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 September 30, 2000

                          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)

             660 HEMBREE PARKWAY, SUITE 106, ROSWELL, GEORGIA 30076
    (Address of registrant's 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 November 8, 2000,  there were 12,919,143  shares of the  Registrant's
Common Stock outstanding.


<PAGE>


                    FIRST HORIZON PHARMACEUTICAL CORPORATION
                                    FORM 10-Q
                                      INDEX

<TABLE>
<CAPTION>
PART I.                 FINANCIAL INFORMATION (UNAUDITED)                                     PAGE
<S>     <C>             <C>                                                                   <C>
        Item 1.         Balance Sheets at September 30, 2000 and                                1
                        December 31, 1999

                        Statements of Operations for the three months ended                     2
                        September 30, 2000 and September 30, 1999 and for the
                        nine months ended September 30, 2000 and September 30, 1999

                        Statements of Cash Flows for the nine months ended                      3
                        September 30, 2000 and September 30, 1999

                        Notes to Condensed Financial Statements                                 4

        Item 2.         Management's Discussion and Analysis of Financial Condition             7
                        and Results of Operations

        Item 3.         Quantitative and Qualitative Disclosures about Market Risk              11

PART II.                              OTHER INFORMATION

        Item 1.         Legal Proceedings                                                       12

        Item 2.         Changes in Securities and Use of Proceeds                               12

        Item 3.         Defaults Upon Senior Securities                                         13

        Item 4.         Submission of Matters to a Vote of Security Holders                     13

        Item 5.         Other Information                                                       13

        Item 6.         Exhibits and Reports on Form 8-K                                        13

                        Signatures                                                              14



</TABLE>

<PAGE>


                  SECURITIES AND EXCHANGE COMMISSION FORM 10-Q
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                    FIRST HORIZON PHARMACEUTICAL CORPORATION

                                 BALANCE SHEETS
                                   (unaudited)

                                                                                     September 30,                   December 31,
                                                                                          2000                           1999
                                                                                -------------------             -----------------
<S>                                                                             <C>                             <C>
ASSETS
Current Assets:
        Cash and cash equivalents.............................................  $       10,810,828              $        219,688
        Accounts receivable, net of allowance for doubtful
          accounts, discounts and contractual adjustments
          of $174,440 and $55,783 at September 30, 2000 and
          December 31, 1999, respectively.....................................           5,807,565                     2,900,623
        Inventories...........................................................           3,240,399                       798,615
        Samples and other prepaid expenses....................................           1,694,070                       553,614
        Deferred tax assets...................................................             923,780                       550,780
                                                                                -------------------             -----------------
                Total current assets..........................................          22,476,642                     5,023,320
                                                                                -------------------             -----------------
        Property and equipment, net...........................................             659,812                       422,096
        Other Assets:
          Notes receivable from related party.................................              30,000                        30,000
          Intangibles, net....................................................          23,363,264                     5,602,328
                                                                                -------------------             -----------------
                Total other assets............................................          23,393,264                     5,632,328
                                                                                -------------------             -----------------
                Total assets..................................................  $       46,529,718              $     11,077,744
                                                                                ===================             =================

LIABILITIES AND STOCKHODERS' EQUITY
Current Liabilities:
        Accounts payable......................................................  $        1,463,733              $        794,088
        Accrued expenses......................................................           8,423,141                     2,892,727
        Borrowings under revolving loan agreement.............................                   -                       800,000
        Current portion of long-term debt.....................................             437,186                     1,270,389
                                                                                -------------------             -----------------
                Total current liabilities.....................................          10,324,060                     5,757,204
Long -Term Liabilities:
        Long-term debt, net of current maturities.............................                   -                     1,628,497
        Deferred tax liabilities..............................................              76,479                        76,479
                                                                                -------------------             -----------------
                Total liabilities.............................................          10,400,539                     7,462,180
Stockholders' Equity:
        Preferred stock, 1,000,000 shares authorized and none
          outstanding.........................................................                   -                             -
        Common stock, $0.001 par value; 40,000,000 shares
          authorized; 12,919,143 and 8,539,643 issued and outstanding
          at September 30, 2000 and December 31, 1999, respectively...........              12,921                         8,540
        Additional paid-in capital............................................          36,952,184                     5,788,220
        Deferred compensation.................................................          (1,032,588)                   (1,284,374)
        Accumulated deficit...................................................             196,662                      (896,822)
                                                                                -------------------             -----------------
                Total stockholders' equity....................................          36,129,179                     3,615,564

                Total liabilities and stockholders' equity....................  $       46,529,718              $     11,077,744
                                                                                ===================             =================
</TABLE>
                                       1
<PAGE>
<TABLE>
<CAPTION>

                    FIRST HORIZON PHARMACEUTICAL CORPORATION

                            STATEMENTS OF OPERATIONS
                                   (unaudited)


                                                  For the Quarter       For the Quarter        For the Nine         For the Nine
                                                       Ended                 Ended             Months Ended         Months Ended
                                                September 30, 2000    September 30, 1999     September 30, 2000   September 30, 1999
                                                ------------------    ------------------     ------------------   ------------------
<S>                                             <C>                   <C>                    <C>                  <C>
Net Revenues..............................      $  9,632,716          $  5,505,964           $   24,595,902       $    13,683,058
Operating costs and expenses
       Cost of revenues...................         1,401,940               959,948                3,623,549             2,311,534
       Selling, general and administrative
           expenses, excluding non-cash
           compensation expense...........         5,805,848             3,344,036               16,524,409             8,663,464
       Non-cash compensation expense......            81,257                47,839                  251,786                67,323
       Depreciation and amortization......           338,637               113,779                  741,371               305,868
       Research and development expense              525,564               240,107                1,513,261               465,650
                                                ------------------    ------------------     ------------------   ------------------
               Total operating costs and
               expenses...................         8,153,246             4,705,709               22,654,376            11,813,839
                                                ------------------    ------------------     ------------------   ------------------

Operating income..........................         1,479,470               800,255                1,941,526             1,869,219
                                                ------------------    ------------------     ------------------   ------------------
Other income (expense):
       Interest expense...................           (11,476)              (97,634)                (316,114)             (270,424)
       Interest income....................           137,209                 3,159                  184,740                 7,434
       Other..............................           (15,786)                   35                   21,985                 1,786
                                                ------------------    ------------------     ------------------   ------------------
               Total other income
               (expense)..................           109,947               (94,440)                (109,389)             (261,204)
                                                ------------------    ------------------     ------------------   ------------------

Income before provision for
    income taxes..........................         1,589,417               705,815                1,832,137             1,608,015
Provision for income taxes................          (634,284)             (293,197)                (738,653)             (670,291)
                                                ------------------    ------------------     ------------------   ------------------

Net income................................      $    955,133          $    412,618           $    1,093,484       $       937,724
                                                ==================    ==================     ==================   ==================
Net income per common share:
    Basic.................................      $       0.07          $       0.05           $         0.10       $          0.12
                                                ==================    ==================     ==================   ==================
    Diluted...............................      $       0.07          $       0.05           $         0.09       $          0.11
                                                ==================    ==================     ==================   ==================
Weighted average common shares outstanding:
    Basic.................................        12,919,143             7,981,248               10,449,247             7,981,248
    Diluted...............................        14,554,541             8,848,269               12,052,730             8,848,269

</TABLE>
                                       2
<PAGE>

<TABLE>
<CAPTION>

                    FIRST HORIZON PHARMACEUTICAL CORPORATION

                            STATEMENTS OF CASH FLOWS
                                   (unaudited)


                                                                          Nine Months Ended                Nine Months Ended
                                                                         September 30, 2000               September 30, 1999
                                                                     --------------------------          -----------------------
<S>                                                                  <C>                                 <C>
Cash flows from operating activities:
Net income......................................................     $           1,093,484               $           937,724
Adjustments to reconcile net income to net cash
     (used in) provided by operating activities:
          Depreciation and amortization.........................                   741,371                           305,868
          Deferred tax benefit .................................                  (373,000)                                -
          Non-cash compensation expense.........................                   251,786                            67,323
          Changes in assets and liabilities, net of acquired
              assets and liabilities:
            Accounts receivable.................................                (2,906,942)                       (1,208,302)
            Inventories.........................................                (2,441,784)                         (386,039)
            Samples and other prepaid expenses..................                (1,140,456)                         (146,979)
            Notes receivable from related party.................                         -                                 -
            Accrued expenses....................................                 3,634,654                         1,383,560
            Accounts payable....................................                   669,645                           312,824
                                                                     --------------------------          -----------------------

                 Net cash (used in) provided by operating
                 activities.....................................                  (471,242)                        1,265,979
Cash flows from investing activities:
     Purchase of intangibles....................................               (16,508,990)                       (4,000,000)
     Purchase of property and equipment.........................                  (335,273)                          (80,184)
                                                                     --------------------------          -----------------------

                 Net cash (used in) investing activities........               (16,844,263)                       (4,080,184)

Cash flows from financing activities:
     Revolving loan agreement payments..........................                  (800,000)                         (152,927)
     Principal payments on long-term debt.......................                (2,461,700)                         (827,858)
     Proceeds from long-term debt...............................                         -                         4,000,000
     Proceeds from issuance of common stock, net................                31,168,345                                 -
                                                                     --------------------------          -----------------------

                Net cash provided by financing activities.......                27,906,645                         3,019,215

Net change in cash and cash equivalents.........................                10,591,140                           205,010
Cash and cash equivalents, beginning of period..................                   219,688                           425,023
                                                                     --------------------------          -----------------------
Cash and cash equivalents, end of period........................     $          10,810,828               $           630,033
                                                                     ==========================          =======================
</TABLE>
                                       3
<PAGE>


                    FIRST HORIZON PHARMACEUTICAL CORPORATION
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (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 Registration Statement on Form S-1 (File No. 333-30764).

2.   New Accounting Pronouncements

     In June 1998, the Financial  Accounting Standards Board issued SFAS No. 133
"Accounting  for Derivative  Instruments and Hedging  Activities."  SFAS No. 133
established  methods of accounting  for  derivative  financial  instruments  and
hedging  activities  related  to  those  instruments  as well as  other  hedging
activities.  Management  believes that adopting SFAS No. 133 (as amended by SFAS
No. 138) on January 1, 2001,  will not have a material  impact on the  Company's
financial condition or results of operations.

3.   Inventories

     Inventories  are  stated  at the  lower  of cost or  market  and  primarily
consists of purchased  finished  goods.  Cost is  determined  using the first-in
first-out method.

4.   Earnings Per Share

     Below is the calculation of basic and diluted net income per share:
<TABLE>
<CAPTION>

                                           Quarter Ended     Quarter Ended       Year to Date     Year to Date
                                            September 30,    September 30,       September 30,    September 30,
                                                 2000            1999                2000             1999
                                          ---------------   ---------------     --------------    --------------
<S>                                       <C>               <C>                 <C>               <C>

Net income.....................           $      955,133    $      412,618      $   1,093,484     $     937,724
Weighted average shares
  outstanding - basic..........               12,919,143         7,981,248         10,449,247         7,981,248
Dilutive effect of stock
  options......................                1,635,398           867,021          1,603,483           867,021
                                          ---------------   ---------------     --------------    --------------

Weighted average shares
  outstanding - diluted........               14,554,541         8,848,269         12,052,730         8,848,269

Basic earnings per share                   $         .07    $          .05      $         .10     $         .12

Diluted earnings per share                 $         .07    $          .05      $         .09     $         .11
</TABLE>
                                       4
<PAGE>

5.   Product Agreements

     The  Company  entered  into a  patent  license  agreement  with  Jame  Fine
Chemicals,  Inc.,  a supplier of raw material  for the drug  Tanafed,  effective
January 1, 2000. This agreement grants the Company a  semi-exclusive  license to
use, sell and distribute  finished products containing an active ingredient used
in Tanafed. Pursuant to this agreement, the Company must pay a royalty on future
sales.  The license  continues  through the life of the  licensed  patent  which
expires in 2014.

     On  April  14,   2000,   the  Company   acquired   exclusive   rights  from
Warner-Lambert  Company  ("Warner-Lambert")  to distribute,  market and sell the
drug Ponstel in the U.S. for $9,500,000 in cash and a $3,500,000 promissory note
to the seller.  The agreement  includes the purchase of the licensing rights and
certain  trademarks.  The purchase price was  preliminarily  allocated among the
fair values of tangible  and  intangible  assets and  liabilities  assumed,  the
majority of which is being amortized over 20 years.

     The Company  negotiated with  Warner-Lambert to continue to manufacture and
supply  Ponstel to the Company  through  December 31, 2000 and is negotiating an
agreement with another  manufacturer for the manufacturing of Ponstel subsequent
to December 31, 2000.

     On June  22,  2000,  the  Company  acquired  exclusive  rights  to  market,
distribute  and sell the drug  Cognex  and a new  unapproved  version  of Cognex
called Cognex CR, in the U.S. and other  countries for  $3,500,000 in cash.  The
Company  must also pay up to  $1,500,000  in  additional  purchase  price if the
Company  obtains  FDA  approval  to market  Cognex  CR. The  purchase  price was
preliminarily  allocated among the fair values of tangible and intangible assets
and liabilities assumed, the majority of which is being amortized over 20 years.

     The Company  negotiated a supply agreement with a Warner-Lambert  affiliate
to continue to manufacture and supply Cognex and the active ingredient in Cognex
for two years subject to a one year renewal.

     In addition,  the Company entered into a transition services agreement with
Warner-Lambert    under   which   Warner-Lambert   will   provide   transitional
administrative  services to the Company  until  December 31, 2000 in  connection
with the sale of Cognex in European countries.  The Company is currently seeking
relationships   with  third  parties  to  secure  marketing,   distribution  and
administrative  services in connection with sales of Cognex in Europe  beginning
January 1, 2001.

     On April 14, 2000, the Company entered into an amended credit facility with
LaSalle Bank that provided for bridge  financing of up to $13,000,000 to finance
the Company's  acquisitions.  The Company borrowed  $9,500,000 under this bridge
loan agreement for the acquisition of Ponstel.  Borrowings under the bridge loan
bore an interest  rate at the  Company's  choice of the prime rate or LIBOR plus
1.5%.  Interest on the bridge loan became  payable  monthly on May 1, 2000.  The
bridge loan matured,  and was repaid,  upon completion of the Company's  initial
public offering on May 31, 2000.

6.   Initial Public Offering

     On May 31,  2000,  the Company  completed  its initial  public  offering of
3,800,000 shares of common stock at a price of $8.00 per share. On June 5, 2000,
the Company  received net proceeds of $28,272,000  pursuant to the offering.  On
June 30, 2000, the Company's underwriters exercised an over-allotment option and
the Company sold an additional 570,000 shares of common stock at $8.00 per share
from which the Company  received  $4,240,800  in net proceeds.  After  deducting
offering   expenses  of  $1,357,578,   the  Company  received  net  proceeds  of
$31,155,222 from its initial public offering.  The proceeds were used to finance
product acquisitions, repay indebtedness and for general corporate purposes.

                                       5
<PAGE>

7.   Related Party Transactions

     In connection with the $9,500,000  bridge loan discussed above, the Company
paid a fee of  $16,848  to a Trust  affiliated  with John N.  Kapoor,  Ph.D.,  a
Director and the President and sole  stockholder of the managing general partner
of the Company's majority stockholder, in return for the pledge of certain Trust
assets as collateral for the loan.

     On May 3, 2000, the Company entered into an Amendment to the  Collaboration
Agreement  with  Inpharmakon  Corporation,  a related  party,  to amend  certain
payment terms under its existing Collaboration Agreement between Inpharmakon and
the Company relating to the Company's migraine product under development.  Under
the amended  agreement,  the Company paid  $200,000 to  Inpharmakon  on June 15,
2000. See "Item 2- Changes in Securities and Use of Proceeds."

                                       6
<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 Registration Statement on Form S-1
(File No. 333-30764). 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 currently  markets and sells 13 brand name  prescription  drugs
through its  nationwide  sales and  marketing  force of 147  professionals.  The
Company seeks to acquire and obtain  licenses for  pharmaceutical  products that
other  companies do not actively  market and increase  sales through  aggressive
promotion and marketing. In addition, the Company seeks to increase the value of
existing  products by  developing  new  formulations,  new delivery  methods and
seeking new indications for existing products.

RESULTS OF OPERATIONS

     Net Revenues.  Net revenues increased $4,126,752,  or 75%, over the quarter
ended  September  30, 1999, to  $9,632,716  for the quarter ended  September 30,
2000.  Net revenues  increased  $10,912,844,  or 80%, over the nine month period
ended September 30, 1999, to $24,595,902 for the nine months ended September 30,
2000.  Sales of  continuing  products for the quarter  ended  September 30, 2000
decreased  $77,970,  or 1%,  compared to the quarter ending  September 30, 1999.
Sales of continuing products increased $3,147,577,  or 24%, over the nine months
ended  September  30,  1999.  Sales of a  discontinued  product were $81,889 and
$327,589  for the  quarter  and nine month  period  ended  September  30,  1999,
respectively. The decrease in sales of continuing products for the quarter ended
September 30, 2000 was due to decreased sales of the Company's  cough,  cold and
allergy products.  This aniticpated  decrease was due to reduced promotion.  The
company expects that sales of the cough, cold and allergy products will continue
to decline as more  promotional  emphasis is placed on the  Company's key growth
drivers Nitrolingual  Pumpspray,  Ponstel,  Robinul and Tanafed. The increase in
sales of  continuing  products  for the nine month period was  primarily  due to
higher unit sales of Robinul and Tanafed.  Sales of the Company's newly acquired
and licensed products Nitrolingual Pumpspray, Ponstel and Cognex were $4,286,611
for the quarter  ended  September  30, 2000 and  $8,092,856  for the nine months
ended  September 30, 2000. The Company began to sell  Nitrolingual  Pumpspray on
February 1, 2000 (under a license  agreement  entered into in 1999),  Ponstel on
April 14, 2000 and Cognex on June 22, 2000.

     Cost of Revenues. Cost of revenues increased $441,992 or 46%, to $1,401,940
for the quarter  ended  September  30, 2000 compared to $959,948 for the quarter
ended  September  30, 1999.  Cost of revenues  increased  $1,312,015  or 57%, to
$3,623,549  for the nine months ended  September 30, 2000 compared to $2,311,534
for the nine months ended September 30, 1999.

     Gross Margin.  Gross margin for the quarter and nine months ended September
30, 2000 was 85% compared to 83% for the quarter and nine months ended September
30, 1999. This increase  resulted  primarily from increased sales of Robinul and
Robinul Forte,  which have higher margins than the Company's other products,  as
well as sales of the newly acquired Cognex and Ponstel products, which also have
higher margins.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses  increased  $2,461,812,  or 74%, to $5,805,848  for the
quarter ended September 30, 2000. Selling,  general and administrative  expenses
increased $7,860,945, or 91%, to $16,524,409 for the nine months ended September
30, 2000.  Selling related expenses  increased due to expansion of the Company's

                                       7
<PAGE>

sales  force,  higher  commission  expense  due to  increased  sales,  increased
marketing  and  promotional  expenses  due  to  promotional  campaigns  for  new
products,  increased  sampling of the  Company's  products,  increased  training
expenses for new and existing sales  representatives,  and other market research
activities. Royalty expense increased due to increased sales of Robinul, Robinul
Forte and Zebutal and royalties on sales of Nitrolingual  Pumpspray and Tanafed.
There was no comparable  royalty  expense on Tanafed sales in 1999.  The Company
expects  selling  expenses to continue to increase for the remainder of 2000 due
to higher  marketing and  promotional  expenses for  Nitrolingual  Pumpspray and
Ponstel and due to higher royalty and commission expense.

     General and  administrative  expenses  increased  due to  additions  to the
Company's  management  team and support  personnel  in the  Company's  corporate
office,  higher insurance costs due to increased  insurance  coverage and higher
professional  fees  related to the  Company's  SEC  reporting  requirements.  In
addition,  in  March  2000,  the  Company  engaged  a  consulting  firm  to make
recommendations  on the alignment and optimization of its sales force and future
expansion possibilities.  As a result, the Company has realigned its sales force
in order to increase  its sales  territory  coverage  area and to  optimize  the
efficiency of the Company's sales representatives.

     Non-Cash  Compensation.  Non-cash  compensation expense was $81,257 for the
quarter  ended  September  30, 2000  compared  to $47,839 for the quarter  ended
September  30,  1999.  Non-cash  compensation  expense was $251,786 for the nine
months ended  September  30, 2000  compared to $67,323 for the nine months ended
September  30, 1999.  This  increase  resulted  from the Company  issuing  stock
options  at  exercise  prices  that  were  lower  than the  market  value of the
Company's  stock  at the time the  options  were  issued,  as  determined  by an
independent valuation.

     Depreciation  and  Amortization  Expense.   Depreciation  and  amortization
expense  increased  $224,859 or 198% to $338,637 for the quarter ended September
30, 2000.  Depreciation and amortization  expense increased  $435,503 or 142% to
$741,371 for the nine months ended  September 30, 2000.  This increase  resulted
from  higher  amortization  expense  related to the  acquisition  of Robinul and
Robinul  Forte in January  1999,  Ponstel on April 14, 2000,  Cognex on June 22,
2000 and increased  depreciation  expense for furniture,  computer equipment and
leasehold  improvements at the Company's  corporate  headquarters.  Amortization
expense  could  further  increase  if the  Company  concludes  any more  product
acquisitions.

     Research  and  Development   Expense.   Research  and  development  expense
increased  $285,457,  or 119%, to $525,564 for the quarter  ended  September 30,
2000.  Research  and  development  expense  increased  $1,047,611,  or 225%,  to
$1,513,261 for the nine months ended September 30, 2000. This increase  resulted
from  continued  development  of FHPC 01, the Company's  migraine  product under
development,  and the Robinul line extension.  In addition,  on May 3, 2000, the
Company  amended  the  payment  terms  under its  Collaboration  Agreement  with
Inpharmakon  Corporation  relating  to the  development  of FHPC 01.  Under  the
amended terms, the Company paid a $200,000 fee to Inpharmakon upon completion of
the  Company's  initial  public  offering.  The  Company  anticipates  incurring
$500,000 of research  and  development  expense  for the  remainder  of 2000 and
$3,000,000 through 2002 in research and development cost for FHPC 01 relating to
conducting  clinical trials,  filing a new drug application and making milestone
payments under the Company's development agreements.

     Interest Expense.  Interest expense decreased  $86,158,  or 88%, to $11,476
for the quarter ended  September 30, 2000 due to the company using proceeds from
its initial  public  offering to repay  borrowings  under the  revolving  credit
facility  as well as the term  note  payable  to  LaSalle  Bank  related  to the
acquisition of Robinul.  Interest expense increased $45,690, or 17%, to $316,114
for the nine months  ended  September  30, 2000.  This  increase  resulted  from
borrowings  under the  bridge  loan  agreement  with  LaSalle  Bank used for the
acquisition of Ponstel in April 2000, as well as higher average  interest rates.
The  Company  currently  does not have  any  long-  term  debt  outstanding  and
therefore expects interest expense to decrease. However, the Company could incur
significant  interest  expense in the future if it continues to acquire products
and finance the purchase of these products with debt.

     Interest  Income.  Interest  income  was  $137,209  for the  quarter  ended
September 30, 2000 compared to $3,159 for the quarter ended  September 30, 1999.
Interest  income was  $184,740  for the nine  months  ended  September  30, 2000

                                       8
<PAGE>

compared to $7,434 for the nine months ended  September  30, 1999.  The increase
was the result of interest  earned on the remaining  proceeds from the Company's
initial public offering.

     Provision  for Income  Taxes.  Income taxes were  provided for at a rate of
40.3% in 2000 compared to 41.7% in 1999.  The decrease is primarily due to state
income tax structuring initiatives.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  liquidity  requirements  arise from debt  service,  working
capital requirements 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 $10,810,828 at September 30,
2000. Net cash used in operating  activities for the nine months ended September
30, 2000 was $471,242. This use of cash was the result of increased purchases of
inventory  primarily for Nitrolingual  Pumpspray,  increased accounts receivable
due to higher sales, and higher prepaid expenses.  This use was partially offset
by  increased  accounts  payable and accrued  expenses,  net income and non-cash
depreciation,  amortization and compensation expense. The Company estimates that
its  supply  agreements  with  its   manufacturers   require  that  it  purchase
approximately  $1,400,000 of inventory during the remaining quarter of 2000. The
Company is negotiating an agreement win another manufacturer for the manufacture
of  Ponstel  subsequent  to  expiration  of  its  manufacturing  agreement  with
Warner-Lambert on December 31, 2000. However, the Company believes that based on
the  current  level of  inventory  of  Ponstel  and the amount  scheduled  to be
delivered in the first  quarter of 2001,  that it will have enough  inventory to
sell Ponstel  through  2001.  The Company  expects to use  significant  cash for
operating  activities in the future in connection  with the  development of FHPC
01.  The  Company  expects  to incur  approximately  $500,000  of  research  and
development  expense  through  the last three  months of 2000 and  approximately
$3,000,000 through 2002.

     Net cash used in investing  activities for the nine months ended  September
30, 2000 was $16,844,263.  The Company  purchased  Ponstel on April 14, 2000 for
$9,500,000  in cash and an  additional  $3,500,000  financed by the  seller.  In
addition,  the Company assumed  liabilities for returned products shipped by the
seller prior to the acquisition.  The Company  purchased Cognex on June 22, 2000
for $3,500,000 in cash and assumed  liabilities for returned products shipped by
the seller prior to the  acquisition.  Purchases of property and equipment  were
$335,273 for the nine months ended  September  30, 2000  primarily  for computer
equipment and leasehold improvements at the Company's corporate headquarters.

     Net cash  provided by financing  activities  was  $27,906,645  for the nine
months  ended  September  30,  2000.  This  source of cash was the result of the
Company's  initial  public  offering and the exercise of stock options by former
employees  that  provided net proceeds of  $31,168,345  offset by payment on the
revolving   loan  agreement  of  $800,000  and  payment  of  long-term  debt  of
$2,461,700.

     In May 1998, the Company  entered into a credit  facility with LaSalle Bank
National  Association,  which was  subsequently  amended to include a  revolving
credit facility, a term loan and a bridge loan. The revolving loan is subject to
borrowing  base   limitations.   The  revolving  credit  facility  provides  for
borrowings up to $2,500,000  and bears interest at the bank's prime rate, and is
due May 2, 2001. At September 30, 2000, the Company had no  outstanding  balance
under the revolving credit facility.

     In January 1999,  the Company  borrowed  $2,400,000  under a term loan with
LaSalle Bank.  The term loan bore an interest  rate at the  Company's  choice of
either  the bank's  prime  rate or LIBOR  plus 2%. The term loan was  payable in
monthly  installments of $40,000 plus accrued  interest and was due to mature on
May 2, 2001. On June 5, 2000,  the  outstanding  balance of  $1,640,000  payable
under the term loan was paid with  proceeds from the  Company's  initial  public
offering.  On April 14, 2000, the credit facility was further amended to include
bridge financing of up to $13,000,000 to finance product acquisitions.  On April

                                       9
<PAGE>

14,  2000,  the  Company  borrowed  $9,500,000  under this  bridge  loan for its
purchase  of  Ponstel.  Borrowings  under the bridge  loan bore  interest at the
Company's  choice of the bank's  prime rate or LIBOR plus 1.5%.  On June 5, 2000
the  outstanding  balance of  $9,500,000  payable under the bridge loan was paid
with proceeds from the Company's initial public offering.

     The Company's credit facility with LaSalle Bank is secured by the Company's
accounts receivable,  inventories, equipment and intangible assets including the
Company's intellectual  properties.  Under the terms of the credit facility, the
Company must maintain a minimum net worth plus  subordinated  debt of $3,300,000
plus 75% of net income,  a ratio of liabilities  to net worth plus  subordinated
debt of 2.25 to 1.00, a minimum  specified  EBITDA,  and a fixed charge coverage
ratio ranging from .75 to 1.00 to 1.25 to 1.00. The credit  facility also limits
the  Company's   ability  to  incur  additional   indebtedness,   and  prohibits
substantial  asset sales and cash  dividends.  As of  September  30,  2000,  the
Company was in compliance with these covenants.

     On April 14, 2000, the Company issued a promissory  note to  Warner-Lambert
evidencing $3,500,000 of the purchase price of Ponstel. This promissory note was
interest free. The Company paid this  promissory note in full with proceeds from
the initial public offering.

     The Company  believes that its cash and cash  equivalents,  cash  generated
from operations plus borrowings available under its credit facility with LaSalle
Bank 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.

     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    developing  new  formulations,  new  delivery  methods and seeking new
          indications for existing products;
     o    increases in selling expenses for Nitrolingual Pumpspray and Ponstel;
     o    concluding further product acquisitions;
     o    the Company's product  development efforts for FHPC 01 and the Robinul
          line extension;
     o    obtaining regulatory clearance for FHPC 01;
     o    future development expenses;
     o    capital expenditures;
     o    future inventory levels and purchases; and
     o    adequacy of capital resources.

     When used in this Report,  the Company intends the words "may",  "believe,"
"anticipate," "planned," "expect," "require," "intend," and "depend" to identify
"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 Registration Statement on Form S-1 (File No. 333-30764)
under the  headings  "Our  growth  will  suffer if we do not  acquire  rights to
additional  products",  "We may  encounter  problems in the  manufacture  of our
products that could limit our ability to sell our products",  "The  availability
of a previous version of our Nitrolingual  product could reduce its sales",  "If
our  products  under  development  fail  in  clinical  studies  or if we fail or
encounter  difficulties in obtaining regulatory approval for new products or new
uses of existing products,  we will have expended  significant  resources for no
return",  "Our level of debt could  reduce  our  growth",  "We expect to require
additional funding and if we cannot obtain it, our sales, profits,  acquisitions
and  development  projects  could suffer" and "  Pohl-Boskamp  can terminate our
rights to  Nitrolingual."  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.

                                       10
<PAGE>

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  are made in German  Deutsche  marks.  The Company  expects to make
purchases several times per year under this agreement.

     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. To the extent that the Company borrows under its credit
facility  with  LaSalle  Bank,  it will  experience  market risk with respect to
changes in the  general  level of the  interest  rates and its  effect  upon the
Company's interest expense.  Borrowings under the Company's credit facility with
LaSalle Bank 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.

                                       11
<PAGE>


                           PART II - OTHER INFORMATION


ITEM 1: LEGAL PROCEEDINGS

        None

ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS

     The  Company's  Registration  Statement  on form S-1 (File  No.  333-30764)
relating to its initial public offering was declared  effective on May 31, 2000.
The offering of 3,800,000 shares of common stock, $.001 par value,  commenced on
May 31, 2000 and closed on June 5, 2000. All 3,800,000 of the shares  registered
were  sold at $8.00  per  share for an  aggregate  price of  $30,400,000  before
deducting  underwriting  discounts  commissions and underwriting  expenses.  The
managing  underwriters  of the initial  public  offering were Chase  Securities,
Inc.,  Banc of America  Securities  LLC,  and Thomas  Weisel  Partners  LLC (the
"Underwriters").  The Company deducted $2,128,000 in underwriting  discounts and
commissions and $1,357,578 in offering  expenses  incurred through September 30,
2000. The Company  received net proceeds of  $26,914,422.  On June 30, 2000, the
Underwriters  exercised  their  over-allotment  option,  pursuant  to which  the
Company sold an additional 570,000 shares of common stock at $8.00 per share for
an aggregate price of $4,560,000  before  deducting  underwriting  discounts and
commissions of $319,200.  The Company  received net proceeds of $4,240,800  from
the exercise of the over-allotment option. The total net proceeds to the Company
from its initial public  offering  including the exercise of the  over-allotment
option was $31,155,222.

     Through  September 30, 2000, the Company used the proceeds from the initial
public offering to repay  $9,500,000 due under the bridge loan with LaSalle Bank
which it  borrowed  to  purchase  Ponstel,  $1,640,000  due  under the term loan
facility with LaSalle Bank and $2,000,000 under the revolving loan facility with
LaSalle Bank. The Company also repaid  $3,500,000 due under the promissory  note
issued  to  Warner-Lambert  for  the  purchase  of  Ponstel  and  $3,500,000  to
Warner-Lambert  Company  for the  purchase of Cognex.  The  Company  also paid a
$200,000 fee to Inpharmakon  Corporation under the terms of the Amendment to the
Collaboration Agreement with Inpharmakon Corporation dated May 3, 2000.

     The Company  currently  expects that the  remaining  proceeds  will be used
primarily  for working  capital and general  corporate  purposes,  including the
development of new products and for new product acquisitions.

     None of the  Company's  offering  expenses or net proceeds from the initial
public  offering were paid  directly or  indirectly to any director,  officer or
their  associates,  persons  owning  10% or more of any  class of the  Company's
equity  securities or to any  affiliates of the Company  except for the $200,000
fee paid under the  Amendment  to the  Collaboration  Agreement  to  Inpharmakon
Corporation  and the  $16,848  fee paid to the Kapoor  Children's  1992 Trust in
consideration  of its  pledge of  securities  and  investments  in the amount of
$10,000,000 under the bridge loan with LaSalle Bank.

     The John N. Kapoor Trust,  dated  September 30, 1989 (the "Trust") owns 50%
of the  common  stock of  Inpharmakon  Corporation.  The Trust is a  partner  of
Kapoor-Pharma  Investments,  L.P., the Company's  majority  stockholder and John
Kapoor, Ph.D., the Trustee of the Trust is one of the Company's Directors and is
the  President  and  sole   stockholder  of  the  managing  general  partner  of
Kapoor-Pharma Investments, L.P. In addition, Mahendra Shah, Ph.D., the Company's
Chairman and Chief  Executive  Officer is a director of Inpharmakon  Corporation
and owns options to purchase 25,000 shares of its common stock.

     Dr.  Kapoor is the  husband  of Edith  Kapoor,  the  Trustee  of the Kapoor
Children's 1992 Trust and their children are the beneficiaries.

                                       12
<PAGE>

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

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

     At the Annual  Meeting of  Stockholders  held  September  8, 2000,  John N.
Kapoor,  Ph.D. was  re-elected to the Company's  Board of Directors as a Class A
Director.  There were 10,506,329  votes for and 457,643 votes withheld,  for Dr.
Kapoor. The Company's Class B Directors, Mahendra Shah Ph.D. and Jon S. Saxe and
the Class C Directors,  R. Brent Dixon and Pierre  Lapalme  continue to serve on
the  Board.  The terms of the Class A, B and C  Directors  expire at the  Annual
Meeting of Stockholders in fiscal year 2003, 2001 and 2002, respectively.

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

              27     -   Financial Data Schedule - September 30, 2000
                         (for SEC use only)

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

              *  Incorporated by Reference from the Company's Registration
                 Statement on Form S-1 (File. No. 333-30764)

        (b)   The  Registrant has not  filed any  reports  on Form 8-K  for  the
              quarter ended September 30, 2000.


                                       13
<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 November 10, 2000.


                                FIRST HORIZON PHARMACEUTICAL CORPORATION


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


                                By:/s/ Balaji Venkataraman
                                   -----------------------------------------
                                   Balaji Venkataraman
                                   Vice President of Corporate Development
                                   and Chief Financial Officer
                                   (Principal Accounting and Financial Officer)


                                       14