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 June 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 ] (1) No [ ]

     As of August 8, 2000,  there  were  12,919,143  shares of the  Registrant's
Common Stock outstanding.

     (1) The Registrant has filed all reports required to be filed by Section 13
or 15(d) of the Securities  Exchange Act of 1934, but it has not been subject to
such      filing      requirements      for     the      past      90      days.


<PAGE>

                    FIRST HORIZON PHARMACEUTICAL CORPORATION
                                    FORM 10-Q
                                      INDEX


PART I.   FINANCIAL STATEMENTS (UNAUDITED)                                  PAGE

          Item 1.     Balance Sheets at June 30, 2000 and                      1
                      December 31, 1999

                      Statements of Operations for the three months ended      2
                      June 30, 2000 and June 30, 1999 and for the six months
                      ended June 30, 2000 and June 30, 1999

                      Statements of Cash Flows for the six months ended        3
                      June 30, 2000 and June 30, 1999

                      Notes to Condensed Financial Statements                  4

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

          Item 3.     Quantitative and Qualitative Disclosures about          10
                      Market Risk

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
<PAGE>

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

ITEM 1. UNAUDITED FINANCIAL STATEMENTS

                    FIRST HORIZON PHARMACEUTICAL CORPORATION

                                 BALANCE SHEETS
                                   (unaudited)

                                                         June 30,   December 31,
                                                          2000         1999
                                                          ----         ----
ASSETS
Current Assets:
   Cash and cash equivalents.........................  $10,376,111   $  219,688
   Accounts receivable, net of allowance for doubtful
       accounts, discounts and contractual adjustments
       of $163,516 and $55,783 at June 30, 2000 and
       December 31, 1999, respectively................   4,105,145    2,900,623
   Inventories........................................   2,649,240      798,615
   Samples and other prepaid expenses.................   1,466,731      553,614
   Deferred tax assets................................     776,780      550,780
                                                        -----------   ----------
              Total current assets....................  19,374,007    5,023,320
                                                        -----------   ----------
Property and equipment, net...........................     639,813      422,096
Other Assets:
    Notes receivable from related party...............      37,172       30,000
    Intangibles, net..................................  23,654,742    5,602,328
                                                         ----------    ---------
              Total other assets......................  23,691,914    5,632,328
                                                         ----------    ---------
              Total assets............................ $43,705,734  $11,077,744
                                                        ===========  ===========
LIABILITIES AND STOCKHODERS' EQUITY
Current Liabilities:
    Accounts payable.................................. $ 1,087,918  $   794,088
    Accrued expenses..................................   6,768,811    2,892,727
    Borrowings under revolving loan agreement.........       -          800,000
    Current portion of long-term debt.................     648,533    1,270,389
                                                        -----------   ----------
             Total current liabilities................   8,505,262    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.......................   8,581,741    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 June 30, 2000 and
       December 31, 1999, respectively................      12,921        8,540
    Additional paid-in capital........................  36,983,388    5,788,220
    Deferred compensation.............................  (1,113,845)  (1,284,374)
    Accumulated deficit...............................    (758,471)    (896,822)
                                                       ------------  -----------
              Total stockholders' equity..............  35,123,993    3,615,564

              Total liabilities and stockholders'
              equity                                   $43,705,734  $11,077,744
                                                       ===========  ===========

                                       1
<PAGE>

<TABLE>
<CAPTION>

                    FIRST HORIZON PHARMACEUTICAL CORPORATION

                            STATEMENTS OF OPERATIONS
                                   (unaudited)
<S>                                     <C>                    <C>                <C>               <C>

                                        For the Quarter        For the Quarter  For the Six Months  For the Six Months
                                            Ended                  Ended               Ended             Ended
                                         June 30, 2000          June 30, 1999       June 30, 2000     June 30, 1999
                                         -------------          -------------       -------------     -------------

Net Revenues                              $ 7,843,547            $ 3,977,158        $  14,963,186     $   8,177,093
Operating costs and expenses
       Cost of revenues                     1,159,872                632,155            2,221,609         1,351,586
       Selling, general and administrative
           expenses, excluding non-cash
           compensation expense             5,226,907              2,769,271           10,718,561         5,319,426
       Non-cash compensation expense           83,261                  8,764              170,529            19,485
       Depreciation and amortization          307,261                112,787              402,733           192,089
       Research and development expense       612,405                 82,599              987,697           225,543
           Total operating costs and      ------------           ------------        -------------      ------------
           expenses                         7,389,706              3,605,576           14,501,129         7,108,129
                                          ------------           ------------        -------------      ------------

Operating income                              453,841                371,582              462,057         1,068,964
                                          ------------           ------------        -------------      ------------
Other income (expense):
       Interest expense                      (213,410)              (117,031)            (304,637)         (172,789)
       Interest income                         41,940                  2,077               47,530             4,274
       Other                                   27,950                   (700)              37,771             1,750
                                          ------------           ------------        -------------      ------------
           Total other income
           (expense)                         (143,520)              (115,654)            (219,336)         (166,765)
                                          ------------           ------------        -------------      ------------
Income before provision for
    income taxes                              310,321                255,928              242,721           902,199
Provision for income taxes                   (133,438)              (106,728)            (104,370)         (377,094)
                                          ------------           ------------        -------------      ------------

Net income                                $   176,883            $   149,200         $    138,351       $   525,105
                                          ============           ============        =============      ============
Net income per common share:
        Basic                             $      0.02            $      0.02         $       0.02        $     0.07
                                          ============           ============        =============      ============
        Diluted                           $      0.02            $      0.02         $       0.01        $     0.06
                                          ============           ============        =============      ============
Weighted average common shares
outstanding:
        Basic                               9,861,813              7,981,248            9,200,728         7,981,248
        Diluted                            11,360,489              8,759,904           10,699,404         8,759,904

</TABLE>

                                       2
<PAGE>

                    FIRST HORIZON PHARMACEUTICAL CORPORATION

                            STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
<S>                                                           <C>                       <C>
                                                              Six Months Ended          Six Months Ended
                                                                June 30, 2000             June 30, 1999
                                                                -------------             -------------
Cash flows from operating activities:
Net income............................................          $       138,351            $      525,105
Adjustments to reconcile net income to net cash
     (used in) provided by operating activities:
          Depreciation and amortization...............                  402,733                   192,089
          Deferred tax benefit .......................                 (226,000)                      -
          Non-cash compensation expense...............                  170,529                    19,485
          Changes in assets and liabilities, net of acquired
              assets and liabilities:
              Accounts receivable.....................               (1,204,522)                 (639,736)
         Inventories..................................               (1,850,625)                 (328,537)
         Samples and other prepaid expenses...........                 (913,117)                 (213,140)
         Notes receivable from related party..........                   (7,172)                     -
         Accrued expenses.............................                1,980,324                   714,078
         Accounts payable.............................                  293,830                    33,575
                                                                ----------------           ---------------

               Net cash (used in) provided by operating
               activities.............................               (1,215,669)                  302,919
Cash flows from investing activities:
     Purchase of intangibles..........................              (16,501,816)               (4,000,000)
     Purchase of property and equipment...............                 (275,288)                  (75,769)
                                                                ----------------           ---------------

              Net cash (used in) investing activities.              (16,777,104)               (4,075,769)

Cash flows from financing activities:
     Revolving loan agreement payments................                 (800,000)                 (300,000)
     Principal payments on long-term debt.............               (2,250,353)                 (352,173)
     Proceeds from long-term debt.....................                     -                    4,000,000
     Proceeds from issuance of common stock, net......               31,199,549                      -
                                                                ----------------           ---------------

             Net cash provided by financing activities               28,149,196                 3,347,827

Net change in cash and cash equivalents...............               10,156,423                  (425,023)
Cash and cash equivalents, beginning of period........                  219,688                   425,023
                                                                ----------------           ---------------
Cash and cash equivalents, end of period..............          $    10,376,111            $       -
                                                                ================           ===============

</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.  The Financial Accounting Standards Board delayed
     the effective  date of SFAS No. 133 for one year to fiscal years  beginning
     after June 15,  2000.  The delay,  published  as SFAS No.  137,  applies to
     quarterly  and  annual  financial  statements.   Management  believes  that
     adopting  SFAS No.  133 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>
         <S>                        <C>              <C>               <C>              <C>
                                    Quarter Ended    Quarter Ended     Year to Date     Year to Date
                                    June 30, 2000    June 30, 1999     June 30, 2000    June 30, 1999
                                    -------------    -------------     -------------    -------------

         Net income...............   $   176,883     $   149,200        $   138,351      $   525,105
         Weighted average shares
           outstanding - basic....     9,861,813       7,981,248          9,200,728        7,981,248
         Dilutive effect of stock
           options................     1,498,676         778,656          1,498,676          778,656
                                     ------------    ------------       ------------     ------------

         Weighted average shares
           outstanding - diluted..    11,360,489       8,759,904         10,699,404        8,759,904

         Basic earnings per share    $       .02      $      .02        $       .02      $       .07

         Diluted earnings per share  $       .02      $      .02        $       .01      $       .06

</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 Tanned. 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  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  $1,326,374,  the
     Company  received  net  proceeds of  $31,186,426  from its  initial  public
     offering.  The  proceeds  are being 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 RESULTS OF OPERATION AND
         FINANCIAL CONDITION

     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 141  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 $3,866,389,  or 97%, over the quarter
ended June 30, 1999, to $7,843,547 for the quarter ended June 30, 2000. Sales of
existing products increased $1,301,367, or 33%, over the quarter ending June 30,
1999. Net revenues increased $6,786,093, or 83%, over the six month period ended
June 30, 1999, to $14,963,186  for the six months ended June 30, 2000.  Sales of
existing products increased  $2,980,225,  or 36%, over the six months ended June
30, 1999. These increases in sales of existing  products for the quarter and six
month  period  were due to  higher  unit  sales.  Sales of the  Company's  newly
acquired and licensed products Nitrolingual  Pumpspray,  Ponstel and Cognex were
$2,565,022 for the quarter ended June 30, 2000 and $3,805,868 for the six months
ended  June 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 $527,717 or 83%, to $1,159,872
for the quarter  ended June 30, 2000  compared to $632,155 for the quarter ended
June 30, 1999. Cost of revenues increased $870,022 or 64%, to $2,221,609 for the
six months ended June 30, 2000 compared to  $1,351,586  for the six months ended
June 30, 1999.

     Gross  Margin.  Gross  margin for the  quarter  ended June 30, 2000 was 85%
compared to 84% for the quarter  ended June 30,  1999.  Gross margin for the six
months ended June 30, 2000 was 85% compared to 83% for the six months ended June
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  $2,457,636,  or 89%, to $5,226,907  for the
quarter  ended June 30,  2000 from the  quarter  ended June 30,  1999.  Selling,
general  and  administrative   expenses  increased   $5,399,135,   or  101%,  to
$10,718,561  for the six months ended June 30, 2000.  Selling  related  expenses
increased  due to continued  expansion  of the  Company's  sales  force,  higher
commission expense due to increased sales and higher salary expense for existing
sales   representatives.    Marketing   and   promotional   expenses   increased
significantly due to the promotional  campaign for Nitrolingual  Pumpspray,  the
Company's  launch of Ponstel and increased  sampling of the Company's  products.
Meeting  and  training   expenses   increased  due  to  training  of  new  sales
representatives   as  well  as   continuing   education   for   existing   sales
representatives. Royalty expense increased due to increased sales of Robinul and
Robinul  Forte,  and royalties on sales of  Nitrolingual  Pumpspray and Tanafed.
There was no comparable  royalty  expense on Tanafed sales in 1999.  The Company
incurred  additional  third party market research expense due to additional data
needed for  Nitrolingual  Pumpspray  and Ponstel.  The Company  expects  selling


                                       7
<PAGE>

expenses  to  continue  to  increase  for the  remainder  of 2000 due to  higher
marketing and promotional  expenses for  Nitrolingual  Pumpspray and Ponstel and
continued expansion of its sales force.

     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,  effective  July 1,  2000  the  Company
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 $83,261 for the
quarter  ended June 30, 2000  compared to $8,764 for the quarter  ended June 30,
1999. Non-cash  compensation  expense was $170,529 for the six months ended June
30,  2000  compared  to $19,485  for the six months  ended June 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  $194,473 or 172% to $307,261 for the quarter  ended June 30,
2000.  Depreciation  and  amortization  expense  increased  $210,644  or 110% to
$402,733 for the six months ended June 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  $529,806,  or 641%,  to $612,405 for the quarter ended June 30, 2000.
Research and development  expense increased  $762,154,  or 338%, to $987,697 for
the six months  ended June 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 $900,000 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 increased $96,379,  or 82%, to $213,410
for the quarter ended June 30, 2000.  Interest expense  increased  $131,848,  or
76%, to $304,637 for the six months ended June 30, 2000. This increase  resulted
from  borrowings  under the bridge loan agreement with LaSalle Bank used for the
acquisition of Ponstel 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 $41,940 for the quarter ended June 30,
2000 compared to $2,077 for the quarter ended June 30, 1999. Interest income was
$47,530 for the six months  ended June 30,  2000  compared to $4,274 for the six
months  ended June 30, 1999.  The increase was the result of interest  earned on
proceeds from the Company's initial public offering.

     Other  Income and  Expense.  Other income and expense was income of $27,950
for the quarter  ended June 30,  2000  versus  $700 in expenses  for the quarter
ended June 30, 1999.  Other income and expense was income of $37,771 for the six
months ended June 30, 2000 versus $1,750 in income for the six months ended June
30, 1999. This increase was the result of gains recognized from foreign currency
transactions related to purchases of inventory.



                                       8
<PAGE>


     Provision for Income Taxes. Income taxes were provided for at a rate of 43%
in 2000 compared to 41.8% in 1999. The increase is due to higher  non-deductible
travel and entertainment expenses.

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 issuance of common stock.

     The Company's cash and cash  equivalents were $10,376,111 at June 30, 2000.
Net cash used in operating activities for the six months ended June 30, 2000 was
$1,215,669.  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 $2,200,000 of inventory during the remaining two quarters of 2000.
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  $900,000 of research and  development  expense through the
last six months of 2000 and approximately $3,000,000 through 2002.

     Net cash used in  investing  activities  for the six months  ended June 30,
2000 was  $16,777,104.  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
$275,288 for the six months ended June 30, 2000 primarily for computer equipment
and leasehold improvements at the Company's corporate headquarters.

     Net cash  provided by  financing  activities  was  $28,149,196  for the six
months ended June 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  $31,199,549  offset by payment on the  revolving
loan agreement of $800,000 and payment of long-term debt of $2,250,353.

     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 June 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. The
term loan bore an  interest  rate of 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 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


                                       9
<PAGE>


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 June 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 for 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    the expansion of the Company's sales force;

     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 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),  that 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  are made in German  Deutsche  marks.  The Company  expects to make
purchases  several times per year under this agreement and has an obligation due
on August 15, 2000 for $200,479.

     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


                                       10
<PAGE>


Company's interest expense.  Borrowings under the Company's credit facility with
LaSalle Bank bears 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 $1,326,374 in offering  expenses incurred through June 30, 2000.
The  Company  received  net  proceeds  of  $26,945,626.  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 $31,186,426.

     Through  June 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,  the expansion of the Company's sales and marketing
force 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

     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
          27   - Financial Data Schedule - June 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  filed a Report on Form 8-K on June 27, 2000 under Item
          2 of Form 8-K.




                                       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 August 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)





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