customers  are
          normally  granted  the  right to  return  product  for a refund if the
          product  has not been  used  prior to its  expiration  date,  which is
          typically two to three years from the date of manufacture.  Management
          is required to estimate  the level of sales which will  ultimately  be
          returned pursuant to the Company's return policy, and record a related
          reserve  at the time of sale.  These  amounts  are  deducted  from the
          Company's  gross sales to determine  its net  revenues.  The Company's
          estimates  take  into  consideration  historical  returns  of a  given
          product,  all of which have been on the market for many years, product
          specific   information  provided  by  its  customers  and  information
          obtained from  independent  sources  regarding the levels of inventory
          being held by the Company's  customers,  as well as overall purchasing
          patterns by the Company's customers.

     o    Intangible assets. When the Company acquires the rights to manufacture
          and sell a product, it records the cash purchase price, along with the
          value of the  product  related  liabilities  the Company  assumes,  as
          intangible  assets.  The  Company  uses the  assistance  of  valuation
          experts to help it allocate  the  purchase  price to the fair value of
          the various  intangible  assets the Company has  acquired.  Then,  the
          Company  must  estimate  the  economic  useful  life of each of  these
          intangible assets in order to amortize their cost as an expense in its
          statement of operations over the estimated economic useful life of the
          related asset.  The factors that drive the actual economic useful life
          of a  pharmaceutical  product are  inherently  uncertain,  and include
          patent  protection,   physician  loyalty  and  prescribing   patterns,
          competition  by products  prescribed for similar  indications,  future
          introductions of competing  products not yet FDA approved,  the impact
          of promotional  efforts and many other issues. The Company uses all of
          these factors in initially estimating the economic useful lives of its
          products, and the Company also continuously monitors these factors for
          indications of appropriate revisions.

FORWARD LOOKING STATEMENTS

     The Management's Discussion and Analysis of Financial Condition and Results
of Operations  discussion  as well as  information  contained  elsewhere in this
Report contains forward-looking  statements within the meaning of Section 21E of
the Securities  Exchange Act of 1934. These  forward-looking  statements include
statements about the following:

     o    the effect of any revisions to the Sular purchase price allocations;
     o    future gross margins;
     o    future selling expenses;
     o    future general and administrative expenses;
     o    future amortization expenses;
     o    the treatment of debt fees;
     o    adequacy of capital resources;
     o    adequacy of funds to fund working capital requirements; and
     o    the ability to obtain  future funds through  additional  borrowings or
          the issue of debt or equity securities.

     When used in this Report,  the Company intends the words "may",  "believe,"
"anticipate," "planned," "expect," "require," "intend," and "depend" to identify


                                       9
<PAGE>

"forward-looking  statements." The Company's forward-looking  statements involve
uncertainties and other factors, including those described in the "Risk Factors"
section of the Company's  Prospectus dated April 19, 2002 under the headings "We
expect our operating  results to be substantially  dependent upon our results of
operations from Sular, and any factor  adversely  effecting sales of Sular could
have a  materially  adverse  effect  on our  sales  and  profits,"  "We may have
difficulty maintaining our increasing sales of Sular, Prenate and Furadantin and
successfully  integrating  these products into our business,"  "The costs we may
incur to sell our new products may be disproportionately  high relative to their
expected  revenues,"  "The  potential  growth  rate for Sular may be  limited by
slower  growth  for the  class of drugs to  which  Sular  belongs,"  "We have no
experience  selling Sular, have only limited  experience  selling Furadantin and
the Prenate  products and there is no  established  market for Prenate GT," "The
regulatory  status of  prenatal  vitamins  makes  Prenate  products  subject  to
increased  competition,"  "Our  level  of  debt  could  reduce  our  growth  and
profitability,"  "Our  growth  will  suffer if we do not  acquire  rights to new
products and integrate  them  successfully,"  "We may encounter  problems in the
manufacture  of our products that could limit our ability to sell our products,"
"Part of our growth  strategy  is to acquire  businesses,  which  subjects us to
additional  risks,"  "We face  generic  and other  competition  that could lower
prices  and unit  sales,"  "Strong  competition  exists  for our  products,  and
competitors have recently  introduced new products and therapies that could make
our products obsolete," "A small number of customers account for a large portion
of our  sales  and  the  loss  of one of them or  changes  in  their  purchasing
patterns,  could result in reduced  sales," "If our products  under  development
fail in clinical  studies,  if we fail or  encounter  difficulties  in obtaining
regulatory approval for new products or new uses of existing products, or if our
development  agreements  are  terminated,  we  will  have  expended  significant
resources  for  no  return,"  "We  or  third  parties  may  violate   government
regulations," "If third-parties  payors do not adequately reimburse patients for
our  products,  doctors may not  prescribe  them," "We depend on highly  trained
management,  and we may not be able to keep current management or hire qualified
management  personnel  in the  future,"  "Product  liability  claims and product
recalls could limit sales and increase costs," "We expect to require  additional
funding,  and if we cannot  obtain  it,  our sales,  profits,  acquisitions  and
development   projects  could  suffer,"   "Competitors  could  offer  a  product
competitive  with  Sular,"  "If we do not  secure or enforce  patents  and other
intellectual  property  rights,  we could encounter  increased  competition that
would adversely affect our operating  results," "Our products could infringe the
intellectual  property  rights of third  parties,  which could require us to pay
license  fees to defend  litigation  that would be  expensive or prevent us from
selling  products,"  "The  regulatory  status of some or  products  makes  these
products subject to increased competition and other risks," "We face risks under
one of our development  agreements because the other party to the agreement is a
related  party,"   "Pohl-Boskamp   can  terminate  our  rights  to  Nitrolingual
Pumpspray," "We have no experience  selling products in other countries," "There
is  uncertainty  concerning  our  continued  use of Arthur  Andersen  LLP as our
outside auditors," and "There is uncertainty  concerning stockholder approval to
increase  our  authorized  common  stock."  We do not  undertake  to update  our
forward-looking statements to reflect future events or circumstances. These risk
factors  along  with  the  others  may  cause  actual  results,  performance  or
achievements,   to  be  different   from  that   suggested   by  the   Company's
forward-looking   statements.   You  should   not  place   undue   reliance   on
forward-looking  statements.  The Company does not intend to update any of these
factors or to publicly  announce  the results of any  revisions  to any of these
forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's  operating results and cash flows are subject to fluctuations
from  changes  in  foreign  currency  exchange  rates and  interest  rates.  The
Company's   purchases  of  Nitrolingual   Pumpspray  under  its  agreement  with
Pohl-Boskamp and its purchases of Sular product inventory from Bayer are made in
Euros. In addition,  sales of Cognex are recognized in the foreign currencies of
the  respective  European  countries  in which it is sold.  While the  effect of
foreign currency  translations has not been material to the Company's results of
operations to date,  currency  translations on export sales or import  purchases
could be adversely affected in the future by the relationship of the U.S. dollar
with foreign currencies.

     In connection  with  borrowings  incurred  under the senior  secured credit
facility, the Company will experience market risk with respect to changes in the
general  level of  interest  rates and its effect  upon the  Company's  interest


                                       10
<PAGE>

expense. Borrowings under this facility bear interest at variable rates. Because
such rates are variable, an increase in interest rates will result in additional
interest  expense  and a  reduction  in  interest  rates will  result in reduced
interest expense.  Accordingly,  the Company's present exposure to interest rate
fluctuations  is  primarily  dependent  on rate changes that may occur while the
senior secured credit facility is outstanding.


<PAGE>


                           PART II - OTHER INFORMATION


ITEM 1: LEGAL PROCEEDINGS

     There were no material developments during the three months ended March 31,
2002 in our previously  reported legal  proceedings  with Ethex  Corporation and
Ther-Rx.  Other than these legal proceedings,  the Company is not a party to any
material legal proceedings.

ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS

     None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     None

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

     None

ITEM 5. OTHER INFORMATION

     None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          3.1* - Restated Certificate of Incorporation
          3.2* - Amended and Restated By-Laws
          4.1* - Form of Stock Certificate
          4.2**-  Credit   Agreement  dated  as  of  March  5,  2002  among  the
               Registrant,  Various Lenders,  Bank of America, N.A. as Syndicate
               Agent,  LaSalle Bank National  Association as Documentation Agent
               and Bankers Trust Company as Administrative Agent.
          10.1*** - Form of  Employment  Agreement  dated as of January 21, 2002
               between the Registrant and its Executive Officers.
          10.2****  -  Asset  Purchase  Agreement  between  the  Registrant  and
               AstraZeneca UK Limited dated February 12, 2002.
          10.3*** -  First  Amendment  to the  Asset  Purchase  Agreement  dated
               January 17, 2002 between the  Registrant  and  Sanofi-Synthelabo,
               Inc.
          10.4**** - Exclusive  Distribution  Agreement effective as of December
               18,   1998   between   the   Registrant   and   Unisource,   Inc.

-----------------

*    Incorporated by reference from Company's Registration Statement on Form S-1
     (Commission  File No.  333-30764.)
**   Incorporated by reference from the Registrant's  Current Report of Form 8-K
     filed on March  20,  2002  (Commission  File No.  000-30123).  Confidential
     treatment was granted for certain portions of this exhibit pursuant to Rule
     24b-2 of the Securities Exchange Act of 1934.
***  Incorporated by reference from the  Registrant's  Form S-1 (Commission File
     No. 333-83698)
**** Incorporated  by reference from the Registrants  Form S-1 (Commission  File
     No. 333-83698).  Confidential treatment was granted for certain portions of
     this  exhibit  pursuant  to Rule  406 of the  Securities  Act of  1933,  as
     amended.


<PAGE>

(b)  The Registrant filed the following Forms 8-K during the quarter ended March
     31, 2002:

     (i)  On January 7, 2002, the Registrant filed a Form 8-K dated December 21,
          2001 pursuant to Item 2 to report the  acquisition  of its  Furadantin
          product.

     (ii) On March 5, 2002, the Registrant filed a Form 8-K/A dated December 21,
          2001 pursuant to Item 2 to report the  acquisition  of its  Furadantin
          product in which the Registrant  incorporated the following  financial
          information  from its Form S-1 filed on March 5, 2002:  (a) Statements
          of  Net  Sales  and  Product  Contribution,  (b)  Notes  to  Financial
          Statements and (c) Pro Forma Financial Information.

     (iii)On March 5, 2002, the  Registrant  filed a Form 8-K/A dated August 21,
          2001 pursuant to Item 2 to report the  acquisition of its Prenate line
          of  products in which the  Registrant  filed the  following  financial
          information:  (a)  Statement of Tangible  Net  Liabilities  Sold,  (b)
          Statements  of Net  Sales  and  Product  Contribution,  (c)  Notes  to
          Financial Statements and (d) Pro Forma Financial Information.

     (iv) On March 20, 2002, the Registrant filed a Form 8-K dated March 6, 2002
          pursuant to Item 2 to report the  acquisition  of its Sular product in
          which the Registrant  incorporated the following  information from its
          Form S-1 filed on March 5, 2002 (Commission File No.  333-83698):  (a)
          Statements  of Net Assets To Be Sold,  (b)  Statements of Revenues and
          Direct Expenses,  (c) Notes to Financial  Statements and (d) Pro Forma
          Financial Information.





<PAGE>


                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized on May 6, 2002.


                               FIRST HORIZON PHARMACEUTICAL CORPORATION


                               By:      /s/ Mahendra G. Shah, Ph.D.
                                        ---------------------------
                                        Mahendra G. Shah, Ph.D.
                                        Chairman and Chief Executive Officer



                               By:      /s/ Balaji Venkataramans
                                        -------------------------------------
                                        Balaji Venkataraman
                                        Executive Vice President,
                                        Chief Financial Officer and Secretary
                                        (Principal Accounting and
                                        Financial Officer)